DATE=5/4/99 TYPE=BACKGROUND REPORT NUMBER=5-43309 TITLE=CORRUPTION / FREE MARKETS BYLINE=MICHAEL BOWMAN DATELINE=ATLANTA CONTENT= VOICED AT: INTRO: PARTICIPANTS AT AN ANTI-CORRUPTION CONFERENCE IN ATLANTA (GEORGIA) SAY FREE MARKET ECONOMIC REFORMS CAN HELP DETER BRIBERY AND INCREASE TRANSPARENCY IN BUSINESS DEALINGS IN THE AMERICAS. FOUR CURRENT AND EIGHT FORMER HEADS OF STATE FROM THROUGHOUT THE HEMISPHERE ARE AMONG NUMEROUS OFFICIALS ATTENDING THE THREE-DAY CONFERENCE, WHICH BEGAN MONDAY. THE EVENT IS HOSTED BY THE CARTER CENTER - A PUBLIC POLICY ORGANIZATION HEADED BY FORMER (U-S) PRESIDENT JIMMY CARTER. V-O-A'S MICHAEL BOWMAN REPORTS. TEXT: CONFERENCE PARTICIPANTS ARE ADVANCING NUMEROUS IDEAS FOR CRACKING DOWN ON CORRUPTION, WHICH FORMER PRESIDENT CARTER SAYS - IN SOME NATIONS - ROBS PEOPLE OF MORE THAN HALF THEIR PURCHASING POWER. THE IDEAS RANGE FROM ENACTING PUNITIVE LEGAL MEASURES TO INCREASING PUBLIC ACCESS TO INFORMATION ABOUT GOVERNMENT OPERATIONS. ONE CONCEPT FOCUSES ON THE POTENTIAL FOR FREE MARKET ECONOMICS TO REDUCE THE IMPETUS - AND THE OPPORTUNITY - FOR ACTS OF CORRUPTION. ROBERT KLITGAARD, DEAN OF THE RAND GRADUATE SCHOOL, EXPLAINS: // KLITGAARD ACT // COMPETITION IS LESS VULNERABLE TO CORRUPTION THAN MONOPOLY. CLEAR RULES OF THE GAME ARE LESS VULNERABLE THAN ARE SYSTEMS WHERE OFFICIAL DISCRETION IS PARAMOUNT. // END ACT // MR. KLITGAARD'S OBSERVATIONS ARE ECHOED BY THE HEAD OF THE WORLD BANK'S ECONOMIC DEVELOPMENT INSTITUTE, DANIEL KAUFMANN. MR. KAUFMANN SAYS CORRUPTION AND BLOATED BUREAUCRACIES GO HAND-IN-HAND. // KAUFMANN ACT // BRIBERY, BASICALLY, FUELS RED TAPE, FUELS BUREAUCRATIC OBSTACLES AND THE INCENTIVE FOR BUREAUCRATS TO HAVE MORE DISCRETION AND TO IMPOSE MORE REGULATION. // END ACT // THE COSTS OF CORRUPTION ARE DIFFICULT TO QUANTIFY, SINCE - BY DEFINITION - CORRUPTION IS AN ILLICIT AND SURREPTITIOUS ACTIVITY. NEVERTHELESS, STUDIES CONDUCTED BY THE WORLD BANK REVEAL THAT, IN CERTAIN COUNTRIES, THE PRACTICE IS SO COSTLY THAT FOREIGN CORPORATIONS OPERATING IN THEM WOULD GLADLY PAY AN ADDITIONAL 20-PERCENT IN LOCAL TAXES IF CORRUPTION WERE ELIMINATED. THE IDEA THAT THE FREE MARKET SERVE AS A BARRIER TO CORRUPTION ALSO HAS THE BLESSING OF THE PRESIDENT OF THE INTER-AMERICAN DEVELOPMENT BANK, ENRIQUE IGLESIAS. MR. IGLESIAS SAYS NATIONS THAT WANT TO COMBAT CORRUPTION SHOULD LIMIT THE SIZE AND POWER OF THEIR GOVERNMENTS. // IGLESIAS ACT // IN GENERAL, MAKING GOVERNMENT SMALLER, MORE EFFICIENT, LESS BURDENED BY REGULATORY SYSTEMS IS AN INSTRUMENT TO REDUCE SHARPLY THE OPPORTUNITIES OF CORRUPT PRACTICES. // END ACT // BUT MR. IGLESIAS SAYS THE FREE MARKET BY ITSELF CANNOT ERADICATE BRIBERY AND CORRUPTION. HE DOES NOT ADVOCATE ANARCHISTIC AND UNFETTERED CAPITALISM, BUT RATHER A SYSTEM IN WHICH DEREGULATION IS COUPLED WITH HEIGHTENED RESPECT FOR MORALITY AND ETHICAL BEHAVIOR. // IGLESIAS ACT // THERE IS A KIND OF DISEASE OF ETHICS IN OUR SOCIETIES IN THE MODERN WORLD - VERY MUCH LINKED TO INDIVIDUALISM AND MATERIALISM. I THINK THAT WHEN WE SPEAK ABOUT LIBERALISM, WE SHOULD NOT FORGET THAT (EARLY ECONOMIST) ADAM SMITH, BEFORE TEACHING LIBERAL ECONOMICS, WAS A PROFESSOR OF ETHICS. // END ACT // ECUADOR'S PRESIDENT, JAMIL MAHUAD, SAYS HE BELIEVES ONE OF THE ROOT CAUSES OF CORRUPTION IS MAN'S DESIRE FOR MATERIAL GAIN - A DESIRE HE SAYS IS FUELED BY POPULAR CULTURE. // MAHUAD ACT // WHAT HAPPENS WHEN SOMEBODY IS WATCHING TELEVISION, AND ALL THE T-V ADVERTISEMENTS ARE SAYING THE MOST IMPORTANT THING IN LIFE IS MONEY? WITH MONEY, YOU CAN DO ANYTHING. YOU CAN BUY CLOTHES, YOU CAN TRAVEL, YOU CAN HAVE THE BEST CAR. IF ALL THE VALUES THAT WE ARE SELLING ARE JUST CONSUMERISM, WHAT IS THE INCENTIVE TO BE HONEST? // END ACT // MANY PARTICIPANTS AT THE ANTI-CORRUPTION CONFERENCE SAY - FOR A SOLUTION TO BE VIABLE - IT MUST INVOLVE MANY SECTORS OF SOCIETY, INCLUDING THE GOVERNMENT, THE BUSINESS COMMUNITY, CONSUMERS AND THE NEWS MEDIA. FINAL RECOMMENDATIONS ARE TO BE UNVEILED AT THE CONCLUSION OF THE GATHERING WEDNESDAY. (SIGNED) NEB/MCB/WFR 04-May-99 6:44 PM EDT (2244 UTC) NNNN Source: Voice of America .