Bryan Caplan  

Intertemporal Corruption

Sticky wages and sticky fed fu... Kakha Bendukidze, RIP...
When I was an undergrad at UC Berkeley, there was an informal norm about professors dating their students: Just wait until after the final exam.  Professors dating their current students?  A recipe for corruption.  Professors dating their recent students?  Only the prudish could object.

You might dismiss this as a weird Berkeley norm, but it's also ubiquitous in American politics.  Consider:

If a major corporation gives a U.S. Senator a ten-million-dollar "gift," it's likely to be punished as corruption.  It doesn't matter if the corporation protests, "We're only expressing our affection for this fine Senator" or if the Senator bellows, "How dare you claim my vote is for sale!"  However, if the same Senator retires, and the major corporation gives him a ten-million-dollar sinecure on its Board of Directors, it's perfectly legal - and few demur.

The painfully obvious flaw with both norms: Intertemporal corruption is a wonderful substitute for ordinary corruption.  A professor is unlikely to give an F to his current girlfriend; but he's also unlikely to give an F to his future girlfriend.  A Senator is unlikely to vote against a corporation that gives him millions of dollars; but he's also unlikely to vote against a corporation that's going to give him millions of dollars.  What comes around, goes around.

You could object that intertemporal corruption is less reliable than ordinary corruption.  True, but the magnitude of this reliability difference is probably small.  Gratitude and resentment are deeply-rooted human emotions.  We like to repay kindness with kindness, affront with affront.  And whenever emotions fall short, reputation picks up the slack.  How hard can it really be for corporations to predictably hand out sinecures to their retired political cronies?

An alternate objection is that punishing ordinary corruption is much easier than punishing intertemporal corruption.  But if we learn anything from the economics of crime, we learn that the severity of punishment should go up when the probability of detection goes down.  So instead of throwing up their hands about intertemporal bribery, crusaders against corruption should sharpen their pitchforks.

There is one last intellectual escape route: Say that anti-corruption efforts are misguided in the first place.  Quit your bellyaching; it doesn't really matter if professors date their students, or if corporations have politicians in their pockets.  But few will want to bite this bullet, at least publicly.

Other attempts to explain our puzzling tolerance for intertemporal corruption?

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COMMENTS (17 to date)
Daniel writes:

Intertemporal corruption is a hard narrative to sell, at least in politics.

Media outlets will run stories about the soft landings prominent politicians receive in the private sector, but the coverage is limited and dies down quickly because the politician is no longer relevant to voters. While they are still in office, they can honestly say they have received no payback for the corporate favors that they promise are just good policy.

What's interesting to me is the experience Charlie Crist had in Florida recently. He received a fat private sector job working with a prominent law firm after leaving office the first time. Running for governor a second time, the fact that he was still employed at this powerful and politically active law firm didn't seem to affect his candidacy significantly. Even stories that appear to be pretty easy to tell don't go as far as one might think as voters seem willing to separate private sector work and public service.

Authors like Peter Schweizer are working to reframe the debate to focus more on revolving door narratives, just by cataloguing the incredible number of examples. Actual legislation may be needed, though, to further limit what opportunities politicians have once they leave office.

Duncan Earley writes:

I have long thought that solving the "Revolving Door" problem is much more important than regulating campaign contributions.

The campaign contributions are just a signal to the candidate that they will probably get a plum job after they leave office as long as they voted on policies in favor of the contributor.

But I cant see any way to stop ex-politicians from taking any jobs they like without violating there freedom significantly.

Christopher Chang writes:

My understanding is that professors are prohibited from dating their current students because, otherwise, a professor could give a worse grade to a student who spurned the professor's advances. As far as I can tell, the prohibition works as intended; the type of intertemporal corruption you discuss (where the student charms the professor into giving them a good grade) just isn't a big deal in comparison, due to the imbalanced professor-student power relationship.

However, I believe your point is relevant in the context of congressmen and major corporations.

Tom West writes:

The problem with prosecuting intertemporal corruption is that it requires determining the subject's frame of mind.

Did he *intend* to date the student later? Did the politician vote a certain way because he believed he would be rewarded?

It's not just a matter of getting caught, it's that you either require *proof* of frame of mind (which is nigh impossible) or you open a different and much worse can of worms where the verdict is more or less completely arbitrary and far more dependent on the narrative spun by lawyers than anything else.

John writes:

Tom West, that was my initial objection too, but current campaign finance laws could require determining the subject's frame of mind ("did the senator vote this way because of the contribution, or did he get the contribution because he was likely to vote this way?") but don't. Instead they are broad prohibitions on behavior that might lead to conflicts of interest: you can't accept more than $X from someone no matter what you're thinking when you take it. Laws against behavior associated with intertemporal corruption could work the same way.

Vivian Darkbloom writes:

This observation should not be limited to teachers and politicians. There are vastly more officials on government payrolls who are in a position to influence policy (writing regulations, enforcing (or not) laws, adjudicating administrative disputes, whose judgement is colored by the prospect of future employment or rewards given *before* entering government. Just look at the circulation of lawyers from government to top law firms and back again. The relationship between government and think tanks (not excepting, sponsors of this blog) is perhaps an even a better example. Follow the party line in government and we'll get you a job at a friendly think tank and follow the party line at the think tank and we'll get you a job in future government is pretty much standard procedure.

The comments above, which so far respond to this blog post, seem to fall into my category of looking to the state to solve problems.

There is a problem. Something is rotten in government. We agree on that point. But is it best to look to the powers of government to solve this problem? Is it best to ask what new legislation or government-law prosecution is needed?

Naturally we think in this statist way, because a political democracy has a transactions-cost institutional bias favoring centralized, simplified decision making.

But I have tried to form an opposite habit: Ask what previous legislation, if repealed, would make such a problem less likely to recur. Pertaining to intertemporal corruption I would suggest:

  • Repeal acts that require businesses to get government permission before proceeding.
  • Repeal acts that make government the provider of some service which would be supplied by private enterprise if government removed itself.
Such suggestions seem obviously impossible in the present US. Nonetheless I believe that would be a healthier direction and would reduce intertemporal corruption.

Yaakov writes:

When politicians have what to sell and there are buyers, there will always be a market. The harder it is to strike a deal, the more costly the merchandise.

The reason there is insufficient outcry on corruption is because voters understand that the only way to get rid of corruption is to take away the ability of politicians to sell favors. The ability to receive favors, however, is more important to many voters than the desire to fight corruption. Of course, fighting corruption is very important to voters. They want to hang the villains. So we draw an arbitrary line between bad corruption and good corruption.

Tracy W writes:

John: but, "You can't ever date an ex-student" or "you can't ever accept a high-paying job after you leave politics", or, at least, you can't do those things without seriously risking a conviction for corruption, are dangerous rules in their own right.

The "Can't ever date an ex-student" will get broken, people are forever breaking rules about who they can and can't date. Expecting people to wait a bit might be practical, but expecting them to refrain for years just isn't going to be. It's like laws against sodomy, or adultery. We'd wind up losing a lot of professors who were presumably the best candidates for their jobs.

The "can't ever accept a high-paying job after you leave politics" means lowering the attractiveness of a life-after-politics much more than it is now. Leaving politics means you give up a lot of power, under the "can't ever accept" rule it means that loss can't be at least partially compensated by a lot of money. Whatever the problems of inter-temporal corruption, I don't think we want politicians to be more reluctant to leave power.

Sometimes the cure is worse than the disease.

John Hayes writes:
But if we learn anything from the economics of crime, we learn that the severity of punishment should go up when the probability of detection goes down. So instead of throwing up their hands about intertemporal bribery, crusaders against corruption should sharpen their pitchforks.

This should not be taken as a given, the larger the penalty the greater the return on investment for activities that avoid detection. If spending money bribing the investigator or other testifying parties prevents severe fines and jail time, it's clearly worthwhile. In economics this is a variation on the Laffer Curve, but in penal justice we can go all the way back to Utopia which discusses why punishments must be scalable to prevent escalating crimes to avoid detection.

To avoid inter-temporal corruption, I recommend a tragedy of the commons. Place a very large tax on post-services earnings and pay an equal pension to all former-congresspersons. Unlike the typical Laffer curve, there are few enough ex congress members that they can be found individually. If you scale payout percentage with years of service long serving members can be bought out and it may even inspire cooperation.

It works for the NFL, why not congress?

David W writes:

The rule does have useful effects, even if it's not a cure all.

Intertemporal corruption requires trust, or at least reputation. Can you imagine telling another professor 'I gave her the A she wanted, but when the semester ended she wouldn't put out'? Wouldn't that damage you much more than it would damage her? Preserve the option to defect, and the deal's less likely to happen in the first place.

Second, it lowers the standard of evidence for a direct quid pro quo. To prosecute a professor, you just have to prove the fact of the mid-semester dating, not also prove state of mind.

Third, people are good at lying to themselves. 'I didn't fudge her grades, she really does know her stuff. She's just not good at taking tests.' Harder to do that when your interactions are kept professional.

Joe Teicher writes:

As a voter, one solution to intertemporal corruption is to pick politicians that are already rich. Similarly, I guess whoever does the hiring at universities could prefer professors that are married, though maybe that would be illegal.

A bolder solution would be to take whoever got elected and make them rich. so, like pay congressmen $10M/year with a $1M/year for life pension or something like that. Pay them more than they could reasonably expect to get after they leave office. Maybe the pension is contingent on them not taking another job. That seems like an easy, though expensive, way of decreasing intertemporal corruption.

Roger Sweeny writes:

"Other attempts to explain our puzzling tolerance for intertemporal corruption?"

What is seen and what is not seen.

ColoComment writes:

Glenn Reynolds (Instapundit) suggests a "revolving door" surtax. Here's a summary:

Nathan W writes:

The classic expression that comes to mind is "it is the certainty, not the severity, of punishment that deters". People are not very good optimizers in straying foul of the law. But since we value privacy and want to prevent against risk of state power excesses, counterintuitively (perhaps), we seem to rely more on severity than certainty (perhaps counterintuitively, because after costs maybe it's better to jail for e.g. 1% of guilty people for e.g. 10 times "too long", then via risk aversion this will obtain similar outcomes to imprisoning 100% of the, say, 20% who might try anyways), or the disutility of living in a totalitarian, authoritarian, fascist, situation with respect to formal authorities.

I.e., while I feel that most sentences are too harsh for most crimes, I'm just thinking that via risk aversion it makes sense to allow a certain "optimal" level of criminality which is more oriented towards the severity than the certainty of the punishment.

How much is it worth to have privacy from the state, in and of itself and for the value it procures in the form of averting potential for Matrix-like outcomes? Knowing people, this means that probably there will always be corruption in this strategy without additional measures.

How about moral teaching of children? The sort of brainwashing you can explain on paper with pride? You know, please, thank you, don't steal, don't hit your friends, don't help people screw people, always strive, appreciate what you have, don't be so self-centered all the time, etc. I don't mean never punch the other guy straight in the nose if he deserves it, but pretty much unless it really, really, really needed to happen (various alternative approaches were demonstrably already tried). You might have to do time for that too, but ideally it would never come to that.

Jeff writes:

The reality is actually more insidious than this, isn't it? A professor might give favorable grades not only to his future girlfriend, but students he only hopes will be his future girlfriend. Female students therefore have the incentive to plant the idea in his head that they might be open to dating in the future, but they're not quite sure.

Likewise, corporations have the incentive to dangle the possibility of post-retirement consulting or Board gigs for current elected or appointed officials, but without making a firm commitment to any particular arrangement. Then again, a congressman can only serve on so many corporate boards at once, so he/she can afford to withhold favors from some people, so the situation isn't perfectly analogous, but nonetheless, I think the point holds that the mere possibility of future rewards is enough to influence behaviors today in ways we might consider to be corrupt or unethical. In fact, the rewards never have to even materialize.

Effem writes:

Democracy is simply unable to solve this problem as there is no simple standard to agree on. Therefore Democracy will trend towards corruption with periodic revolutions/upheavals once the majority feels that they are not well served. Inequality may be a leading indicator.

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