Nathaniel Heller of Global Integrity, an organization whose work I respect very much (among other things Global Integrity recently started doing local level corruption assessments in Liberia), has made an intriguing blog post building off the comments of the very talented Daniel Kaufmann.

Kaufmann is the developer of the World Bank’s Governance Indicators and an early pioneer in the anti-corruption and good governance field, and he is leaving the World Bank to go to Brookings.

According to Heller, Kaufmann discussed to problems putting the governance movement in a crisis: corruption in banking and finance, and lack of capacity to deal with political or grand corruption.

the anti-corruption/good governance movement is at a point of crisis largely because of its failure to address issues of political corruption, state capture, and money in politics. In other words, this is corruption called by other names (“influence peddling,” “patterns of patronage,” etc).

I agree this is a huge problem, and one I’ve discussed some in my thesis for Fletcher (an earlier version is available via the Economics of Corruption site).

Ultimately, the basic issue is, wherefore all these rankings and policy analysis? So what? The strategy for anti-corruption work has usually been one of either “name and shame,” similar to human right advocates, or to pressure from above via donor institutions like the World Bank or bilateral aid.

Heller is lucid on this point:

I think a better approach is for development banks and official aid donors to focus on research and case studies while leaving the operational side of this agenda – the hard-hitting advocacy and public policy formulation – to domestic stakeholders in each country. The Bank and others have a tremendous opportunity to support innovative research into the political-economy issues behind patronage and capture. Efforts to explore the dynamics of political leadership and what brings together coalitions of reformers would be amazingly impactful and could energize a field that hasn’t produced a truly new approach to these issues for arguably 15 years. But going further down the road into operationalizing those new findings should be left to local stakeholders, who are unencumbered by the very real constraints facing work done via official governmental channels.

I couldn’t agree more.  However, who are these local stakeholders going to be? How will they be funded or affiliated? How will they be protected? How can activists be sure they’re not furthering violent conflict? Is the TI model of national chapters the best option at this point?

For more information on working from the ground up in dealing with political corruption (and the conflict/corruption nexus), refer to the thought pieces from Fletcher’s 2007 conference on the topic.

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Over the holiday break, I was able to catch up on some non-thesis related reading, including Paul Krugman’s updated edition of his 1999 book The Return of Depression Economics.  The new 2008 version has enough current material in it to justify a re-release, and finishing it has inspired me to share some links on the Fletcher Reflections blog. 

There is just so much good journalism right now on the economy and the financial crisis that any list of articles is bound to be limited.  Nevertheless, I thought I’d give it a shot here.  I should also mention some of these are pulled from an email thread that went around Fletcher’s “Social” listserv for students a few weeks back.  Here goes… 

First off, you might wonder about the title of this post.  “Bread and Honey” is a cockney expression for money, one among many, inspired by yesterday’s Planet Money podcast with Adam Davidson and Laura Conaway, where they’ve been having an interesting week on the theme of “What is Money.”  Also check out the show’s two-part interview with Niall Ferguson.

NPR listeners will immediately recognize that the  idea of picking a theme and collecting a bunch of stories around the theme came from This American Life, which has had two extremely high quality shows on the financial crisis so far entitled The Giant Pool of Money and Another Frightening Show About the Economy. 

While we’re on the topic of NPR, let us not forget Terry Gross of Fresh Air, who has also welcomed some fascinating guests onto her program to discuss the economy.  My favorite so far has been Michael Greenberger, formerly of the U.S. Commodity Futures Trading Commission. 

Of course, The Economist has been good for indepth daily coverage, including on their Free Exchange blog.

Terry Gross also welcomed onto the show Paul Krugman, the Nobel Laureate mentioned above, who was also interviewed today by another Gross (Daniel)(I don’t think there’s a relation) for Slate’s new e-magazine The Big Money.  Finally, Krugman’s own blog for the New York Times is a quick, painless, and pleasant daily read–I especially liked his post today reasoning through the logic for nominal wages and unemployment during the 1930s.  It brought me back to last semester’s macroeconomics class with Fletcher Professor Michael Klein.

Credit write downs?  You can find out more here.

Concerned about the transparency and integrity of the bailout ?  You should be, and have I got blogs for you. Bailout Sleuth, founded by billionaire Mark Cuban (who blogs here), has investigative journalists covering the TARP and other aspects of the Fed & Treasury’s bailout activities.  The Project on Government Oversight has also been looking at corruption risks for bailout funds.

What does all this mean for emerging markets?  Harvard faculty member Dani Rodrik has been blogging on this very topic for some time now.  His posts are great.  We’ve also had some very interesting lectures here at Fletcher on the topic, including one that I covered last month hosted by Fletcher’s Center for Emerging Market Enterprises. 

I have to get back to work now, but if all this material has you whirling, you might consider taking some more courses next semester on finance and banking.  Happy reading.

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