Bribes Relative to Rents-1

B. Bribes Relative to Rents

Before we leave the subject of costs
of corruption, it may be useful to comment
on the magnitude of bribes in relation
to that of the rent they are supposed
to procure for the briber. The
early literature on rent-seeking, as in
Anne O. Krueger (1974), assumed a
process of competitive bidding by the
rent-seekers which resulted in a complete
dissipation of the rent. Since then
there have been models of barriers to
entry in the rent-seeking sector (including
models of dynamic games of moves
and counter-moves of the contending
rent-seekers) and of the various transaction
costs and risks that the rent-seekers
have to face. But what is still
astonishing is the extremely small size
of the usual bribe compared to the rent
collected (Gordon Tullock, 1980, had
pointed this out quite early, and the
phenomenon is sometimes referred to
in the public choice literature as the
“Tullock paradox”). The anecdotes are
endless. Tullock (1990) cites the case of
the New York Congressman Mario
Biaggi, who manipulated the federal
government to save from bankruptcy an
enormous Brooklyn dockyard, for which
he received three Florida vacations
worth $3,000. Spiro Agnew had to resign
from the Vice Presidency of the
Nixon Administration for continuing to
take bribes of an incredibly trifling
amount from an arrangement made earlier
in his political career. Most such
anecdotes are from democratic polities.
On the other hand, there are anecdotes
of corrupt income running to billions of
dollars for authoritarian rulers in much
poorer countries, like Mobutu sese
Seko in Zaire or Ferdinand Marcos in
the Philippines. This may point to a particular
coordination problem in bribe
collection in democratic polities that
Eric Rasmusen and Mark Ramseyer
(1994) have tried to model.