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The Honest Truth About Dishonesty and how it shapes corruption in China

I recently finished Dan Ariely’s book, The Honest Truth About Dishonesty, and realized that I’ve been thinking about corruption in the wrong way. While I’m not about to argue that there are “acceptable levels” of it, in the way Global Times tried, I do think we are overlooking a few key points.

For one, as Ariely argues, cases of embezzlement and fraud are not made up largely of Madoff’s (or Liu Zhijun’s), but of small daily acts by very ordinary people. He shows through his research that for the most part everyone is willing to cheat a little, and that massive cheats are actually far more rare than they should be (if one assumes that a person would cheat as much as is possible without repercussions), and that we should be much more concerned about the tens of millions of officials that go unnoticed.

The way Ariely and his fellow researchers tested their theories was with a basic math quiz, which allowed participants to lie about their score. They were then paid according to the score they reported to gauge how great of an effect variables had on people’s willingness to cheat. Surprisingly, people were unwilling to claim that they had solved all the questions correctly, even though there was plenty of opportunity to do so.

Ultimately, Ariely reasons, cheating is something that needs to be rationalized by the individual so that they can continue to see themselves as a decent person. The massive scams typically involve people who are very good at rationalizing what they are doing. This may explain some officials’ rather unbelievable claims about their “legal income” that seems completely beyond what they are earning on paper. Corrupt officials have likely convinced themselves that they aren’t doing anything wrong. Ariely’s research seems to suggest that something as simple as a pledge at the start of a work day or document could curb some abuse, as it would remind the individuals that these small acts are unacceptable.

There were also several factors that caused an increase in cheating that seemed to correlate to China’s officials. One is that removing physical cash from the equation greatly increased people’s dishonesty. If the award is something like a banquet, a wedding gift for a child, or perhaps a nice box of tea it would be easier to accept without guilt than cash. This means that the periodic gov’t crackdowns on gift cards may actually be more useful than they might have seemed at the outset. Another factor is something as simple as wearing knockoffs, which Dan argues results in the individual viewing themselves as more dishonest, causes people to cheat more to fit this new self-image. I would imagine there would be a similar effect on individuals who wear watches that were “gifted” in a dishonest fashion.

The biggest influence on dishonesty though is a demonstration of someone else cheating without punishment, which most officials likely get a glimpse of in their first gov’t position. I say this based on what I have seen within the schools that I’ve worked in, and the public hospital where administrators wined and dined without rebuke.

However, Ariely did discover that virtually every country’s culture is similarly corrupt, even though people often feel that their culture is especially corrupt (China was included in these tests, and the Chinese researcher was surprised to find there was no difference).  He did believe though that certain professions foster a culture that are more corrupt than others, with gov’t officials being among some of the top offenders (regardless of country).

So then, what lessons can we draw from this book about China? For one, the absolute most effective way of curbing cheating was to be supervised by a a third-party who had zero contact with the individual prior to or during the experiment. However, when the third-party was given time to get familiar with the individual, normal levels of cheating returned, and even slightly increased. This would seem to imply that China’s current system of corruption monitoring is faulty by design. Monitors should not be Party members, they should be frequently reassigned to limit fraternization, and should be closely monitored themselves (perhaps by an unrestrained media, or the citizenry). It would also abandon the idea that harshly punishing a few individuals would be enough to send a message to the rest.

We should also bear in mind that the daily, seemingly minor abuses, are likely more costly than the scandals that are too large to cover up. In a country with tens of millions of gov’t employees, if each employee enjoyed 100rmb in banquets per year (which is an insanely conservative figure), the cost to the citizens would be over a billion yuan (more than Liu Zhijun is said to have embezzled). To reach the level of monitoring that would be required to effectively crackdown on this kind of corruption, the gov’t would have to open their books to the public, which they are loathe to do.

An official account of corrupt officials – How People’s Daily reports on graft in China

A few days ago, it was announced that Liu Zhijun, former head of the Railway Ministry was stripped of his party title as a result of misconduct. In the Western press it was said that his graft involved hundreds of millions of RMB (over 800 million), and yet People’s Daily (PD) has never hinted at an amount. With this small spark, I decided to do a case study of PD’s reports on corruption in China.

The Party’s mouth piece is left in a precarious situation, a lack of reporting on corruption would give the people the impression that nothing is being done to confront the very visible problem. Reporting too much though gives the impression that every gov’t official is corrupt, and the Party is failing in their efforts to control it. This tight rope act must be carefully managed so as to maintain precisely the right balance in appearance of action and control.

In order to get a sample of the stories published by People’s Daily, I used Google Site search with the phrase “corrupt” (which also caught corruption and ant-corruption), and then limited the results to 1/1/2011-12/31/2011 (results). This returned a total of 374 results, of these roughly 60% were false positives caused by links to other articles. The remainder fell into three general categories; the largest focused on the Party’s anti-corruption efforts, the second largest focused on denouncing corruption and opinion pieces encouraging the gov’t to take action, and the smallest subset consisted of just 14 articles related to specific cases of corrupt officials being prosecuted.

These cases proved particularly interesting, since they give the clearest picture of corrupt officials and their crimes (see table at bottom). The smallest amount published was 10,000rmb, which was used for a banquet for the Luwan District Red Cross in Shanghai, while this received a great deal of attention on Weibo and was part of a very painful public image crisis for the Red Cross (which had also been hit by the Guo Meimei scandal), it was an insignificant amount compared to the other instances of corruption. The average amount accumulated by individual corrupt officials tried in 2011 was over 18,000,000RMB (based off only what has been reported in PD, which excludes the Liu Zhijun case), with the most corrupt being Xu Zhongheng, former mayor of Shenzhen, who was accused of taking over 33,000,000 RMB. The largest instance of corruption reported, was related to the trial of the managers of the Wenzhou Vegetable Basket group, which is a State Owned Enterprise; the CEO and 15 others took over 426 million RMB from the company during a restructuring process. People’s Daily though prefers to focus on individuals even when it clearly involves a group of corrupt officials.

I think for a casual reader the steady stream of information about anti-corruption efforts and limited reporting on individual trials may give the impression that corruption is being effectively controlled. Yet, when one looks at all of the reporting together, it seems woefully inadequate. For example, the paper mentions an effort to register the financial assets of 1.67 million officials, yet only 51% reported their property ownership, 36% registered their investments, and 48% reported the employment status of their relatives (who as we learned from the Bo Xilai scandal can also receive massive perks from their connections). Unsurprisingly the paper is complicit in glossing over these disparities; in the previous year roughly 146,000 corruption cases were investigated, yet only 14 were reported in the PD. These efforts seem at best to be a weak attempt at transparency.

The lowest amount reportedly taken by an individual official was 1.2 million RMB, which makes me wonder what the threshold is for punishment. Unfortunately we will never know how much the 146,000 officials were caught with, but the total must be massive considering that according to the cases reported in People’s Daily just 29 officials pilfered 647.18 million RMB.

Furthermore, the People’s Daily quickly backed away from the sensational report released last year from the Chinese Academy of Social Sciences that 16-18,000 officials had fled overseas with up to 800 billion RMB over the past 20 years. This figure was later replaced with the somewhat less damning claim of 4,000 officials with 50 billion USD over 30 years (roughly 40% of the original figure). The fact that there is a phrase to describe officials getting ready to flea, naked officials, indicates the scale of the problem.

Despite being the mouth piece of the Party, People’s Daily did publish a few bold editorials related to corruption. “Tofu Projects in China,” focused on various vanity projects throughout the country that had been poorly constructed and wasted public funds, and “The Recipe of China’s Food Safety Crisis” squarely blames corrupt inspectors for the country’s failure to protect its citizens from harmful ingredients. The paper also reported that corruption was rife in the construction industry, and that bribes can make up to 5-10% of the cost of a single project (China invested over 4 trillion RMB to bolster the economy after the 2008 downturn, do the math).

Overall, it seems that the tight rope act is now in danger of taking a disastrous fall as Weibo and other platforms become the more popular sources of information, largely because of inept reporting by PD and other “official” papers. Sadly, state media fails miserably at providing the people anything more than a glimpse of the scope and scale of the corruption. There are a few bright spots though, one being that corruption efforts do seem to actually be expanding to formerly off limits levels of gov’t, and secondly, that local elections seem to be reducing corruption at the local level, which has a large impact for China’s farmers.

The fall of Bo Xilai and spreading rumors as civil disobedience in China

Last night the Central Gov’t confirmed that rumors of Bo Xilai’s involvement in the death of a British national were true. The Party claims this as a victory that shows China as a country “ruled by law (and here),” even though information about this case began to surface months ago with Wang Lijun fleeing to the U.S. Embassy in Chengdu.

Bo’s sacking along with the revelation that he may have been an accomplice in a murder is also unusual in that high-level officials are usually dismissed without much clarification. In the last big case, with Railway minister Liu Zhijun supposedly embezzling 800 million RMB, it was only stated in the Chinese press that he was suspected for graft without a specific amount (even though he was blamed for the high-speed rail crash and other railway officials were named with specific amounts). This indicates that more information has been revealed this time as part of an effort to curb rumors.

However, there are still many questions left unanswered and censorship has been greatly increased since the announcement to squash any new rumors from forming (which is difficult).

The first question we should explore is – What kind of country spawns rumors about officials murdering foreigners in which the official gets away with it? Or that the military has occupied Beijing without it being reported on the news? While one of these rumors has been verified and the other disproved, they both spread like wildfire without any confirmation or semblance of evidence. Rumors only take root in fertile soil (compare the viability of Bo rumors to whether or not Bin Laden was killed). This reveals a society (inhabitants of weibo, not all of China) that believes most gov’t officials are corrupt, that such officials are rarely punished, and that even a murder most foul would be covered up. This does not suggest that the citizens see China as a country under rule of law; they know that many like Chen Guangcheng are still being held outside the law.

Secondly, rumors are continuing to spread in spite of real name registration on Weibo, renewed efforts to effectively contain such sensitive speech online, and a dozen or so articles from the Chinese press begging netizens to stop spreading rumors and place their trust in the Party. This demonstrates a hunger for knowledge even under threat of arrest, and a major push towards the democratization of information in China. While the gov’t still discourages the spread of “illegal information,” it looks as though netizens are starting to challenge the assertion that there are some things they should never know.

This brings me to my main point – In modern China spreading rumors about gov’t officials can be seen as a form of civil disobedience* (In that it is non-violent and challenges a law that is seen as unjust). Netizens are actively refusing to heed the requests of the gov’t to stop spreading rumors as a way of demanding a more transparent and open form of gov’t. This is in no way an attempt to overthrow the Party, but instead seeks the information that is being denied to them, as well as challenging the current limits on their freedom of speech.

This morning as my wife headed to work she noticed that her school bus was a cacophony of “Bo Xilai,” “murder,” and “British person.” With the knowledge that this was being discussed openly, we tested whether or not a text message of 薄熙来 (Bo Xilai) could be received – it was not. When I arrived at work I mentioned this to my Chinese co-workers. They both claimed that it was a problem with my phone and that China did not possess the capabilities to block text messages. So one of them, wanting to prove me wrong, sent a text. A few minutes passed before my phone beeped with a new message – it was the second one she had sent as a test, it simply read “OK.” After waiting a few more minutes without any more messages, they saw first hand the level of censorship that exists in China**. It was an experience that overrides all the People’s Daily and Global Times articles that claim freedom of speech exists in this country. It also shows that even sending a 3 character text can be a form of civil disobedience and a tool for political awakening.

*I recommend reading The Mask of Anarchy (the important bits), which is considered the first poem on the subject of Civil Disobedience (full poem).

**I repeated this test with friends in Beijing and Chengdu, both reported that they did not receive my text. The pinyin “Bo Xilai” seemed to be uncensored. Test was done around 8a.m. on April 11th

Slowing Down the High Speed Rails – News Story of the Week

China’s high-speed rail system has been a hot topic for these past few months since it was revealed that millions of dollars had been embezzled from these projects. With that revelation came some big questions over the safety of the system, which had already been constructed with a fraction of the budget used in other countries. Japanese engineers were also raising questions about how China was using the same technology, but were traveling 25% faster than was allowable on Japanese lines.

Yesterday we got the first notice that these lines were going to be slowed down, however all of the information pointed to this move being in response to complaints about high ticket prices. Today it seems we are getting a bit more of the truth in this surprisingly honest piece from the People’s Daily, that admits safety concerns for the first time.

The concerns over the project don’t end there. Customers are complaining about high ticket prices, and bankers are questioning when exactly these new lines will be able to pay off their massive amounts of debt.

America definitely should be thinking about high-speed rail, but I’m not sure China’s system is what we should be envying.