April 11, 2018, by Edward Hadas
LONDON (Reuters Breakingviews) – Until fairly recently, a king could not be corrupt. Monarchs just did what they did, as the biblical prophet Samuel explained. “He will take the best of your fields and vineyards and olive groves and give them to his attendants,” he told the ancient Israelites. “He will take a tenth of your grain and of your vintage and give it to his officials and attendants.”
Some modern rulers carry on with the tradition, as was made all too clear around the world on April 6. That day, ousted South African President Jacob Zuma showed up in court to face charges of fraud, money-laundering and racketeering, which he denies. Park Geun-hye, the former South Korean president, also was sentenced to 24 years in prison for, among other things, exchanging business favours for payments of $22 million. Nearly concurrently, more than 18,000 kilometres away, a Brazilian judge ordered former President Luiz Inácio Lula da Silva to start serving a 12-year jail term for corruption convictions.
Despite the bonanza of malfeasance, alleged or proven, their deeds caught up with them. The prosecutions suggest a major change since the days of Saul, whom the Israelites elevated to royalty despite Samuel’s warnings. These days, wasting a few hundred thousand dollars of taxpayers’ money on unnecessarily luxurious travel is enough to put a senior U.S. government job at risk, as Scott Pruitt, the head of the U.S. Environmental Protection Agency, has discovered.
The year 1886 was a turning point, at least in forward-looking industrialising economies. When King Ludwig II of Bavaria died that year, he left his royal treasury empty and his gigantic personal castle in Neuschwanstein incomplete.
Within months, the new government turned the site into one of Europe’s first mass tourist attractions. Visitors gawking at the kitsch folly were unwittingly celebrating the firm rejection of the absolute privileges of leadership. A new definition of corruption was taking hold.
Misuse of relatively small amounts of money can bring down today’s kings. Juan Carlos, for example, was forced to abdicate the Spanish throne in 2014 in part because of accusations of offering a 2 million euro bribe.
Royals, like politicians and the corporate elite, are subject to the universal moral code of bureaucratic organisation. As part of being “mentally awake and morally straight”, in the words of the American Boy Scout Oath, they are expected to judge subordinates only on merit, not to use their positions for personal financial gain nor to favour unjustly friends or family.
For many decades, chief executives of publicly traded companies adhered to these principles of honest moderation. In 1960, they received a relatively modest 20 times the salary of the average worker, according to the Economic Policy Institute (EPI) think tank.
Impartiality and judiciousness make sense in complex industrial economies. Anything other than a meritocracy ends up reducing prosperity for the many while providing great wealth for the very few.
In some ways, the era of anti-corruption and anti-excess can be interpreted as receding. The imprisoned and fallen leaders are just the unlucky ones. Malaysian Prime Minister Najib Razak is expected to win re-election despite accusations of siphoning $700 million into his personal accounts. Evidence of self-serving and favouring childhood friends has hardly dented the popularity of the leaders of Russia, Turkey and Hungary.
Business bosses also have lost the taste for moderation. The U.S. boss-to-worker pay ratio in 2016 was 217, according to updated EPI figures. When Rex Tillerson was made secretary of state under U.S. President Donald Trump, the former Boy Scouts leader took a 99 percent pay cut from the $24 million he pocketed on average each year during his last decade running oil titan Exxon Mobil.
Tillerson’s earnings were legal, but the Trump administration sets the developed-world standard for disrespect of the bureaucratic ethical code. The president, whose popularity has hardly declined since the election, refuses to give up his private business interests. His personal attorney’s home and office were just searched by the FBI. And if Pruitt leaves under an ethical cloud, he would follow, among others, the national security adviser and the secretary of the Department of Health and Human Services.
Even as corporate bosses and popular politicians revert to the earlier idea of privilege, the global fight against corruption and excess may be gaining ground. After all, malpractice only brings down current and former leaders because it is so unpopular.
Indeed, public unacceptability is one reason Xi Jinping’s China has been cracking down. Fear of an anti-corruption backlash explains why autocratic leaders from Saudi Arabia to the Philippines are so sensitive about accusations of personal malpractice. Popular revulsion also helps explain why Trump’s appointees cannot get away with bad behaviour. Steadily rising middle classes the world over will become even less tolerant of the traditional royal disdain for probity.
Brazil’s Lula may show the way. The former revolutionary finally surrendered to the court, even though he can make a good case that he was no worse than most leading members of the government which prosecuted him. Just before turning himself in, he expressed the core principle of the bureaucratic code: “I’m not above the law.” These are not the words of Saul.
(Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.)