US is almost as corrupt as India, says Nobel laureate Stiglitz

While corruption indeed runs deep in India, the United States is a close competitor, according to Nobel-winning economist Joseph E Stiglitz.

''To say that India's corruption is extraordinary is a comparative statement. I would say that the United States of America is a good competitor for the title,'' the Columbia University professor said at an interaction with the media in Bangalore on Thursday, ahead of an address to the Azim Premji Foundation at the Indian Institute of Science.

While India's corruption cannot be ''underestimated'', the US ''is equally corrupt in its own style,'' he said. Be it the drug industry's stranglehold over the government, Walmart's lobbying, or the current crisis in the financial sector, ''corruption is rife'' - particularly so in the corporate sector, he added.

''It would be nice if everyone was honest but that is not what we are. We have to design economic systems that build in checks and balances and that are inherently transparent,'' he said.

Stiglitz pointed out that the US drug industry succeeded in getting a provision incorporated wherein the government cannot bargain with the industry on drug prices. That added $500 billion in costs to the government's healthcare expenditure. Such provisions happen because of campaign contributions that are a form of corruption, he said tellingly enough in the Indian context.

Here too, opaque political funding is considered by experts as the root of corruption; and a study commissioned by the Association for Democratic Rights (ADR) revealed earlier this week that 87 per cent of political funding in India comes from corporate houses.

''We tend to focus on public sector corruption, but there is corruption in the private sector. The US financial sector was rife with corruption; the absence of corporate governance as demonstrated in the 2008 financial crisis is a form of corruption. Walmart demonstrated in Mexico that it is an expert in corruption. Credit rating agencies are paid by investment banks; so they compete to give the banks good ratings.

''So corruption in India is not extraordinary, but you are in the top league. Erosion of honesty and trust has become global. You have to have checks and balances. The impact of corruption in India cannot, however, be underestimated. The telecom scam and the coal scam, for instance, have dented people's confidence in the government, Stiglitz said.

But at the same time he cautioned that ''solving corruption does not necessarily lead to economic growth''.

Prof Stiglitz said it is ironic that although the American-style capitalism is clearly not working, with widening inequalities, ''this is what the world emulates''. The US' growth story has been ''anti-poor and anti-middle class'', he said.

''The view that privatisation will increase efficiency has been discredited. Trickle-down economies have been discredited, neo-liberal policies have been discredited, and the 2008 crisis was empirical validation of this,'' said Stiglitz. ''Bill Gates is doing well but that doesn't mean the United States of America is. It is a trickle up economy.''

He elaborated these views during his lecture on Globalisation, Structural Change and Inequality. ''The median income of a full-time male worker in the US is less than what it used to be four decades ago, and one in seven people looking for a full-time job do not get one,'' Stiglitz said.