In Australia it is common to hear criticisms of the corruption in developing countries. It is a constant theme, for example, in media coverage of Papua New Guinea, our nearest neighbour.
The criticisms are usually right, at least in part. But the implication that Australia, and other Western countries, are somehow above all that malfeasance stuff is absolutely false. All countries are corrupt; it is just that the corruption comes in different forms.
That is the theme of the book Game of Mates by two economists Cameron Murray and Paul Frijters. They detail, a little sketchily, what they call Australia's 'grey corruption': the grubby nexus between 'James' (corrupt business people) and governments or regulators. The Jameses thrive at the expense of the 'Bruces': ordinary working people. According to Murray and Frijters, the games of the corrupt elite now cost the 'Bruces' about half their wages.
The book reminded me very much of the departing speech of an editor of the now defunct BRW business magazine. He said people often asked him what he thought was the worst thing about Australian business. 'The corruption of the mates,' was his conclusion. Those 'mates', of course, are also almost exclusively male.
The authors estimate that in the property market 'James' gets 70 per cent of the benefits from rezoning and other planning decisions and about two thirds of the benefits from transportation infrastructure. 'James' gets 27 per cent of the superannuation returns from ridiculously inflated fees which even the Treasury has estimated is about twice what it should be, approximately $12 billion a year (the banking royal commission is about to look into it).
'James' gets the lion's share from mining and is skilled at avoiding taxes. Ordinary workers, the 'Bruces', pay about 60 per cent more for mortgages over the lifetime of loans, and about double for small business loans. They pay about twice as much for prescription medication. And so on. Little wonder that Australia is rapidly becoming more unequal.
What could be done to work against this? Introducing more transparency on what is happening with land zoning might help, as would restricting property developers' involvement in the major political parties (they are disproportionately represented).
"Systemic corruption in developed economies, especially in the financial systems, is a deadly threat. Allowing such widespread theft will inevitably create serious upheaval, and perhaps even a collapse of the type that nearly happened with the GFC."
Basing super fees on a percentage of the assets, rather