I also wish there was more of a political consensus in opposition to China. It's quite alarming that our long-term political and economic rival practices and promotes an authoritarian government and social structure antithetical to liberal values.
But as a brief riff on a minor point of yours, the Foreign Corrupt Practices Act is a disas…
I also wish there was more of a political consensus in opposition to China. It's quite alarming that our long-term political and economic rival practices and promotes an authoritarian government and social structure antithetical to liberal values.
But as a brief riff on a minor point of yours, the Foreign Corrupt Practices Act is a disaster. Corruption is the cost of doing business in many emerging economies, unfortunately, and its stringent penalties (despite how unpredictably and randomly enforced they are) have deterred economic linkages with developing countries that, cash-poor and lacking other partners to turn to, are now indebted to China as you describe.
It's a tough issue, but FCPA was passed after it was discovered in the 70s that Lockheed Corp had bribed the Prime Minister of Japan, and another defense contractor had bribed Indonesian officials to buy military equipment they had not even planned to buy or seemingly wanted. It was out of control. If you don't control it, your multinationals can foul up your foreign policy and contribute to the mess in developing countries.
FCPA is actually "moderate" compared to the British bribery law, because FCPA allows routine bribes to speed up nondiscretionary processes ("grease payments"), while UK does not.
But yeah, one consequence is that corrupt officials in developing countries will deal with China instead of us so they can get their sugar.
There are potentially marginal reputational benefits to the FCPA, and other countries may have more onerous variants, but I find those benefits intangible and likely make only an immaterial contribution to whether or not a country acts toward us in a way they otherwise wouldn't. First, I don't know how much the FCPA deters such abuses. Bribery is already illegal in Japan. These high-profile instances of corruption likely involve grift that wouldn't be deterred by additional legal consequences (especially given erratic enforcement). Indonesia and other counties have since been pressured into arms transactions with the US (often for the sake of maintaining a relationship with a military patron), which periodically may cause domestic blowback. But, even if the FCPA were to deter some of these fiascos, those reputational costs are a drop in the bucket. Considering the myriad factors that contribute to or detract from our credibility and that would factor in another state's actions towards the US.
However, the downstream chilling effect against investment in developing countries has harmed both our contact with developing countries (which over time could have been a liberalizing influence), and those countries development trajectories themselves. The harms are significant and, as far as I'm aware, quantitative studies have demonstrated them beyond a reasonable doubt (See: Spalding, "UNWITTING SANCTIONS: UNDERSTANDING ANTIBRIBERY LEGISLATION AS ECONOMIC SANCTIONS AGAINST EMERGING MARKETS," 62 Fla. L. Rev. 351, 427-407, 2010). Given the speculative and intangible nature of the benefits, I would asssess the costs are far greater.
I teach FCPA, and the arguments for and against are interesting. But in my view, they are purely academic. It is simply inconceivable that Congress would repeal FCPA and announce to the world that US multinationals are henceforth free to bribe foreign officials as they see fit in order to win contracts. I don't think that would be wise, but it doesn't really matter. It's never going to happen.
It's quite difficult to repeal or change legislation in general, and there is not a strong political coalition advocating for FCPA repeal at the moment (and truth be told it's not at the very top of my political agenda either). But that's a fairly fatalistic attitude. We should have healthy and honest debate, when we can, about what policy would be best in theory; gradually, depending on the relatively unpredictable shifts of the political winds over time, who knows what will happen? I guarantee you there will be forthcoming events over the next fifty years that appear out of left field and are deemed by conventional wisdowm to be a hell of a lot more inconceivable than repealing an often-criticized law few outside of specialists, industry and political insiders, and academics have heard of.
I also wish there was more of a political consensus in opposition to China. It's quite alarming that our long-term political and economic rival practices and promotes an authoritarian government and social structure antithetical to liberal values.
But as a brief riff on a minor point of yours, the Foreign Corrupt Practices Act is a disaster. Corruption is the cost of doing business in many emerging economies, unfortunately, and its stringent penalties (despite how unpredictably and randomly enforced they are) have deterred economic linkages with developing countries that, cash-poor and lacking other partners to turn to, are now indebted to China as you describe.
It's a tough issue, but FCPA was passed after it was discovered in the 70s that Lockheed Corp had bribed the Prime Minister of Japan, and another defense contractor had bribed Indonesian officials to buy military equipment they had not even planned to buy or seemingly wanted. It was out of control. If you don't control it, your multinationals can foul up your foreign policy and contribute to the mess in developing countries.
FCPA is actually "moderate" compared to the British bribery law, because FCPA allows routine bribes to speed up nondiscretionary processes ("grease payments"), while UK does not.
But yeah, one consequence is that corrupt officials in developing countries will deal with China instead of us so they can get their sugar.
There are potentially marginal reputational benefits to the FCPA, and other countries may have more onerous variants, but I find those benefits intangible and likely make only an immaterial contribution to whether or not a country acts toward us in a way they otherwise wouldn't. First, I don't know how much the FCPA deters such abuses. Bribery is already illegal in Japan. These high-profile instances of corruption likely involve grift that wouldn't be deterred by additional legal consequences (especially given erratic enforcement). Indonesia and other counties have since been pressured into arms transactions with the US (often for the sake of maintaining a relationship with a military patron), which periodically may cause domestic blowback. But, even if the FCPA were to deter some of these fiascos, those reputational costs are a drop in the bucket. Considering the myriad factors that contribute to or detract from our credibility and that would factor in another state's actions towards the US.
However, the downstream chilling effect against investment in developing countries has harmed both our contact with developing countries (which over time could have been a liberalizing influence), and those countries development trajectories themselves. The harms are significant and, as far as I'm aware, quantitative studies have demonstrated them beyond a reasonable doubt (See: Spalding, "UNWITTING SANCTIONS: UNDERSTANDING ANTIBRIBERY LEGISLATION AS ECONOMIC SANCTIONS AGAINST EMERGING MARKETS," 62 Fla. L. Rev. 351, 427-407, 2010). Given the speculative and intangible nature of the benefits, I would asssess the costs are far greater.
I teach FCPA, and the arguments for and against are interesting. But in my view, they are purely academic. It is simply inconceivable that Congress would repeal FCPA and announce to the world that US multinationals are henceforth free to bribe foreign officials as they see fit in order to win contracts. I don't think that would be wise, but it doesn't really matter. It's never going to happen.
It's quite difficult to repeal or change legislation in general, and there is not a strong political coalition advocating for FCPA repeal at the moment (and truth be told it's not at the very top of my political agenda either). But that's a fairly fatalistic attitude. We should have healthy and honest debate, when we can, about what policy would be best in theory; gradually, depending on the relatively unpredictable shifts of the political winds over time, who knows what will happen? I guarantee you there will be forthcoming events over the next fifty years that appear out of left field and are deemed by conventional wisdowm to be a hell of a lot more inconceivable than repealing an often-criticized law few outside of specialists, industry and political insiders, and academics have heard of.