Corruption By Design -- by Melanie Manion
Paul Romer uses Hong Kong as an example of a Charter City, where one can see the effects of rules (governance) over a multi-decade period. Manion contrasts the anti-corruption drives in Hong Kong (following the Peter Godber incident in 1973) and the Communist Party's multiple attempts before and after the June 4th Tian An Men Protests.
How is it that Hong Kong drastically reduced corruption, while the Communist Party failed? HK created a well-funded (better than normal police) department separate from the police and reporting only to the Governor. Whereas the Communist Party has many different groups that oversee corruption, with several levels of Party officials reviewing corruption cases.
Manion also argues that:
In the 1980s, salary gains of Chinese officials were meager, at a time when incomes of entrepreneurs grew to exceed by far those of middle-ranking officials. To be sure, if corruption reasserted official superiority, it also neutralized bureaucratic resistance to reform.Which fueled the "explosion" alluded to in the title of the chapter. Prior to the Communist Party allowing more commerce, corruption
Campaigns epitomized an important aspect of the Maoist approach to corruption control: deterrence through unpredictability. A great boon to the communists in the 1951-52 campaign was the simultaneous purge of officials associated with the old regime, identification of loyal activists to take their place, and public approval of a new intolerance for official veniality. The constant threat of purge in campaigns also had a deterrent effect on various forms of misconduct by public officials.After the collateral damage of Tian An Men 6/4,
Chinese authorities have responded to the anticorruption challenge by defining the forms of corruption that produce major state revenue losses mostly as crimes. The forms of corruption most offensive and directly costly to ordinary citizens have been defined as mere irregularities.
Corruption de-legitimizes a government; combining that with the removal of Economic Good Times could cause large-scale unrest, which the Party would have to quell somehow.