Making Bribery Legal and How?

Netherlands is one country where Coccaine and Prostitution is legal. And it does not mean that these two evils are more in this nation. Others where they are banned, it is a greater problem. Same goes for the ban on alcohol in Gujarat. Arguably, in no state of India is liquor – from the black market – consumed as much as in Gujarat! And there are no safe-guards!

Now, bribing is also an evil in India. Here comes a Municipal Commissioner (Ajay Shankar Pandey) in Ghaziabad who has made Bribery LEGAL.. yes legal in his city. So, you dont have to push the money “under the table”. Contractors simply issue a cheque!

Today, contractors being paid after finishing long-delayed construction projects write the municipality a check for the 15 percent bribe that once would have gone to corrupt city officials. The money, for which the contractors now receive a city receipt, goes to install sewers, roads and lighting in the city’s slums.

“I prefer this system. All of us do,” said Arun Tyagi, a roads and drainage contractor with the city. “There’s no harassment, and we get paid on time. Change has definitely come.”

Prashant’s blog here goes into the “Demand” and “Supply” side economics of this issue. And how the measure of Pandey do take care of some. But in my view, the BOTTOM LINE for bribery to thrive are two reasons:

1. FOREMOST, the differential in the Government salaries and the cost of living index. It is not possible for the Government officials to live a decent life in the salary they get given the level of decision making they are supposed to be doing. If one is making a decision (even signing authority is decision making – although we do not now reckon it as that given the process of bribing that is involved) involving several millions, and getting paid in a few thousands, then the “arbitrage” for the returns to that person from being “influenced” is very high. The next “best” alternative in such a situation (or the opportunity cost) is more than current alternative. When the differential with the opportunity cost is NEGATIVE, then the individual tends to the that alternative.

2. The second is the level of integrity. Integrity levels ultimately of an individual are in many ways determined by the average of the society. The individuals balance gravitates to the societal average. The societal average for the western societies for intregrity is really high compared to the developing countries.

As the integrity levels of society decrease, the direct relationship between common good and individual good weakens. It is no longer to see the relationship between how one’s good can be taken care of by the common good. For individuals to work for common good that is imperative. THAT is why it is very important for countries to take care of the government servants – specially the soldiers and the administrators – which are the first and second lines of defence of a country in top shape. Whenever their good and happiness is compromised and the differential in their payments and the opportunity cost becomes negative, the country is looking at unmitigated disaster!

So will Pandey’s move help? It may help in moving the curve higher a little bit, when the “bribe component” becomes another line item and it is business as usual. It will happen in some not-so-distant future. For Pandey has attacked at the branch. The root of the tree is still alive and kicking!

The 15% money instead that comes from the bribes – should have been put in a fund that could help buy a Rs 10 crores worth of insurance (Cash Value) for every employee in that office from LIC or another such top company. That Insurance would have ensured them that their salary differential would not compromise their (and their kids’) future ultimately! Then I would have completely endorsed this. And in return the city may not have gotten that extra sewer, but at least the sewers they were getting would have been “real” ones and of good enough quality!