RE: Corruption: Alternative Hypotheses

[Sanjeev Sabhlok <sabhlok@almaak.usc.edu>]

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