Corruption and Inequality




Title: Instructor. Harvard Summer School
Summary: Corruption and inequality share a peculiar and enigmatic dance that is poorly understood and distorted by ideological rhetoric. But with inequality fast becoming the defining issue of our time, and sweeping anti-corruption efforts gaining steam in developing countries (often with questionable political motives, as recently witnessed in Brazil), there is a pressing need to develop a more precise picture of when and how these forces interact. In this class, we’ll answer why corruption sometimes exacerbates inequality, and sometimes does not. We’ll examine the conditions under which corruption stifles economic growth, efficiency, and investment; but also the environments in which corruption effectively substitutes for misguided or missing law to “grease the wheels” for investment. We’ll compare two different theories that propose “vicious cycle” relationships between corruption and inequality: the “inequality trap” (where inequality creates a lack of trust in institutions, enabling corruption that deepens inequality), and the “fairness perception” theory where if people believe there is already rampant corruption, they behave more corruptly. We’ll investigate many peculiar paradoxes of these themes—such as how China has grown rapidly while ranking among the most corrupt countries, and why Latin America is the only region where corruption reduces inequality.
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