Disgruntled

I am a little put off by this paper, released very recently by two Harvard profs for the Harvard Institute of Economic Research (H.I.E.R.)

Here is the abstract:
We use a data set of federal corruption convictions in the U.S. to investigate the causes and consequences of corruption. More educated states, and to a less degree richer states, have less corruption. This relationship holds even when we use historical factors like education in 1928 or Congregationalism in 1890, as instruments for the level of schooling today. The level of corruption is weakly correlated with the level of income inequality and racial fractionalization, and uncorrelated with the size of government. There is a weak negative relationship between corruption and employment and income growth. These results echo the cross-country findings, and support the view that the correlation between development and good political outcomes occurs because more education improves political institutions.

Now I’ll admit, I have not read the paper in detail, but I have read most of it and looked at the data.

And I’m no Harvard professor, but the assertions the authors make seem to me just a tad elitist.

First, I have a problem with type of data from which the authors derive their statistics: convictions of federal corruption offenses. The contention is that more education makes better political institutions and therefore results in less corruption. Can’t one also conclude from this data that smarter people get caught less, can afford better lawyers, and therefore don’t get convicted in the first place?

Second, using the number of convictions as a measure of corruption neglects to take into account the degree of severity of certain federal offenses. Under this analysis, convictions of one Enron exec, whose crimes deprived thousands of people of their entire pension funds totaling in the billions of dollars, count just as much as the conviction of a small-scale federal violation. Directors of large corporations are almost always highly educated and extremely wealthy individuals. These people’s crimes have a larger financial impact because their shady dealings probably involve a lot more money. So even if there is only one conviction at Enron Towers in Houston, Texas, that one conviction has more of an impact than a hundred smaller convictions in a less-educated region of the country.

Further, the authors point out that the more racially diverse an area is, the more corrupt it is. Especially if the area has a lot of black people. There are so many other factors that would affect the “corruption rate” and also cause an apparent direct relationship between racial diversity of an area and corruption. The authors’ point seems almost to imply that white, well-educated areas are better places to do business, while racially diverse areas (especially black communities) should be avoided until their people get some learning in them. Is it just me or have we just regressed a few decades in political correctness?

And guys, nice acronym. “H.I.E.R”…are your family estates owned in fee tail, too?

Not that I'm against education...I just think it's erroneous to assume that educated people have a lesser propensity to want to take advantage of the system, and this has never been more apparent than after the Enron/Arthur-Andersen scandals.