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Lockheed Bribery Scandals (wikipedia.org)
43 points by simonebrunozzi on Feb 1, 2020 | hide | past | favorite | 7 comments



I think bribery is probably bad. I am curious though, when I try to put on my super naive hat, how it's very much different than a normal market transaction? Like sure if bribes are part of the transaction then it stops being completely about the quality of widgets delivered, but you do get some additional information, right? Like how skilled the company is at politics or how deep its pockets are? Isn't that valuable info?


While I think some of the larger industrial cases are clearer, it's perfectly reasonable to wonder about this.

Richard Posner wrote about the difficulties of rigorously studying or even clearly defining corruption in this essay:

https://www.becker-posner-blog.com/2005/08/economics-of-corr...

I've heard some people say the Russian and Chinese cultural contexts make it difficult to talk about corruption in terms of Western ideals. There are social expectations of gift giving and tipping that are offensive to break, but might appear to outsiders like people are paying others for ordinary services. I haven't lived in either country, so I can't say how accurate or apologist that take really is though.


> Richard Posner wrote about the difficulties of rigorously studying or even clearly defining corruption in this essay:

I found that piece a bit thin, overtly partisan, and I also have to agree with "David's" comment on the blog.

>> Corruption is motivated by the same force as most crime: greed. People with power abuse that power to extract illegal gains for themselves. It's no different, really, than embezzlement, insider trading, Enron-style accounting tricks, or any other sort of white collar crime. The corrupt official uses his position to exact a premium from the "customer."

>> I agree with Posner that a weak rule of law leads to corruption, because the corrupt official has nothing to fear. Similarly, a weak SEC leads to insider trading, and a weak police force leads to rampant street crime. If the criminal perceives little chance of getting caught, there is little incentive to refrain from crime.

>> Corruption has nothing to do with markets or with "excessive" gov't regulation. Nor does it have anything to do with the party in power. Both Republicans and Democrats have been guilty of corruption, and good prosecutors of both parties have zealously pursued corruption. Some state prosecutors have been even more zealous than federal prosecutors. For instance, Eliot Spitzer of New York has cracked down on corrpution on Wall Street, while the Republicans in Washington have largely looked the other way.

>> The problem with Posner's analysis is that he views corruption as a "voluntary transaction" rather than a pure crime. Bribery is never voluntary. No one wants to bribe an official or a waiter at a NY club. But in corrupt cultures it is necessary, so it is done. Bribery is as voluntary as extortion.

You also stated:

> I've heard some people say the Russian and Chinese cultural contexts make it difficult to talk about corruption in terms of Western ideals.

As an immigrant to the USA from a Soviet controlled satellite state, let me say that just because corruption is so endemic that from the outside it looks like their "culture", does not negate the fact that it is still corruption. Aside from you and officials receiving the bribe enjoys this "culture." It is not mysterious at all. In my experience corruption is usually extremely easy to define and detect. For example, do you have to give "black money" to an official to get your business license? This has never happened to me in the USA, and has certainly happened to me in less democratic places. Now I have only worked internationally on the SMB level, when you get to "national asset" level of business, then corruption seems just as rampant here in the USA. Fortunately it is still SMB that is the opportunity and heart of the US economy. The lack of official(bribes) and private(mob) corruption in most of the USA is America's greatest appeal and advantage when running a business.

The difference is mostly a strong Liberal Democracy[0]. That is why I came here, that is what separates the USA from Russia and China. Even the USA's wavering democratic processes are still generations ahead of Russia, China, and many former Soviet satellite nations. Please do not take Liberal Democracy for granted and ignore that major difference when comparing the USA, China, and Russia. I am really worried about the USA's financial corruption of elected officials via Citizens United, and the seeming lack of holding elected officials to the letter and spirit of the law. Both of these seemingly recent changes in the USA are really beginning to remind me of Soviet times. None of the documented high-level corruption is mentioned in your linked blog, but he does manage to find time to blame immigrants for local corruption in some cities.

[0] https://en.wikipedia.org/wiki/Liberal_democracy

> Liberal democracy is a liberal political ideology and a form of government in which representative democracy operates under the principles of classical liberalism. Also referred to as Western democracy, it is characterised by elections between multiple distinct political parties, a separation of powers into different branches of government, the rule of law in everyday life as part of an open society, a market economy with private property and the equal protection of human rights, civil rights, civil liberties and political freedoms for all people.

For readers in the USA, I just want to clarify the meaning of "liberal" in this context as it seems to have different meanings to different people:

> Liberalism is a political and moral philosophy based on liberty, consent of the governed and equality before the law. Liberals espouse a wide array of views depending on their understanding of these principles, but they generally support limited government, individual rights (including civil rights and human rights), capitalism (free markets), democracy, secularism, gender equality, racial equality, internationalism, freedom of speech, freedom of the press and freedom of religion.[


Yeah, fairly compelling, I appreciate your points. I might still quibble in a couple places, but I think we're not actually that far apart overall.

> As an immigrant to the USA from a Soviet controlled satellite state, let me say that just because corruption is so endemic that from the outside it looks like their "culture", does not negate the fact that it is still corruption.

I appreciate hearing that. I had previously endorsed a more black and white view here, but faced some pushback from Russia scholars. I'll hold my ground more next time.

I had originally found the Ikea experience pretty compelling:

https://www.rbth.com/business/2016/08/29/losing-the-good-fig...

I was a little more taken aback at your description of the essay as...

> overtly partisan

He notes that divided government with opposing parties controlling different levels of government contributes to combating corruption.

I could see a narrow reading of it as him saying "we need Republicans to police these Democrats!" But having read him previously take shots at both sides, I don't think that's what he was going for. I think he just meant that having a competitive political environment helps prevent the consolidation of power generally.

> Corruption has nothing to do with markets

This point was hard for me to understand. It's like saying that the moon has nothing to do with physics. Sure, you can exclusively look at the moon poetically if that's your preference, but there are tools in physics that are going to help you understand some phenomena related to the moon. Same for economics and various human activities.


It's bribery when the benefit accrues to an individual instead of the organization. If a movie studio has a director of product placement, and said director solicits cash payments to determine whether Coke or Pepsi is used in a movie, that's bribery. If the director takes bids for the product placement, that's just business as usual.

It ceases to be a normal market transaction when an individual captures the benefit. If 100% of the payment from PepsiCo goes through the movie studio, the movie studio has captured all the information (esp the pricing information). If some percentage of the price is captured by an individual (ie as a bribe), then the movie studio has lost information.


Bribery is bad, period. The entire point is to get people to make the wrong choice.

Occasionally, bribery might be excusable. E.g. in 1990s FSU countries, most government employees would literally starve if they had to live off their government salaries. Demanding bribes was in those times probably the lesser evil.


German Air Force and Navy losses totaled 110 pilots. One alternative considered at the time was the Mirage III. But (partial) production in Germany and Nuclear Sharing were in the mix, too. The latter seems to be a factor wrt. the F-35 again now... (1) Not sure how much of a deterrent this really is, given Trump now and the Soviet plans earlier (2).

I am not sure why France doesn't seem to want to play a bigger role in Europe in this regard.

1) https://www.defensenews.com/opinion/commentary/2018/03/07/nu...

2) https://en.wikipedia.org/wiki/Seven_Days_to_the_River_Rhine#...




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