Who will guard the guards from corruption?

Abstract

Corruption is common in political and economic processes. Auditing is one of the options to fight it. Another option is the Judiciary Branch, supported by the Constitution and laws approved by the Legislative Branch. However, these auditors depend on a higher-level auditor as they can also be corrupt. Ethics in public administration evolves over time and is part of society’s culture, which may include tolerance to high corruption in a given period. Since the 1950s, the theory of competitive markets has been adapted to explain the competition between political agents running for public office. In this view, high competition is equivalent to a democratic political process. An essential element is the free access to information about the politicians’ acts during their tenures. In the long run, political competition reduces politicians' personal gains, including legal and illegal income, because of informed voter choices. Models of monopoly or firms with few competitors in markets are equivalent to authoritarian regimes under the control of the Executive Branch, which combines restrictions on critical information and high entry barriers for competitors. Also in the long run, the political monopoly seeks to at least restrict information about its acts of corruption, preserving personal gains, but attracting competitors. Due to weak contestation, achieving citizens' preferences for political ethics takes a lengthier and more turbulent period of adjustment under a monopoly. In any case, the voter will be the auditors' auditor and will be more effective in a competitive political situation.