04 August 2010

Enough (With) Corruption

[Once again, a Jenial Thanks to Janine Mendes-Franco for picking up another of My posts. In this case, she highlighted some words My dad used to say. Today would have been his 83rd birthday. I miss him.]

Yes, there seems to be such a thing as "enough corruption," or at least, "stable corruption."

In this Foreign Policy article, Ray Fisman points out that, up to a certain point, corruption is like a tax: when you know you have to pay it and can estimate fairly closely how much, you factor it into your economic calculations. So, to explain this to statehooders, if My apartment building will net Me about $11 million with a construction cost of about $5 million, then the permit "facilitation" costs under a certain (mis)administration will run about 10% of net total, or roughly $110,000. Factor that into the building cost, tack on a little bit on every apartment and voilá!

Any similarity to an actual apartment building erected under the Pedro Stupid Rosselló (mis)administration is entirely purposeful.

Now where does My Island rank on the worldwide list of corruption? Glad you asked. According to the 2009 Corruption Perception Index (CPI), Puerto Rico has a ranking of 5.8 on a scale of 0 (Hell, the New Progressive Party or Popular Democratic Party headquarters; the independentistas don't bother with an HQ anymore...) to 10 (My living room.)  Because you wonder about these things, the U.S. of part of A. came in at 7.5; the world leaders are New Zealand (9.4), Denmark (9.3), with Singapore and Sweden tied at 9.2.

Suck that, gringos.

Now, it's painfully obvious even to a zombie--politicians wish they were that smart--that the higher-ranking countries, the ones that, say, are 8.0 or higher, are growth economy nations. Places like Canada, Germany, Austria, Ireland, Hong Kong and others are certainly hit by the global recession, but are coming out of it strongly. Those under 8.0 are struggling, some of them, like the United Kingdom, Japan (both at 7.7) and the U.S. of part of A. are giving foreign ministers late-night headaches. But at what point under 8.0 is the CPI morphing from Fisman's "good side" to the "bad side"?

It has to happen at less than 8.0 since the countries above it are by and large doing a splendid job of keeping their economies fairly robust, so either corruption is not really a problem, or it's managed so well that it has become a "tax.". Could it be that the worm turns at 7.5? Could that explain why Uncle Sam's economy is thrashing for air like a bottom-feeder on the high bank? (I'd ask you to pardon the pun, but I can't bring Myself to care.) But if 7.5 is still on Fisman's "good side," then what do We think/say about 5.8?

In that neighborhood, we have Israel and Spain (both 6.1),  Portugal (5.8) and Botswana at 5.6. Portugal is listed as "the next Greece," along with 20 others in this fascinating May 13th article in The Week. (Yay! Great magazine!) Portugal and Puerto Rico have equal CPIs. Look at some of the countries in that list (many of the candidates are States and U.S. cities...yeah, have fun with that.): UK, Japan and France (6.9). Along with Portugal and the U.S. of part of A. that makes 5 candidates for an economic meltdown that have CPIs between 5.8 and 7.7.

True, China, Vietnam, Italy and Malaysia are also listed, none of which passes 4.5 on the CPI scale. But think about this: none of the economies deemed be "the next Greece" (3.8) ranked above 8.0. Coincidence? Somehow, I don't think so.

If the Fisman Line is 8.0, then the over is the good side and the under is on the bad side. If Portugal is on the financial rocks--and it is--then Let's look at Our situation: unemployment hovering at 24-27% (screw what the (non)administration says about "15%": by their math, Babe Ruth hit only 414 home runs in his career), tax revenue dropping by some 22%, budget overages rising, an extra $15 billion in government debt since August 2009, and a GDP/debt ratio of 1:1, which means We are just about owing more than We can produce. Does that sound like a candidate for "the next Greece" to you? Throw in an overburdened government (far far too many people "working" as parasites) and a pension system that holds water like a senile old coot's flaccid bladder (same as in Greece...and Portugal and Italy...) and We, people, are on the wrong end of the screw.

Does the CPI have a direct correlation with an "economic meltdown" prediction? I'd say yes, pending more research on direct and indirect factors. On the surface, it seems like it makes a great deal of sense. So put it to the test, My Brethren: doesn't the 5.8 seem right when compared to Our economic situation? And doesn't the implication of that "rightness" make you pause?

The Jenius Has Spoken.

[Update: 12 August 2010: Germany had 2.2% economic growth during the second quarter of 2010, its largest growth in over 20 years. Greece? Down 1.5%. And the U.S. of part of A.? 0.6%, down from the previous quarter's 0.9%.]

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