When people think corruption, they think freezers full of money. Or Rolex watches. They think Congressman William Jefferson and Governor Robert McDonnell.
But then there are those who engage in what George Mason University Professor Janine Wedel calls “the new corruption.”
“These players — some of them big names, some of them virtual unknowns — violate our health, pocketbooks, our trust,” Wedel writes.
“Their actions compromise our health, pocketbooks, or security and can lead to deep and lasting inequalities.”
“And their behavior is typically legal, making it next to impossible to hold them to account.”
Wedel’s new corruption is practiced by elite power brokers who assume a tangle of roles in government, business, nonprofits, and media organizations.
These elites are enmeshed in a “systemic unaccountably.”
How can we know whom to trust when “experts” pronounce on crucial policy issues and present themselves as impartial, while concealing that they have a dog in the fight?
Wedel is the author of Unaccountable: How Elite Power Brokers Corrupt our Finances, Freedom, and Security (Pegasus Books, 2014).
“Transparency International pioneered the corruption index in the early 1990s,” Wedel told Corporate Crime Reporter in an interview last week. “They rank countries from most corrupt to the least corrupt. And they are based on public perception – perception of business people and experts from outside the country.”
“They come up with these numbers that are attractive to the press. And it has put Transparency International on the map. They are simple minded surveys. But they don’t really mean a lot. The idea of corruption in these surveys is simple bribery — cash changing hands. It’s the proverbial cash in the piano or the freezer. Corruption is reduced to bribery.”
“In fact, today’s most savvy power brokers are engaged in a kind of corruption that is much more subtle and more difficult to detect. Today’s most corrupt players, at least in the West, don’t need this quid pro quo corruption. They are far beyond that. That’s for the little players. That’s for the small fry. That’s a key point of Unaccountable.”
Wedel says that the new corruption involves “a violation of public trust that can’t be reduced to a simple quid pro quo.”
“It’s the difference between need based corruption — the customs official in Nigeria or the Ukraine who takes bribes to supplement his meager income — and greed based corruption,” she says.
“Greed based corruption is practiced by key opinion leaders — for example, physicians taking money from the pharmaceutical industry to promote particular products or courses of treatment without making it clear that that is what they are doing.”
“When we go to a physician, the physician might have been swayed by the views of these key opinion leaders without even knowing it. They are very prominent people usually in the public press or the most reputable journals.”
“Or retired generals and admirals who continue to get access to inside information by sitting on government advisors boards, while at the same time consulting for the defense industry.
“The problem is that the public has no way of knowing whose interests they are serving. We can’t know what they are up to. That’s why this kind of corruption is so insidious and dangerous. Or take the top academic economists.”
“The University of Massachusetts at Amherst did a study a few years ago that looked at 19 top prominent academic economists. They found that in the run up to and just after the 2008 financial crisis that these economists were promoting specific financial reform proposals, both in the media and before Congressional committees. At the same time, they were not disclosing their links to private financial institutions, like big banks. There is an information problem.”
“This is not the old fashioned quid pro quo corruption. These are elites. These are sometimes people whose names we recognize. And they believe they can police themselves. This pattern of activity leaves us without information about what they are really up to. And we have no way of knowing whose agenda they are serving — ours or theirs.”
The new corruption also spills over into the non profit arena.
In 2012, Corporate Crime Reporter broke a story titled — Sierra Club Tells Members – We Don’t Take Money from Chesapeake Energy – When in Fact They Took $25 Million.
“What you describe is straight out of the Shadow Elite and the Unaccountable playbook,” Wedel says. “It reflects the unaccountability that so many organizations and players are operating in. In the book, I describe the systemic nature of this new corruption, the cornerstone of which is unaccountability. I look at unaccountability in different arenas of activity. One of them is in so called grassroots organizations. Grassroots and non profits organizations are sometimes funded by industry or billionaires. And that funding is laundered through the grassroots and non profits organizations. Some people in the organizations know about this, but that information is not fully disclosed.”
“Let’s say you hear an ad about a group to support Alzheimer patients. You might think it’s a grassroots group. But no, it’s funded by a company that has a particular dog in the fight. That is endemic.”
“We see the laundering of influence by billionaires or industry through think tanks. The billionaires or industries have specific agendas. And the reason they want to launder the money through think tanks is because think tanks have a neutral imprimatur. If the think tank comes out with a study, we take it at face value. If a company comes out and says the same thing, we are more skeptical about it. It’s a form of trickery that is in vogue.”
In her book, Wedel lays out the grim details of the new corruption that pervades the American political economy. She’s admittedly short on solutions. She talks about “reinventing shame” and redefining corruption as “a violation of public trust.”
Wedel says that people no longer trust the institutions of our society. And when they don’t trust formal institutions, they look to private ones — friends, family.
What’s wrong with defaulting to friends and family?
“There is nothing inherently wrong with that. But it represents big cultural and societal shifts,” Wedel says.
“This is Eastern Europe all over again. If people don’t trust the official system, and trust only their own — what happens to the public interest? We have a violation of public interest. There is a growing group of outsiders and just a few insiders. The loss of institutional trust, combined with growing income inequality, creates an larger and larger group of outsiders and a sense that the system is being gamed.”
“People sense that something new and different is happening — that there is a violation of trust en masse. But until now, it hasn’t really been laid out in the way that I have laid it out. It hasn’t been shown to be a systematic phenomenon, which it is. It exists in all of these arenas that we have discussed. It affects our pocketbooks, habitats and our security.”
“The Occupy Wall Street and Tea Party movements, while they may diverge ideologically, are really peas out of the same pod. They both grew out of a grassroots sense that something is amiss, there are more and more outsiders, and the system is gamed by insiders. People do have a deep sense of that. I’ve shown in the book how the pieces fit together. And we have to recognize that campaign finance is not the only problem. It is a big problem. But we really have to go beyond that. And before we start jumping to quick solutions, we have to start recognizing the breadth and depth of the problem.”
Wedel says that once people start distrusting public institutions, they default into their own “private silos.”
“And I get that, because that’s what happened under Communism,” she says. “That’s exactly what happened under Communism. “
Sooner or later, that leads to some sort of institutional collapse?
“Well, that raises the question — to what extent is this sustainable?” she asks “How it ends, I don’t know. It’s very difficult to know the unknowable because there are so many factors that will shape it.”
(For the complete q/a format Interview with Janine Wedel, 29 Corporate Crime Reporter 3(13), January 19, 2015, print edition only.)