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Charles Hugh Smith: There Won’t Be Any Winners Because The Status Quo Is Corrupt Everywhere

Systemic corruption on this vast scale optimizes failure and collapse. Charles Hugh Smith lays out the details…

posted by Charles Hugh Smith on Of Two Minds:

Debating which nations will “win” as the global economy unravels is a popular but pointless parlor game. Since the status quo in every nation is deeply, profoundly, systemically corrupt, there won’t be any “winners,” there will only be losers.

Apologists love to say that corruption has always come hand-in-hand with power, and this is superficially true. Once a centralized hierarchy takes power, those seeking self-glorification and wealth seek power as a means to their self-enrichment and glorification.

Naturally, they use their power to reward those who helped them gain power and those helping them maintain power. So a small Texas contractor who contributed to Lyndon Johnson’s political career was awarded immense contracts to build bases in Vietnam during Johnson’s vast expansion of the Vietnam War. It’s just business, right?

But this naive, superficial normalization of corruption ignores the consequential difference between two types of corruption. One kind is directing cushy positions and contracts to cronies: well-paid positions on boards are given to pals, fat contracts are awarded to political allies, and so on. The point here is that somebody was going to get the cushy position and the fat contract anyway, and so the corruption is in who gets the gravy.

This level of corruption has a systemic cost. Bribes paid to secure contracts and subsidies act as a “tax” on the economy, as the bribes add expense but do not deliver any improvement in quality or quantity. When the most qualified candidate or firm is passed over to favor an unqualified crony or ally, the loss in effectiveness is consequential, though more difficult to measure.

The systemically destructive type of corruption is on a completely different level. Systemic corruption deforms the core economic functions of governance and capital to enrich insiders at the expense of the national interest and the common good.

When corruption hollows out a nation’s military capabilities, that undermines national security. When shoddily built equipment is stripped of valuable parts (to be sold on the black market) to the point it’s no longer of any military value, corruption has a cost that is incalculable until it’s too late to repair the rot. When armament contracts are given to build inferior weapons systems to benefit cronies, corruption has optimized losing the next war.

When corruption is the deciding factor in distributing the nation’s capital, that mal-investment of irreplaceable resources in unproductive projects fatally undermines the entire economy. When corruption funnels national resources into poorly built bridges to nowhere ghost cities and monuments to excess, there are opportunity costs that can never be recovered, for all that capital and labor could have been invested productively.

Corruption becomes fatal when those in power are no longer able to distinguish the difference between self-interest and the national interest. Systemic corruption blurs the lines and persuades those in power that their self-enrichment and power grabs are serving the national interest.

The truth is their distorting the system to maximize their private gain cannot possibly serve the national interest or the common good. It’s one thing to reward a long-serving crony by appointing the pal to a cushy no-real-work-required position on a crony-filled board with little actual power. It’s another to distort the distribution of irreplaceable capital and resources to maximize the self-enrichment of the corrupt few as the expense of the many.

Systemic corruption on this vast scale optimizes failure and collapse.

In my book Global Crisis, National Renewal, I argue that the only nations that will survive the transition from a waste is growth economy will be those which embrace Degrowth. We can also say that only those nations which succeed in limiting systemic corruption will have the means to invest their nation’s dwindling resources productively.

Since no nation is exhibiting any consequential interest in either Degrowth or eradicating systemic corruption, there will be no “winners”, there will only be losers. While the status quo careens into decay and collapse, at least we can enrich ourselves by chasing the Pelosi Portfolio.

Originally posted by Charles Hugh Smith on Of Two Minds.

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