The Third Pillar: How Markets and the State Leave the Community Behind

by Raghuram G. Rajan

Far from rewarding honesty, the system favors the corrupt politician because he is not just richer but, being adept at the game of favors, is better at making the wheels of the bureaucracy creak in favor of his constituents. Such a system is self-sustaining. An idealist who is unwilling to work the system can promise to reform it, but the voters know there is little one person can do. Moreover, who will provide the patronage, the jobs and the wedding gifts, while the idealist is fighting the system? So why not stay with the known fixer even if it means the idealist is defeated? Thus the circle is complete. The poor and the underprivileged need the politician to help them get jobs and public services. The crooked politician needs the businessman to provide the funds that allow him to supply patronage to the poor and fight elections. The corrupt businessman needs the crooked politician to get monopoly rights, public resources, and contracts cheaply. The politician needs the votes of the poor and the underprivileged. Every constituency is tied to the other in a cycle of dependence.