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Corruption: Beyond Financial Deprivation


Public was surprised as President Joko “Jokowi” Widodo granted clemency for a graft convict Annas Maamun, a former Riau governor who found guilty of involving in bribes in forest-conversion case in Riau. Annas is already over the hill and diagnosed to be suffering from several chronic illness, such as obstructive pulmonary disease and dyspepsia. Thus, in the name of humanity, the President signed his request for clemency. Nevertheless, this might be a wrong step since graft may have various impact. Despite all the financial losses, there are more severe impacts of the graft which tragically would reduces social trust and harms behavior of the people that might blemish the quality of human capital.

Looking backward, actually the President has made unpredictable moves before this. He declared that he would not sign a long-awaited regulation in lieu of law (Perppu) which was intended to revoke newly revised Corruption Eradication Commission (KPK) Law. This apparently broke many people’s heart, particularly students and anti-corruption activists who demand the government to pull out the revised law, as well as economists from several prominent universities and research organization who had warned about the ‘jeopardy’ of graft through open letter [1].

A deliberate study that attached to the open letter as the evidence of the horrifying impact of graft on entire economy perhaps not convincing enough to thwart the amendment of KPK. Despite perplexity of the way to counter the lawsuit, corruption is obviously still rampant in public and private sectors as it could be seen in latest news, where about three pseudo-villages which were still receiving village funds found out in Konawe regency and the peculiar allocation for multipurpose glue on Jakarta’s proposed 2020 city budget.

In general, Transparency International defined corruption as the abuse of entrusted power for private gain. The definition captures three main points which are the public and private as the agents, utilization of power, and benefit. By that, corruption is identical with all kind of activities that exploit money and relation to attain certain agenda.

It has variety types of modus operandi, including bribery, nepotism, fraud, clientelism, and money laundering, yet ironically it is still hazy in terms of its impact on real world. Social scientists themselves are still on debate about the real impact of corruption. Some of them who came out with Grease the Wheels Hypothesis (GWH) believe that corruption positively affects economy since it unleashed jaded bureaucracy and improve ease of doing business [2]. Conversely, some others are confidently speaking about Sand the Wheels Hypothesis (SWH) which stated that corruption critically undermines economic growth [3].

The debate reflects that impact of graft itself might heavily subjective due to different point of view. However, public common sense believe that graft is just a chronic malady which generates deep-rooted socio-economic problem such as macroeconomic instability, inequality, unemployment, low quality of human capital, and lessen investment. Those problems might lead to economic stagnation.

For example, in terms of inequality, bribery could be an example. It is vivid that during an election, money politics usually be a shortcut for unskilled ambitious people to get into the government. Frankly, the action might curb the best potential candidate to be elected while the unqualified leaders shall enjoy drawing development budget. In consequence, a well made development plan might not be well established. In short, graft may induce inefficiency at any kind of activities, including the activities of government institution.

Douglas C. North defines social trust as an informal system that shaped beliefs on others’ behavior [4]. According to behavioral economics point of view, people’s behavior is highly influenced by their environment. For example, people who live in a community who is familiar to graft are more likely to have low social trust. Graft in public authorities might diminish people’s trust in authorities themselves, moreover to the people in general [5][6]. People would think that neither the government or their fellow friends are free from corruption. Then, as stated by a Noble Laureate in the late 1960s Gunnar Myrdal, those people would also think that they should be corrupt because everybody seems to be doing so.

Channeling the ideas above, Professor Bo Rothstein, a political scientist from University of Gothenburg, explained his Corruption-Trust Theory which shows that graft would lead to a serious vicious circle. First, public officials are widely known for being corrupt thus public would think that since those sworn people could not be trusted, other people could not be trusted either. By that, people would think that most of people could not be trusted. Therefore, they would realize that they have to do the same to get into such society [7].

As the long term consequence, high level of graft and low social trust might have roots in individual behavior. Simon Gachter and Jonathan Schulz, both are economists from University of Nottingham, evidenced the causality between graft and individual prevalence to violate rules. Through an experimental study on young people from countries with various level of graft, they found out that youth from highly corrupt country are more likely to be dishonest and break rules. Moreover, there is another evidence from study conducted by Muthukrishna et al which have shown that young generation who grew up in a corrupt society are prone to tolerate bribery. The more we mingle with graft, the more it vines into our culture then there is nothing we can do to erode it [8].

It is terrifying to know all the bad impact of graft on society as well as the individual ethical thinking and behavior. Therefore, considering the low quality of human capital, Indonesia government indeed must be strictly and patently against graft in order to breed reliable next generation. Otherwise, the nation would only enjoy a bunch of youth with low skills, less creativity, and less integrity in demographic dividend era.

Article written by Faradilla Rahma Sari
Director of RISED



[1] Pradipto, R., Dartanto, T., Priyarsono, S., Setiawan, M., Sahadewo, G. A., & Wibisana, P. S. 2019. Naskah Akademik: Menghapus Pulau Berintegritas atau Membangun Kepulauan Berintegritas? Rekomendasi Ekonom Terhadap Pelemahan Penindakan dan Pencegahan Korupsi.

[2] Dreher, A. & Gassebner, M. 2013. Greasing the Wheels? The Impact of Regulations and Corruption on Firm Entry. Public Choice, 155(3/4): 413-432

[3] Chang, E. C. C. 2013. A Comparative Analysis of How Corruption Erodes Institutional Trust. Taiwan Journal of Democracy, 9(1): 73-92

[4] North, D. C. 1998. “Economic Performance Through Time.” In The New Institutionalism in Sociology, edited by Mary C. Brinton and Victor Nee, 247–257. New York: Russell Sage Foundation

[5] Uslaner, E. M. “Trust and Corruption.” In The New Institutional Economics of Corruption, edited by Johann Graf Lambsdorff, Markus Taube and Matthias Schramm, 76-92. New York: Routledge

[6] Rothstein, B. & Eek, D. 2006. Political Corruption and Social Trust: An Experimental Approach. Rationality and Society, 21(1): 81-112

[7] Rothstein, B. 2011. The Quality of Government: Corruption, Social Trust and Inequality in a Comparative Perspective. Chicago: University of Chicago Press

[8] Muthukrishna, M., Francois, P., Pourahmadi, S. & Henrich, J. 2017. Corrupting Cooperation and How Anti-Corruption Strategies May Backfire. Nature Human Behaviour, 1(7): 1-5

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