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Lack of systemic corruption in the US is a major competitive advantage
Jack and Suzy Welch



Q What is the impact of corruption on a nation's economy? Is there corruption in the United States in any form? My impression is that there is no major corruption in America, which explains its entrepreneurial success.

RM Subbiah, Kuala Lumpur

A Like heat, humidity, and tax rates, corruption falls into the 'everything-is-relative' category.

We happen to live in Boston, home of the Big Dig, said to be the one of the largest public works projects in US history. The Big Dig, launched in 1991 to bury many of the city's highways and create a wide swathe of parkland, was supposed to be concluded in 2001 for $2.8bn. It may be done by 2010, with a final price tag of $14.6bn.

Now, anyone who has ever put in a new kitchen knows that renovations always cost twice what you expect.

But this is an $11bn overrun.

According to media reports, federal and state authorities are investigating the project and are examining evidence that may lead to corruption charges. Such incidents certainly seem to suggest that, yes, there is corruption in the United States. But it's rare. . .comparatively.

We recently met with hundreds of business people in Brazil and Argentina, and their stories of ubiquitous corruption, much of it at the hands of government, were chilling.

Tax evasion is widespread;

enforcement is spotty. In Argentina, several CEOs told us that if you attempt to conduct business without playing by the unwritten rules imposed by government bureaucrats, an army of tax auditors arrives at your door, paralysing your company and often staying until an employee or two goes to jail.

Even in some European countries, business as usual can include illegal activities.

While the situation has improved over the past couple of decades, CEOs there have told us that bribery was once so pervasive that they often did not know which of their own employees they could trust.

Today, corruption is particularly rampant in the developing world, from India to China, and throughout eastern Europe and Russia. It remains one of the main reasons that capitalism cannot take root in Africa. Corruption can make it just too expensive to start a business, or in many cases, to keep a small one running.

By contrast, the relative lack of corruption in the United States is a key reason, along with the entrepreneurial culture and the wide availability of venture capital, that we lead the world in business creation.

Virtually no one starting a company in the United States today - and no one funding a company - has to worry about covering the hidden costs of bribes, payoffs and kickbacks. They just have to worry about coming up with great ideas, getting the best people, and terrific execution. That's hard enough.

Yes, the United States has its share of corruption in public works projects. And we did have a spate of corporate scandals - Enron, WorldCom and Tyco, to name the most notorious.

But those were mainly cases of individual fraud and malfeasance, not systemic corruption. We really don't have that.

That's why, when the sustained health and entrepreneurial energy of the American economy are compared with those of the relatively more corrupt countries around the world, your question says it all.

Corruption is a competitive disadvantage.

When it comes to getting an entry-level job with a corporation, does it matter where a person went to college?

Ben Santacroce, Florida Q A Every situation is unique, of course, but in general, college mainly matters if the person in question is sort of average - OK grades, OK recommendations, OK everything - in which case a brand-name degree comes in quite handy.

A stamp of approval from a top university has a way of opening doors. Hiring companies will hold their noses and say, "Well, he did graduate from Cachet College . . ."

But stars are stars no matter where they go to school. We're talking about students who have held leadership positions on campus and, because of their hard work and great attitudes, have garnered enthusiastic letters of recommendation from professors and employers.

This crowd of winners is welcome anywhere, with perhaps the exception of consulting firms which, for reasons of prestige, hire almost exclusively from about a dozen top-tier colleges. It's their loss.

That said, how a person did at school - or to refer to your question, where he or she went to school - becomes irrelevant after about one month on the job.

At that point, a person's performance takes over as the driver of career success, as it should, rendering college to its rightful place - a happy memory.

Jack and Suzy Welch are the authors of the international best-seller Winning. You can email them questions at Winning@)nytimes. com




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