Inequality and Corruption

Abstract

Successful (or well-ordered) democracies are marked by high levels of trust in people and in government, low levels of economic inequality, and honesty and fairness in the public sphere. Trust in people, as the literature on social capital has shown, is essential for forming bonds among diverse groups in society (Uslaner 2002). Trust in government is essential for political stability and compliance with the law. Corruption robs the economy of funds and leads to less faith in government (perhaps also to less faith in fellow citizens) and thus lower compliance with the law. And institutions seen as biased (unfair) cannot secure compliance and may exacerbate inequalities in society. Transition countries are short on both trust in people and trust in government (Badescu et al. 2003; Hayoz 2003). Under totalitarian regimes, there was little sense of social solidarity. The state was feared rather than legitimate (Howard 2003). Transition countries are also lacking in honest and fair institutions. And they have more than their share of corruption and an underground economy. Many citizens have little faith in their leaders or their fellow citizens.