HOME OF CORRUPTION: Mississippi ranked first in a study that measured public corruption’s effects on spending.
By Steve Wilson | Mississippi Watchdog
Mississippi has finally got a top ranking among the states. Problem is, it’s an achievement the state can do without.
A study by researchers Cheol Liu from the City University of Hong Kong and Indiana University’s John L. Mikesell found corruption in Mississippi was tops among the states from 1976 through 2008. The study sized up the effect of public corruption — measured by convictions — on state spending. Data after 2008 for all of the areas of their research was incomplete.
According to the study, the 10 most-corrupt states could have reduced per capita spending by an average of $1,308 if they had average corruption levels. The study found states in the top 10 tend to focus spending on “bribe-generating” spending and items directly beneficial to public officials such as capital projects, construction, highways, borrowing and total salaries and wages.
According to Jon Moen, chair of the Department of Economics at the University of Mississippi, corruption has clear consequences for the state with wasteful spending, misallocation of resources and lost productivity.
“Clearly corrupt officials will encourage activities or businesses that will also provide them with the most benefits, whether they are outright bribes or more legal benefits like campaign contributions,” Moen said. “Rarely are these activities that are true public goods, like elementary education, as they provide few direct monetary benefits that can be appropriated by a politician or private interest.”
The top 10 most corrupt states according to the study are:
- South Dakota
A climate of corruption or even a perception of one can lead to serious economic effects. The study cited several sources on how economic activity is depressed in nations riddled with corruption. States are no different, and it creates a vicious cycle.
With economic activity depressed because of corruption, states such as Mississippi are forced to use more subsidies and tax breaks. This encourages companies to engage in more rent-seeking behavior — spending wealth on political lobbying to increase one’s share of wealth without creating wealth. This helps build an even more entrenched climate of corruption with companies constantly seeking to maintain or even add to special privileges not afforded their competitors.
Mississippi’s massive tax incentives to encourage companies such as Nissan, Toyota and Yokohama Tire to relocate or, in the case of Cooper Tire, to remain in the state, are prime examples.
“Corruption also results in less-secure property rights, and that makes smaller businesses less likely to invest as much as they otherwise would or even avoid the corrupt state altogether,” Moen said. “This depresses the overall level of economic activity, but in ways that are not obvious. A few well-connected businesses always will appear successful, and the politician can point to them as evidence of his ability to produce economic success. No one ever knows which businesses decided not to start-up in a corrupt state.”
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