Making Lemonade
Privacy and Social Media

When is a Bribe Legit?

Jonathan B. Wight

The New York Times reports that Wal-Mart paid substantial bribes in Mexico to facilitate the construction of stores.

Let me draw a moral distinction:

I. A bribe paid to evade the law. If Mexico's zoning laws prevent the building of a retail store in certain neighborhoods, then paying a bribe to the zoning board to get a variance is clearly being used to subvert the democratic will. This would be illegal and immoral.

II. A bribe paid to enforce the law. Suppose instead that Wal-Mart submits paperwork to demonstrate lawful compliance with zoning and building codes, but such compliance has to be approved by a bureaucrat. However, in time-honored tradition, such bureaucrats will not approve any requests—even entirely legitimate ones!—without getting a kick-back.

This is the reality of how many government agencies work in developing countries. Hernando de Soto's attempt to start a small business in Peru, without paying any bribes, is recounted in his classic book, The Other Path (2002).

I spent many years in Brazil during the 1960s and again in the early 1980s. My experience then (I can't speak for now) is that to interface with a government agency you generally wanted to hire a despachante (or document agent) to run the hurdles for you. That includes knowing who to bribe to get particular things done. Although it never came up, I would be surprised if the despachante I hired to do routine tasks did not have to "grease the wheels" in order to get government agents to carry out their legally-mandated tasks.

Before you start attacking the government agents, consider the fact that many civil servants are woefully underpaid. In fact, it is much like waiters and waitresses in the U.S.: their salaries are held below minimum wage and they are expected to earn a decent living by working for tips. Government agents are likewise underpaid and expected to earn a living through the bribes that they can command. (Sure helps the budget deficit, doesn't it?)

This atrocious system is an enormous drain on productivity and entrepreneurship, and it hurts the poor the worst, since they typically don't have the resources to hire despachantes.

If Wal-Mart's alleged bribery turns out to be of this second sort—that is, paying government agents to perform their jobs—our moral outrage would be better directed away from Wal-Mart and towards the system in which citizens must pay bribes to get ordinary government services done.

[Photo source:]


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