How mates and grey corruption rig the political game

If you were a powerful politician, there is a good chance you would make decisions that favour your mates.

How do we know you might behave in this way? We set up a computer game^[1] to see whether everyday people get seduced into favouring their mates at the expense of others.

The experiment involved over 600 university students. As in politics, they could choose to allocate resources most productively for the group as a whole, or they could allocate resources to a mate, so that their mate could reciprocate in the future – a revolving door of sorts. If they favoured a mate, it cost the rest of the experimental society real money.

In 84% of the groups, students were seduced into costly favour-trading that stole from the others in their group. Astonishingly, those who rigged the game reported feeling good about it and justified their behaviour as the right thing to do. After all, looking after mates is pro-social.

Grey corruption

One popular idea to end corruption in Australia and catch all the baddies is a federal anti-corruption commission. But we doubt this will eliminate the problem.

The reality is that although there are many cases of blatant corruption such a commission could (and should) catch, the bigger economic costs usually come from totally legal “grey corruption” among the people who would write the very laws that the anti-corruption body would enforce.

Mundane political decisions happening every day cost billions each year. Sometimes these are high profile decisions, such as building major transport projects, but often they happen in quiet back offices of parliaments and government departments deciding on niche regulations for things like pharmaceuticals and banking.

The well-connected end up with laws written to favour them economically, generally enacted in completely legal ways and after extensive consultation. Despite sometimes good intentions, though often not, these decisions are corrupted by the social relationships that human beings find impossible to ignore.

Economist and social scientist Mançur Olson^[2] has described the process of social decay that results as “institutional sclerosis”. Olson observed that over time all institutions succumb to the power of special interest groups, which incur great economic costs on the community as they reallocate wealth towards themselves.