Legal and Illegal Corruption

Corruption has been identified by the World Bank as the single greatest obstacle to international development. According to some estimates, the cost of corruption to the global economy is as high as $4 trillion a year (5 percent of world GDP), with $1 trillion spent on bribes alone.

Going after dark money, money laundering, and cracking down on graft are all laudable goals. Corruption drains public funds meant to deliver services to the working class and undermines state capacity to deliver transformative programs. But this does not mean we should support and align ourselves with the anti-corruption politics of Biden and new US Agency for International Development head Samantha Power.

Anti-corruption has been identified by all the big international players as a major international development concern since the early 1990s. Every year, the big multilateral development agencies and NGOs ritualistically recant the same sermons on the evils of corruption — while there is no evidence that, for all their efforts, corruption has actually been reduced since combatting it became an international cause.

The World Bank, for instance, defines corruption as “behavior(s) that break with the rules governing public officials regarding the pursuit of private interests, such as wealth, power or status.” This understanding of corruption is, in essence, legalistic, because “the rules” broken are laws or international protocols set by the World Bank or United Nations.

Anti-corruption is never neutral; it is always political, especially when cloaked in the guise of unobjectionable platitudes about good governance, transparency, and accountability. Reducing corruption to simply acts that violate laws or international protocols not only disguises the roots of systemic corruption — it enables the same elites who preach the anti-corruption gospel to get away with their own (legal) grifts.

More often than not, international anti-corruption standards have been used to justify attacks on the welfare state, with austerity and privatizations promoted as anti-corruption measures.

Biden’s Plan

The Biden administration, despite its many other faults and the president’s own political history, is not today pushing for retrenchment of the welfare state. But a similar focus on legal and technical approaches to fighting corruption disguises the way corruption actually works in the United States. Much of what would be considered corruption in a functional democracy has been more or less legalized in the United States. After all, who really needs to do something as crude as handing over a grubby envelope filled with dirty money in a back alley when you can launch a Political Action Committee? At least with Tammany Hall, workers could get beer and chicken come Election Day.

The Democratic Party, in many ways, is simply a fundraising machine that ensures its functionaries are never short of a lucrative gig, whether in a think tank paid for by Michael Bloomberg or at a consultancy feasting off state contracts. The #Resistance nomenklatura may have spent the last four years outraged about Trump-related sleaze, but you won’t find any of them turning down a well-paying corporate speaking fee.

Take a look at the Biden administration’s appointments: the Department of Defense looks like a division of WestExec, and several of Blackrock’s finest have been given the go-ahead to live out their West Wing fantasies. Even the ex–Obama administration types who missed out on the draft can still get a gig as a lobbyist based off their relationship with Biden — for instance, Lyft hired Sudafi Henry, Biden’s former director of legislative affairs when he was vice president.

Biden himself came to Washington in the 1970s promising to get private money out of politics, and he tends to at least say the right things on the matter — but as the cliché goes, actions speak louder than words, and Biden’s political success has been based on his ability to project the simulacrum of “Middle-Class Joe” while raising hefty amounts from private donors.

But it’s really on the international front that the dangers of this type of anti-corruption become apparent. Anti-corruption will be used to discipline governments and political parties that dare challenge the US empire and its “rule-based order.” And, to make matters even worse, enlightened foreign policy hawks like Samantha Power are arguing that anti-corruption should be used to open up a new front in a cold war against China.

Writing for Foreign Affairs, Power argues that “Anticorruption is another domain in which the United States has a competitive advantage over China.” It’s true that the United States can’t really compete with Xi Jinping’s own anti-corruption crusade in terms of pure spectacle — don’t expect Biden ordering the execution of the next Rod Blagojevich. But given the fact that pretty much everyone is forced to use American financial institutions to do business, and much of the world’s dark money slushes around US banks, freezing the assets or monitoring the transactions of whoever is deemed the bad guys is a relatively simple matter.

So far, the anti-corruption agenda has been limited to the passing of the National Defense Authorization Act, which includes the Corporate Transparency Act that will require millions of businesses registered in the United States to report their actual beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network. The Treasury Department has a year to come up with the regulations to go along with this act.

Another Power proposal: “The United States could insist that a country make a set of minimum anticorruption commitments in order to enter into preferential trading arrangements, ramping up technical assistance to those countries eager to do more.” This is hardly a new idea; the United States has often used anti-corruption protocols to bully countries into accepting concessions while maintaining the facade of moral righteousness.

Beyond the wonk’s version of sabre-rattling against China, none of these ideas are really new; they rather mark a return to the type of allegedly enlightened global leader that matches the self-image of American empire before the country elected a reality TV star. Expect American power to be once again exercised in the name of human rights, democracy, and multilateralism — all packaged in a neat anti-corruption box.

Bringing Latin America’s “Anti-Corruption Crusade” Home

However, who decides which leaders and countries are the bad guys? Corrupt autocracies aligned with the United States tend to get a free pass, while any country that decides to experiment with redistributive policies tends to get punished and have their assets sitting in American banks confiscated. To see how this works in practice, one need only examine the example that Biden, Sullivan, and Power have all cited as the paradigm to follow: Latin America’s “anti-corruption crusade” of the 2010s.

The fable goes something along these lines: empowered prosecutors and judges, supported by a rising and confident new middle class, finally took on the culture of impunity that had plagued the region for centuries with the support of the Obama administration, who provided legal expertise and used its financial might to fine the wrongdoers or freeze and confiscate their assets. Biden is already promising to roll out the same model in Central America in the near future.

The fable really centers on Brazil’s historic Lava Jato investigation. And the moral of that story is not that there were historic victories in the war against corruption undermined by populism, but rather that the anti-corruption crusade helped unleash the authoritarian populist furies ravaging the region.

Thanks to the good work of the Intercept, we have evidence that the investigation was a politically motivated campaign that shredded Brazil’s constitution in pursuit of its goals with the help of the Department of Justice. It helped remove a democratically elected social-democratic government in 2016 and later ensured the victory of the extreme-right Jair Bolsonaro in the 2018 election by jailing Luiz Inácio Lula da Silva — who was leading all the polls by a wide margin. Barack Obama even compared Lula to a Tammany Hall boss in his latest memoir, despite the fact that he cut his political teeth in the Daley political machine in Chicago. The irony is that Bolsonaro shut down Lava Jato in January — claiming that “there is no more corruption in my government.”

Anti-corruption also serves as a way of “redeeming” or “restoring” the mythological self-image of American liberalism after the shame of the Trump years, which are deemed an aberration from America’s noble role in promoting democracy and progress. Indeed, anti-corruption is being promoted as the vaccine to the virus of populism because “corruption is a key area of vulnerability for these leaders.”

“Normality” was destroyed because the populists cheated by using dirty money to bewitch the electorate through fake news to win elections, as the story goes. The responsible adults lost because they played by the rules. Blaming corruption for liberal defeats excuses away the political failures of the last few decades. Instead, they comfort themselves with the just-so-stories that Cambridge Analytica and Russians were responsible for Trump or Brexit.

By obsessing over corruption, real or imagined, liberals ignore the structural explanations for political disasters and can persist in believing that the system works. No need for radical redistribution or serious political reform, when you can simply focus on punishing the bad guys. In essence, the anti-corruption politics of the Biden administration is the geopolitical version of “call the manager.”

The finger-waving technocratic moralism of liberal elites and the blatant double standards when it comes to their own personal financial dealings have proven a fertile breeding ground for the populism they decry. Corruption is not some alien virus that enters and disrupts a system, it is a symptom of all that is wrong with the world that liberals are vainly striving to restore.