Selling Access: Corruption or Capitalism?

What is the most precious commodity in the world? It’s not gold, or oil, or even Moscow real estate. It’s access.

All power is hierarchical. The fate of the many in the hands of the few. It’s how life works. Like trains in a rail yard. Our lives proceed along a track until someone or something throws a switch and diverts us onto a new track.

Most successful people earned their success. But all of them, at one time or another, got a break that vaulted them to fame and fortune. And that break, in one form or another, came as a result of getting the right access – the right switch, if you will.

Last week I took my daughters to one of the largest and most well-known amusement parks in all of the United States. And despite a base admission price equal to a week’s wages for many Chinese, I was enthusiastically informed by the young ticket seller that for an extra $75 per person I could purchase a magic wrist band that would allow me to jump the lines at all of the most popular rides.

“Really? I can pay to cheat?” And because I paid it’s okay? (Ironically, there are numerous warning signs around the park that read: “Jumping lines will result in immediate dismissal from the park.” Unless, of course, you bribe the company that owns the park.)

It’s un-American, plain and simple. I know that the corporations who sponsor this sort of practice will argue that it’s all about Horatio Alger, rags-to-riches, and the American dream – equal opportunity for all. But it’s not. Because it’s not a financial issue. It’s a social issue. This is a public park. And queues are a zero-sum game. If you get in faster, someone else, by definition, has to wait.

So China has a corruption problem. The government of Xi Jinping has been very open about it and has promised to combat it at the highest levels of government.

And he appears to be making good on his commitment. (One of my 10 predictions for 2014 that has proven to be correct, by the way.) According to the Supreme People’s Procuratorate, the country’s top investigative body, seven ministerial level officials have been investigated for corruption so far in 2014, a 40% increase over the same period in 2013. An additional 1,577 officials above the county level have also been investigated through May, an increase of 33% from the prior year. (Source: China Daily, July 5, 2014) Just last week, in fact, the government announced it would court marital a former senior army general for taking bribes, the most senior official ever to face such discipline, according to Reuters.

Mr. Xi has a lot further to go, of course, but he would be the first to admit that. He doesn’t want a mob lynching and has admittedly silenced some of those inclined to take matters into their own hands through public exposure of the wealth held by senior government officials. By all appearances, however, the President and his critics appear to disagree more on methodology than desired outcome.

And let’s be fair. It is very rare for any senior politician anywhere in the world to die a pauper. The America Treasury Department and the richest Wall Street banks could easily share one alumni office. There may be a wall between the two, but there’s a very big revolving door in the middle of it.

Bill Clinton, a damn good speaker, to be sure, is said to have earned more than $100 million in speaking fees since leaving office, receiving up to $750,000 for a single appearance. He’s a smart man. But that’s a lot of wisdom, right there.

Or is it not that simple? (Of course it isn’t. And I’m not picking on the Clintons. They’re a brilliant, dedicated couple. I’m just making a point and they’re, well, handy. If I had money to burn I’d gladly pay to have a beer with Bill. I’ll bet he’s a kick.)

I believe there are three basic arguments against bribery – both public and private. The first is moral. The second is that it leads to an inefficient allocation of resources. And the third is fairness.

Westerners tend to focus on the morality argument when condemning bribery in the developing world. And while I’m all for morality we tend to confuse morality and opportunity. As long as we all have the same opportunity to acquire wealth, the thinking goes, using that wealth to influence government officials through well-connected lobbyists or special interest groups is somehow moral.

Instead of 'one man, one vote' why don't we weigh the value of each vote based on how much the voter pays in taxes?
Instead of ‘one man, one vote’ why don’t we weigh the value of each vote based on how much the voter pays in taxes?

Deductively or inductively, it’s a slippery slope. If I can buy my way to the front of the line, why not set speed limits based on the price of the car you’re driving? (There is a logical argument for doing that, if you think about it. A Porsche Carrera can be safely driven at a much higher speed than, say, a Chevrolet Cruze.) Or instead of one man, one vote, let’s weigh the value of everyone’s vote in political elections based on how much they pay in taxes.

While I have no firsthand knowledge of his thinking on the topic, I suspect that President Xi Jinping is motivated more by the efficiency and fairness arguments than anything else. While the American Dream is all about owning your own home and a comfortable retirement, the Chinese Dream is more about utopian Confucian values of mutual obligation. It’s a collective dream, if you will, compared to the very individualistic American dream.

As a mere blogging glassmaker it is not my place to tell you which dream is the better dream or to defend bribery at any level. I don’t.

Why not set speed limits based on the value of the car?  Or better yet, sell license plates that allow you to ignore traffic lights?  States would bring in more money than the lottery.
Why not set speed limits based on the value of the car? Or better yet, sell license plates that allow you to ignore traffic lights. It would bring in more government revenue than the lottery.

I do believe, however, that this is an issue that requires as much attention and public discourse in the West as it is getting here in China.

And here’s why: Economists talk a lot about the fact that the U.S. and Europe are transforming their industrial economies of the20th Century into the information or knowledge-based economies that will ultimately define the Digital Age.

And that has a lot of implications, many of which have been exhaustively examined. One that hasn’t, however, is the door this opens to a kind of financial bribery that further polarizes the haves and the have-nots.

When you actually make something tangible you are creating value largely through skills that can be acquired through education or experience. Information, on the other hand, does not stand on its own. It’s a commodity that can’t necessarily be acquired or learned without access to the source of the information.

It is, I believe, one of the reasons that the gap between the rich and the poor continues to widen in the United States and other Western democracies. Wealth, today, is created not with your hands or by your work habits, but with the knowledge stored in your mind. And since wealth, as I learned at the amusement park, begets access, wealth clearly begets more wealth. (Do you really think those hedge fund managers who earn bonuses measured in the tens of millions are really that much smarter or more clever than everyone else? Or are they just better connected?)

Commercializing social justice is not the answer. That only codifies the polarization. Instead, I believe we should take a page from the Chinese Dream and treat access not as a commercial right, but as a social or human right.

America was built on the idea of equal opportunity. And for the most part it’s worked. Because everyone has two hands and is born with an equal opportunity to use them productively.

That’s not the case with knowledge or information, however. Information isn’t just acquired through education and practice. The most powerful information is, more often than not, acquired through selective access. You know something the rest of us don’t. And you may know it because you’re smarter or you worked harder. Or you may know it only because you’ve got the right access.

Why is Silicon Valley less diverse than the Rust Belt?  Simple.  Access!
Why is Silicon Valley less diverse than the Rust Belt? Simple. Access!

To understand the implication you need look no further than the gender and racial employee profiles recently released by several of the most successful companies of the high-tech era. Silicon Valley is less diverse than the Rust Belt. And the ultimate reason, I believe, is access. Young suburban boys simply have more access to information technology growing up than anyone else. (A lack of access, by the way, doesn’t have to be a function of denial. It can be self-imposed, although you might make a reasonably strong argument that self-denial of access is ultimately a function of denial further upstream.)

In the end, corruption is corruption. And it’s bad. Even when it looks like free market capitalism.

And, no, I didn’t buy the magic wristband.

For reasons having little to do with civility, the Chinese generally don't honor queues.  But they would never pay for the chance to cut.  It wouldn't be right.
For reasons having little to do with civility, the Chinese generally don’t honor queues. But they would never pay for the chance to cut. It wouldn’t be right.

Contact:  You may contact the author at glassmakerinchina@gmail.com Copyright © 2014 Glassmaker in China Notice:  The views expressed in this post are strictly those of the writer acting in a personal capacity.  They are not in any way endorsed or sanctioned by his employer or any other individual with which he may be personally or professionally affiliated.