It's rainy and hot in central Maryland today. Many of our youngsters are returning to school this week, with the exception of a few who dropped out during the COVID-19 lockdowns and made other plans. In previous decades, a conscientious father would talk them into going back to their lessons, but these days one wonders if it's worth it.
How many bartenders and baristas have a degree in women's studies or early French poetry? A sound plan or a good apprenticeship seem like valid choices.
But I digress. Yesterday I told you we as a country were paddling across the River Styx, in debt to the ferryman, hell-bound and in denial. I outlined the ways this country is corrupt, from the secret police to the taxman to the media.
Trust, justice, and the rule of law are the cornerstones of any civilization. When you stop and ponder complex financial instruments like derivatives or even basic ones like life insurance or a 30-year mortgage, you’re amazed that, given the scams of the world, they exist at all.
After all, life insurance is a bet that you will die young, and most current mortgages are below the rate of inflation. Those firms that hold the loans are losing money. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
That said, corruption is a cancer on the economy.
According to The Conversation:
Corruption severely constrains poverty alleviation and economic development… Countries like Bangladesh, China, India, Indonesia, Malaysia, Nepal, Thailand, and the Philippines all face pervasive corruption problems.
If developing countries can control corruption and enforce the rule of law, the World Bank estimates per capita income could increase fourfold over the long term. On average, the business sector could grow 3% faster. Corruption is also a de facto tax on foreign direct investments, amounting to around 20%.
Controlling corruption can improve many socioeconomic indicators, including reducing infant mortality rate by 75%.
The fact that the United States is in decline due to corruption is evident.
In the 1920s, the Teapot Dome scandal involved President Warren G. Harding's administration taking bribes from oil companies to get favorable contracts for storing oil for the U.S. Navy. At the time, it was called the “greatest and most sensational scandal in the history of American politics.”
These days, such things are not only commonplace but accepted. Instead of brown paper bags full of cash, politicians get book deals, podcasts, or speaking engagements. I seem to remember former President Bill Clinton buying a New York brownstone at a fraction of the real value.
Congress members make below $200,000 a year but retire among the 1% in terms of wealth. Laws that apply to the rest of us don’t apply to those who write them. That alone is enough to get you to grab a pitchfork.
Turnaround
Today, we are looking for countries that turned it around, that stopped the decline and bounced back. After some research, it seems that there are only a handful that rose like the proverbial phoenix but many more that have gotten worse.
According to Transparency International’s Corruption Perceptions Index, 25 out of 180 countries have reduced corruption in their public sectors since 2021, with 31 significantly dropping down the scale in the same period.
Armenia seems to be a winner. After the Armenian Velvet Revolution in 2018, the new government made the fight against corruption an official top priority. Another example is Georgia. In 2003, Georgia was one of the most corrupt countries in the world. However, after the Rose Revolution, the new government implemented reforms that led to a significant reduction in corruption.
It should be noted that both of these countries had massive political turnover that involved key political figures and businessmen being fired, arrested, and/or tossed in jail. In Georgia's case, whole departments were disbanded and reformed.
So yes, countries can bounce back, but it takes a revolution to make it happen.
All the best,
Christian DeHaemer Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
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