There Are No ‘Good Bribes’

There’s a wonderful article in the May 14 edition of the New Yorker by James Surowiecki about foreign bribery, the FCPA, and so-called ‘good bribes.’

Our contributing editor Andy Spalding said,

‘This is my favorite kind of bribery law commentary: not simplistic or polarizing, very nuanced and smart, but with a clear position to advocate.’

Here’s some of Surowiecki’s masterful narrative:

This argument [that some bribery is needed to grease the wheels of commerce] is appealingly counterintuitive, but it’s wrong. While bribes may make things run more smoothly in the short run, in the long run they hurt both the business of the bribers and the economies of the bribed. As the economists Daniel Kaufmann and Shang-Jin Wei have shown, bribes beget more bribes: far from cutting through the red tape, they give bureaucrats a reason to produce more of it; each regulation creates another opportunity to collect a payoff. Walmart’s bribes in Mexico may have enabled the company to build its stores more quickly, but they also gave local officials an incentive to make the permit process as difficult and arcane as possible. . . . .

Elizabeth Spahn, who has agreed to join the FCPA Blog as a contributing editor, sent us the link to James Surowiecki’s ‘Invisible Hand, Greased Palm,’ here.