Open Bribery

== An Idea To Further Us Along the Road to Transparency ==

India’s chief economic adviser Kaushik Basu argues that to reduce bribery we should make the paying of bribes (not the demanding!) legal.

Let’s have a little context here. There are two types of bribery. First comes the kind where the briber and the bribed are in collusion to perpetrate an illegal act. This problem exists worldwide and Basu’s proposal will do nothing about it. In the west, its occurrences are isolated, but extremely severe. Sophisticated schemes of collusion between politicians, corrupt bureaucrats and oligarchs can result in multi billion dollar theft from investors and taxpayers — and some contend that the last decade has been an especially busy time for such raids. But that’s not the topic here.

Rather, the issue is something that seems rare in the West, but that’s endemic across the developing world. It is the sad fact that regular people often have to pay gifts to public officials, just to get them to do their jobs. To attain a business permit, for example, or a rental agreement, or driver’s license, or get your kids in the right school. To get a project completed on time. So, here’s the idea:

“Under current law… the bribe giver and the bribe taker become partners in crime. It is in their joint interest to keep this fact hidden from the authorities and to be fugitives from the law, because, if caught, both expect to be punished. Under the kind of revised law that I am proposing here, once a bribe is given and the bribe giver collects whatever she is trying to acquire by giving the money, the interests of the bribe taker and bribe giver become completely orthogonal to each other. If caught, the bribe giver will go scott free and will be able to collect his bribe money back. The bribe taker, on the other hand, loses the booty of bribe and faces a hefty punishment.

“Hence, in the post-bribe situation it is in the interest of the bribe giver to have the bribe taker caught….Since the bribe taker knows this, he will be much less inclined to take the bribe in the first place. This establishes that there will be a drop in the incidence of bribery.

“Basu notes that he intends this to apply to bribes where the person paying the bribe is receiving only what they are entitled to receive, e.g. when you have to bribe to get a business license that you are entitled to or to get your rice rations or get an income tax refund.”

This is a bit of brilliance, on a scale with Hernando de Soto’s scheme that has worked so well, in Peru, vesting property rights in poor farmers so that they can then use capitalist processes for their own benefit. Moreover — need I add — it is a pure and magnificent example of the cleansing, healthy power of transparency.

== Final Note ==

Now, in closing, let me give you your your assignment till next time. Consider. If we find a solution to bribery, what about its vastly worse twin… BLACKMAIL?

Read this. Ponder it. Spread the word and make every public official… every person who ever THINKS about seeking public office… think about it in depth.

It may be too late. Then again, perhaps it isn’t.

2 Comments

Filed under society

2 responses to “Open Bribery

  1. Johnicholas

    Robin Hanson has written on the blackmail topic:

    http://www.overcomingbias.com/2009/10/in-praise-of-extortion.html

  2. Brendan Podger

    Part of the problem with this solution is it looks at bribery on its own, not as part of the wider economic system.

    In reality the real wages that many of these low level employees are very low and they accept this since they know the income from “greasing palms” will make up for it(plus a little extra). For an analogy from within the US, look at the minimum wages of people in the service industies. Their pay level is low because it is expected that they will make their money on tips.*

    To properly wipe out the corruption that this sort of bribery makes endemic,(since because of the potentially lucrative nature of the job, officials higher up are also bribed, sometimes quite substantially and the briber will often go into debt to get the money needed-creating a huge black economy money market) a government is going to have to blow its budget by putting up wages to a realistic amount at the same time as spending large amounts on enforcemet against bribe takers.

    While ths may be effective over time and well worth the effort, in the short term it is going to be hugely costly. And since many of the countries where this is problem occurs are in debt to the IMF already, I can’t see a goverment being allowed to do this as one of the key demands of the IMF when loaning money is huge austerity cuts to government spending.

    *When I was looking at going to the US ten years ago I was told the “expected” tip was about 10% of the bill, but now I am told it is 20-35%, so it looks like thier is a genuine wage issue in the US as well.

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