Wednesday, April 25, 2012

To Bribe or Not To Bribe

When a foreign country's government operates on a bribe-for-license basis, what's a multi-national corporation to do?

Holman Jenkins  explains how Wal-Mart executives got in trouble in Mexico but ended up doing Mexican consumers a favor.

Conor Cruise O'Brien, the late Irish diplomat, once explained the alarming arithmetic of a certain kind of corruption for poor countries.
Take the agriculture minister who approves the import of $20 million in tractors his country can't use and that will rust in the fields. He does so in order to receive a $200,000 bribe from the tractor salesman. Had he simply been paid $200,000 to render an honest decision not to import the tractors, his country would have been $19.8 million better off.
Not to risk an angry letter or a caning, but such thinking has long led the benign despotism of Singapore to pay its officials six- and seven-figure salaries. It tamps down corruption.
Most poor countries with lots of officials find such an approach prohibitive. Their solution is to pay their officials almost nothing and expect them, down to the local traffic cop, to supplement their incomes with graft.
This is the world Wal-Mart and other American businesses sometimes face when they invest abroad, and occasionally when they invest in the U.S.
Read it all.

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