Corrupt anti-corruption campaigns - Kaushik Basu

The Amazon rainforest has been burning for weeks. Yet Brazil’s president, Jair Bolsonaro, mobilized the armed forces to help contain the fires only in the last few days – in the face of European leaders’ threat to suspend a major trade deal and the possibility of a far-reaching boycott of Brazilian products. 

• Bolsonaro government’s weak enforcement of laws protecting the Amazon are root causes of the crisis, encouraging ranchers to set fires to clear land for agriculture.
• The crisis in the Amazon is a stark example of the damage that can be done when governments bow unequivocally to business interests. It also highlights the cynical manipulation of anti-corruption efforts to undermine democracy and advance an authoritarian political agenda.
• Some conservative economists argue that corruption can be beneficial, as it enables economic actors to bypass regulations, thereby enabling markets to function more effectively. The truth is that corruption corrodes markets, protects incumbents from competitive challenges by impeding the entry of new actors, destroys the moral fabric of society, and stunts economic development. There is a strong inverse correlation between development and corruption.
• The world’s least corrupt countries are Denmark and New Zealand. Both have achieved high standards of living. The world’s most corrupt countries are Somalia, South Sudan, and Syria – all poor and mired in conflict. Ranked from least to most corrupt, the United States is 22 of 180 and, India is 78th, China is 87th and Brazil is 105th.
• The connection between corruption management and democratic compromise is complex. This is the reason why many leaders who have come to power with a genuine interest in controlling corruption have ended up nurturing cronyism and damaging democracy instead.
• Some political leaders launch a corruption “purge” that targets rivals or critics for prosecution. In countries that are rife with high-level corruption, leaders can simply begin by taking aim at those who challenge their authority. What starts as an anti-corruption drive ends up as an instrument of cronyism and media control. And by creating a safe zone for loyalists, it often ends up exacerbating corruption.
• Corruption can implicate even those who would prefer to operate according to the law.

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Adviser to the Government of India, is Professor of Economics at Cornell University and Nonresident Senior Fellow at the Brookings Institution.

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Rio Olympics 2016 - Billions wasted

• The 2016 Summer Olympics in Brazil cost Brazilian taxpayers $4.6 billion, conservative estimates show. But once related expenses covered by the Brazilian government are factored in, the overall costs hit the $12 billion mark.
• Prior to the Olympics, the Brazilian government had already spent $12 billion on infrastructure. Stadiums and urban projects designed to ensure the country was ready for the sports event were built, but aside from the scheduled 2014 & 2016 events, there seemed to be little to no demand for such public investments prompting the country that the expenses were not worth the trouble.
• These structures are left to rot symbolizing government waste, not only because the investments weren’t meant to stand the test of time, but also because the Brazilian government’s lack of concern for the taxpayer.
• The government ignored the economic realities of the country, betting on inflation and cronyism in order to throw an unforgettable party.
• Due to the government’s lavish spending prior to the World Cup and Summer Olympics, led to a move that provoked chaos among consumers simply because banks were forced to put money into circulation that wasn’t backed by anything.
• As more cash was put into circulation by the banks and the federal government due to the World Cup and Olympics-related expenses, the value of Brazilian money tanked. To the consumer, that translated into lower purchasing power, making it more difficult for the poor to stock their pantries. 
• With the government’s out of hand expenses Brazilian people suffered because the government robbed them of their money’s purchasing power. 
• Now that the structures built for the world to see are rotting away, the low-income Brazilian continues to suffer. The only solution to this matter is to unleash currency control from the hands of the federal government. Only then will the federal government be powerless in creating more debt and inflation, keeping it from playing with the Brazilian taxpayer’s hard-earned money.

My View:

Greece has spent £7 billion, twice their projected budget, for 2004 Olympics. Ten years later now, these sports venues in Athens lie empty, completely unused and decaying. Greece hit by the global financial crisis and with no real post-games plan, the prestigious venues were abandoned. Greece has seen post Olympic era as a decade of lost opportunities. No country, with weak fundamentals, should embark on such ambitious spending risking economic collapse, for partying and fun. Former Olympic Greek sporting hero turned Socialist member of Parliament Pyrros Dimas said 'We didn't take advantage of this dynamic that we got in 2004, We simply made the biggest mistake in our history: We switched off, locked up the stadiums, let them fall to pieces, and everything finished there.' This 8.5 billion euros is a drop in the ocean of the country's subsequent 320 billion-euro debt, which spun out of control after 2008.