13 November 2012

Regarding immunity and corruption – Part 1


In the wake of the financial crisis and the numerous instances of public malfeasance it revealed, a growing number of commentators have argued for the abolition of the privilege of immunity from prosecution enjoyed by Greek politicians. A new academic study by Karthik Reddy, Moritz Schularick, and Vasiliki Skreta provides original and systematic evidence that democracies whose politicians enjoy stronger immunity protection do, indeed, suffer from more corruption and poorer overall governance. The study’s findings are particularly important at a time when many countries in the world teeter on the brink of economic collapse because their public finances were badly mismanaged. Likewise, movements such as the Arab Spring, the Indignados, and Occupy Wall Street reveal the strong desire of younger generations, who suffer the most from unemployment and lack of opportunity, for greater transparency and accountability in government. The evidence in the study suggests that the legal institution of immunity should be re-examined in established democracies.

We present this study in two parts. The first part explains why in countries with more immunity one would expect politicians to be more corrupt and to succumb more easily to pressure by interest groups. The second part, which will be made available mid-week, presents the actual findings of the study.

Democracy in crisis?

This has been a tough fall for Southern Europeans, who continue to brace themselves for further significant cuts to their standard of living. Their frustration with the economic situation is even greater because they feel that while politicians bear the lion’s share of responsibility for the current mess, nothing has been done to address this issue at its core. Clientelism, corruption, favoritism and the mismanagement of public funds are viewed as part of the main culprits of today’s situation.  In addition to an investigation into why two former Greek finance ministers did not pursue the 2,000 suspected tax evaders on the so-called “Lagarde List,” more than 30 Greek politicians have come under fire for suspected corruption, among them the speaker of the Greek Parliament, the third highest ranking public officer in Greece’s constitutional hierarchy. The verbal exchanges that took place in Parliament were shocking and suggestive of the decay that has plagued the institution.

Why are reforms failing in Southern Europe? The role of political institutions.

While the majority of the Greek population endures strict austerity measures, the government continues to eschew essential reforms that would set the stage for future growth and prosperity. When the legislature does enact such reforms, they are not implemented because various interest groups resist and overcome politicians, who do not have the will or the strength to fight back. For example, a long overdue law that sought to reform higher education in Greece passed Parliament with an unprecedented majority of 250 for to 50 against in August 2011.  The law, however, was not implemented, and little was done to stop the illegal actions that prevented its implementation because the ruling university elite could not turn its back to the groups that helped to put them in power. Perhaps even sadder, the first legal reform that the current government passed in August 2012 was one that essentially revoked key parts of the 2011 educational reforms. This law is a striking example of the power of interest groups and their ability to get their way. Interests groups may now resist the implementation of the new, milder law without fear of facing any consequences. This phenomenon encourages other interest groups to resist the implementation of necessary reforms if they feel their positions are threatened.

Another further example is tax evasion, which is viewed as one of the main problems that plagues Greece.  While battling tax evasion would by itself go a long way of improving the Greek debt-to-GDP ratio, politicians have not shown the requisite determination to take action. A recent New York Times article provides a good overview of this situation. At the end of the day, politicians only manage to enact reductions of salaries and pensions that hurt the most vulnerable members of society, who are not associated with strong interest groups. The perception of injustice infuriates society, and pushes an inflamed electorate to support extreme views.

Holding politicians accountable

Most analysts argue that re-election provides an important motive that disciplines the behavior of elected officials. The scale of recent demonstrations, however, suggests that there is strong sentiment among Southern Europeans that their voices have fallen on politicians’ deaf ears. If not the public’s, whose wishes do politicians indulge and what means do they use to indulge them?

Immunity and voter alienation

In a new paper, we explain how statutory provisions that limit politicians’ criminal liability—immunity—encourage corruption by shifting politicians’ allegiance away from voters and toward interest groups. Our analysis suggests that politicians who enjoy immunity succumb to interest group pressure and use immunity to engage in illegal behavior that rewards these groups, who in turn help to secure their reelection.

Immunity: history and justification

Legal provisions that protect politicians from prosecution exist in many democracies throughout the world. These provisions date back to the French Revolution; at a time when the judiciary and law enforcement agencies remained under the control of the Ancien Régime, immunity shielded elected representatives from politically motivated prosecution and helped preserve legislative independence. While this sanguine view of immunity may apply in certain historical contexts, one cannot help but wonder whether immunity provisions function in a perverse manner in more stable, democratic contexts.

Reconsidering immunity

In our view, any effort to design and implement reforms is doomed to fail in countries in which law enforcement is lax and where the political class co-exists with interest groups in a quid-pro-quo relationship. Given our theoretical suspicion that immunity has helped foster this environment, the reconsideration of immunity provisions may play a vital role in ensuring that politicians in Greece and similar countries make lasting reforms that curtail future mismanagement and malfeasance.

STABLE LINK OF ORIGINAL: http://greekeconomistsforreform.com/justice/immunity-and-lawlessness-part-1/