RE: Corruption: Alternative Hypotheses

[Charudatt <charu@iced.com>]

Sanjeev wrote:
	----------

	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. 

	<stuff deleted>

	The black box of govt can include ANY form of govt. (communism,
socialism,
	capitalism, fascism, anarchy)

	Sanjeev's (Economic) model:
	==========================
	<stuff deleted>

	In my hypothesis, therefore, it is the form of government
**creates**
	corruption out of the usual human traits of "greed, opportunism
and
	bounded rationality." 

	<stuff deleted>

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.

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