Is the U.S. Really Less Corrupt Than China? (Update)

Key Takeaways

Both the U.S. and China exhibit distinct forms of corruption, with the U.S. having legalized, institutionalized forms.
China's rapid economic growth occurred despite high corruption, by containing growth-damaging forms.
Corruption can be categorized into four types: petty theft, grand theft, speed money, and access money.
Xi Jinping's anti-corruption campaign serves both genuine reform and political power consolidation.
The U.S. and China can be viewed as "Gilded Ages," with similar challenges like inequality and cronyism.

Political scientist Yuen Yuen Ang argues the U.S. has legalized, institutionalized corruption, while China's is illegal.
Ang asserts that current U.S. corruption, involving corporate lobbying influencing policy, mirrors China's historical Gilded Age.
Academic findings suggest lobbying in the U.S. can yield higher returns than research and development investments.
The U.S. and China are framed as two Gilded Ages: China at 1.0 and the U.S. at 2.0, both characterized by sophisticated, financialized economies.

The discussion expands corruption beyond illegal acts to include the abuse of power for private gain and setting rules.
Ang introduces a four-type typology of corruption: petty theft (extortion), grand theft (embezzlement), speed money (bribes for red tape), and access money (bribes for special deals).
Certain growth-damaging forms of corruption in China, such as embezzlement and petty bribery, were contained, contributing to economic prosperity.

China's growth model shifted to construction, debt, and real estate, leading to policy distortions such as neglecting affordable housing for luxury properties.
The Evergrande crisis, where the firm owes over $45 billion and 20% of China's housing stock is unoccupied, resulted from this real estate boom, which accounts for up to 30% of China's GDP.
The 2007-2008 U.S. financial crisis and the collapse of Lehman Brothers are linked to 'access money,' with lobbying in the U.S. correlating with riskier lending and higher delinquency rates.

The guest criticizes the Transparency International Corruption Index for its generalized score, proposing an 'unbundled corruption index' (UCI) to measure four distinct types of corruption.
To develop the UCI, experts in 15 countries, including China and the U.S., were surveyed using specific vignettes rather than broad rating scales.
The UCI shows similar levels of 'access money' in both China and the U.S.; in the U.S., this manifests as lobbying, distinct from China's more personalist, bribe-driven system.

Yuen Yuen Ang introduces the concept of multiple "China models" since 1949, noting regional and temporal variations.
World Bank data indicates China has lifted over 800 million people out of poverty since 1979.
Mao's personalist dictatorship (1949-1976) and centrally planned economy are contrasted with Deng Xiaoping's adaptive, decentralized authoritarian model (1978-1989).

High-level officials in China may curb low-level corruption to project a less corrupt image, facilitating their own higher-level corrupt activities.
Local leaders curtail visible corruption to attract businesses and investors, which benefits their careers.
From the 1990s to early 2000s, a "profit sharing" system in China provided mid- to low-level officials with approximately 70% of their compensation in non-salary benefits, incentivizing economic growth.

Measuring corruption among the powerful is challenging due to their ability to evade scrutiny, leading to a focus on less visible forms.
Influence politics among the wealthy often remains unaddressed because easily downloadable data is scarce.
Academic incentives can lead researchers to focus on 'publication-friendly' topics, potentially neglecting more crucial but less tractable questions about corruption.

Xi Jinping's anti-corruption campaign is both a genuine structural concern and a political tool to consolidate power, as evidenced by the state television documentary 'Zero Tolerance.'
The campaign profiles corrupt officials, framing corruption as a moral failing and disloyalty to the party, reinforcing Xi's authority ahead of his third term.
New regulations on corporate debt, leading to the Evergrande debt crisis, reflect Xi's discomfort with unchecked capitalism and his preference for top-down socialist policies.

The U.S. combatted its 'Gilded Age' through the Progressive Era, using tools like an open press, independent prosecutors, electoral reforms, and labor movements.
Xi Jinping aims to bring China into its own progressive era, but his top-down commands may only address symptoms and potentially shake business confidence.
Despite ongoing challenges like inequality and polarization in developed nations, the guest remains optimistic about the opportunities afforded by America's openness, especially for 'intellectually weird' individuals.