Sunday, May 31, 2015

Corruption's Mark

The fix was in. As the horses entered the turn, a large wall made them briefly invisible to the stands. Moments later the horses came back into sight - with the long-shot now in the lead. A collective moan. Angry shouting. Torn tickets flying, the cynical crowd realizing that it had been the "mark" - the victim of a con.

Of course, horse racing is notoriously corrupt - hence the crowd's immediate, cynical reaction to the fix. But corruption abounds in the world today, and affects our well being more deeply than you might realize.

You are probably thinking of corruption's direct consequences: The better horse loses; the lesser firm gets the deal; the meritorious job candidate is passed over. Such injustice often leaves the mark helpless. They played by the rules, but someone else was playing a different game - one where a corrupt payoff trumps merit. And so everyone loses: fans, shareholders, and consumers alike. Only the thief prospers in such a system.

Yet corruption has an even more insidious effect: collective nihilism. I first saw this effect in my old step-grandfather when I was but a boy. I was telling grandpa about the coming world series matchup. Grandpa waggled the cigar in his mouth, took it out, and said "the whole thing's fixed." I replied, "What do you mean, 'fixed'?" A deep, cigar laugh, and then "Well, they pay everybody off to make sure it goes the way they want. Then they collect their bets. They think we're stupid."

So went my first exposure to nihilism, the view that our institutions are so hollow as to render all action pointless. I said nothing; I knew better. Taking after my own father, I have always believed in the possibility of effective action, and to this day I resist the cynical urge to see everything as one big "fix."

But for many, widespread corruption has sown the seeds of nihilistic cynicism, distorting their perceptions. When I was in Moscow recently, a frustrated entrepreneur illustrated the problem. As we shared a drink, he pointed to a passing luxury car and reflected, "When you see a nice car blow by, you know that guy stole from someone." How odd, I thought. Of course thieves are everywhere, but the shining Teslas in Palo Alto look to me like the fruit of hard work and innovation. Yet he sees corruption, and so throws up his hands as if to say "all is pointless."

Effective leadership roots out corruption, not just to do "what's right", but to create institutions that reward meaningful action. If we fail this leadership challenge, we fail the innovators of the future.


A sample of the research in this area is by Marcolo Veracierto.