How to Bring Systemic Corruption into Demise

 By:

Armand Arief Sim (2009)

Final-year student of Department of Economics FEUI and

Chairman of BOE FEUI

Corruption is a notorious economic phenomenon. Indeed, its degree would be so much worse when public servants are the doers on the grounds that when they are fond of doing corruption thing, public interests are distorted. This hypothesis seems to meet reality in the case of so many retarded developing countries, including Indonesia. It’s deemed that corruption is the culprit of stagnancy or even deteriorating Indonesian economic growth and development.

Before moving on to deeper analysis of the case of corruption carried out by government officials in Indonesia and how to cease it, we need to clarify what it means. So many definitions of corruption by public servants abound, but I chose the one by Klitgaard (1988). He defines it as deviated activities carried out by government officials where their private, family, or relatives interests come first and public interests thereafter.

Impact of Corruption

The impact of corruption on economic activities is still debatable. There is at the very least one purported benefit of corruption, that is efficiency in resources allocation, which has become the basis of optimists’ standard argument. They argue that corruption would help throw inefficient entrepreneurs away because when entrepreneurs bribe government officials, they indirectly help sweep the inefficient ones away, because only the efficient ones who earn a great deal of profits that are able to allocate big proportion of it to be used to bribe public servants. On the other hand, pessimists argue that it’s not working as predicted.

According to Alam (1989), corruption may not be able to filter the most efficient entrepreneurs since there could be a situation where public servants only trust certain entrepreneurs they trust most to bid for undergoing projects, which is called as collusion. Why? Corruptive public servants are scared of being badmouthed to their boss by whining loser entrepreneurs that already transferred big amount of bribe.

Interestingly, this hypothesis is proved by one of the most important works on corruption and economic growth conducted by Paulo Mauro. Mauro (1993) cogently concludes that countries with relatively higher corruption level exhibit lower total investment and private investment per GDP ratio than those with relatively lower level of corruption. In addition to that study, Knack and Keefer (1999) proves that relation between corruption pervasiveness in a country is negative to its economic growth rate.

Communal Corruption

As this article aims to explain how to bring systemic corruption into demise, I would use communal corruption model, which is very well known in Indonesia as ‘korupsi berjamaah’. What are the assumptions needed to explain its existence? Main assumption proposed here is cliché, that is economic motive, instead of moral issue which is the most talked one. Let’s assume that a public servant willing to corrupt is forced by a severe need to provide a decent and proper daily life for his entire family. Hence, this motive implicitly indicates that his salary is far from his family basic monthly spending to live a decent life.

Assuming this theory is well proved, I can simply say in brief that below-standard salary is the main cause of persistent corruption. As a result, rationally a public servant will not feel reluctant to corrupt when he doesn’t have capability of living his daily proper life out of his earning, let alone no strict and severe punishment for what he has done in return.

On the other side, he is considered to be irrational if most of his colleagues conduct what he decided not to do before, that is to corrupt, and do not get punitive sanction from the big boss in return. This argument stands on the argument that by doing so this one clean bureaucrat, if I may say so, gains nothing, like higher salary and fringe benefits, but incurs cost in terms of extreme peer pressure, instead. If this extremely unhealthy atmosphere is allowed to happen in a persistent way, systematically indestructible communal corruption is about to be born, which is very likely to jeopardize economic activity within a nation.

I would describe communal corruption simply as a condition where corruption is practically normal thing to do, which gives birth to nothing-to-be-ashamed-to-corrupt condition among ‘inhabitants’. For instance, we can see this kind of activity at  so many government offices in Indonesia, where a public servant bluntly asks for bribes to his clients in open space in front of the other clients and his colleagues. What his colleagues would possibly do is just smile, indicating permission and willingness to do the same thing.

Apparently, it is highly threatening to nation’s stability and potential growth when communal corruption has found its comfort zone. Indeed, one to another is interrelated, hence it’s very difficult to bring it into demise. They would utilize all of the possibilities to prevent themselves from being thrown into prison, including suppressing the likeliness of emergence of whistle blower, which could play the main actor to demolish the system. We can see the example from recent BLBI corruption case conducted altogether by board of governors BI, where Anwar Nasution happens to play as whistle blower that brings his colleagues into dreadful nightmares they have never predicted before.

Conclusion

Intuitively, one who reads this article would ask what the solutions then. Since I see the main culprit of ‘korupsi berjamaah’ to occur is below-standard salary, then I would suggest higher salary adjusted to one’s job risk. This kind of solution, that was already imposed by department of finance would, to an extent, inhibit reckless and irresponsible work and corruption, in the end. However, this is just a necessary condition to abolish corrupt government institutions. Since, as I stated before, communal corruption could be cleared by one whistle blower, which has often been proved highly effective in revealing systemic corruption in an institution, for instance as in a commission in DPR, in BI, etc., I would propose giving higher incentives in terms of financial, law, and physical protection than that of the risk of blowing the whistle. This partly has been proved in the case of flow of fund of BLBI, where Anwar Nasution has successfully dragged his colleagues to put this story to an end. This is what I call the sufficient condition.