I just finished Economics module and had read some interesting concepts and theories from various Economics books; and wanted to think loud on some of the concepts that I found thought provoking...one of which is - Corruption.
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Economists realize that corruption in public life is not just a matter of criminal temperament but of opportunity.
The economist and a prominent authority on the subject of corruption, Robert Klitgaard, proposed a formula for bribery.
His theory is that corruption flourishes in a system of governance where there is a high degree of monopoly and discretion with a low demand for accountability. He holds that corruption succeeds where citizens have not yet begun to demand public services as their entitlements and still look upon them as favours dispensed from above.
With respect to India, as monopoly in many systems of governance in the country is inevitable (whether it is state-owned monopoly or state-backed monopoly), the key is to reduce the level of discretion available with babus and increase their degree of accountability for their actions.
Klitgaard felt that corruption is a crime of calculation; and predicted that many people would drift into becoming corrupt if they see that the risks are low, penalties are mild and rewards great. Drawing from these insights, he also suggested that the broad solution that anti-corruption movements can offer is to make the calculation risky for the corrupt - they will move out if the system is tightened.
All our recent activities in India (fasts of Anna Hazare or Ram Dev Baba or other Right To Information movements in last few years) focus only on increasing Accountability, but no one is bothered about Monopoly and Discretion.
And tackling Monopoly and Discretion is a real challenge!
Accountability issue is easy to perceive and hence it is easy to seek support from the masses. And that's why so many people start supporting anything aimed at increasing Accountability.
But it is difficult for a layman to understand negative impact of Monopoly and Discretion. And hence there is hardly any mass movement on this front.
Public-choice theory suggests that a small group with much to gain from a policy will tend to prevail against a large group who stand each to lose a small amount. The small group knows the stakes and is better organized - which is why we have trade tariffs, which help a small number of people while imposing poorly understood costs of a diffuse majority.
Accountability issue may be addressed through genuine movements or through publicity stunts like fasts, strikes etc. which easily catch the imagination of masses. The same means will not work with issues of Monopoly and Discretion. The intelligent people who benefit from Monopoly and Discretion and the intelligent people who oppose it, both know that the public-at-large is not of much use in this battle. Still in a democracy like India, both the parties have to win over masses. Those who favor Monopoly and Discretion try to do so by confusing people and those who oppose Monopoly and Discretion try it by educating people and increasing awareness.
So far "confusing people" has been extremely easy than "educating people"...and it will remain so (in India) for few more years to come.
In short - Corruption may reduce marginally if Accountability increases, but unless we address Monopoly and Discretion, corruption is here to stay...unfortunately.
More about corruption and black money soon...
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Economists realize that corruption in public life is not just a matter of criminal temperament but of opportunity.
The economist and a prominent authority on the subject of corruption, Robert Klitgaard, proposed a formula for bribery.
Corruption = Monopoly + Discretion - Accountability.
His theory is that corruption flourishes in a system of governance where there is a high degree of monopoly and discretion with a low demand for accountability. He holds that corruption succeeds where citizens have not yet begun to demand public services as their entitlements and still look upon them as favours dispensed from above.
With respect to India, as monopoly in many systems of governance in the country is inevitable (whether it is state-owned monopoly or state-backed monopoly), the key is to reduce the level of discretion available with babus and increase their degree of accountability for their actions.
Klitgaard felt that corruption is a crime of calculation; and predicted that many people would drift into becoming corrupt if they see that the risks are low, penalties are mild and rewards great. Drawing from these insights, he also suggested that the broad solution that anti-corruption movements can offer is to make the calculation risky for the corrupt - they will move out if the system is tightened.
All our recent activities in India (fasts of Anna Hazare or Ram Dev Baba or other Right To Information movements in last few years) focus only on increasing Accountability, but no one is bothered about Monopoly and Discretion.
And tackling Monopoly and Discretion is a real challenge!
Accountability issue is easy to perceive and hence it is easy to seek support from the masses. And that's why so many people start supporting anything aimed at increasing Accountability.
But it is difficult for a layman to understand negative impact of Monopoly and Discretion. And hence there is hardly any mass movement on this front.
Public-choice theory suggests that a small group with much to gain from a policy will tend to prevail against a large group who stand each to lose a small amount. The small group knows the stakes and is better organized - which is why we have trade tariffs, which help a small number of people while imposing poorly understood costs of a diffuse majority.
Accountability issue may be addressed through genuine movements or through publicity stunts like fasts, strikes etc. which easily catch the imagination of masses. The same means will not work with issues of Monopoly and Discretion. The intelligent people who benefit from Monopoly and Discretion and the intelligent people who oppose it, both know that the public-at-large is not of much use in this battle. Still in a democracy like India, both the parties have to win over masses. Those who favor Monopoly and Discretion try to do so by confusing people and those who oppose Monopoly and Discretion try it by educating people and increasing awareness.
So far "confusing people" has been extremely easy than "educating people"...and it will remain so (in India) for few more years to come.
In short - Corruption may reduce marginally if Accountability increases, but unless we address Monopoly and Discretion, corruption is here to stay...unfortunately.
More about corruption and black money soon...
