Is corruption natural or learnt?

New Zealanders like to think of themselves as honest. But, asks Bruce Munro, if the Government is having to invest an extra $15.2 million to tackle unscrupulous business practices, what does that say about us?

Prof Steven Grover
Prof Steven Grover

It is a bit of a conundrum. On the one hand, honesty and fair dealing are two of our core values.

Being straight up and ensuring people get a "fair suck of the sav'' are more highly prized by Kiwis than, for example, being intellectual or sophisticated.

• Gilding the lily

Others appear to agree. New Zealand has consistently been a front-runner in Transparency International's annual Corruption Perception Index.

But at the same time, we seem to be losing our grip.

In January, it was announced that for the second year running we had slipped in the corruption perception stakes and now lie fourth, after seven years at the top of the leader board.

Weight was added to that perception when the Government last month announced it was committing an extra $15.2 million, over four years, to help the Commerce Commission better protect consumers from unscrupulous business practices.

What is going on?

Our proud tradition and even our government-sanctioned "NZ Inc'' global marketing strategy rests on a foundation of personal and collective integrity.

So why do we appear to be drifting, however gently, in the opposite direction? A small group of Swiss researchers might hold the answer.

In late 2014, University of Zurich economists Alain Cohn, Ernst Fehr and Michel Andree Marechal published a startling paper in the journal Nature.

Their research had been driven by questions about the cause of numerous large-scale cases of fraud in recent years, which had undermined trust in the global finance industry.

Using 128 employees from a large international bank, the researchers conducted a number of experiments. The core test was a simple coin toss, repeated 10 times.

Bank employees were asked to report their results, heads or tails. Depending on which way the coins landed, they could win up to $200.

What it revealed was striking: bankers, when they thought of themselves as bankers, were consistently more dishonest than the control group.

Assoc Prof Brian Roper
Assoc Prof Brian Roper

The conclusion: there is something in the water of the cultural pool from which bankers drink that makes them dishonest.

A range of hypotheses was tested to explain what caused this dishonesty. The one that stuck was the bankers' belief that social status was primarily defined by financial success.

The bottom line: The finance industry culture that equates materialism with success promotes dishonest behaviour.

Could this explain the apparent growing tension in New Zealand society; holding on to honesty while also pulling away from it at the same time?

Is it because, for the past three decades, Kiwis have been swimming in an economic system that promotes a mindset that would make most investment bankers feel truly at home?

Steven Grover believes that is an untenable conclusion. The University of Otago Business School professor's areas of expertise include business ethics and leader integrity.

He agrees people can be conditioned to think of themselves in certain ways, and how they view themselves can determine their priorities.

For example, the engineers who gave the ill-fated 1986 Challenger space shuttle the all-clear for take-off (after earlier reservations) did so after being told they had to "take off your engineering hat and put on your management hat''.

Prof Grover does not rate parts of the Swiss team's research that led it to its conclusion about materialism.

"I reject the idea that as the global society becomes more materialistic it will become more dishonest,'' Prof Grover says.

"I cannot find empirical evidence that it is true. Corruption is as old as mankind.

"Some people will find ways of extracting resources from a system or use an opportunity to extract resources. This often becomes the business system until a point at which it is stopped by a higher authority or mass effort from victims of the corruption.''

Brian Roper, however, gives the notion that neoliberalism could be making us all more dishonest "a qualified yes''.

A political economist at the University of Otago, Prof Roper says a key value of our prevailing economic system is "greed is good''.

"It is a system whereby people are going to try to maximise profit and accumulate capital. And they are going to do it just about any way they can.''

For those with money, New Zealand's lightly regulated business environment provides plenty of opportunities for dishonest gain.

For those at the bottom of the heap, ideologically driven cuts to welfare provisions also encourage morally questionable behaviour.

Both could be considered to be doing wrong. But there is one difference, Prof Roper says.

"You are much more likely to get away with illegal activity if you've got a commercial lawyer and an accountant ... [than] if you're living on the East Coast or in Northland and you're growing marijuana to supplement your low-wage income.''

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