Is your State a Kleptocracy?

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Four ways corruption is costing our country

Kleptocracy (noun) is defined as a “government by those who seek chiefly status and personal gain at the expense of the governed” according to Merriam Webster. While pundits, voters, political operatives and others could find examples of corruption, how are we might we measure the true cost of corruption? 


Since the department of Justice defines public corruption as “crimes involving abuses of the public trust by government officials”, a definition of what corruption is set by the federal government. However, there is very little empirical evidence as to the effect of government corruption on government spending and resource allocation. This should come as no surprise to anyone given that politicians write the rules by which they play the game. This lack of checks leads to furtherance of self-interests, at the expense of citizens. 


In the May/June 2014 issue of the Public Administration Review journal, Cheol Liu of City University of Hong Kong, and John Mikesell of Indiana State University published The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending. Using conviction data by state for the period between 1976 and 2008 for over 25,000 people, Liu and Mikesell discovered four factors that were consistent for corruption in states. The convictions were then compared to the number of state employees to account for state population difference. In order to ensure validity, the authors based the corruption convictions on federal corruption laws (because local laws vary by state). This showed that convictions were not just a measure of law enforcement activity in that particular state, and used variables that accounted for reverse causality. 


The study identified the following factors in the most corrupt states. It is worth noting that corruption was found to exist in both red and blue states, consistent with other findings that this is not a partisan issue. 


1. The most corrupt states spend more money on and favor capital construction projects. These types of projects involve large, non-standard activities with few contractors, lacking transparency and susceptible to bribes. 

2. Real per capita total wages of public official salaries are higher in the most corrupt states. Higher salaries benefit only the employees, and those employees were also more likely to engage in deficit financing, thus masking the true cost of government spending. 

3. The most corrupt states spent more money on law enforcement and prisons speaking to the direct legal cost of corruption. Corruption leads to unfair laws and inconsistent enforcement for the benefit of the private prison industry. 

4. The most corrupt states spent less money on education at all levels, public welfare, health, and hospitals. While the merits of healthcare costs are the topic of another discussion, these sectors offer less room for public corruption. 


The list of corrupt states can be found in the article link below. These factors suggest that regardless of political affiliation and ideology it is up to the citizens in each state to examine the above four factors and see how they apply in their state. Awareness is key, however the factors now identified are the tool to begin the hunt for corruption at all levels of government. The impact is most evident in Liu and Mikesell’s conclusion that the ten most corrupt states could have reduced their total state expenditure by $1,308 per capita if their corruption levels were merely reduced to the mean average of corrupted states. Click here to see if your state is a kleptocracy (pdf).