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August 2019 posts

Comparing U.S. and Mexico Bribery

By Jonathan B. Wight

I’ve been enjoying John Steinbeck’s account of his journey in the early 1940s to the waters of Baja, Mexico, where he was helping a biologist friend gather samples of the diverse ocean life.  The reissued book is The Log from the Sea of Cortez (1941).

There is lots of philosophy as well as some science.  Steinbeck reveals a wonderful distinction between U.S.-style corruption and Mexican-style corruption.  He prefers the Mexican style: 

“We have thought of this in regard to the bribes one sometimes given to Mexican officials. This is universally condemned by Americans, and yet it is a simple, easy process. A bargain is struck, a price named, the money paid, a graceful complements change, a service performed, and it is over. He is not your man nor you his….  

“We find we like this cash and carry bribery as contrasted with our own system of credits. With us, no bargain is struck, no price named, nothing is clear. We go to a friend who knows the judge. The friend goes to the judge. The judge knows a senator who has the ear of the awarder of contracts. And eventually we sell five carloads of lumber. But the process has only begun. Every member of the chain is tied to every other. 

“Ten years later the son of the order of contracts must be appointed to Annapolis. The Senator must have traffic tickets fixed for many years to come. The judge has a political lien on your friend, And your friend taxes you indefinitely with friends who need jobs. It would be simpler and cheaper to go to the order of contracts, give him one-quarter of the price of the lumber, and get it over with. But that is dishonest, that is a bribe. Everyone in the credit chain eventually hates and fears everyone else. What the bride-bargain, having no enforcing mechanism, promotes mutual respect and a genuine liking” (p. 82).

This is a clear demonstration of the double coincidence of wants problem in economics, comparing barter to a cash market.  The cash market is clearly better for winning favors (bribery), according to Steinbeck.

Yet his tongue-in-cheek analysis of course ignores all the real problems with corruption and bribery, the rent seeking, the misallocation of resources (both in the short and long run), the unfairness, and the collapse of the rule of law.