Corruption, inequality and trust: Vicious cycles, virtuous cycles and public policy


Χρήστος Ι. Παρασκευόπουλος
Abstract
Corruption, inequality and trust are considered crucial and intertwined/interrelated concepts that crucially affect contemporary democracies in general and public policy-making in particular. This is because they are 'sticky' phenomena that are dominated by institutional equilibriums and form a vicious cycle that persists over time and is difficult to break. The institutional theory of trust suggests that corruption is at the core of the vicious cycle. Other theoretical approaches emphasizing the concept of the 'inequality trap', however, point to the opposite direction, in the form of a causal mechanism -namely that high inequality leads to low trust and high corruption, and then to more inequality and so on. Public policy is considered the appropriate tool for breaking the vicious and encouraging the creation of a virtuous cycle. Although universal programs are widely viewed as the most appropriate public policy component for tackling inequality and building social trust, their introduction in unequal societies that find themselves trapped in a continuous cycle of inequality, corruption and low social and institutional trust is considered to be politically difficult. Thus public policy in these countries should concentrate primarily on redistributive programmes, avoiding means-testing and empowering citizens through the provision of choice and competition in policy implementation.
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