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Knowledge: Knowing the environment – The subconscious propaganda
A general rule of thumb in curbing organized crime is to make it a
low gain and high risk crime (Graycar, 2000). So suppose this is also applicable
to the case of corruption, the idea would be to make people believe that they
are becoming relatively richer and will no longer need to be corrupt. This is more or less
equivalent to answering the question: "What will make people think they have been
removed from poverty ?" In fact, like Durst (1995) said,
"the removal of poverty is not an emergency action, but an ongoing process."
In order for the process be successful, it has to be smooth and steady.
So what is smooth and steady? Figure 1 below shows the change of the median monthly
income of working persons and that of the households in Hong Kong from 1971 thru 1991 .
The household income was HK$708 in 1971 and rose in a stepwise manner to HK$9,964 in 1991,
which apparently represented a 13 times of increase over 20 years (1971-1991).
Figure 1. Median monthly income of working persons and households in Hong Kong. (Source: "Reports on Population Census," 1993. Census and Statistics Department, HKSAR Government.)
Yet if we further look into the nominal and real wage indices in Hong Kong
from 1982 thru 1992 (Figure 2), we will notice that the general purchasing power
of the people have remain relatively the same and have never been substantially risen.
Interesting enough, with a per capita GDP that is almost constantly growing ,
people in Hong Kong have never actually enjoyed a real increase in their
purchasing power even though the economy has virtually always been expanding.
Figure 2. Nominal and real wage indices  in Hong Kong. (Source: "Report on Half-yearly Survey of Wages, Salaries and Employee Benefits," Census and Statistics Department, HKSAR Government.) (Note: Nominal index = Real Index = 100 in 1982, March)
So, what does this imply? It implies that in order to make a crime
"low gain and high risk," the government will have to control the relative
"quality of living" in terms of the current dollars or otherwise
increase the "cost for committing the crime" through the use of inflation (probably).
In the case of Hong Kong, a carefully maintained relationship between
the nominal and real wage (via inflation) has caused the society to gradually
pick up the attitude of "living better and better lives" and hence effectively
lowering the gain of the crime and increasing the risk of losing the
quality of living – and in turn creating an environment that helped
prevent people from taking bribes – in other words, this possibly helped
relieved the problem of petty corruption on a city-wide scale.
To further examine the logic of this rationale (if it really worked), let us
take Nigeria as an example. In Nigeria, "real wages fell significantly in the l980s
following a statutory wage freeze (1982-88), salary cuts in the public sector in 1985,
and a constant nominal minimum wage that started in 1981.
From 1986 to 1989, real wages fell almost 60 percent" (US Library of Congress Federal
Research Division [USLCFRD], 1998). The failure of maintaining the relationship
between the nominal wage and the real wage (i.e. inflation) by allowing the various
wage freezes and cuts has caused social and economic instability which in turn
created the perception of a "corruptionfriendly yet unstable living environment."
Knowing the phenomena that public opinions about inflation differ depending on
people's political affiliation, and that those who support the government are
more likely to expect lower future inflation and, interestingly, are more likely to
have perceived lower past inflation (Carlson & Valev, 2003), the inability of the
government to control inflation will cause the attitude of the people to drift
and hence form the perception of a "higher gain crime (relative to their current
living standards) ." In short, people will tend to accept the reasons for taking bribes
as a way to "fit in" to this situation (oh wait... some of my Nigerian friends do not concur and they explained that this is all due to some kind of a cultural issue – any Nigerians around to help us check with this?).
After all, attitudes and perceptions toward corruption are dependent upon
the social and economic expectations which are government-controllable to a
certain extent. The smarter the use and control of these components, the more likely
the public will perceive a "corruption unfriendly environment."
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Note 2: For relationship between poverty and corruption, see "Wealth, Culture, and Corruption" (Husted, 1999) and
"The Link between Corruption and Poverty: Lessons from Kenya Case Studies" (African Centre for Economic Growth [ACEG], 2000)
Note 3: We take the period from 1971 to 1991 because ICAC was established in 1974 and this period would show the
actual impact of the wage increase with respect to relieving of the corruption problem
Note 4: The per capita gross domestic product (GDP) at current prices of Hong Kong in 1967 was HK$12,000 (HK$4,000
at constant prices), whereas that in 1992 was HK$127,700 (HK$49,400 at constant prices). Source: "National
Income Branch," Census and Statistics Department, HKSARG.
Note 5: Real wage is derived from nominal wage index by discounting changes in consumer prices. This can reflect
changes in the purchasing power of wages.