Here’s why you should care more about corruption in your local statehouse, these crooked politicians are taking money right out of your pocket.
States with more corrupt officials are taking on more public debt than states with less corrupt officials. Guess who will pay for that increase in debt? You, the honest taxpayer.
A study authored by Indiana University Professor John Mikesell in the Public Administration Review revealed that taxpayers in the ten most corrupt states in the United States would each have owed $249.35 less if only their states had cut their corruption to the 50-state level.
Governing summarized the findings:
A link between public debt and corruption may exist for a number of reasons. Compared to operating budgets, issuance of debt typically isn’t as closely scrutinized. And, the report authors say, stealing a fraction of money from a large deal is often more profitable than siphoning dollars from a single line item in the budget.
From 1977 to 2008, the study found the relationship between corruption convictions and debt to be strongest for long-term debt issued for private purposes. Debt issued for private purposes typically involves more private-sector players, opening up more opportunities for corruption. For instance, deals involving private parking garages or stadiums — where profits are a major consideration — are more ripe for corruption than construction of new schools, said Mikesell.
Mikesell says that some measures taken to cut down corruption at the state level like strong gubernatorial veto powers and limits on tax spending and additional debt have been ineffective.
Further research from the Oxford-based The Review of Financial Studies indicate that lowered credit ratings on bonds issued by corrupt state governments resulting in higher borrowing costs also failed to gain traction.
Still, this doesn’t mean that deterrents are futile. Other safeguard measures not studied might be more effective. Mikesell cited efforts such as aggressive internal audits, requirements for more than one person to sign checks and regular personnel rotations.
“It’s very important to have robust systems in place to prevent the impact of public corruption as much as possible,” said Mikesell. “Little things could prevent fairly massive theft.”