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Is NZ the least corrupt place on earth?

datePosted on 19:51, November 19th, 2009 by Pablo

Transparency International has come out with its latest rankings on state corruption and found New Zealand to be the least corrupt state on earth, scoring 9.4/10 (10 being perfection, defined as zero corruption). The SE Asian country I live in came out 3rd (at 9.2), which I found very surprising in that it is a one party authoritarian state in which an oligarchical few dominate the party, which in turn has its fingers in virtually every aspect of economic life in the country (for example, the largest state holding company happens to have as a CEO the spouse of the PM, who in turn is the son of the founder of the Party and first PM of the state; similarly, all of the military high command are members of the Party and retire to become high level officials in the civil service, by-passing careerists in the process). There may be little street-level graft by low-level officials, but influence-peddling and patronage networks abound.

I also am not sure about NZ’s ranking, given the Philip Field affair, Winston Peter’s shennanigans, a variety of Labour Party rorts and misconduct, the Immigration scandals and influence-buying by well-heeled foreigners, lack of accountability and transparency in government agencies (such as the SIS), and problems with procurement processes in situations such as the MoD/NZDF acquisition of the LAVs, MP housing and travel allowance excesses, etc. Nor do I think that National is any “cleaner” than Labour. So how did TI come up with its ranking?

It turns out that the ranking is based on reputational status, which in turn is based on perceptions  of monetary corruption when doing business in a given country. In other words, the rankings are based on image and anecdotal evidence rather than time-lagged, objectively measurable universal variables or, dare I say it, reality. Ignoring non-monetary corruption ignores the reality of things such as patronage and influence-peddling, or of exploitation of privileged position for personal, non-remunerated gain. Things like discreet insider trading, subtle cooking of statistics, preferential treatment in securing housing in desirable areas–all of those are excluded by definition by TI. It seems that the rankings avoid institutionalised “high end” corruption while concentrating on perceptions of the lower end.

I would therefore argue that we should take the rankings with a grain of salt because, although it may accurately capture corruption realities towards the bottom of the scale where corruption is vulgar and obvious (say in places like Haiti, Nigeria or Pakistan), it is not suited to reflect the subtle genius of corruption in sophisticated societies where it simply is not necessary to pay individual bribes to get business done.

But then again, perhaps I am asking too much of TI and NZ deserves its award because the world is, after all, a very flawed place.

11 Responses to “Is NZ the least corrupt place on earth?”

  1. Phil Sage on November 19th, 2009 at 21:02

    I have gone through the same thought process as you previously. The Churchill quote about democracy being the worst of all systems apart from all the others springs to mind. It is not that New Zealand is not corrupt but other countries are more corrupt.

  2. SPC on November 19th, 2009 at 21:19

    One could mention MP’s perks and a predisposition of MP’s to own rental property (their entry into this market is assisted by their housing allowance) – where there is the ability to deduct borrowing costs from taxable rent income (the level of which is boosted by accommodation supplements available to tenants), or to transfer any loss on rental property against other income and the lack of a lack of capital gains tax. Certainly MP’s corrupt the process of accountable government and the economy where they have self-interest.

  3. What would Hayek say on November 20th, 2009 at 09:11

    To me the ranking highlights the difference between relative and absolute performance. Relatively compared to other countries, by the best measure possible for international comparison, New Zealand is less corrupt than other countries. On absolute performance there maybe a different story and some way to go.

    But relative performance does matter – often you don’t have to be the smartest person, you just have to be slightly better than the person next to you. An in the case of being chased by a tiger, slightly faster than your soon to be unfortunate friend.

  4. Eoipso on November 20th, 2009 at 11:24

    Like corruption, perception of corruption is cultural.

    I will speculate and say perceived “self-corruption” would be less in predominantly protestant societies (a puritanical legacy, like the rejection of indulgences to the church), and also less in Asian countries (based on a legalist/confusian heritage of patriotic duty to the state)

    Pablo refers to corruption in places ranked towards the bottom (like Haiti, Nigeria or Pakistan) as vulgar and obvious. But have a look at the meaning of the word “Baksheesh” (charity, tip, bribe).

    In NZ, we have euphemisms like “greasing the wheels” and some people refer to the Maori practice of “Koha” in this context as bribery, even though traditional Polynesian economy was based on a system of gift-giving.

    I don’t want to be an apologist for corruption, but it is important to see how close it is to other etiquettes of reciprocity and to not forget our “subtle genius” in order “to get business done”.

  5. Pablo on November 20th, 2009 at 12:24

    WwHs: You are quite right, and the analogy was very funny. I allude to that in my last sentence but did not develop the thought fully, so thanks. But I am still not sure of the NZ ranking even on a relative scale–ahead of Sweden, Norway, Denmark, Finland, Iceland Switzerland, Lichtenstein? It might be correct to rank NZ first but given the corruption that does exist in NZ it makes me wonder what is going on in other supposedly “clean” places.

    Eoipso. I was going to bring up the question of koha but decided to leave it to commentators because I noticed that in discussions about the rankings many make cultural-religious arguments. That is, that Anglo-Saxon Judeo-Christian cultures are more honest (less corrupt), than Arab Muslim or African spiritualist or Latin American Catholic cultures. I am not sure that I buy these type of argument and think it is more a matter of legal frameworks and enforcement capability associated with modernisation.

    What I do know of is the koha practices in Polynesia, although I do not enough to distinguish between gifts, tokens of appreciation and bribes. That is why I left it out.

    A recent news item about the traditional practice of giving envelopes of money as marriage gifts in South Korea has now been legally challenged because along with its traditional symbolism of respect and honor, it is now used as a form of bribery or influence-peddling.

    Incidentally, would people here agree that the widespread practice in NZ of paying cash for services in order to avoid GST is a form of low-level corruption? If so, then the ranking if most definitely wrong.

  6. Eoipso on November 20th, 2009 at 13:25

    @ Pablo: Is paying cash for services in order to avoid GST a form of low-level corruption?
    Yes, but would it happen less in other countries.

    I seem to remember that you are originally from South America. What is your impression of corruption there, and people’s attitude towards it? (My limited knowledge is a couple of Gabriel García Márquez novels).

  7. Pablo on November 20th, 2009 at 13:32

    Eoipso:

    I found that corruption in LATAM was most closely associated with underdevelopment rather than Latin culture per se. However, that does not hide the fact that in the more developed countries, say Argentina where I spent most of my childhood and which is quite developed, “high-level” corruption is almost an art form. To my mind Chile is the least corrupt LATAM country, which some attribute to the strong Germanic influence in the country. But Uruguay is also pretty “clean” and the Germanic influence is not great at all. However, both countries have relatively small populations and fairly long traditions of democracy and professional civil services (each extending back decades before the dictatorships of the 1970s), so maybe the foundation for “cleanliness” is political institutions, legal frameworks and a meritocratic bureaucracy–the Weberian ideal, in other words.

  8. George D on November 20th, 2009 at 18:33

    As you make clear in the post, Transparency International only measures _perceptions_ of corruption in the public sector. Actual corruption is much harder to measure.

    Their sample (primarily foreign businesspeople) is not exactly representative. See their methodology: http://www.transparency.org/policy_research/surveys_indices/cpi/2009/methodology

    Thus, some countries are likely to be seen as less corrupt, based on what a European executive thinks of that country, and others unfairly seen as more. Many things which are seen as normal business practice are in fact corruption, or blur the lines. It is these things that are accepted in the home culture which aren’t seen, as other commenters have noted.

  9. Tom Semmens on November 20th, 2009 at 18:51

    New Zealanders seem to draw a sharp distinction between how they conduct their private affairs – i.e. the black economy – and their expectation in both themselves and others in their dealings in public life and their interactions with the representative of state agencies.

    New Zealanders take a strong streak of civic pride in discharging their roles as teachers, nurses, firefighters, policemen, postal workers etc etc etc with impeccable and uncorruptable correctness. I well remember the disbelief of a friend of mine who had moved to Australia when her annual package of goodies to nanny vanished in the Australian postal system; It was simply beyond her frame of reference that such a thing might occur in a public service. A recent Russian arrival I know asked a policeman who pulled him over for speeding how much the bribe he wanted was – he spent the rest of the day at the station before being released with a severe warning.

    Practically all New Zealanders have an innocence about corruption that would regard an attempted bribe as a simple insult to their civic society.

    And long may it remain so.

  10. Matt on November 23rd, 2009 at 10:28

    Individual New Zealanders are no more or less likely to do corrupt things than people anywhere. What counts is what happens when they get found out.

  11. Ari on November 23rd, 2009 at 15:24

    Individual New Zealanders are no more or less likely to do corrupt things than people anywhere. What counts is what happens when they get found out.

    I actually disagree with this sentiment in general. Living in a society where integrity and incorruptability are heavily valued may well weight the decision-making process against corruption.

    I agree with you that the reaction when corruption is revealed is important, but so too is the view of how inevitable or appropriate corruption may be.

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