I was prompted by a post of Cian’s to consider the question of who, precisely, pays the cost of corruption. Cian sets out what I’d say is a fairly widely held view:
When the developers got their hands on West Dublin up went the endless acres of houses, nominal services were put into the areas. Small central villages were supposed to support huge numbers of people. The developers cared not one wit, nor the councillors who operated so cosily with them.
Now, this might feel intuitively right: The inner circle of favoured developers undoubtedly benefitted. While the people who now live in these areas undoubtedly have gripes about the place. But are these directly linked? I’d say that the closer you examine this, the intuitive link evaporates.
Firstly, consider that the estates in question consist of private, not public housing. To get to a “harm” or “cost” imposed on the residents of such housing, who, after all, have voluntarily chosen to rent or buy there, it will be necessary to make a case for a market failure. Let’s say that everyone who lives there would like, say, a playground and a local pub within walking distance but for whatever reason the market fails to provide them. Now, I’m generally skeptical of market failure arguments and think that there are often much better explanations for phenomena lazily labelled as market failures but for the purposes of argument let’s go with this particular flow. The problem is that it is hard to see how this problem is connected to corruption per se.
Let’s imagine two estates. One by a corrupt developer - Kickback Close and one by a developer who played by the rules - Honest Alley. Now, if we are going to claim that buyers or renters have no way of signalling their willingness to pay a premium for additional services, playgrounds and the like, there is no particular reason for the developers of Honest Alley to offer anything to residents over and above that offered by the developers of Kickback Close. One might excoriate the council for failing to insist that corrupt developers include such amenities but the fact is that they have also failed to insist that incorrupt developers include such amenities. The corruption such as it existed, related mainly to the rezoning of certain tracts of lands at the expense of others and not to insufficient regulation of the quality of resultant estates (Note also that this not about corrupt allocation of public contracts whether for housing or infrastructure).
Then if the “cost” borne by residents of such areas may be attributable (assuming the market failure argument to be correct*) to insufficient oversight by planning officials, rather than corruption per se, who does bear the cost of corruption, or why is it wrong? Well, people primarily affected by a corrupt system are not the end-punters who generally get what they paid for - a house they liked at the time in an area they wanted to live in at the time - but rather the adjoining landowners and competing developers who played by the rules and didn’t bribe politicians or planning officials. Secondly, the cost of corruption is borne by the overall economy - it is a deadweight cost and there is a well established (inverse) correlation between corruption and economic activity.
Why does this matter? After all, if corruption is wrong, do we really need to determine why it’s wrong to counter it. I’d say, yes, particularly if you are concerned about possible remedies for the wrongs you attribute to corruption or seek to prevent them from occuring in the future.
* The alternative explanation is that there is no market failure, that each developer knows too well that the punter, however much he might gripe about their absence now, or however much he might gratefully accept them for free, doesn’t actually prize such additional amenities sufficiently to pay a premium he would quite happily discharge for, say, a Plasma screen TV.