Economics of the broken window is applicable to corruption

Abstract

The Sirisena presidency and the UNP that championed it have been endorsed by the ballot with the hope that they will take action against the rampant corruption that was felt to be hurting the public welfare under the SLFP-led Rajapaksa presidency. Two months into the new presidential term, two concerns are being raised. (1) That the progress against corruption is too slow (2) That actions against ‘small fish’ are unwarranted. This article provides insights from economics on the second concern and on the economic importance of countering corruption.