Costs of Corruption

In his 2012 book, 'A Capitalism for the People,' Luigi Zingales notes the deep economic problems that arise when people are rewarded for who you know, or even, who you pay off, rather than what you know, or your ability to produce and sell better goods and services. What are the broader consequences of this type of corruption that distorts outcomes like who gets a job, what is purchased, and what attributes determine economic success? What impact does corruption have on public trust in institutions? What can one do when norms that had protected market-based outcomes break down or prove insufficient? And what do the answers to these questions tell us about present circumstances? Luigi joins EconoFact Chats to discuss these issues. Luigi is the Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance at the Booth School of Business at the University of Chicago. He is also the Director at U. Chicago's Stigler Center.