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The Corruption Club The political sphere is a very important part of government and the essential functioning of society. As part of the social contract proposed by authors such as Hobbes (2010), citizens give up part of their freedom of choice to live in peace, leaving the state of war behind. The logical result of this is having a government that ideally makes decisions in favor of society. These decisions are usually made by Congress, depending on constitutional rules, and are either approved or not by the Executive power. These decisions are executed in the form of public works and specific bills. According to the public choice theory by Buchanan (1983, 1988), politicians act in their own self-interest based on the constitutional framework presented to them, exchanging positions to increase their personal utility. This is known as the homo-economicus postulate. This paper will focus mainly on Congress and how the homo-economicus postulate, from the public choice perspective, affects politics, as well as how it creates coalitions and their effects. When decisions are made through a democratic process, the proposal is scrutinized and voted upon. Then, the projects are financed through debt, taxation, or money creation. However, for politicians' proposals to access these funds, they need to be approved first. Approval requires a certain proportion of Congress voting for the proposal, which, according to Buchanan's public choice theory, is achieved through the exchange of positions between politicians. This exchange takes place as a quid pro quo when proposing their own initiatives. But this exchange of positions requires a certain level of trust among members of Congress. Therefore, this essay proposes that trust is developed as a social norm or a requirement for making an exchange, as described by Ostrom (2000). For this analysis, the funds for public works and government bills will be treated as common pool resources because, as long as one initiative uses them, they will not be available for others and exclusion within Congress will be difficult. For example, Party A cannot ensure that Party B does not have access to the funds unless Party A has a majority seating. In a multi-party setting, Party A colludes with another party, Party C, to ensure exclusion. Thus, Party A assumes transaction costs to reach an agreement with Party C to ensure trust and a majority in Congress, thereby excluding Party B from the funds. To emphasize the importance of these funds, the core incentives for their use should be examined. A significant incentive for the use of public funds is reelection. In order to get reelected, incumbents use the current period as a precedent for their duty as officeholders. For this reason, politicians have an incentive to use the funds for public works in their district and approve popular bills, as long as they do not go against the interests of concentrated groups. By doing so, they try to maintain a high approval rate, minimizing the chances of losing office to a challenger in the elections. This is also why public debt is used to bring benefits today at the expense of tomorrow. Among these core incentives is financing their campaign or repaying campaign financiers from the previous election. Therefore, incumbents tend to favor these individuals with government contracts. But the most interesting implication of this approach is that incumbents may also find an incentive to enrich themselves. This is a corollary of the homo-economicus postulate from the public choice perspective (Buchanan, 1983). Corruption, in the sense of a company, group, or crime lord paying government officials for special benefits, is, in some sense, a way for politicians to increase their personal utility. But it is also a means to gain access to public funds. By paying other politicians for their vote, they create a coalition in which trust is gained by collaborating with the objectives of the group and by not betraying or failing to cooperate. If a member does not cooperate, they will be ostracized and their propositions will not be approved in order to maintain control of the group members. Members can gain more as they "prove their worth" by securing more votes and demonstrating trustworthiness. As the corrupt coalition grows in number in Congress, there is more incentive to join and access the funds. As they join, according to Ostrom's work on collective action (Ostrom, 2000), most members become conditional cooperators. As others cooperate and do not betray one another, they will remain active members of the group. However, joining the coalition comes with a certain cost and the enjoyment of capital gains from the benefits conceded to external groups. This cost is the damage to their reputation and the risk of imprisonment if caught. Consequently, politicians use economic calculus to weigh the costs and benefits, such as the use of funds, better chances of reelection, and capital gains from corruption. This effectively turns public funds from a common pool resource into a club good, restricting access to only members of the coalition. The whole process could be viewed as a polycentric agreement that becomes self-enforcing. The organization of politicians to "distribute" and mutually benefit from the use of public funds, as already mentioned, requires votes from other politicians who belong to the group. For this organization to be sustainable in the long run, there must be a process of "weeding out." Ironically, in this case, corrupt politicians, the "weeds," eliminate those most likely to expose the corruption, the "hay." This process can be achieved through polycentric enforcement. It is in the interest of all coalition members that others are involved in the corruption process. As a result, members monitor each other for alignment with the club and the possibility of default or snitching. This also gives them the chance to be welcomed back into the coalition, especially for first-time offenses. Defaulting activities can be sanctioned by not voting for the defaulting member's proposals or, in more severe cases, by removing them from the coalition and pushing their party members to expel them from the party. These sanctions have the same effect as the "willing punishers" in the model of collective action (Ostrom, 2000). These willing punishers reprimand other group members when they fail to commit or cooperate, thus affecting the group's overall outcome. These sanctions damage the reputation of the receiving member within the coalition but serve as a reinforcement of the rules among conditional cooperators. Ultimately, this reinforcement encourages collaboration and strengthens the behavior of other conditional cooperators in the coalition. Overall, the dynamics within the group are very similar to what Ostrom described in her model of coalitions (Ostrom, 2000). Members are conditional cooperators, and scalable sanctions, as well as the idea of future gains, reinforce their commitment to the group. From this perspective, the network nature of the corruption coalition makes it difficult to remove from the political sphere. It not only reinforces itself but also becomes more attractive as the proportion of members in Congress increases. Additionally, the "corruption club," in addition to restructuring incentives from self-interest to group benefit, promotes compliance with norms through the threat of losing potential future gains. Therefore, the organization is created by politicians to control access to public funds, especially when there are external incentives such as payments from corrupt agents. The organization behaves as a coalition where trust is based on cooperation, accepting payments, and the risk of damaging one's reputation by being part of this corrupt circle. This makes corruption a sustainable problem as long as external funds are injected into Congress. The coalition becomes a significant force due to its voting power in the chamber. This is also tied to the homo-economicus postulate, which implies that politicians seek to maximize their own benefit. By joining the coalition, they can concentrate favors and receive more benefits from interest groups, in addition to the payment they receive for voting in favor of other members' proposals. Thus, the coalition allows individual politicians to maximize their own benefit and gain approval for their projects more easily, thereby improving their position with interest groups and voters. It also serves as a way to exclude non-members from accessing funds. In conclusion, coalitions form to control access to funds and facilitate income maximization for politicians, effectively making public funds accessible only to a few, forming a Corruption Club. References: Brennan, G., & Buchanan, J. M. (1988). The Reason of Rules: Constitutional Political Economy. Economica, 55(218), 282. https://doi.org/10.2307/2554477 Buchanan, J. M. (1983). The Public Choice Perspective. Journal of Public Finance and Public Choice. https://doi.org/10.1332/251569298x15668907116436 Hobbes, T. (2010). Leviathan - Revised Edition. Broadview Press. Ostrom, E. (2000). Collective Action and the Evolution of Social Norms. Journal of Economic Perspectives, 14(3), 137–158. https://doi.org/10.1257/jep.14.3.137 Ostrom, E. (2010). Beyond Markets and States: Polycentric Governance of Complex Economic Systems. The American Economic Review, 100(3), 641–672. https://doi.org/10.1257/aer.100.3.641
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