Corruption in the System | Mises Institute

People in high office and their friends are at the receiving end of anger and frustration due to their misbehaviors of late. The release of the Epstein files have only fueled this. The internet is ablaze with anger against the “elites.” Is this an opportunity, as some claim, to advance ideas of individual liberty? To convince people of the evils of coercive state action? With such idiots at the top, surely we can fuel mistrust for the system.

I disagree. In Spain we have had plenty of “political corruption.” From profiteering off the public purchase of face masks, to creating a job to line a politician’s family with public money, even as far as spending money intended for unemployment relief in prostitution and drugs, we have grown accustomed to this abuse of entrusted power for personal gains.

Has the system weakened? To the contrary, it has made it more robust. The current government came in to “clean up” the corruption of the previous one. That meant that people gave them more credibility, not less. Ideologically, Spanish people continue to be overwhelmingly statist. As an example, in the last controversy on the state of the rail network, not a single voice has suggested trying an alternative private system.

This makes absolute sense. In this article I will try and make the point of why political corruption does not really exist and why libertarians would be ill-advised to concentrate on these misbehaviors.

Free Markets

Humans need to transform their environment to pursue their wants. Goods and services do not have intrinsic value and individuals have their own goals. Goods and services only have the value given by those who want them. For example I could produce a painting through much time and effort, but it would be worthless as no one would buy it.

Humans work to produce things. As one cannot produce everything they want, they produce things to exchange for other things. If I grow potatoes, I will grow enough to have some to exchange for shoes, for example. The shoemaker will do the same. This division of labor and free, voluntary exchanges allow far greater production and everyone benefits. With the advent of money, our modern world was built. This was thanks to individuals pursuing their own goals and trying to satisfy their own wants and needs.

On the other hand, government does not participate in any of this. Rather, as it has the monopoly of violence, it intervenes in the peaceful production and exchange economy, expropriating goods and limiting voluntary interactions.

One effect is through prohibition. By banning certain exchanges that it deems unlawful, production is reduced. One recent example is the banning of the production of plastic drinking straws (which have been substituted by far more contaminant and harmful paper ones).

Another effect is regulations. These, in essence, are a partial ban on certain ways of doing things, stifling innovation, disallowing voluntary interactions, and again reducing production.

A further effect is through taxes. These resources are necessarily taken from the private sector and used to pay the bureaucratic apparatus which produces nothing. Moving money from A to B, filling forms, and whatever politicians do, are non-productive endeavors that literally destroy the communities resources.

The amount of revenue that does go to finance so-called “public services,”—education, roads, etc.—are services that the politicians value in those amounts, not the individuals. Being disconnected from profit and loss, they are expensive, inefficient services that no one has demanded. Any services that are provided by “public funding” could be done by private companies which only survive by serving the public. Being shielded from making losses and from competition does not produce a better service; it produces a worse one—worse quality and more expensive.

The Logic of Corruption

For those who believe in political corruption, or—put another way—that public money can be misused (for example, to buy cocaine for politicians instead of subsidies for the unemployed), one must believe that there is a legitimate use for that public money.

Here we enter the myth of the good government. For if there is a good use for public money, that must mean that taking that money from an individual in the form of taxes is legitimate. What does this mean? It must mean that the decision of what to do with that money or resource is better in the hands of the state than in the hands of the individual.

This must mean that—at least for that taxed money—the government knows best. Here is the cognitive dissonance that causes so much anger. When this taxed money is used in a way that is very difficult to defend, there is outcry: “Corruption!”

The decision regarding the use of the money was legitimately taken from the individual and placed in the hands of the politician. If taxes are legitimate, this surely must be true. Where is the corruption then? If the politician decides to use that money for healthcare or to feather his own pocket, it is his own decision—superior to the individual’s—is it not?

Basically, if it is granted that government knows best, hence taxes for government purposes are legitimate, then it follows that the decisions as to how to use the revenue ought to be trusted in all circumstances. If it does not know best, then those resources are best spent by the individual and the problem was taking that money from him in the first place, not how it is used afterwards.

The Benefit of Voluntary Transactions

The main point is not whether a selfless expert is at the helm or if it is a drunken sailor, the system is the problem and corruption only highlights one aspect of it—governments spend money on wants that are not the wants of citizens at their expense. Focusing on corruption alone simply implies that all that is needed is to get the non-corrupt “good guys” to take over.

Government always reduces production and inhibits voluntary exchanges. It always plunders to their own benefit. We must remember that government is made up of people, not magical beings. All government action has a negative effect on our lives to their benefit and that of their friends.

Corruption does not really exist in a system based on coercion. The system is not corrupt, it is unjust. It is not that there are bad people at the top, it is the whole idea of government that is bad. The idea that we need to transmit is that free, voluntary exchange is what makes us prosper. It is what creates a community. It is what makes us all help each other. That is why individual freedom is so important.