Tuesday, April 15, 2014

Government Size and (Non)Corruption

By Michael Dorf

Last week brought news that doctors receiving very large Medicare reimbursements made very large campaign contributions to Democratic campaigns and PACs, and that in turn they may have received special consideration to avoid punishment. I haven't checked out the rightwingoverse reaction to the story, but it wouldn't surprise me if it went something like this: Aha! This sort of thing shows that government-funded health insurance is rife with fraud and therefore people (like those left-wing crazies at Dorf on Law) who argue for Medicare for All would simply drive up the price of health care.

Well, okay, they probably aren't mentioning DoL expressly, but I would be surprised if that's not the general reaction. Here I want to take it seriously.

My first reaction is that this is chiefly a corruption problem, rather than a government spending program. Supreme Court decisions like Citizens United, and now McCutcheon, hold that wealthy individuals and corporations have a First Amendment right to use their wealth to influence government policy--including government policy that enables these individuals and corporations to accumulate greater (or to protect existing) wealth. I don't know whether the doctors discussed in the Times article broke any laws, but if they did, that was probably due to ineptitude rather than necessity: Our system of campaign finance permits just about anything short of an express quid pro quo, so that a well-advised donor can purchase just about all of the influence he or it wants to purchase without breaking the law.

But wait. Some small-government conservatives say that the opportunities for corruption are chiefly a product of big government. According to this argument, if we had merely a watchman state, there would be little to be gained in the way of government contracts or regulation avoidance by bribery, legal or illegal.

Although frequently offered as an axiom, that's actually an empirical claim that we can test rather easily by comparing data about social spending and corruption. And when we do so, it turns out that the claim is false.

Consider that Denmark had the second highest social spending per capita as a fraction of GDP and tied for the lowest level of corruption.  In general, high rates of (public) social spending tend to correspond with low corruption, and vice-versa--although the relation is hardly linear. Culture, politics, and other factors appear to be the main determinants of corruption.

So the data confirm my initial reaction. The corruption story (assuming that's what it is) certainly does not indict single-payer health insurance. The Supreme Court is a more likely suspect.

11 comments:

Lloyd said...

I think your argument that big government doesn't induce corruption isn't valid because you have only verified it for one country. I'm pretty sure the absence of corruption in Denmark comes from this country's Lutheran culture, in which honesty and transparency are highly regarded.

Maybe a good way to find out would consist in comparing the levels of corruption in two similar U.S. states where public spending and government size significantly differ. But I find the Denmark example to be quite unconvincing.

Michael C. Dorf said...

Lloyd: Right after giving Denmark as an example, my post says: "In general, high rates of (public) social spending tend to correspond with low corruption, and vice-versa--although the relation is hardly linear." You can confirm that generalization for yourself by examining the data in the links I posted. My post also acknowledges the role of culture. The data for a large number of countries belie the right-wing claim that big government social spending programs lead to corruption. Given the right political system and culture, they don't. Conversely, corruption is rampant in many low-government spending countries. E.g., Somalia ties for the most corrupt country in the world and essentially has no government at all. (Again, that's just one example. The data overall support the point.)

tjchiang said...

With all due concession to that this is a blog post, not an academic paper, there are way too many uncontrolled-for variables here to support your claim. High rates of public spending may well tend to correlate with low corruption. But that could equally be because intrinsically low levels of corruption then foster public support for high public spending, rather than the direction of causality you posit (i.e. that high public spending causes lower corruption, or at least that lower public spending would not marginally reduce corruption). "Correlation does not prove causation" would practically be the first words out of my mouth at a workshop.

Unknown said...

Thank You, Professor Dorf. The statistical analysis is most insightful.

Michael C. Dorf said...

TJ: That would be a fair objection to a bolder claim that neither I (in this post) nor Neil (in the follow-up post) actually made: namely, that high levels of government spending CAUSE low corruption. What both of us actually say is that the strong claim by some proponents of small government--that big government leads to high levels of corruption--is false. (One of many examples of this sort of claim by right-wing pundits can be found at http://goo.gl/u7qx2J . It has the useful title "Big Government and Big Corruption Go Hand in Hand.") And in fact the data are inconsistent with that claim, just as Neil and I both say.

I take you to be saying that econometric tools that control for various other factors MIGHT show that there is some positive correlation between government size and corruption. Given the big-picture trend, I think such an effect would have to be quite small, but I acknowledge it's a possibility--and nothing that either I or Neil wrote is inconsistent with that possibility.

tjchiang said...

If you mean to address a claim that big government causes high levels of corruption in absolute terms--i.e. that the corrupting effect of big government is so strong that it always swamps every other factor--then I agree that the data you cite refutes that claim. But that refutation doesn't get you very far in terms of the original point of your post. The conservative claim can simply be recast (or, more precisely, cast in the terms I've always understood it) as saying that, on the margins, bigger government causes higher corruption than otherwise. And that would still "indict single-payer health insurance" in so far expanding government would have a marginal detrimental effect on the corruption front.

The only way to get to your substantive conclusion that the corruption story "certainly" does not indict single-payer is if the corruption effect is either non-existent (which you disclaim) or at least very small (which you do claim). But the data at most refutes a counter-claim that the corruption effect is so enormous that it swamps everything else. It does not refute a counter-claim that the corruption effect is somewhere in the middle.

I should end by saying that I actually do think the corruption effect of larger government is probably small in the grand scheme of things. But (a) I think the effect is probably larger than what you think it is, and (b) I have a big problem with describing the issue as "an empirical claim that we can test rather easily by comparing data about social spending and corruption."

Rose Warissa said...

The data for a large number of countries belie the right-wing claim that big government social spending programs lead to corruption. Given the right political system and culture, they don't. Conversely, corruption is rampant in many low-government spending countries. E.g., Somalia ties for the most corrupt country in the world and essentially has no government at all. (Again, that's just one example. The data overall support the point.) fifa coins  elo boost  cheap fut coins  lol elo boosting

David Burns said...

Example of Denmark shows that big government does not necessarily imply corruption in all cases. It doesn't show much else. I am guessing a study of American states or cities would show a strong correlation between budget size and corruption. And of course, in the bizarre political satire where we now live, who gets to define what is/is not corrupt?

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