CORRUPTION

 

MAIL FROM SANJEEV ON "Corruption"

Date: Sat, 18 Apr 1998 09:50:10 -0700 (PDT)

I know what I am asking is virtually impossible. All of us are too busy.

 

But before I reply at length on the corruption issue (and this is one on

which I have much to say), I would request anyone who has the time or

inclination to go to:

 

http://www-rcf.usc.edu/~sabhlok/Termpap/termpap.html

 

and click on the term paper entitled "Six Propositions and Recommendations

on bureaucratic corruption in government organizations of Less Developed

Countries, with focus on India," which I wrote almost exactly one year

ago. Please press the shift key while downloading. You will get a

Microsoft Word edition of the paper which can then be read, if you like.

 

Also, preliminary material that I am writing for the book is available at:

 

http://www-scf.usc.edu/~ssabhlok/Bk/Chaps/chap6.html

 

That also gives come news-reports on this topic that were compiled (mostly

sent in by friends all over the world) after Spring '97.

 

Thanks for your interest and patience. This topic has been buring me from

day one of my life in the civil service, and I think I see the light at

the end of the tunnel now after many, many years. I will share some of

these findings with the members later in the day or tomorrow.

 

Sanjeev

 

MAIL FROM SANJEEV ON "Corruption"

 

Date: Sun, 19 Apr 1998 11:03:31 -0700 (PDT)

 

Not much time to devote to corruption, today, but thought I'd send off a

brief (!) note.

 

Kush's hyothesis: "socialism has nothing to do with ideology"

-----------------

> Sanjeev seem to be saying that corruption in India is because of

> socialistic thinking. I am saying that socialism is just a facade

> for corruption, In other words, corruption has nothing to do with any

> ideology. Rather corruption has only one "ideology" which is personal

> greed (sometimes necessity) and opportunity for corruption which an

> unaccountable system provides.

 

To test this hypothesis, we will have to frame the argument as follows:

 

Hypothesis 1: Indians are genetically corrupt. Hence it is immaterial

what system of government you put them in. They will

always be corrupt. Particularly greedy, these Indian

folk.

 

Hypothesis 2 (more refined):

Indians are not all genetically corrupt, but there is

a law of self-selection operating here, in that only

the corrupt enter government service. The law of

self-selection operates irrespective of the government

system that you operate in. The very word "government"

will ensure that Indians will fall into two lines:

a) the corrupt will fall into the line headed by the

flag called "government"

b) the non-corrupt will fall into the line headed by

the flag called "private sector."

 

In other words, diagramatically, the Kush model reads as follows:

 

Indians Grp I -----> Black box of ----> Result is the same

(genetically corrupt) government since only

genetically

corrupt join govt.

 

Indians Grp II -----> Black box of -----> genetically honest

(genetically honest) government and never greedy

=====

 

The black box of govt can include ANY form of govt. (communism, socialism,

capitalism, fascism, anarchy)

 

Marx's model was that it is the industrialists who are genetically greedy

and the workers are chaste, pure, humanitarian and good. The Kush model

makes a similar argument, but discriminates on the fact whether you are a

government servant or not.

 

Sanjeev's (Economic) model:

==========================

 

In my model, derived from the discipline called economics which studies

how wealth has been created and is created, three assumptions apply to ALL

human beings:

 

a) All human beings want more of what they value than less (i.e., they

are greedy). Children might want more of a pony ride, Mother Teresa may

want to save the soul of more people, and you and I may want a more clean

environment (less pollution). All of us will, given the choice of chosing

between equally "clean" $10 and $100, will choose $100.

 

b) All human beings are opportunistic. In other words, they all have

"guile." Starting from our epics like Mahabharat and Ramayan, right upto

the current day, when a very "simple," politically untrained, Italian girl

(now Indian), called Sonia Gandhi suddenly "kicked out" our old man Kesri

who was unprepared for the fact that his "own" appointees to the CWC will

change color behind his back, ALL human beings are and will remain

opportunistic. Beware of even the most simple shephard (not necessarily in

a negative sense, though).

 

c) All human beings are boundedly rational. In other words no one knows

everything about everything else. Hence they take "maximizinig" decisions

based on uncertainty and incomplete knowledge. Consciously they are

always "maximizing" their own welfare, never minimiziing it though the

results may be quite to the contrary.

 

All these human laws are derived from the laws of nature. In nature, no

animal that does not do the above things, will or can, survive. The result

of any single one of these motivations might not always be obvious as

people apply a combination (also called strategy). Therefore when a king

is very good to his people (as recommended by Chanakya) that does not

violate the first law; it simply is an opportunisitic (strategic) way of

continuing to get the support of his people and to thwart his enemies. If

a king were a fool enough to be not good to his people (as Aurangzeb was),

he will lead to his own downfall or the downfall of his future dynasty.

 

In my model human beings can be "chanelled" into socially constructive

activities only by devising a system of checks and balances, including

incentives, to ensure that people do what is expected of them.

 

My hypothesis is:

 

All Indians are genetically greedy and opportunisitic, like anyone else in

the world. Therefore their observed behavior depends almost completely on

the system which they operate in (i.e., the Black Box above makes a huge

difference on the outcome).

 

Socialism ---> great role for government in business (including industry)

+ very low wages to all levels of decision-makers

----> a general temptation to squeeze out public funds for

private gain, by government functionaries.

 

----> Given the opportunity (which is always there),

the vast majority of the government becomes "corrupt"

 

As per this hypothesis, there is no self-selection operating which makes

the corrupt join government, and the honest folk to stay outside it. In

fact it does not matter whom you put into the government. Provide them

with a greater role to interfere in private affairs and to build cloth

mills, and pay them a low salary. Invariably, and for sure, in all

societies everywhere (not only in India), this "mix" will lead to corrupt

outcomes.

 

We all know that people compare our government functionaries with the time

when the British were there. Our bureaucracy was never as corrupt, then.

But we never had socialism, then, either... This also shows that Indians

are not genetically corrupt.

 

Nehru was himself never corrupt, but his greatest bane was the growing

corruption in government all around him. Go to Bhakra Nangal Dam and you

will still find his admonition to the engineers not to be corrupt. He was

completely blank as far as economics was concerned (or even politics: look

at his shock when China attacked us: of course, they would. Why would they

not?). He did not realize that the socialism that had led to great

corruption and even massacres of innocent people in USSR (he was a great

fan of Stalin, can you believe that!), was going to do the same to India.

 

His daughter and his grandchildren were of course blissfully unaware of

anything at all (Nehru had a truly great understanding of India's past, at

least, and had done much to bring us freedom). When we have top ranking

economists in the world like Bhagwati, Srinivasan and even Sen, trying to

tell these folk that their path is destined to lead India to disaster

(1991, by the way, was a disaster of mammoth proportions), these

mystified, confused, and power-drunk progeny of Nehru did not have the

intellectual capability to understand their sound advice.

 

In my hypothesis, therefore, it is the form of government **creates**

corruption out of the usual human traits of "greed, opportunism and

bounded rationality."

 

I insist that all Indians are greedy, opportunistic and boundedly rational

[individual differences might exist in the level of these traits]. I also

insist that **no** Indian was born corrupt. All corruption that we see

around us (at the cutting edge level of ticket collectors in trains,

police mamas, delhi development authority, and at higher levels like the

Defence Secretary Mr. Bhatnagar who took money in the Bofors case [by the

way, for those folk who might not be aware, my father was the Additional

Secretary to the GOI, and the number two or three man in defence finance

for many years and he knew of Bhatnagar's involvement right through, in

the Bofors case. He also told me of the activities of many other top

bureucrats and politicians. When I talk of corruption, I not only talk

from my own experience in Assam where a Chief Minister wanted money from

me, indirectly, but from my father's experiences in Andhra Pradesh where

the then Chief Minister asked for contributions from the public sector

company my father was in, and so on...]) was created from the socialistic

system we have adopted.

 

There are some folk who need very little (like my father, whose needs are

quite small). These people do not become corrupt in any system. There are

others who are so strongly offended by corruption that they will never

participate in corruption. But I wish to point out that these few folk can

only be a minority. Most people's needs are increasing all over the world.

When an average worker in the USA has a car and a house, why should our

average DDA clerk aspire for less? Therefore, by giving enormous powers

and low salaries to people who are intrinsically greedy and opportunistic,

we create the monster called corruption all around us.

 

I am not saying that coming down heavily on corruption is a waste of time.

It does help, for a few weeks or a few months even. But unfortunately, we

live longer lives than that, and simply taking draconian measures against

our corrupt people will not solve any problem. It comes back as soon as

these strong measures are slackened, and when it comes back, it comes back

with "vengeance," strengthened and even more greedy.

 

Instead, we have to go for the standard economic model of bureaucracy

(Niskanen, Douglas North, and others), and follow the path of Singapore.

 

a) Change the system completely by eliminating govt. involvement in almost

all business activities.

 

b) Pay the law makers, judges, and bureucrats (at all levels) higher and

still higher salaries, as economic growth increases. Today, a typical IAS

officer gets hundreds of times less than his counterpart used to get

before Independence. That is not a sure way to increase honesty in the

IAS. Among the faculty at the National Academy of Admn. in 1994, one of

the most burning topics of discussion among us was the higher and yet

higher levels of corruption among the young IAS officers the moment they

are released into the field. Self-selection is now beginning to operate, I

think. As salaries in the civil services plummet, the people who join it

are more and more clear that they will have to "make up" through other

means.

 

I am not saying that corruption will disappear when these things are done,

but that it will come down to such low levels that we could even live with

it, and in any case, it would become much easier to take strong steps

against the corrupt (such as maiming them in public!) without causing a

social outcry.

 

Therefore we need to change the system, not simply kill off our corrupt

folk (as Kush's argument might lead us to conclude).

 

These are difficult topics and the solution is pointing clearly to one

path: get rid of socialism and adopt "capitalism," and standard economic

theory. That way, growth will happen, corruption will go, and poverty

will be completely eliminated (in Korea it took only 10 years of

capitalism to almost completely eliminate poverty). We can then talk of

how exploitative the system is, who is suffering from the greed of our

industrialists, etc. At least will be spared from the greed of DDA

clerks, and the torture of being led by leaders who have barely passed

school.

 

Sanjeev

 

CHARU’s REPLY FOR SANJEEV’s MAIL ON "Corruption"

 

Date: Sun, 19 Apr 1998 17:21:48 -0400

 

My views lean towards Kush's: Power corrupts, regardless of the form of

government.

I do not find Sanjeev's arguments persuasive that socialism is the

cause of corruption. If this were the case, then we should be able to

observe all capitalist societies free of corruption. How does that stack

up the corrupt yet capitalist societies of Japan, or even more glaringly

Indonesia? (Or for that matter the central and Latin American former US

satellites like Haiti, El Salvador, Guatemala, or Chile?) And how does

the corruption in those countries compare with corruption in say Cuba or

China?

 

I don't have hard numbers to answer these questions but based on what I

can glean from current news reports there is plenty of corruption

regardless of the form of government. This is also not to say that I

advocate the totalitarianism of the governments in Cuba or China any

more than I would the recent governments of South Korea. While we're

talking about different forms of government I may as well observe that

Fascism is if nothing else extremely efficient- when Mussolini ran

Italy, the trains ran on time (as they did in India under Sanjay Gandhi)

and there was no crime in fascist Italy either- Mussolini didn't want

competition from the Mafia so he smashed them.

 

Something else to ponder is that in the US, much of what would be

labeled corruption in India is considered perfectly respectable. An

example that comes to mind is Bush's "100 Club". This was a group of

political contributors that paid Bush 100K or more. Altogether this

group contributed several tens of millions of dollars. In exchange Bush

would push legislation favorable to their interests, one very obvious

example was the capital gains tax cut which if it had passed would have

benefited the members of the club to the tune of $30 billion within a

year.

 

I'll concede that apparent and petty corruption in the US is a lot lower

than in India is probably among the lowest in the world but this IMO is

more a result of a civil society where representative social

institutions and pressure of public opinion is powerful enough that

exposure of corruption can lead to tangible consequences.

 

If the local people in a district in India had the power to kick out a

corrupt IAS officer in India I'm sure they would do so and corruption

would decrease. If the populace is powerless the corrupt official has no

incentive to change his/her behavior. I believe this model is applicable

anywhere regardless of the form of government.

 

To me this discussion comes down to the question- what is the role of

government? The form of government you chose would flow from that.

 

My personal view is that in any society some individuals and groups will

accumulate power/wealth/resources disproportionate to their numbers,

This can have many reasons- ambition, ability, opportunism, a culture

that happens to fit well with the current conditions, or historical

accident. I don't see this as a necessarily bad thing, it does become

detrimental to the society as a whole when it restricts opportunities

for others in society to also seek their pursuit of wealth.

 

For example, the fact that someone's great grand father was very

successful in terrorizing all his neighbors and laying claim to all

irrigated land in a village is not a good reason that his descendants

should be able to enjoy the benefits of the land and deprive all other

people of that community.

 

The role of a __representative__ Government (democracy?) then is to

level the playing field towards the ideal that anyone with the ambition,

drive, ability, and the hard work, has the same opportunity to succeed

and their ability to participate in the government is not predicated on

wealth and pre-existing power regardless of background. I believe that a

purely market driven society will become the kind of government

advocated by John Hancock during the drafting of the US constitution

where he proposed that "The government of a country should be done by

those who own the country". Don't laugh, many US states up into this

century had laws on the books that required a minimum asset value

ownership as a precondition to the right to vote.

 

The way a representative government levels the playing field is by

acting as an agent of _all_ the members of the society thus sometimes

acting as a check and counterbalance to non-representative powers such

as corporations, or even partially representative but disproportionately

powerful organizations for example some unions. The key to keeping a

government representative is accountability- availability of information

on what it does and responsiveness to those it claims to represent.

 

After all this I suppose I should also state my position on markets.

Markets are useful mechanism in that they tend to have an extremely

rapid response to inputs by their participants. In an ideal society,

every member in society would have some stake in the market, so that

collective will of the people was expressed vary rapidly by market

positioning. However, as long as income disparities remain huge, a large

proportion of the population is locked out of any significant

participation and until the disparity is reduced the market players will

be a small group who in the absence of regulation from entities of

significant power will compete, collude, manipulate only to their own

benefit and benefit to the rest of society will only be accidental.

 

Now to respond to some of the economic theory discussed here I'll quote

Adam Smith. He said that "... the worst enemy of free capitalism is a

successful capitalist". It's been stated before and I agree that the

evidence supports this that un-regulated capitalism creates oligopolies.

Since Marx was mentioned I'll throw in my own $0.02 worth. IMO, despite

his failed social theories his economic theories on capital were close

to the mark in that accumulation of wealth depends on the availability

of access to capital. A rather good demonstration of this is the

performance of Mohammed Yunus's Grameen bank in Bangladesh where the

availability of micro-credit loans has enabled large numbers of people

to liquidate their debt and raise their living standards and the loan

delinquency rate is lower than any commercial bank.

 

To get back to some of the specific's we've discussed so far:

 

Minimum wages- I would favor there being a minimum wage. I don't think

it takes a rocket scientist (or economics Ph.D. ;-)) to figure out what

is fair- I would propose that if a wage paid is inadequate to support

basic needs of food shelter or clothing for one person ( I would favor a

wage that supports two but that is negotiable) it is too low. If some

economic enterprise cannot pay its workers at least a support wage it is

not worth doing. This formula would probably come out with a pretty low

number and would have some geographic variation that can be

rationalized, but again this is not rocket science. My view is that if

it is reasonable then most employers will be inclined to pay it.

 

Corruption: it is not about to go away. It can be minimized by

maximizing exposure of such information and making public officials

accountable to their constituents i.e. being periodically accessible for

q&a and making the penalties for corruption meaningful. I would also

allocate further de-regulation of broadcast news media with government

grants for community organizations to have their own radio station and

video production facilities with cable operators are required to carry

those programs.

 

Attendant issues I would consider are land reform and estate tax.

 

 

I just received Utkarsh's mail, where he said this discussion is getting

too theoretical. I agree it's theoretical now but before we get

concrete, I suppose it would make sense to have some overall stated

purpose to so we can all focus are energies in that direction. Could

someone clarify (or if I missed something in earlier discussions, could

someone remind me?)

 

-Charu

SANJEEV’s REPLY FOR THE ABOVE MAIL :

 

Date: Sun, 19 Apr 1998 14:53:30 -0700 (PDT)

 

Charu:

 

> My views lean towards Kush's: Power corrupts, regardless of the form of

> government.

 

What! Am I not saying precisely that, all along? That people are

universally greedy (want more than less), opportunitistic (will misuse

power when given the opportunity, etc.) ...

 

Therefore I am afraid of Socialism; not because of its "noble ideals" but

because of the higher scope it gives to misuse power. All forms of govt.

lead to misuse of power. But democracy is the best. Else we might advocate

dictatorship, if you like. There are huge differences in the outcomes

for the people between different forms of government.

 

Similarly, all forms of economic systems lead to corruption. But

capitalism (suitably moderated: as I have been stating all along), leads

to two clear reasons for reduction in corruption:

 

a) the people become rich, therefore the "need-based" corruption, as

someone mentioned earlier, is reduced. Hence you find - in all capitalist

societies, that low level corruption such as from DDA clerks, is reduced

or virtually eliminated.

 

b) the goverment does not capture the people's capital through things like

nationalization and does not interefere much in other people's business.

That drastically reduces the opportunity for corruption.

 

Corruption can never be eliminated, but by getting rid of socialism, we

will minimize it. By the way, there is a huge empirical literature which

clearly shows the strong relationship between higher wages and lower

corruption. In socialistic societies, higher wages are considered a sin:

there is no hope of reducing corruption in such societies. The USSR was

the most corrupt society in the world before it broke up, according to my

father, who had travelled virtually all over the world, as Addl. Secy in

the defence ministry.

 

We cannot mix up lobbying by various groups, by official use of funds

(these are publicly declared funds), as in the USA, with the underhand and

surrpetitious misuse of power as in India.

 

I don't quite follow. Most of the people on this list are advocating

privatization, increasing wages of lawmakers and others, and yet find it

relevant to bring in the cases of Cuba and China - two major failed

experiments of the socialistic world (these are dictatorships, anyway, and

have nothing much to do with socialism in the way Marx saw it. China's

success in the last 20 years, if you remember, was entirely brought in by

following free market policies in the Southern provinces).

 

Why do we care for China? Or for India for that matter? These are failed

experiments which are rotting on the sidelines of the world. We must look

at the West, Japan, Singapore, Korea, Taiwan, even Indonesia. There is no

perfect capitalism and we will have to evolve one of our own, but to even

support socialism while advocating the need to reduce corruption, is very

strange, if I may be permitted to say.

 

I really don't understand the resistance we have to follow economic

thinking. Economist have spent lifetimes carefuly studying the

institutions that led to the creation of wealth. If engineers are the best

judges of the strength of a structural bridge, and doctors are the best

judge of a person's health, then economists (not Marxian political

economists, whose fundamental assumptions of human nature are completely

flawed, in that they glorify the good nature of workers) can at least be

considered as speaking some sense when they talk of the causes of economic

growth ...

 

Sanjeev

 

KUSH REPLIES :

 

Date: Sun, 19 Apr 1998 19:12:37 -0700 (PDT)

 

Sanjeev, I did not quite understand this alternative hypothesis. Let

me reiterate: Corruption has nothing to do with genes or political

ideology. Corruption is a direct result of the system--a system which

has no public accountablity, has no transperancy and provides ample

opportunity to everyone in the system to steal public's money without

any noticeable consequences. Neither genes nor ideology is responsible.

I do not know how many on the list are familiar with the corruption

which was so prevalent at the local level here in United States up

until the second world war (in some cities like Chicago even later)

that it matched that of India, Mexico and Nigeria (the three top

corrupt countries today!). As in India, bribery was as common and

local chiefs (Mayors, Sherifs, even the attorney generals and of

course the police) had their "cut" set in all deals--it was usually

called the "graft." Two things happened that ended this sorry state

of affairs. One was a powerful, grassroots level reform movement and

the introduction of technology, professionalism and modern accounting

systems. Yes, another thing that helped were strong associations of

professioinals (government accountants and managers who were tired of

this corruption of culture).

Therefore, corruption is not that difficult to eliminate as it seems.

What, however, is difficult is how do you change the attitudes of

those who are inside the system and those who are outside? What

frightens me vis-a-vis India is not the massive problem of corruption

(because I am confident that can end with the right system and

institutions) but what frightens me is the lackadaisical attitude of

the people toward corruption. Even the educated think, it exists

everywhere and in ALL countries. Yet if you ask any immigrants, for

example, to give specific examples of corruption from their lives here

in the United States or Canada, examples are terribly lacking. By

eliminatioin of corruption is not meant, that there will ever come a

time when a few people will not try stealing money and resources. But

there does come a stage when most people do not do that kind of a

stuff because it becomes too risky (not because they have turned

saints or have become genetically superior). That is what I mean by

the SYSTEM.

Kush Khatri

 

SANJEEV REPLIES FOR KUSH :

 

Date: Mon, 20 Apr 1998 03:18:39 -0700 (PDT)

 

Hi Kush,

 

I seem to get your point about a "system" but I am actually quite a bit

lost about what are its characteristics. I think we are now going far

afield into an unknown territory. I admit that I have very little

knowledge of USA's level of corruption in the pre-WW period. My recent

trip to Chicago clearly showed me that Chicago was very bustling and

rapidly growing city in the early 20th century. About its corruption, I

don't know much.

 

On the other hand, statistics indicate that except for a brief period of

about 10 years following the Depression, the US has seen very rapid growth

of per capita incomes since early nineteenth century. I am also aware of

the huge debates against government intervention that were raging in this

nation at all times. If this country was growing so rapidly, people were

getting richer all the time, then what adverse effect was this

"corruption" having? It seems that it was having a benign effect, instead

of an adverse one! I am not going to discuss political issues like

discrmination against blacks, women and those without property. I am only

looking at economic outcomes.

 

I am also quite unaware of the grassroots level reform movements that you

refer to (which apparently helped remove this corruption). I would be

grateful for any studies that establish the influence of such movements,

if any, on the economic growth of this nation, as well as on its

corruption level. I also need references or more specific data on "strong

associations of professionals (government accountants and managers who

were tired of this corruption of culture)." Anyway, how does a strong

association of professionals remove corruption of a DDA clerk? Please

elaborate.

 

However, I would strongly suggest that we revert to logical premises. I

repeat my earlier argument, hopefully more clearly:

 

Corruption can either be caused by inherent (genetic) causes or by

environmental causes. This covers all possible causes.

 

Human being --> Black box ----> Outcome

 

If the contents of the black box matters (which is what I am saying) then

outcomes can be changed by changing the system.

 

If the black box does not matter, then we can dispense with the box:

 

Human being ---> Outcome

 

i.e., the outcome is determined by the genes of the individual.

 

You have to have one of these models. It cannot be neither this nor that.

If the system matters, then you have to define the system in terms of the

opportunties and incentives it creates. Ideology is not the issue here.

The specification of the system is. Hence, please specify your system more

clearly. What are the specs of the system in India today that lead to

corruption?

 

> Yet if you ask any immigrants, for example, to give specific

> examples of corruption from their lives here in the United States or

> Canada, examples are terribly lacking.

 

This, in my opinion, properly reflects what not only I have observed, but

hundreds of observers have noted. Not only about USA but about all Western

nations.

 

Yet I do not believe for a moment that the Western societies are

genetically blessed with 'honest genes.' Instead, these countries have

worked hard and debated much, to develop two institutions: one is called

democracy and the other is called capitalism.

 

1. In capitalistic societies, opportunties for corruption are dramatically

reduced as the government withdraws from running businesses itself, and

lets people do what they want within very broad restraints. In socialistic

societies like India, the reverse is the case.

 

2 In capitalistic societies, incentives for corruption are dramatically

reduced. The method is very simple: high wages, and instantaneous

penalties if found to be corrupt.

 

This debate on the system we want to have for India is fundamental. That

is why I am not 'letting go,' here.

 

Finally, I want to ask a few questions:

 

a) Do we want India to resemble the USA or to resemble North Korea?

 

b) Which embassy in India has huge lines of people wanting to get visas to

that country? USA or Cuba? If so, why?

 

c) If you are working or studying in the USA, why are you here and not in

China, or in Cuba, for that matter? If you think the US is a socialistic

country, then why don't you go to much greater socialistic countries like

China or North Korea to get a better treatment from dictators, lesser

corruption, and a higher minimum wage?

 

Let me revert to words that some of us seem more comfortable with. India

has been saved from the terrible disasters of China, Cuba and N.Korea by

virtue of having at least some private sector (we had Fabian socialism,

not full socialism). Therefore we had some, minor growth, before the

'liberalization' of the mid-80s and early 90s. The moment we went in for

more liberalization (capitalism) our economy boomed like a rocket and

poverty dropped like a brick. Strange but true: capitalism and economic

theory works in India too, just as it does everywhere else!

 

I am simply re-affirming that this is the direction to go in. Call it what

you like. Put in more and more economic theory. More and more econometric

studies showing what is related to what. More and more scientific

research. All of these point toward (a) opening the economy (b) minimizing

the role of government in business (c) increasing the role of government

in building the right institutions and incentives (d) paying wages

sufficiently high (not outlandishly high) to attract the best into public

service.

 

Apart from these of course are the issues related to education as already

pointed out by Utkarsh, and so on.

 

I think the time has come for someone (Puneet?) to start compiling a draft

Manifesto/ Agenda. If possible, I will spend some time on this too. Then

we can debate more specific things.

 

Sanjeev

 

 

KUSH REPLIES :

 

Date: Mon, 20 Apr 1998 15:48:26 -0700 (PDT)

 

Sanjeev, your points are well taken. Corruption is "benign" to those

who benefit from the system. Otherwise, corruption always has

adversial effects. Keep in mind, the reson why, US could still grow

(like you rightly said) is because economic power was not controlled

by the Central (federal) govt. The States had full autonomy over

their economic destinies. Therefore, central control that has stifled

things at the states level in India, did not happen, and indeed, could

not happen in the United States. I do not intend to be too

elementary, but as everybody knows that the central or federal

government was created by the original States or colonies. In India,

there were no states. And I can understand that power had to be

concentrated at the center, in the beginning, for security reasons.

But over the years, the Central government instead of letting go

gradually, did the very opposite.

In addition to states, the local governments in the United States have

always been strong--in fact, that has been the strength of the

Americal democracy. I have been reading Tocqueville's "Democracy in

America" (not an easy read, so I will not recommend the book, unless

you are seriously interested in the history of democracy in America),

Tocqueville coming from France, was flabbergasted by the fact how

much "power" local governments (which always had a democratically

elected setup) had, and how much Americans were involved in their

local governments. Please note, that even though on paper local

governments in America, receive their powers from their respective

State government, the jurisdictions, and territories are well defined.

There are very few examples of State governments "meddling" with

local governments.

THIS DECENTRALIZATION OF POWER IS WHAT WE SHOULD FOCUS ON NEXT.

Apart from this division of power, the other reason why corruption was

"benign" to a certain degree was, that governments never got into the

running of businesses. The government had the same respect for

landlords and business that they had for different jurisdictions.

 

The next important issue that you have raised is about the SYSTEM.

What is this system that I keep talking about? A very good question.

But as this post has already become long please allow me to address

that in my next post. Regards,

Kush Khatri, D.C.

 

A JOKE FROM KUSH

 

Date: Wed, 22 Apr 1998 13:27:38 -0700 (PDT)

 

Since the list has been quiet, I though I'll send this "application

form" which was circulating for prospective candidates to the Indian

parliamentary elections. I though it was funny. Hope it doesn't

offend.

 

> >

Application form to contest in Indian constitutional elections

> >> .

> >>

> >> 1. Name of Candidate : _______________________

> >> 2. Present Address

> >> (i) Name of Jail : _______________________

> >> (ii) Cell Number : _______________________

> >> (If not in Jail, attach proof of residence)

> >>

> >> 3. Political Party : _______________________

> >> (List ONLY the Last Five parties in the Chronological Order)

> >>

> >> 4. Sex : [ ]

> >> A - Male

> >> B - Female

> >> C - Jayalalitha

> >> D - Lalloo

> >>

> >> 5. Nationality : [ ]

> >> A - Italian

> >> B - Indian

> >>

> >> 6. Reasons for leaving last party (circle one or more)

> >> A - Defected

> >> B - Expelled

> >> C - Bought out

> >> D - None of above

> >> E - All of above

> >>

> >> 7. Reasons for contesting elections (circle one or more)

> >> A - To make money

> >> B - To escape court trial

> >> C - To grossly misuse power

> >> D - To serve the public

> >> E - I have no clue

> >> (if you choose "D"- attach Certificate of Sanity from a

Recogonised Government Psychiatrist)

> >>

> >> 8. How many years of public service experience do you possess

?

> >> A - 1-2 yrs

> >> B - 2-6yrs

> >> C - 6-15yrs

> >> D - 15+yrs

> >>

> >> 9. Give details of any criminal cases pending against you

(Use as many Additional Sheets as you want)

> >>

> >> 10. How many years have you spent in Jail ? [ ]

> >> (Do not confuse with question 8)

> >> A - 1-2 years

> >> B - 2-6 years

> >> C - 6-15 years

> >> D - 15+years

> >>

> >> 11. Are you involved in any financial scams ? [ ]> >> A -

Why not

> >> B - Of Course

> >> C - Definitely

> >> D - I deny it all

> >> E - see a foreign hand.

> >>

> >> 12. What is your Annual Corruption Income ? [ ]

> >> A - 100-500 Crores

> >> B - 500-1000 Crores

> >> C - Overflow...

> >> (Note: Convert all your $ earning from Hawala etc into Rupees)

> >>

> >> 14. Do you have any developmental plans for the country in

mind ?

 

> >> A - No

> >> B - No

> >> C - No

> >> D - No

> >>

> >> 15. Describe in space provided, your achievements :

> >> _________________

> >>

> >>Thumb Impresssion of candidate (Not that of the person who filled

the form)

> >>

 

MAIL FROM SANJEEV ON "corruption/ ethics"

 

Date: Fri, 1 May 1998 09:49:14 -0700 (PDT)

 

In my previous note on the "corruption" prevailing in the health insurance

system in the USA, an objection was raised that this would not quite be

corruption, since it involves doctors and insurance companies. Well, the

thing I wanted to highlight was that human nature here in the USA is not

particularly more ethical than that of an Indian, in general. Given

adequate secrecy, and opportunity, humans will cheat, here as well as in

India.

 

I just came across a case which would confirm this in the context of

governmental "corruption." In a discussion on parking meter thefts, it was

stated: "New York City, which has 67,000 meters - the most in the nation

- has suffered a number of scandals involving collectors arrested for

theft. Several years ago, nearly half of the city's collection workers

were charged with pocketing some of the change." (LA times, 5/1/98)

 

The method of "preaching" to people not to be corrupt never worked and

will never work anywhere. Kautilya (I believe) has much to say about fish

in the water, sucking in water, etc.

 

There are perhaps two primary ways of eliminating corruption: (a) minimize

the direct role of government in business (i.e., reduce the opportunities)

and (b) increase salaries (increase the opportunity cost of being kicked out

of the job). Even if only the very top layer of government is payed

**grossly** disproportionate to its actual workload, then you would have

ensured honesty at the top (this was the argument when the Indian Civil

Service was started in the 1800s, and this actually did work), and these

honest can keep the lower functionaries in check.

 

Of course, management of government must be as transparent as possible. We

have been talking of that all along.

 

Thanks,

 

Sanjeev