Chapter 28 5. Economic development, democratic system and anti-corruption

The corruption index of Transparency International gives us an important revelation: the level of corruption is highly correlated with the level of economic development, and it can even be said that the level of economic development determines the level of corruption in a country to some extent.Why?Because real economic development and real modernization will definitely generate strong domestic demand for an environment governed by the rule of law, and the rule of law is the best way to deal with corruption. China is developing in this direction. The whole society calls for a fairer competition environment. In the medium and long term, the market economy and modernization will generate a strong domestic demand for the rule of law and eventually lead to a decline in corruption.In other words, the trend of corruption in China may be like this: "low corruption" → "medium corruption" (at this stage) → "low corruption".From an international perspective, today's developed countries have also experienced "corruption" in the process of their own industrialization and modernization. Take the United Kingdom as an example. In the 18th century when the industrial revolution began, the position of a member of the British Parliament could be bought with money. .The managers of the "East India Company", which represented the interests of the British government in India at that time, were very corrupt and were called "the scum of mankind" by the British.However, almost all these countries, driven by the strong domestic demand of industrialization and modernization, have avoided the paralyzed "high corruption" in Africa and turned to "low corruption" through the construction of a society ruled by law and anti-corruption mechanisms.In the Chinese society, Hong Kong has experienced such a process.For most developing countries, because there is no real industrialization and modernization, there is no strong domestic demand for a legal society, and finally corruption intensifies. The general trend is this: "medium corruption" → "high corruption" → "Higher Corruption".

China's anti-corruption struggle is now at a critical moment: if it sinks downwards, it may develop from "moderate corruption" to "high corruption".However, if we can meet the needs of modernization and pay close attention to the construction of the rule of law and anti-corruption mechanism, we may gradually reduce corruption and achieve "low corruption". Strong domestic demand to govern the country and curb corruption.As long as China's modernization drive is real, the need for the rule of law and anti-corruption will also be real. As long as this trend continues, corruption in China may gradually decrease.Now low-corruption countries have come this way, Hong Kong has come this way, and mainland China may also go all the way.

Another difference between China and "high corruption" countries is that China has gone through a stage of low corruption after all, and has huge cultural and traditional resources to curb corruption, including the traditional culture of Confucianism and the education of the Communist Party, including a group of clean and honest people like Zhou Enlai Influence of type leaders.In most developing countries, neither of these two conditions exists, and all politicians in the memory of living people are corrupt, and the backward economy cannot generate strong domestic demand for the rule of law, so corruption has intensified and eventually got out of hand.

Many people say that to solve the problem of corruption, we must rely on the Western democratic system.However, there are not many cases of successfully curbing corruption by implementing Western democratic systems in underdeveloped countries: "Democratic" India, the Philippines, Ukraine, and Russia are all more corrupt than China, not to mention many so-called "democratic countries" in Africa. In April 2007, I asked the president of Transparency International, Professor Peter Eigan, how to explain the phenomenon that this developing democratic country is more corrupt?With democratization, corruption has also been democratized, he said.He also gave me an example: in the past, Chile was autocratic and Peru was democratic, but the corruption in Peru was much higher than that in Chile.

My own view is that in a country with a large proportion of illiterate and poor people, Western-style democracy can easily be exploited by corrupt elements, thus becoming a legitimate cloak to protect their corruption.Corrupt officials can be elected through bribery and other means, so that their corrupt behavior can be legally protected.This is the case in India, the Philippines, and many countries in Africa.I once asked my Indian graduate students why progress in literacy in India is so slow?He said that literacy is the responsibility of the local government, and the more illiterate and ignorant the local people are, the more beneficial it is for politicians.This explanation may be a bit extreme, but it also tells a part of the truth.India also has problems such as low economic level, low salaries of civil servants, excessive government red tape, and excessive power of officials, which creates many opportunities for corrupt rent-seeking behaviors.

Russia and Ukraine are a different story: they introduced Western-style democratization, but it led to an explosion in political participation and out-of-control and paralysis of government, resulting in an explosive surge in corruption that never stopped.By the time the political situation stabilized, corruption had changed from quantitative to qualitative, and even grass-roots customs and police teams were rotten.Taking Russia as an example, almost all Chinese businessmen and many foreign tourists in Russia have encountered incidents of police extorting foreigners in broad daylight.The same is true of the Ukrainian police.

On the issue of anti-corruption, China is at a juncture, let's see if China can break through.If it cannot break through, China will always be a developing country.The Industrial Revolution in Britain, the Industrial Revolution in France, and the Meiji Restoration in Japan all experienced a period of significant rise in corruption.But in the end, the strong domestic demand for the legal system and anti-corruption in the process of modernization, coupled with institutional innovation and mechanism construction, has achieved a decline in corruption.Taiwan and South Korea, among the "Four Tigers" in Asia, later adopted the Western democratic model, but corruption seems to be on the rise over the past 20 years, and the reasons for this are worth pondering.

French writer Victor Hugo portrayed a character named Govan in his last novel. This character once said a famous saying: “We must operate on evil tumors, but the surgeon who performs the operation must be extraordinarily calm, not fierce.We should also adopt this attitude when we recognize and deal with corruption. We should not just stop at strong moral condemnation, but gradually curb and reduce corruption through solid mechanism construction and rule of law construction. In Asia, Hong Kong and Singapore have done the best anti-corruption work. Instead of adopting Western-style democratic systems, they have established an independent anti-corruption mechanism that daunts corrupt elements through the construction of the rule of law and elite politics, such as the Hong Kong Independent Commission Against Corruption. , Singapore Corruption Investigation Bureau, etc., and eventually became a leader in the anti-corruption cause.While continuing to crack down on corruption with an iron fist, we should carry out institutional innovation, learn from the experience and practice of anti-corruption in Singapore and Hong Kong, conduct some pilot projects first, and then spread it across the country, striving to make China go from the current situation in a short period of time. "Medium corruption" to "low corruption".

Here are three more points of view: First, no matter how much anti-corruption efforts we make, corruption will grow even higher.The long-term and arduous nature of anti-corruption must not be underestimated.Corruption will also change from the "uncivilized" corruption that everyone hates now to a more "civilized" corruption that can be concealed.For example, the subprime mortgage crisis in the United States in 2008 caused economic recession and the global financial tsunami: 1.5 trillion U.S. dollars of low-quality loans were miraculously packaged into high-quality financial products, which were recognized by authoritative evaluation agencies, and most of them became 3A-level financial products. Then sell it to banks in various countries.Was there no corruption in the process?There may be even greater corruption behind this. These financial giants are actually cheating and abducting, doing everything, taking advantage of all loopholes in the legal system and using all available gray areas. The two largest banks in Switzerland both lost tens of billions of dollars and complained endlessly. Finally, they had to seek capital injection from the sovereign funds of Asian countries. The losses caused by this crisis were ultimately paid by the people all over the world.We must not take this "currency war" lightly.

A Swiss banking friend told me that this is the work of the "financial mafia".We might as well use the concept of "second-generation corruption" to describe the difference between it and "first-generation corruption". It is really a bit like the relationship between modern weapons and traditional weapons. "The first generation of corruption" is "uncivilized" corruption, mainly manifested in "kickbacks", "smuggling", "red envelopes", etc. It is a bit like a traditional weapon, hacking people to death with a big knife, bloody, it feels very cruel.The "second generation of corruption" is relatively hidden and relatively "civilized" corruption, mainly manifested in sanctimonious "lobbying", various "political donations" in electoral politics, and "selective neglect" and "supervision" in financial supervision. "Arbitrage" and so on, this is a bit like a weapon used in a high-tech war, what is displayed on the TV screen is just a coordinate, plus a few flashing bright spots, very civilized precision strikes, so that people who are not on the battlefield will forget these bright spots It is the destruction of life, which is worse than the destruction of using traditional weapons.

As I mentioned earlier, Amartya Sen, an economist who has always advocated that Western democratic systems are universal values, once believed that the Asian financial crisis would not occur in Western democracies.I don't know how to comment on the financial crisis in the United States?It seems that such a large-scale crisis can only occur in a country like the United States. The excessive influence of its companies on politics and its political system are too much driven by capital are probably the deep-seated reasons for this crisis.In short, anti-corruption will be a long-term and continuous process. Even in developed countries with relatively sound legal systems, different types of serious corruption may occur. Second, we must grasp the corruption situation in China realistically, prevent the problem from being exaggerated to an unrealistic height, and then mobilize the sense of tragedy and call for another revolution.Looking back at Deng Xiaoping, the Chinese leader guiding China's reform and opening up, it is really like commanding a super-scale battle. There is no foolproof plan. When it is time to charge, you must charge, and when it is time to ambush, you must ambush. There is no war without casualties and attrition. of. In 1979, Deng Xiaoping asked Shenzhen to "make a bloody road", and to kill the bloody road is to be prepared to be injured.It is not to be afraid of wolves and tigers, but to seize the opportunity to attack bravely.Reform requires consideration of strategy and tactics, opportunity and cost, and time lag. Once the opportunity is seized, one must hold on to it and go all out until it succeeds. This is Deng Xiaoping's leadership style.That kind of pure and pure reform, that kind of poetic economic and social transformation, that kind of transformation that cannot tolerate a little sand in the eyes has never been seen in ancient and modern China and abroad. In the 1980s, what aroused people's resentment was mainly the "official downfall" caused by the dual-track price reform.At that time, adopting the dual-track system to carry out price reform was really a last resort, because the rather radical price reform plan had caused rising prices and strong dissatisfaction among the people.However, the adoption of the gradual dual-track price reform also means that within a certain period of time, officials will have more opportunities to seek rent. Some township and village enterprises often find it difficult to obtain production factors that are sold at planned prices without buying officials.However, if price reforms were not carried out in a timely manner, it would be difficult for the Chinese economy to get out of the frame of a planned economy.China's leaders weighed the pros and cons, arguing that without price reforms, China would pay a greater price.Therefore, we bravely promoted the dual-track price reform with great risks, and gradually passed this hurdle. Today, our township enterprises and private enterprises have matured and become half of China's economy.More than 95% of our commodities are priced by the market. Without such brave reforms, the Chinese market would not be as prosperous as it is today.After the success of this reform, although the corruption caused by price fixing still exists, it has been greatly reduced compared with the past.Compare it with Russia, which adopts "shock therapy": Russia's prices were released all at once, which not only caused hyperinflation, but also made corruption unstoppable.The social cost of China's price reform is also quite large, but it is still significantly lower than that of the former Soviet Union.Although this reform is not perfect, although it brought many problems at that time, and there are still many sequelae, few people in the whole world deny that China's dual-track price reform is a successful classic case of economic reform in traditional planned economy countries. . Finally, a brief mention is made of the relationship between corruption and culture.One of the challenges that China faces in the fight against corruption is the deep-rooted human relationship and relationship network in Chinese culture.This is very similar to the human network and relationship network of the Latin nation.To a certain extent, this network of favors and relationships can play a positive role in economic development, but in the long run, it is not conducive to the construction of a modern society ruled by law, and is not conducive to the long-term stability of a country.Among the Latin nations, France, Spain, etc., through continuous and unremitting efforts, finally broke through this barrier and established a society ruled by law. Although Italy is also a developed country, its corruption problem is not solved as well as other developed countries. You only need to go to Italian Chinese If the society understands it, they will know that the police in Italy are very corrupt. Although Italy is a democratic system, the influence of the underworld is still huge. Especially in southern Italy, the underworld controls a large amount of political resources, including votes and official positions. In the Chinese community, Hong Kong and Singapore have broken through the threshold of the human network, and according to my observation, Hong Kong and Singapore have done better than France and Spain in this regard.But most Latin American countries and China, although the economy has also developed, and China is developing very fast, but this threshold has not yet been crossed, so we have not yet established a truly modern society ruled by law.In this regard, we still need to make more efforts.The success of Chinese societies such as Hong Kong and Singapore in solving this super difficult problem provides us with a lot of experience that we can learn from.