The Man From FCPA has seen many arguments which demonstrate why the U.S. should continue to lead the worldwide fight against bribery and corruption, in the face of those who want to cut back on FCPA enforcement. One of the strongest arguments is the simplest economic argument, that corruption acerbates market inefficiencies by allowing a lesser product or service provider to win a contract through subterfuge. I was reminded of this axiom when reading a recent review of the book, The Inner Lives of Markets, in the Wall Street Journal in an article entitled, “Ethics vs. Efficiency” by Phillip Delves Broughton.
The author opens with the statement that “Efficient markets are the Holy Grail for anyone who aspires to build a fair society.” This is because such markets “reward value and merit” and exclude systems based on corruption. Bribery and corruption impede fair markets and allow those who could not compete on quality and price to unfairly win business. Simply put, bribery is not an efficient economic model or tool.
