Public corruption can harm you and all Americans in many ways. The more the government’s leaders and public officials steal from the public purse, the less public resources are available for all manner of social services, for foreign aid, and for national security. The more corrupt acts distort the allocation of public resources, favoring bribe-payers over others, so the more markets and services to citizens are undermined. Public corruption leads to less accountability or less representation in government. Accordingly, public corruption can hurt you directly by increasing your daily cost of living, and, more generally, reducing your quality of life and that of your family and friends. And, of course, there can be consequences if you participate in corrupt acts and get caught.
1. National Security
- Public corruption can result in the loss of vital national security secrets. Motivated by financial greed to fund a lavish lifestyle, Aldrich Ames sold the identities of virtually every CIA and FBI source operating in the Soviet Union between 1985 and 1994. His treachery resulted in “exceptionally grave” damage to national security, including the execution of at least 10 high-level U.S. assets. In another example, Robert Hanssen accepted over $1.4 million in cash and diamonds to provide the Soviets with thousands of pages of classified documents between 1985 and 2001. He compromised U.S. strategies for nuclear war, military weapon technologies, and the existence of a multimillion-dollar eavesdropping tunnel under the Soviet Embassy.
- Public corruption can divert resources away from the military or supply the military with poorly made equipment likely to fail when needed. Various procurement scandals include Operation Illwind (1988), the Fat Leonard (2024) case, and the Raytheon (2025) case.
- Foreign leaders sometimes set out to deliberately corrupt the leaders of lands they want to control. For example, in the summer of 2020, Foreign Affairs magazine published an article by a group of former US diplomats accusing China, Russia, and other countries of having transformed corruption into an instrument of national strategy.
- Public corruption can endanger public safety. A notorious Chinese drug trafficking organization used front companies formed in Massachusetts to distribute deadly fentanyl analogues and 250 other drugs to some 37 U.S. states in the years leading up to 2020. Public corruption, including money laundering, can facilitate the financing of terrorist organizations. In 2018, the US Department of Justice reported that a Lebanese businessman linked by the Treasury Department to Hezbollah pleaded guilty to money laundering and conspiracy.
Corruption plays a key role in the diversion of arms and ammunition to criminal organizations and conflict zones. This is done by arms brokers bribing state officials to create fraudulent export or import documentation, or by military or police personnel illicitly selling state weapons for personal profit.
2. The Economy
Most substantially, government corruption can undermine the efficient performance of markets. This undermining is accomplished by pushing out honest, efficient companies in order to promote dishonest, inefficient companies, and enabling fraud and crime, with the combined impact of rising inflation, rising unemployment, and slower economic growth.
- Public corruption increases the cost of doing business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breached agreements or detection.
- Example: In 2023, Ohio House Speaker Larry Householder, R-Glenford, was sentenced to 20 years in federal prison for his role in a conspiracy in which FirstEnergy, an Akron-based public utility, paid $61 million in bribes to get a $1.3 billion ratepayer bailout. Subsequently, the utility was also found to have made $108 million in balance sheet “errors” that covered up expenses for lobbying and donations.
- Public corruption in financial regulatory offices can put our money at risk.
- Illustration: Oklahoma’s former insurance commissioner resigned ahead of an impeachment trial and was later convicted of embezzlement and accepting bribes in the mid-2000s from an insurance executive in exchange for favorable regulatory treatment. Citizens suffered when Fisher’s actions led to one company’s collapse, leaving them without coverage or facing claim denials. The public bore costs associated with receiverships and regulatory failures. Fisher’s acceptance of bribes for preferential treatment also created an unfair market, damaging legitimate businesses and public trust in insurance regulation.
- Corruptly obtained government support for inefficient firms raises costs for consumers and stifles innovation. Competition for major U.S. Defense Department contracts is intense.
- Illustration: In 2006, the U.S. Justice Department reached an agreement with the Boeing Company on a record $615 million settlement to resolve criminal and civil allegations that the company improperly used competitors’ information to procure contracts for launch services worth billions of dollars from the Air Force and the National Aeronautics and Space Administration – rather than winning based on superior innovation.
- Public corruption in regulatory offices, like transportation safety regulators, food safety, and building codes, can put lives at risk.
- Example: Commercial driver’s licenses were sold to unqualified truck drivers in exchange for bribes that were funneled into a political campaign fund. In 1994, an unqualified driver who had obtained his license through this scheme caused a horrific accident that killed six children.
- Example: Three workers were killed when the Hard Rock Hotel in New Orleans partially collapsed during construction. A subsequent investigation by city officials led to the suspension of two building inspectors who were alleged to have accepted bribes and falsified inspection reports, claiming to have inspected floors they never actually visited.
- Example: Sewol Ferry Disaster. Bribes to regulators in South Korea allowed a ferry there (the Sewol Ferry) to be dangerously overloaded, causing it to capsize and kill over 300 people in 2014.
3. Billions of dollars of taxpayer money
- Public corruption costs ordinary taxpayers billions of dollars annually, not only through lives and property lost but also through inflated prices for goods and services.
- Example: Public corruption causes spending by state governments to be higher than necessary. One study found that the 10 most corrupt states between 1997 and 2008 could have reduced their total annual expenditure by an average of $1,308 per capita—5.2 percent of the mean per capita state expenditure—if corruption had been at the average level of the other states.
- Specific example: Illinois’ public corruption convictions cost the state an estimated $556 million every year from 2000-2018, according to an Illinois Policy Institute analysis of a peer-reviewed 2011 paper published in the academic journal Public Choice.
4. Government capacity to serve
Public corruption can reduce a government’s capacity to defend the nation, provide services to you, and invest in new capacities on your behalf – or require more government debt to finance those expenditures. This can happen in several ways:
- Government revenues can fall below targets when tax collection officials are willing to accept bribes to allow taxpayers to avoid their obligations.
- Government revenues can also fall when taxpayers see a corrupt system failing to deliver adequate public services fairly. Such perceptions make businesses more likely to operate in a “shadow economy” to avoid paying taxes to such corrupt governments.
- Poor quality of goods and services the government procures from corrupt suppliers for use in national defense, infrastructure, and service delivery.
5. Democracy in our republic
Corruption by elected and unelected officials can undermine the legitimacy of representative democracy in our republic. Corruption damages confidence in public authorities and institutions, leading to cynicism and a belief that the system is rigged against them. Corruption can sometimes create emotional and motivational impacts in some people. Victims may experience distress, disillusionment, a loss of hope, and a feeling that their efforts are futile. We briefly review some of the costs, by public sector role:
- Corrupt elected officials will represent and feel most accountable to their corrupt partners – donors, advertisers, political operatives – rather than the voters they are meant to represent. Problems will not get solved, or will be solved only to the satisfaction of the ruling kleptocracy.
- Corrupt appointed officials are selected for their immorality and loyalty rather than useful experience and skills. They will prioritize the needs of their corrupt patrons – corrupt elected officials and political brokers – rather than the citizens they are meant to serve. Laws will be followed and enforced selectively and poorly if they are followed at all.
- Illustration: the Teapot Dome Scandal. Albert B. Fall served as the Secretary of the Interior from 1921 to 1923. In a significant conflict of interest, Fall accepted over $400,000 in bribes (disguised as “loans”) from oil tycoons in exchange for secret, no-bid leases to federal oil reserves in Wyoming and California. He was the first U.S. cabinet member convicted of a felony and sentenced to prison.
- Corrupt judges are of special concern because they cannot be counted on to be of the highest quality, nor can they be counted on to prioritize justice in an unbiased manner. This is of special concern in three arenas: political, social, and economic. Corrupt judges can be paid to influence election disputes. They can be paid to rule against maintaining the civil liberties and rights of citizens. And they can be paid to rule in favor of one side of a business dispute.
- Example: Kids for Cash Scandal. Between 2003 and 2008, Judge Ciavarella and Judge Conahan accepted approximately $2.6 million in kickbacks from the developers and owners of two private, for-profit juvenile detention centers. In exchange for these bribes, the judges ensured a steady flow of “clients” by sentencing thousands of children to these facilities. Approximately 4,000 juvenile convictions involving more than 2,300 children were eventually overturned. Several victims suffered from severe trauma that led to later overdoses or suicides.
- Corruptly selected goods and services suppliers will not face any accountability for high prices and poor quality, even when citizens’ well-being is at risk. In the United States, these kinds of cases of corruption are almost always found in state and local governments. There are many examples in the book ” Corruption in America: A Fifty-Ring Circus, listed in the sources below.
