When Bribes Become the System: Understanding Lock-In

The Answer Is Transaction Costs

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Corruption persists not because people like it, but because it becomes embedded in the incentive structure of the state, creating feedback loops that reinforce themselves and resist reform.
• A prebend is a type of benefice historically given to clergymen, now a useful concept for understanding corruption in developing nations
• Douglas North extended Coase's concept of transaction costs to explain why institutions matter in economics and politics
• Bad institutions create feedback loops through rent-seeking, patronage, and corruption that redistribute resources to entrench elites
• Mental models - our imperfect cognitive frameworks - resist change because belief systems are costly to abandon
• Lock-in occurs when early institutional choices create path dependencies that make reform nearly impossible
• Officials in corrupt systems treat public offices as prebends (sources of personal income) rather than public service positions
• In Nigeria, prebendalism meant officials used positions to enrich themselves and distribute benefits to their ethnic communities
• Russian corruption intensified post-Soviet era when state salaries plummeted and bribes became survival mechanisms
• Reform typically requires massive shocks, external enforcement, or exceptional leadership willing to impose significant costs on corrupt officials
The schedule is changing, because summer is over. Going forward, we'll have two episodes each month until January - one on Wealth of Nations and one interview. The next interview will be Tuesday, September 9th, and the next Wealth of Nations episode will be Tuesday, September 23rd.

Some links:

• Previous episode on corruption: Shruti Rajagopalan
• Richard Joseph and "Prebendal" Nigeria
• Douglass North and transaction costs/lock-in
• Douglass North on Institutions
• Denzau and North, "Shared Mental Models" (Kyklos)

Books o'da'week:

• Johan Norberg Peak Human: What We Can Learn from the Rise and Fall of Golden Ages
• Guy Gavriel Kay A Brightness Long Ago

• California's gigantic political theft of money for "High Speed Rail"

If you have questions or comments, or want to suggest a future topic, email the show at [email protected] !

You can follow Mike Munger on Twitter at @mungowitz

Fejezetek

1. Introduction to Prebends and Corruption (00:00:00)

2. North's Theory of Transaction Costs (00:01:29)

3. Mental Models and Path Dependence (00:05:20)

4. Corruption as a Locked-in System (00:09:42)

5. Nigeria's Prebendalism and Russian Corruption (00:14:50)

6. Twedge and Listener Questions (00:21:22)