Is it boring to have too little corruption?

by on January 13, 2017 at 12:32 am in Current Affairs, Economics, Law, Political Science, Uncategorized | Permalink

A few years ago I wrote this about Bolivia:

It is much debated in Bolivia whether corruption is going up or down.  I believe it is going up, but partially for good reasons.  For instance the construction sector is doing well, and construction tends to be corrupt in many countries, for reasons intrinsic to the activity itself (e.g., lots of big contracts, easy to claim invisible expenses, etc.).  That means higher corruption but also a better corruption than the penny ante bribes of a shrinking economy.

I still think that is correct, and at the time it didn’t meet up with mass moral opprobrium, even though with some very very small chance I may have condemned the citizenry of Bolivia to corrupt, exploitative rule for ever and ever.  I should add that such points are standard fare in the literature, see for instance the book on corruption by Susan Rose-Ackerman.

Now, these days, with more American status relationships on the line, everyone is up in arms because Peter Thiel had the following exchange with Maureen Dowd:

When I remark that President Obama had eight years without any ethical shadiness, Mr. Thiel flips it, noting: “But there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

As I interpret Peter, he is not saying it would have been good to have an exogenous increase in the corruption of Obama the individual.  Rather, had some other conditions been different/better, the overall level of corruption in government would have been higher and that combination might very well have been a net plus.  If you would like a “left wing example,” had the fiscal stimulus been twice as large, corruption in government probably would have been higher too (pointing out “the stimulus wasn’t very corrupt” is missing the point and in fact is a sign that you are a rampant mood affiliator, determined to restore the mood you feel is just, rather than tracing the analytic point at hand).  In other words, Peter’s point is entirely defensible and probably correct.  He’s not saying that “corruption is good.”

Now, to be sure, there is another dimension here.  The incoming Trump administration is showing too many signs of being corrupt, and many people are condemning it on these grounds.  Peter’s remark does not fit into that narrative and Peter has been a significant Trump supporter.  But let’s think about this a little more.   First, is there a role for some outsiders who eschew the dominant moral choruses of approbation and condemnation, in favor of making other, different points?  I certainly hope so, because often I try to be one of them (though unlike Peter I have not supported Trump).  Second, Peter is not an outsider in this process, rather he has taken on an important position on the Trump transition team.  Given that reality, you can’t expect him to produce a quotation here condemning Trump.  So he instead makes some other (valid) outsider-like point about corruption.  Now, you might object to Peter’s role on the transition team, but that is old news at this point.  You shouldn’t be holding any extra grudge against him for his corruption answer.  And above all, keep in mind these are reporter-chosen excerpts from a four-hour dinner/interview, and so we don’t know the surrounding context and qualifications and possibly accompanying off the record statements.

People, you need to pick your targets.  Get upset about the things worth getting upset about, such as the absence of a sustained foreign policy plan to head off imminent volatility in global relations.

1 Mark Thorson January 13, 2017 at 12:56 am

I talked to a guy from mainland China, and I mentioned the problem with corruption. He said it also had some benefits, like cutting through the bureacracy. You can get stuff done faster.

2 JC January 13, 2017 at 2:58 am

So it’s about cutting bureaucracy, right?

3 Ricardo January 13, 2017 at 4:04 am

That’s a very specific kind of corruption. There are also plenty of cases in corrupt countries of competition being squelched or vendors and suppliers being intimidated into unfavorable deals through extortion, legal harassment or threats of violence at the behest of politically connected rivals. For a Chinese example, see this case: http://www.cecc.gov/publications/commission-analysis/california-businessman-david-ji-subject-to-ongoing-detention-in

4 LLB January 13, 2017 at 7:58 am

…………..”That’s a very specific kind of corruption.”

TC’s problem here is that he does not clearly define “Corruption” — so the discussion wanders all over the place.

5 Brian January 13, 2017 at 8:48 am

This is a very very myopic view. Sure, you cut through the current bureaucracy for this one project, but you are giving monetary incentive to entrench the current bureaucracy and create more.

This view can make sense for an entrepreneur or real estate developer, who has staked everything on this project (or has fooled themselves into thinking that only this project matters), but no one else should be cheering.

6 Li Zhi January 13, 2017 at 11:44 am

“You can get stuff done faster.” Faster than what? Faster than those who aren’t able to avoid regulatory burdens imposed to funnel those who can afford it (and many who cannot) into paying it? As someone else said, (and as usual) Tyler fails to define his terms.

7 Pshrnk January 13, 2017 at 2:04 pm
8 TallDave January 13, 2017 at 6:14 pm

Of course, it would be even better to not have to cut through the bureaucracy in the first place, because they are reasonable and efficient.

China also has air so thick you can nearly swim in it. Doubtless this violates all sorts of regulations.

9 Kris January 14, 2017 at 2:05 am

He said it also had some benefits, like cutting through the bureaucracy.

Only if you have the money to “cut through the bureaucracy”. Therefore, corruption is directly discriminatory against the poor.

10 Bryan Willman January 13, 2017 at 1:02 am

Obama did NOT have 8 years with no ethical shadines. His IRS engaged in harassment of conservative groups. His secretary of state, and various high ranking intelligence and security staff engaged in illegal behavoirs.

11 UncleMartyPants January 13, 2017 at 2:01 am

The scandal-free 8 years meme needs to die. It’s simply not true.

12 Michael January 13, 2017 at 11:20 am

At this point, it seems like a pretty blatant attempt to shape a narrative than any real punditry. There are literally dozens of pretty big scandals from this admin, but this meme keeps popping up.

Arguably the only reason Hillary lost the election was because of her private email server and the resulting scandals. The complete inability of folks to connect this scandal to Obama is mystifying. Either he explicitly condoned/tolerated it, or else his White House staff was oblivious to the point of incompetence on some pretty simple technical issues. His White House made Hillary sign some ethics documents regarding fund-raising at the Foundation, which was promptly violated by the Clintons. If I were in his shoes, I would have pushed Biden into the race (and explicitly endorsed him) just to punish that behavior, but Obama seems quite obsequious. I don’t quite get it.

13 Andre January 13, 2017 at 2:11 am

But we are to understand that all those were good things now right? The vampire king Thiel has spoken.

14 Brian January 13, 2017 at 8:55 am

Enforcing the law against non-profits engaging in specific political activities: scandalous! Don’t incorporate as a 501(c) if you want to do things 501(c)’s aren’t allowed to do.

If you want to argue that the IRS should have been targeting more left leaning 501(c)’s you won’t get an argument from me, but there simply weren’t as many targets on the left. I’m also fine with changing the law to allow unlimited ad spend from all these organizations, but as long as the law is in place, I say enforce it (on everyone)

15 Michael January 13, 2017 at 11:24 am

They weren’t enforcing the law. The law allows those non-profits to conduct up to 49% political activities. Oh, and by the way, the enforcement was entirely partisan, as left wing organizations (like OFA) where quickly approved.

Oh, and BTW, the law also required the IRS to provide decisions in 180 days, yet 5 years later, these applications were still in limbo. The reason is that the IRS didn’t have grounds to reject them, so they couldn’t. So, they just sat on them, instead.

16 The Other Jim January 13, 2017 at 8:56 am

Entirely true. Also entirely incomplete — Fast and Furious, Benghazi coverup, on and on it goes.

But note that Tyler covers this up by talking about “personal corruption.” Given that Obama was either playing golf or on vacation for most of his Presidency while all the people he hand-picked were committing these crimes, that means he is completely ethical, dammit!!!

17 collin January 13, 2017 at 11:18 am

It is true second term Obama was cleaner than first term Obama. However:

1) Yes, HRC and e-mail! First term and it did bite Obama.
2) What is with Benghazi cover-up? It took a week with conflicting information to state a conclusion. Benghazi attack itself was not corruption.
3) IRS was lower level people
4) Fast & Furious was poorly designed and the administration came clean. Again first term.

And can we let down with Presidential golfing and vacation time?

18 The Original D January 13, 2017 at 9:37 pm

The Benghazi coverup that was investigated half a dozen times at a cost of over $7 million and out of which nothing was shown to be actionable?

19 Boonton January 13, 2017 at 11:37 am

The IRS ‘harassment’ was not illegal. The law says your donations to political parties are not tax deductible but donations to ‘educational groups’ are. There was an onslaught of newly formed Tea Party formed groups asked to be exempt and the IRS advised to be on the lookout for such applications. Left wing groups have gone through this issue for years and the law is purposefully written poorly (you can create a group to ‘educate’ the public about the value of lower taxes and donations will be tax deductible but a group to support tax cutting candidates won’t be…how do you police that if you’re the IRS?)

“His secretary of state, and various high ranking intelligence and security staff engaged in illegal behavoirs.”

You have 12 months to prove this otherwise you can shut the fuck up the rest of your life.

20 Li Zhi January 13, 2017 at 11:50 am

Benghazi. “Red Line”. Veteran’s Administration. Department of Commerce. Department of Education. CIA. oh, the list goes on and on…

21 The Original D January 13, 2017 at 9:39 pm

“Red line” is corruption?

And in any case it’s part of what Tyler alludes to a the end when he talks about volatility in foreign policy.

22 Boonton January 15, 2017 at 1:52 pm

“corruption” means using laws and power legally or illegally for personal enrichment or enrichment of friends and allies.

Awarding a contract to your buddy’s company to build an aircraft carrier is corrupt. That the Department of Commerce takes too long in processing an application is not corrupt.

Policy differences and poor performance are not corrupt.

23 David Condon January 16, 2017 at 5:48 pm

I would argue the treatment of the IRS by Congress was more corrupt than anything the IRS ever did. This is a relative claim, but Republicans really have made way too much noise over minor issues. Nothing the Obama administration ever did is remotely comparable to lying about the state of intelligence on weapons of mass destruction in Iraq or covering up an affair. You guys are really blowing smoke over small stuff. This isn’t the media shaping a narrative. It’s what happened.

24 SWED January 13, 2017 at 1:12 am

“People, you need to pick your targets. Get upset about the things worth getting upset about, such as the absence of a sustained foreign policy plan to head off imminent volatility in global relations.”

More classic Tyler Cowen Buzzword-Based Signalling. Sad!

25 prior_test2 January 13, 2017 at 1:17 am

‘I still think that is correct, and at the time it didn’t meet up with mass moral opprobrium’

Likely because back then, most Americans would have considered South America as being intrinsically corrupt, with a small group of extremely rich people running both politics and the economy, with ineffective government structures unable to provide basic services, unable to even begin to combat corruption. Of course, Americans still believe that, it is just that America seems to increasingly have many of the features of a banana republic, making South American countries seem much relevant when describing today’s U.S.

‘with more American status relationships on the line’

Come now, cannot we work in ‘mood affiliation’ when it comes to the rule of law too?

‘First, is there a role for some outsiders who eschew the dominant moral choruses of approbation and condemnation, in favor of making other, different points?’

You mean that instead of a billionaire secretly funding a lawsuit to destroy a media company, now that we have a billionaire outsider president elect openly threatening another media company, this is less boring, and thus an improvement?

‘Given that reality, you can’t expect him to produce a quotation here condemning Trump.’

Of course not – both Thiel and Trump share an interest in destroying media companies they do not approve of – after all, the 1st Amendment is one of those things that allows people to use approbation and condemnation when talking about such people as Thiel and Trump.

‘You shouldn’t be holding any extra grudge against him for his corruption answer. ‘

There is more than one type of corruption.

‘People, you need to pick your targets. Get upset about the things worth getting upset about’

1st Amendment, either an example of mood affiliation or status seeking or virtue signalling – really, there are more important things in life, right? Forget those civics lessons about how a free press is integral to a democratic society, grown ups talk about more important things, like shorting the market.

26 Cliff January 13, 2017 at 9:39 am

Obviously the 1st amendment had nothing to do with Thiel since the court found in Hogan’s favor. Your support for media apparently goes beyond their first amendment rights to “they should be able to do literally anything!”

27 cw January 13, 2017 at 1:30 am

“But there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

This is a pretty simple statement. Who knows what he really means. Your make a good try to rationalize this statement, but I think judging by this and to the rest of the interview and to the fact that he supports Donald Trump, that the most likely interpretation is the simplest. He just blabbering. he later says: “Maybe I do always have this background program running where I’m trying to think of, ‘O.K., what’s the opposite of what you’re saying?’ and then I’ll try that.”

The fact that he supports Trump and says such inane things makes me think he basically not too smart.

I used to work at Starbucks headquarters and and once saw Howard Schultz reaming out in public a low level employee for doing something minor that Shultz didn’t like. I thought, what an idiot. Then later I saw what he did to the Sonics and my impression was confirmed. You can be smart in one area of life an make a lot of money and then be an idiot in the other areas.

28 4ChanMan January 13, 2017 at 7:26 am

Tyler once said Peter Thiel was the greatest intellectual of the age. In reality I think Thiel is about 25% as smart as all these people think.

29 Todd K January 13, 2017 at 12:00 pm

TYLER COWEN: Just a minute on the premise of this series. It’s been my view for years now that Peter Thiel is one of the greatest and most important public intellectuals of our entire time. Throughout the course of history, he will be recognized as such. (April 6, 2015)

Holy… I’d say he is one of the laziest thinkers I can recall in recent years and like Trump has no interest in looking thins up. Billionaires don’t have to look things up.

What Thiel says in this interview is similar to his debate with Eric Schmidt. He often either uses superficial buzz words or is just wrong.

Thiel: “Even something like the SDI program in the 1980s. The debate in the ’80s was, it’s a dangerous first-strike weapon versus a great defensive technology, whereas today, people would say that SDI was just this fictional thing that would have never worked. Again, this very odd way that our expectations have been dramatically reduced.”

If Thiel was paying attention when he was a teenager in the 80s, he would know that SDI was widely regarded a fantasy shield among physicists who gave numerous reasons why it wouldn’t work, at least not for decades, if ever.

Then there was this on Japan soon after Thiel visited there: “People aren’t even learning English that much anymore. They’re speaking less English than they were 15, 20 years ago. The golf courses are all getting shut down and converted to solar farms or something; people don’t even want to play golf anymore.”

Both statements about Japanese not learning English much and not wanting to play golf are completely and laughably false. A few large companies have even started to demand *all* employees speak with each other in English even if only Japanese are in the room.

30 The Original D January 13, 2017 at 9:42 pm

SDI was a fantasy, but it was championed by the father of the hydrogen bomb, so that lent credence to the idea and certainly got the Soviets’ attention.

31 JW January 13, 2017 at 1:12 pm

everyone always says their bosses are geniuses.

32 David Condon January 16, 2017 at 5:50 pm

Really?

33 David Condon January 16, 2017 at 5:53 pm

I agree that Tyler Cowen is making Peter Thiel’s comment out to be more thoughtful than it actually was, but I also believe this is a minor issue relative to other issues with the Trump Presidency such as Trump’s extremely poor handling of diplomatic issues. This story is a bike shed effect moment combined with a slow news cycle.

34 b9n10nt January 13, 2017 at 1:46 am

Yes, to forgo significant welfare-enhancing economic growth or liberalization because it may engender increases in corruption is foolish. This is trivial: like noting that bad side effects may nevertheless be worth it for many medical interventions. Of course, trivial points need to be made when they are being overlooked, but is Thiel here responding to an argument that increased corruption is never an acceptable side effect? If not, then your interpretation of his remarks is not only trivial but without relevance.

There is, relatedly, an odd slippage in your opening graph: you first acknowledge that you are interpreting what you think Thiel may be saying, but by the end of the graph you have assumed that your interpretation is absolute in its correspondence to his meaning. It’s not “Peter’s point” that is defensible, it is your interpretation of his point.

As the post continues, you then argue that Cowen-as-Thiel’s #slatepitch is welcome lest the political culture become dangerously conformist in its moral zeal against Trump. But what is also welcome is a political culture in which political corruption is condemned and ethical public service is venerated. By what lights do you see fit to eschew the latter point in favor of the former, especially given the “too many signs” that we agree are clearly evident?

(Also, the point that Thiel shouldn’t be expected to condemn his boss is wrong: although it is true that low-status citizens will often need to “kiss up” to survive and will habitually internalize the values of their high-status colleagues, this does not apply to Thiel: he freely chose his course without a hint of coercion. The bigotry of low expectations reveals a rather lower opinion of him than you wish to portray).

To veer the discussion back to what I perceive as actually relevant…there is, in this post, an implicit rebuke to Yglesias’ and others’ argument that Trump’s potential for corruption is indeed the most urgent threat to the political, social, and economic liberties that we enjoy. Foreign policy, you say, is the threat. Fine, but care to elaborate on why you might dismiss the threat of systemic and self-sustaining corruption?

35 ZoroastrianKurd January 13, 2017 at 1:49 am

Tyler,
You used to be a smart guy, now you are an idiot

36 Aaron January 13, 2017 at 2:23 am

Does anyone else notice how differently these posts read if you replace the term “mood affiliation” with “interpretation consistent with priors”? I can’t be the only one who finds the near-constant invocation of this pet phrase wearisome.

Also it’s odd that volatility would be bad in global relations yet somehow desirable domestically. I’m always impressed by the knots smart people will tie themselves in to justify plainly absurd statements when they feel kindly disposed (notice I didn’t say “mood affiliated”) towards their author.

37 Brian January 13, 2017 at 9:04 am

On your second point: It’s clear to me (especially as an American) that creative destruction is generally good in the economy, but not clear that I want it in international relations. Generally volatility is less desirable the more likely it is to create downward spiral that does not have a similar positive feedback loop on the upside.

38 stephan January 13, 2017 at 2:34 am

“So he instead makes some other (valid) outsider-like point about corruption. Now, you might object to Peter’s role on the transition team, but that is old news at this point. You shouldn’t be holding any extra grudge against him for his corruption answer”

I think anyone who joined the Trump team is there because they saw him as a strong agent for change in the direction they were interested in. The boss comes with strings attached. He can be at times mouthy, inconsistent, unpredictable and his business holdings are rich potential conflicts of interest. They know they may be called upon sometimes to explain away to the public some incoherence or about turn from their boss.

They went in with their eyes open. We have to assume they’re not venal without scruples but pragmatic people.They believe this bargain worthwhile to achieve important goals. They’re riding a train, uncomfortable as it is that will get them to their destination , not mired in a swamp
Similarly the Evangelicals held their noses after Trump’s groping revelation but still preferred him over HRC. Beyond the flawed persona, they saw an heavenly light.

39 Massimo January 13, 2017 at 2:51 am

Corruption can be moral when it takes the form of accepting (but not asking for) money in exchange of not implementing an immoral law. It could apply to policemen, EPA or OSHA inspectors, FDA personnel (to expedite one’s process, not to slow another’s). Following the classic “Defending the indefendable” of Walter Block, check out “The dishonest cop”, page 91: https://mises.org/sites/default/files/Defending%20the%20Undefendable_2.pdf
I invite you to read the other chapters too, they are all examples of the value of supposed outlaws for the society to work, grounded usually in microeconomics and sometimes in natural law.

40 JC January 13, 2017 at 3:04 am

Corruption is a system design problem. In countries with better judicial systems, independent powers and a functioning social contract with citizens corruption tends to be lower while there where judiciary can be manipulated by executive power and citizens voices can be ignored without consequences, corruption rules the system.

Corruption is inefficient and should be reduced to the minimum primarily through effective justice system. Corruption is, above all, the child of impunity.

41 So Much For Subtlety January 13, 2017 at 4:19 am

New York has the same systems and court type that South Dakota has. What it also has is a lot more people descended from immigrants who came through Ellis island.

You really think that there is no corruption in New York’s garbage disposal industry? Construction? Power generation?

42 Decimal January 13, 2017 at 12:31 pm

You really think that there is no corruption in South Dakota’s garbage disposal industry? Construction? Power generation?

43 So Much For Subtlety January 13, 2017 at 6:10 pm

I think there is no corruption in South Dakota’s garbage industry.

44 The Original D January 13, 2017 at 9:44 pm

Garbage disposal at the North Dakota oil fields however…

45 JC January 16, 2017 at 10:12 am

Corruption neither a genetic nor a geographical problem.

46 So Much For Subtlety January 13, 2017 at 3:49 am

Hillary has got hundreds of millions of dollars in pay-for-play schemes that have made her family rich. There hasn’t been such open corruption in any Administration since the Teapot Dome. Or even further back.

Obama’s administration handed automatic weapons to drug gangs so they could justify further eroding the Second amendment.

For anyone to sit there in silence when someone who should know better claims there was no ethical shadiness is insane.

47 Rich Berger January 13, 2017 at 6:52 am

No, it’s not sitting in silence, it’s recognition of invincible stupidity. Obama had a nice crease in his pants, which was good enough for David Brooks, which is good enough for Tyler. And did I mention Matt and Ezra?

48 Brian January 13, 2017 at 9:13 am

It might be worth rereading up on the gun walking scandal from someone other than Alex Jones. The start date of “Operation Wide Receiver” seems pertinent.

49 Rich Berger January 13, 2017 at 10:14 am

You should take your own advice. The Bush administration was far more careful in tracking the guns and did not use executive privilege to avoid embarrassing scrutiny after things got a little hot.

50 Brian January 13, 2017 at 11:19 am

You will not find me defending the ATF or the Obama administration too hard on this point, but you lose me at “so they could justify further eroding the Second amendment”. It sure looks like the continuation of an existing law enforcement activity executed incompetently. Both the left and right will twist themselves into knots to deny that this is a pretty obvious example of stupidity because “incompetent law enforcement” does not fit their narrative (Obama admin was competent and Obama is an evil mastermind, respectively).

51 Michael January 13, 2017 at 11:33 am

Brian,
Operation Wide Receiver had some semblance of tracking in place, F&F decided to completely abandon that practice.

As for the accusation of “justify further eroding the 2A”, granted it is after the fact, but there are several smoking gun emails here, of Justice dept officials wanting to use these guns to push further gun restrictions.

52 Rich Berger January 13, 2017 at 3:51 pm

You certainly read things in my brief comment that were not there. You assumed that I get my information from Alex Jones, which is not true. The Obama administration was never held accountable for the F&F guns being used in a number of murders, including at least one US agent and (IIRC) Mexican law enforcement officials. This information was widely available from reputable sources.

And yet we have TC contrasting the “corrupt” incoming Trump administration with the Snow White Obama regime. This is world-class cluelessness for which there is no apparent cure.

53 Axa January 13, 2017 at 4:01 am

There is no context for the corruption topic. Anyway it’s a very poor word selection. He’s on the board of several publicly traded companies, shareholders should be a surprised.

It’s a very poor word selection because of the US FCPA foreign corruption protection act. A bit more corruption means more cases like the ones this law goes after. I fail to see the good side of more corruption in business.

54 Axa January 13, 2017 at 7:40 am

Corruption is not good for shareholders. For a business organization, it may help to gain a contract but it can also conduct to loses when the company buys goods and services in a corrupt process. It remains to be seen if the VW emission issue is just fraud or there was also corruption.

I think Thiel is a bit lost. People like Tyler, Krugman or the crazy man Zizek can say edgy things and nothing happens. However, people expects businessmen to be as boring and predictable as Bill Gates.

55 So Much For Subtlety January 13, 2017 at 4:07 am

The incoming Trump administration is showing too many signs of being corrupt, and many people are condemning it on these grounds.

What? What signs would these be? I see a bunch of distinguished men who have been in the public eye for generations. Giving sterling performances for the most part. To call people like General Matthis corrupt is absurd.

In fact the only hint of corruption I can see is that Trump presumably paid the Clintons to come to his wedding. But it is always different when Hillary does it.

56 too hot for MR January 13, 2017 at 4:28 am

MR 2017: trigger warnings are neat and BLM is misunderstood genius. Of course Trump is corrupt.

57 N.K Anton January 13, 2017 at 9:24 am

Its nice of you to use the only nomination critics aren’t worried about (aside from civ-military experts who worry about civilian control norms) as your example.

58 Michael January 13, 2017 at 11:38 am

With the possible exception of Sen Sessions, pretty much all of Trump’s Senate-confirm-able positions have been excellent, with Gen Matthis at the top of that list.

However, Trump’s business ties leaves open some pretty stunning COI issues. Add to that the appointment of Kushner to a WH role, and the inclusion of his children in a lot of his transition team meetings, and you have some very serious signs of being corrupt.

59 Matt January 13, 2017 at 5:35 am

If we can’t expect Thiel to be intellectually honest about his boss then we can’t expect the news media, and even less the political opponents of Trump, to pass up a quote of a noted Trump surrogate frankly talking about corruption (analytical rigor for thee but not for me?). Thiel is trying to spin corruption as a positive, and his political opponents are trying to spin that spin as a negative.

Moreover, people aren’t upset that about the nuance of Thiel’s point. They’re upset because the Trump administration seems like it will be corrupt. They’re upset because it’s obvious that Thiel realizes the Trump administration (for which he is partially responsible for assembling) will be corrupt. And they’re upset because instead of talking about fixing the problem, apologizing for the problem, or even distancing himself from the problem, Thiel’s instead made a statement that might be true as far as it goes but in the context of the Trump transition is more of an excuse. (Note that the statement is only easily defended in precisely the sense of non-endogenous corruption that doesn’t apply to Thiel’s work on the transition). Saying true things that sound like they justify bad behavior is not morally neutral.

60 So Much For Subtlety January 13, 2017 at 6:05 am

They’re upset because the Trump administration seems like it will be corrupt.

No. They are upset because they are still going through the Stages of Grief and they have not come to Acceptance yet. They are flailing wildly against the world that so cruelly denied them their choice for President. They cannot swallow the repudiation of all that Hope and Female Empowerment.

So they are taking refuge is delusions of their own making. Hillary actually was corrupt. She is on record as engaging in pay-for-play schemes while Secretary of State. Trump shows no signs of being corrupt so far.

61 The Other Jim January 13, 2017 at 9:04 am

100% correct.

And hey, did you hear that BLM is looking to disrupt the inaugural? But don’t worry, Tyler assures us that they are not a hyper-partisan organization looking only to score political points. That’s why he’s a fan!

62 chuck martel January 13, 2017 at 9:10 am

The epicenter of US corruption is the Washington beltway, location of the vocational merry-go-round where government staff, lobbyists and media types, with their affiliated spouses, jump on and off according to political opportunity.

63 prior_test2 January 13, 2017 at 10:22 am

You left out the military, which does not care about ‘political opportunity’ in the least. Boeing and the Air Force, for example, are above the sort of politics you are referencing in a way that government staff, lobbyists and media types can only dream of.

64 Bob from Ohio January 13, 2017 at 9:48 am

“They are flailing wildly against the world that so cruelly denied them their choice for President.”

No joke. Everything Trump does is the END OF THE WORLD!!!!!!!

Their amps blew past #11 sometime ago. They are at about #15 right now and he has not even taken office.

65 Matt January 13, 2017 at 12:13 pm

Project much? Somehow it only seems to be Trumpers that still care about Hillary (see https://www.nytimes.com/2017/01/13/us/politics/donald-trump-transition.html?smid=tw-share&_r=0). Her political career is over. Personally, I don’t care much which team wins (some, because I’m human), but the indicators that Trump will govern well are not looking good.

66 msgkings January 13, 2017 at 12:45 pm

I thought she was done too until I started reading trial balloons about her running for mayor of New York City. You don’t think she will just walk off the field, do you? She would win that race easy.

67 Borjigid January 13, 2017 at 10:18 am

@Matt +1

68 Charles Guo January 13, 2017 at 5:54 am

>As I interpret Peter, he is not saying it would have been good to have an exogenous increase in the corruption of Obama the individual. Rather, had some other conditions been different/better, the overall level of corruption in government would have been higher and that combination might very well have been a net plus.

Tyler, this seems like a _real_ stretch to me. The quote here is “But there’s a point where no corruption can be a bad thing”, in the context of discussing potential ethical problems with an incoming Trump administration. In order to interpret this quote the way you do, you have to assume that, when he says “corruption”, he really means “a state where there happens to be no corruption”. Essentially, you have to assume that he means something totally different from what the text and thrust of the discussion indicate. I’m not really comfortable arbitrarily extending these assumptions towards people with influence over the executive.

Now, I agree that your larger point is true, and that in fact is a powerful argument that we ought to be more cognizant of. But on a meta-level, even if you’re willing to adopt this charitable interpretation of Thiel’s comments, I think you ought to be concerned with the superficiality of his comments on the matter. Thiel is supposed to be one of the more competent and well-informed outsiders advising Trump, and if the best he can do when asked for his thoughts regarding ethical conflicts is to say, well, theoretically sometimes it’s not really relevant, and sometimes having them just mean you’re really excited about a subject, then isn’t that really concerning?

69 So Much For Subtlety January 13, 2017 at 6:20 am

Get upset about the things worth getting upset about,

Well it is worth it to them. This is just the Left freaking out over an election defeat they cannot accept. It is the Democrat version of Birtherism.

No doubt it will run and run. But there is a lot more evidence Obama was born in Kenya than that Trump is corrupt.

70 4ChanMan January 13, 2017 at 7:18 am

Dude you need to stop cucking out

71 4ChanMan January 13, 2017 at 7:24 am

Don’t forget to take your hypertension meds

72 prior_test2 January 13, 2017 at 10:19 am

‘It is the Democrat version of Birtherism.’

Fascinating – do tell me more about how Trump is a secret socialist Muslim.

‘But there is a lot more evidence Obama was born in Kenya than that Trump is corrupt.’

This post truth world is so easy to live in. And of course, the documented self dealing and donation to someone running for re-election while considering to investigate Trump U is not a sign of corruption, it is a shining example of how virtuous Trump is when it comes to charity. No hypocrisy or ‘virtue signalling’ with Trump – he used his charity for the charitable purpose of serving Trump. For that matter, Trump U wasn’t corruption, it was just good old fashioned American fraud.

73 msgkings January 13, 2017 at 12:50 pm

If you are this far down the partisan rabbit hole, of course there is no evidence of Trump being corrupt. He has an R next to his name, it’s not even possible for an R to be corrupt, or make mistakes, or to fail in anything.

If you had any intelligence you could state the obvious truth, that both Clinton and Trump are shady as hell. But because you are a partisan, this is impossible. Partisans on Team Blue do this too, which you never tire of pointing out, usually with a reference to Pol Pot or Chomsky. Obvious clown is obvious.

74 So Much For Subtlety January 13, 2017 at 6:16 pm

Blah, blah, blah. You need to deal with your issues. Trying to change the subject with an ad hom is not helping.

There remains no evidence as yet that Trump is corrupt. He has been in the political process for decades. The media has been looking pretty hard. Even though he is a New York billionaire, after a generation of scrutiny no one has found anything.

75 Rich Berger January 13, 2017 at 7:12 am

After sleeping through most of the Obama administration, Tyler is woke and suddenly he realizes “Trump is Bad”. This seems to be the strong opinion of most of the libertarian economics bloggers I read. Don Boudreaux seems especially unhinged. I understand their opposition to Trump’s apparent trade views, but there’s something more. I think it’s cultural: Trump is a brash, gaudy guy from Queens and they are “professors”. Think Al Czervik versus Judge Elihu Smails at Bushwood CC.

“Hey everybody, we’re all gonna get laid!” — Al Czervik. “We will have so much winning if I get elected that you may get bored with the winning,” – Donald Trump

76 4ChanMan January 13, 2017 at 7:23 am

It’s the slobs vs the snobs. That’s what the election was, the Democrats decided that embracing the role of Judge Smails to Trumps Rodney Dangerfield would be a winner. That was just a repeatoof the primaries where Jeb Bush et. al. played the Smails style cucks.

77 Millian January 13, 2017 at 8:14 am

The problem for Thiel (or “Peter”) is that he has a history of making grandiose statements suggesting he would like the world to be a field of Baroque conflicts closer to “Game of Thrones” or possibly “Atlas Shrugged”, e.g. when he said “I no longer believe that freedom and democracy are compatible”. So he doesn’t attract a high prior for the extreme-good-faith reading of his quips.

78 TMC January 13, 2017 at 8:40 am

In Cleveland, in the 1990s, we had a mayor who was thought to be a bit corrupt. Word was he took a small cut of projects. He got a lot done though, and was pretty good. He came right after Voinovich, who was also a good mayor, but incorruptible. Voinovich had to fight a lot harder to accomplish anything. Since then there’s been relatively little corruption, but a bunch of ditherers not interested in graft or helping the city. I guess Cleveland can use a Trump moment.

btw: I also take exception to the characterization of the Obama administration as being scandal free. They may have been worse than the Clintons. Firing the Inspector General to save his donor when caught siphoning TARP II money ring a bell?

79 Bob from Ohio January 13, 2017 at 9:53 am

Mike White was a great mayor. Smooth in public and a real SOB behind closed doors.

80 The Other Jim January 13, 2017 at 8:59 am

I love that Tyler is concerned about “imminent” volatility in the world.

Jesus, where the hell has he been for 8 years? [Oh, right — reading the New York Times, where it says that everything is peachy.]

I predict that in about seven days, Tyler is going to start worrying about Syria. He may even hear about Russian troops in Ukraine, if he is thorough.

81 msgkings January 13, 2017 at 12:53 pm

LOL yeah Trump is totally going to make sure his buddy Putin leaves the Ukraine and Syria. I think he plans to do this by lifting all the sanctions we put on him.

82 anon January 13, 2017 at 9:00 am

To say you like corruption because it implies growth is not putting the cart before the horse, it is putting the crooked wheel first.

83 rayward January 13, 2017 at 9:13 am

The effective propagandist must first debase the language, eviscerate the meaning of words: up is down, black is white, corruption is honesty. Focusing on Thiel’s comment about corruption misses the far larger point about the meaning of words, about reality, namely that words don’t mean what they are commonly believed to mean, that reality is not what it appears to be. Of course, Cowen’s blog posts don’t always mean what they appear to mean, but have a hidden meaning (the Straussian meaning). No, I am not accusing Thiel (or Cowen) of being a propagandist; to the contrary, they are intellectuals who understand that words can have different meanings, that reality may not be as it appears to be. “What is truth?” Pilate famously asked Jesus (in the Gospel of John). But it’s a dangerous game Thiel is playing, for if words have no accepted meaning, if reality is not what it appears to be, the propagandist can easily deceive. Read the entirety of the Thiel-MoDo dialogue, in which he repeatedly uses words in ways that have the opposite of their common meanings. I grew up in an era when freedom was equated with clarity in communication, when tyranny was equated with propaganda, when Strunk and White was equated with scripture. To eviscerate the meaning of words is to fall into the trap of the propagandist and risk the freedom that the propagandist abhors.

84 AlanG January 13, 2017 at 9:23 am

Excellent post and to further elaborate we are entering into the Orwellian use of language where good = bad and so on. So much of the ‘fake news’ is intended to distract rather than focus and we are all probably guilty of losing attention to what really matters. Corrupt practices usually get caught and punished though the inaction in the early days of the Obama administration to not go after those at the highest levels that were responsible for bad mortgage underwriting was troubling in that regard.

85 Turkey Vulture January 13, 2017 at 9:24 am

I don’t think when people say corruption has increased they mean in absolute terms (i.e. the total value of goods corruptly allocated, or the total value of bribes/kickbacks/etc). They mean in relative terms. If there is a standard 10% bribe involved in all construction projects, the absolute value of the bribes would increase during a period of rapid growth as the value of output increases. But relatively speaking I don’t think people would say bribery has increased.

A relative increase in corruption doesn’t indicate anything good. If the stimulus had been twice as large and it had led to relatively more corruption (meaning a larger percentage of the total stimulus funds being corruptly allocated due to its larger size), that would be a strong indication that the stimulus was too large, as there were no more obviously beneficial projects to put the resources towards.

I think a reasonable theory would be that, all else equal, corruption becomes relatively more substantial in periods of economic stasis or decline, and relatively less substantial in periods of growth. In static or declining times, people want to at least keep their prior standard of living up, and they will turn to ever riskier tools as the situation worsens. In expansionary times, markets are generally tighter and there is less need to gain business or a job through corruption.

I guess a better way to put it is that, assuming the potential legal downsides of corruption remain the same during both an expansion and a contraction, I think the incremental benefits of corruption are much higher during a period of contraction than expansion. Thus, the better an economy is doing, the more the cost/benefit analysis shifts away from “be corrupt”; the worse it is doing, the more that equation shifts towards “be corrupt.”

Point being that, no, I don’t think it makes any sense to say we have too little corruption, unless he is making the claim that corruption is over-deterred by our current laws. He doesn’t seem to be saying that.

86 Benny Lava January 13, 2017 at 9:28 am

Trolling is a art!

87 prior_test2 January 13, 2017 at 10:09 am

And destroying media companies you despise is priceless.

88 msgkings January 13, 2017 at 12:55 pm

Gawker had it coming though. Thiel did everything legal and by the book, and the bad actor went down. That’s how the system is supposed to work.

89 lbc January 13, 2017 at 9:41 am

to me that quote means Peter Thiel is a moron

90 Turkey Vulture January 13, 2017 at 9:47 am

“Now, you might object to Peter’s role on the transition team, but that is old news at this point. You shouldn’t be holding any extra grudge against him for his corruption answer. And above all, keep in mind these are reporter-chosen excerpts from a four-hour dinner/interview, and so we don’t know the surrounding context and qualifications and possibly accompanying off the record statements.”

I think the better defense would be that in a four hour interview, he probably said a number of things that he hadn’t thought out entirely. This may have been one of them.

I think such bullshitting (in the sense of saying something you may not really believe, or aren’t sure if you believe, as a way of initiating an exploration of the issue) is centrally important and useful for intellectual discourse, and that the internet and its blogs and comments sections give us an opportunity to bullshit like never before.

But two tendencies stand in the way of effective bullshitting: (1) opponents will seek to identify any statement as a central belief of the bullshitter, so that if they say something dumb or naughty they may be forever tainted by it, and (2) in part because of (1), bullshitters may tend to try to defend themselves for too long and in ways that do not actually aid the discussion (bringing up and hammering on tangential points or otherwise muddying the issue).

On (2), I think it is useful to fully advocate for one’s argument, but only in the sense of presenting the best argument possible, not in trying to “win” in whatever manner necessary. In other words, if you are interested in exploring and understanding arguments and the world around us, don’t act like a lawyer for your argument. Leave that to the partisans.

91 lemmy caution January 13, 2017 at 10:11 am

Corruption is bad and the US is very lucky to have relatively low levels of it.

92 jorod January 13, 2017 at 10:29 am

Did you ever hear of Hilary Clinton? The IRS? Drawing lines in the sand? Secret messages to Putin?

93 whatsthat January 13, 2017 at 11:27 am

How dishonest to claim such a thing that corruption can be a net plus, particularly from a tenured well known economics professor. There is a VAST literature on the link between corruption and growth – it all points to corruption having a negative effect on growth. See here for one meta-analysis: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1718935

From Theil I expect this, he’s a sleazebag. But from Cowen? I am flabbergasted.

94 Nattering Nabob January 15, 2017 at 7:15 am

I’m not flabbergasted by this at all.

95 Boonton January 13, 2017 at 11:55 am

Is Peter Thiel really as stupid as he seems?

As I interpret Peter, he is not saying it would have been good to have an exogenous increase in the corruption of Obama the individual. Rather, had some other conditions been different/better, the overall level of corruption in government would have been higher and that combination might very well have been a net plus

The model here seems to be with more economic activity there will be more corruption because there’s more transactions and if a certain percent of transactions are corrupt you get more absolute corruption.

Likewise, with more retail stores open, you get more shoplifting. If lots of stores close down because business is slack, shoplifting will go down. Thereby the Peter/Trump method to revive the local mall is to increase the number of shoplifters!

The other take on this is ‘corruption’ isn’t really about corruption but about rigorously abiding by lots and lots of rules. Sometimes an innovator will ignore many of the rules and people will at first perceive that as deeply wrong but then realize that many of the rules didn’t make sense and were holding us back.

For example, instead of dealing with the State Department’s unreliable email server and impossible to use smart phone system, just use your own email server to run it.

96 Li Zhi January 13, 2017 at 12:00 pm

Personally, and without much deep thinking (my bad), I suspect that it’s not the existence of corruption which should be the focus of policy discussion. Rather it is how “the system” accommodates it. A good system will allow the victors their spoils, but in a measured predictable and legal way. Ambassadorships come to mind. A bad system is generally founded on abstinence – drugs, sex, paying for sex, using power for personal advantage, etc. It just doesn’t work. The more we pretend it does, the more corrupt the system becomes.

97 Ian Leslie January 13, 2017 at 12:42 pm

Thiel’s comment chimed with Megan McArdle on Obama:

This has been his great strength as president: He ran an administration on evidence and principle, unplagued by major scandals. This academic approach has also been his great weakness, because the engine of democracy does not really run on ideas. It works by the kinds of relationships that breed scandal.

https://www.bloomberg.com/view/articles/2017-01-10/farewell-to-the-chief-our-columnists-assess-obama-s-presidency

98 JWatts January 13, 2017 at 2:12 pm

I see poor arguments on both sides:

a) Perhaps a little corruption might be better than none, but that’s not the way the evidence points, so I think Peter Thiel is wrong here.

b) The Obama administration was not free of scandals, the IRS targeting of Conservatives, the attempt to blame Benghazi on a video, the Fast and Furious gun trading operation, the DOJ siezing records from the AP and Fox News were all serious matters.

99 BenK January 13, 2017 at 2:28 pm

Corruption means ‘the system as described isn’t being followed.’ For example, a person is using influence from ‘another system of power’ to adjust behaviors in a different system. Money from the market enters government or changes status in families (such as purchasing brides); power from the government demands bribes in the market or dictates family relationships; family ties enter government or impact contracts in the market; etc. If you are a puritan in any system, you will see the impact of any other system on it as simply corruption. If you believe instead in a hierarchy, then maybe government is the most important, but it can impact markets, family is lowest – or whatever ordering you desire. In that case, corruption is a bubbling up from the lesser system to the higher. In the US progressive orthodoxy, government would be at the top, followed by market, family, social ties, and then religion. In other cultures, it could be the total reverse. In a true plural system, they would be intransitive to each other and none of them would be pure (or corrupt, really). They would all be a bit muddy.

100 Troll me January 13, 2017 at 2:43 pm

Trump cabinet appointments, for the fact of their experience in corruption, might just be the foxes needed to police the fox house. Such minds might be better poised to see the diverse ways things might be abused, but it is far more likely that they will simply try to enrich themselves while doing a half-assed job.

101 Post-Truth Politics January 13, 2017 at 11:21 pm

Actually, it is pretty certain that they will simply try to enrich themselves while doing the opposite of what their job descriptions are.

102 TallDave January 13, 2017 at 6:11 pm

When I remark that President Obama had eight years without any ethical shadiness

Sure, except for Fast and Furious, Lois Lerner, the baldfaced lies about no one losing their doctors or insurance, Benghazi, Hillary’s massive security violations, the VA death lists, barricading WW II vets away from their memorials, handing his UAW special interests a big chunk of GM that was supposed to go to senior creditors, handing billions in government money to failing green special interests…

I’m confident Trump can make up ground pretty quickly, but he’s got a lot of catching up to do.

103 Post-Truth Politics January 13, 2017 at 11:20 pm

LOL, I can always depend on the commentariat here to give me the Right Wing fake news version of the world, one that has little to do with reality.

I look forward to the amusing stories that the Right Wing will make up, in order to try unsuccessfully to make the reign of King Trump the 1st seem less than totally corrupt in every way.

104 Alex January 14, 2017 at 1:09 am

Tyler – these are Kellyanne Conway-style contortions.

105 King Cynic January 14, 2017 at 11:07 am

Sometimes Tyler, your integrity might benefit from calling a spade a spade. Quit trying to polish turds.

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