Democracies based on strong legal foundations provide a stable framework for social life and economic activity. In order for this framework to operate efficiently and fairly, however, political actors – be they political parties or individuals – must seek reelection and must feel insecure about their prospects, but not too insecure. This leads to a “paradox of stability.” Too much security of tenure can further corrupt arrangements. Too much insecurity can have the same effect. Incumbents must have some chance of returning to power in the next election, but the likelihood must be well below 100%. Opposition parties – or even individual candidates – can then play the role of monitors, threatening to make corruption a campaign issue.
Statutes are the result of political deals. They not only express the preferences and ideals of voters and elected officials, but also reflect the interests of those who lobby or make donations to influence provisions in their favor (Laufer 2008; Tillman 2009). Private interests may also provide jobs to former politicians and their top staff, creating a “revolving door” that is open to abuse. Advanced democracies remain vulnerable to the excessive impact of private wealth on public choices in ways that undermine democracy, even if outright bribes are uncommon. Nevertheless, we begin with bribes that enrich politicians personally and illegal campaign donations. Unfortunately, they remain all too common worldwide.
Such payoffs may be deterred by the risk of public exposure. For elected politicians the most immediate form of “punishment” occurs at the polls. Furthermore, the electorate may extract a cost even if the payoffs are kept secret. Bribes and illegal campaign donations are given in return for a benefit. The quid pro quo depends upon the relative bargaining power of the politician and those with whom he or she deals. Many bribes induce corrupt politicians to take actions they would not have taken without the payoff, but if politicians vote against the interests of their constituents, they can expect to suffer at the polls. Thus, the strength of the competitive political environment raises the stakes and reduces the likelihood of corrupt side deals even if bribes are kept secret.
However, some politicians can both be corrupt and please the voters by supporting popular projects that are padded with kickbacks.