The Surprising Benefits of Corruption in the Economy

Get an exclusive Surfshark Black Friday deal! Enter promo code ECONOMICS to get up to 6 additional months for free at surfshark.deals/ECONOMICS

"corruption at all levels...according to some economists - might even be an instrument for the common good." I get the feeling that these economists should have their finances audited, not for any particular reason.

"Grease the Wheel" dilema. At first corruption allows businesses to move fast (jump the queue), but eventually the administration expects a bribe and thus you need to pay to be in the queue. 🇿🇦🇿🇼

man, if only people were open about their corruption so these poor economists could properly track them, everyone is working against these poor economists

It's also worth pointing out the heavy correlation between corruption level and economic level... In the ICRG graph you showed, the countries on the least corrupt side were also majority Advanced economies which tend to have a lower growth rate than developing countries. That seems like a much more likely reason for the correlation between corruption and growth to me.

“No matter how corrupt, greedy, and heartless our government, our corporations, our media, and our religious & charitable institutions may become, the music will still be wonderful.” ― kurt vonnegut,

One of the reason that wealthy countries have less corruption is officials are getting good pay and enjoy middle class standards. People will think twice to commit a crime when there is a risk to lose their comfortable, stable life.

I’m 35 and I have about $150k liquid in savings which I plan to put towards becoming a homeowner but based on the current high prices on real estate, do you suggest I hold from buying and look at stocks instead?

My immediate question to the proposal of corruption being good for growth would be: Why would corruption be good for growth and not the other way around? Why can't corruption be a side effect of growth instead of it's cause? Just because it happens at the same time doesn't mean it has any benefits to it. I'm not sure I agree with the analogy of drownings and ice cream sales, because they are entirely unrelated to each other, and both relate to something else. I don't thing growth and corruption are entirely unrelated to each other, but I think it's growth that causes corruption instead of the other way around. When things are rapidly growing, it's very difficult to have strict rules and police them properly.

Hard no. You could talk about countries that have a strong economy DESPITE the corruption, but corruption is never a positive trait.

Excellent. As always. Since your are asking I do enjoy such type of topic specific videos. Countries and their ranking on the economics explain ladder is great but diving into concepts is also very informative.

I agree this is the old problem of attributing cause to correlation. The relationship between corruption and economic growth is simply a correlation with no causal relationship. The low growth countries have far larger issues than corruption and the high growth countries have advantages that overcome their corruption.

I prefer the longer deep dive videos but videos like this are also important so just keep doing what you feel is natural. My only desired outcome for this channel is that you never stop posting.

Please define corruption. Is lobbying, ‘consulting fees’ and campaign contributions considered corruption?

Correlation is not causation. In developing countries where corruption is prevalent, economic growth is easy to achieve by implementing the technologies which were innovated in highly developed countries.

You manage to make economics fun, that's a great achievement in my book. This format is also great, an opportunity to tackle more aspects. Keep it up!

I have seen corruption used as an instrument to avoid unnecessary bureaucracy, particularly in lower income societies. This money typically ends up in the hands of lower paid jobs in such economies such as traffic police rather than in the hands of higher ups who would still pocket it. The thing is, it works, people still want to avoid situations where they have to bribe others and in the event that they do, it results in higher wages for people who are relatively underpaid as well as a simplified system of service delivery or governance

I liked the video but deep dives are better! Thanks for making economics fun and easy to understand!!

I got a laugh when you pointed out a bribe might be to take money that was stolen by the government anyways since in places with weak or compromised courts, that is very plausible. You can make the argument that in the short term a few bribes can grease the wheels and isn't always like paying a bribe to undermine financial controls at a major bank. The problem is that even "good" bribes will undermine trust in the law if it is publicly known unless trust is already gone.

Great length for this type of niche / short explanation. Perfect length for its subject matter without bloat