RE: Corruption: Alternative Hypotheses

[Kush Khatri <free_voice@yahoo.com>]

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.


---Sanjeev Sabhlok  wro




---Sanjeev Sabhlok  wrote:
>
> 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
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