This podcast challenges the narrow definition of corruption in Western media, highlighting how it ignores colonization, unfair trade, and exploitation. It discusses the significant loss of money due to corruption and tax evasion in poor countries. The episode examines the biased language used by Western media to delegitimize non-Western countries. It explores the narrow definition of corruption in Western media and its failure to capture money stolen from the global South. The podcast also delves into the history of corruption in the City of London and its role as a tax haven. It discusses the lack of transparency and anti-democratic nature of global economic governance. Finally, it suggests redefining corruption and challenging biased metrics to provide a more objective perspective.
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Quick takeaways
Traditional notions of corruption focus solely on bribery and theft, overshadowing the broader global regime of corruption that includes unfair trade arrangements and colonization.
97% of illicit financial flows from the global South are driven by commercial tax evasion, primarily through multinational companies shifting profits to low-tax jurisdictions.
The perception of corruption is colored by biases and stereotypes, perpetuated by Transparency International's Corruption Perceptions Index, which reinforces colonial narratives and disregards power imbalances.
Deep dives
The Limited Definition of Corruption in Popular Discourse
Traditional notions of corruption often focus solely on bribery and theft by leaders and officials, overshadowing the broader global regime of corruption. The limited view of corruption fails to address the structural drivers of impoverishment and inequality, such as colonization, unfair trade arrangements, and Western intervention. Transparency International's Corruption Perceptions Index perpetuates biases and reinforces existing stereotypes, with Western countries often painted as clean and transparent, while the global South is stigmatized as corrupt. This racialized narrative serves to delegitimize disobedient governments in the global South and perpetuate Western domination. To foster a more accurate understanding of corruption, a broader perspective is needed that recognizes the larger mechanisms and practices that facilitate illicit financial flows and the extraction of wealth from the global South.
The Overwhelming Scope of Illicit Financial Flows
The traditional focus on corruption, as defined by bribery and theft carried out by leaders and officials, represents only a small fraction (about 3%) of illicit outflows from the global South. The majority of illicit financial flows, over 97%, are primarily driven by commercial tax evasion, totaling around $1.1 trillion per year. This form of corruption involves multinational companies shifting profits to low-tax jurisdictions through practices like trade misinvoicing and transfer mispricing. The global North, including countries like the US, Switzerland, and the Netherlands, dominates the facilitation of illicit financial flows through tax havens and secrecy jurisdictions. The opacity and lack of transparency in these practices contribute to the ongoing cycle of wealth extraction from the global South.
Challenging Biases in Corruption Perceptions
The perception of corruption is colored by biases and stereotypes, leading to a distorted understanding of the global South. The Corruption Perceptions Index by Transparency International reinforces these biases, with Western countries often portrayed favorably and the global South stigmatized. The invisibility of corruption within Western countries and the focus solely on perceived corruption in the global South perpetuates colonial narratives and disregards the historical and ongoing power imbalances that contribute to impoverishment and underdevelopment. To address this, a more objective and accurate lens should be applied to evaluating corruption, such as the Financial Secrecy Index, which sheds light on the role of secrecy jurisdictions and tax havens controlled by the global North in facilitating illicit financial flows.
The Lack of Transparency in Global Economic Governance
International institutions like the World Trade Organization (WTO) and the International Monetary Fund (IMF) operate with limited transparency and often prioritize the interests of powerful countries. Key decisions in these institutions are made through secretive green room discussions, excluding many global South countries. Furthermore, the voting power within the World Bank and the IMF heavily favors rich countries, undermining democratic representation. The neoliberal policies promoted by these institutions, particularly through structural adjustment programs, resulted in significant wealth transfer from the global South to private banks in the global North. Such actions could be considered a form of corruption, yet they are often overlooked or disregarded due to the lack of transparency and accountability within these institutions.
Redefining Corruption and Advancing a New Narrative
To foster a more accurate understanding of corruption, the focus needs to shift from a limited perspective that overlooks systemic factors and perpetuates biases. Corruption should be recognized as encompassing the substantial shift of wealth from public hands to private entities, occurring through various mechanisms such as bribery, theft, tax evasion, and exploitative trade practices. The Financial Secrecy Index provides a more objective measure that highlights the countries and institutions facilitating illicit financial flows. By challenging prevailing narratives, promoting transparency in global economic governance, and advocating for fair policies, we can develop a broader understanding of corruption and work towards dismantling the structures that perpetuate inequality and impoverishment.
"The scale of corruption in Africa is daunting," warns The Economist. "Corruption a Cause of Poverty in the Developing World," DW tells us. "Why corruption is holding Africa back," CNN laments. Everywhere we turn in elite media and halls of power, we are told the global South is poor, in part or in whole, due to rampant "corruption." But a closer look at the data – and any effort to put notions of corruption in their proper historical context - reveals our limited, racialized definition of corruption is the geopolitical equivalent of complaining about “black on black” crime. True in a limited, technical sense but, in practice, often functions as a victim-blaming red herring meant to avoid uncomfortable discussions of white supremacy, deliberate economic dispossession and a far greater global regime of corruption leveled by the super-wealthy. This episode examines the extraction of trillions annually from the global South in illicit transfers of money through the exploitation of tax shelters, so-called "hot money", interests on exploitative IMF loans, trade misinvoicing and a host of other routine and totally unscrutinized financial schemes. We are joined today by anthropologist and author Jason Hickel.
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