US Corruption Soars to Highest Since 2012 Following Unprecedented Covid-19 Stimulus Spending
It has been nearly a year since the coronavirus pandemic caused historic economic contractions around the world, unleashing unprecedented government stimulus spending in response. However, the pandemic has yet to show signs of dissipating, and with talks of additional bailout packages not happening anytime soon, one begs the question: have the funds been appropriately allocated to the various public sector pandemic responses, or has corruption taken center stage in 2020?
Transparency International’s Corruptions Perceptions Index, which ranks 180 countries and territories on their perceived level of public sector corruption, suggests that 2020 was rampant with fraud across the globe, and as a result, undermined historical Covid-19 stimulus spending. The index, which gives countries a rank between zero (highly corrupt) and one-hundred (clean), scored an average of 43, with two thirds of countries scoring below 50.
According to Transparency International, the year 2020 not only shows that the pandemic has created a health and an economic crisis, but also a global corruption crisis. The health care sector in particular has been at the forefront of various forms of corruption, including bribery, overpricing, embezzlement, and favoritism. Countries that have invested heavily into their healthcare systems before and during the pandemic, scored higher on the index relative to nations that diverted government spending away from essential services— regardless of economic development levels.
The countries that had the lowest level of public sector corruption were Denmark and New Zealand, with scores of 88, followed by Finland, which had a score of 85. Conversely, countries with the highest level of corruption were South Sudan and Somalia, both scoring 12, followed by Syria with a score of 14. Although further up the list, the US did not score relatively well either, receiving a rating of 67— the worst performance since 2012. Canada fared sightly better, receiving a score of 77.
Transparency International attributes the rise in public sector corruption— as illustrated in the US— to the trillion-dollar stimulus packages passed in 2020. Recall, the latest US Covid-19 relief bill included more porky components than vital healthcare spending, including an additional $15 billion for payroll assistance for airlines, as well as a tax break for corporate meal expenses.
Information for this briefing was found via Transparency International, Statista, and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
