Atanu Dey On India's Development

Corruption Matters

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I believe that corruption is as significant an indicator of a diseased economy as cancer is of a diseased body. If unchecked, it will eventually kill. Corruption is organized violence against the people of a poor country which kills them as surely as putting them into concentration camps, extracting hard labor, starving them, and then pushing them into gas ovens.

Corruption matters because it affects all of us. It affects us even if we neither receive nor pay bribes. We all are passive victims of corruption, even if we are not active participants. It is like a poisonous gas that has been released into the atmosphere and we don’t have the option of not breathing.

Corruption in India today permeates every strata of economic and political life. But its fountainhead is at the top of the political structure, and from there it flows down into every place. It starts off as a trickle. Perhaps a few at the top take a few million while handling money with sticky fingers. Word gets out that so-and-so made so much money.

“That housing deal in the capital was crooked. Did you know that he made $7 million in that deal?”

“No, I did not. That’s bloody amazing.”

“He got away with it.

“Really? How?”

“He paid off the investigators with part of the money. If you have to steal, steal so much that you can bribe the cops.”

Just a few bad people at the top who steal a significant sum is enough to set the ball rolling. It can be stopped. Hang the first person who steals from the public. But if the first guy who steals a significant enough amount that he can buy his way out, the game is well under way.

Others note that stealing big is the way to go. Petty thievery is not very attractive and what is worse, if caught, you can go to jail. But engage in grand larceny and you can be confident that you will not be punished for it. When the amounts get large enough, you can even buy the supreme court judges.

Yes, the amounts do increase with time. Here’s how. The first few steal $7 million or so. They get away because they are politically connected. Other potential crooks are paying attention. They note that no one went to the gallows. So they get into the game and escalate it. In the next years, the corruption amounts hit $70 million. And once again, no one gets to spend time in jail. The word spreads.

The ante has been upped. More crooks join the game. There’s competition and with it, the more successful ones make out with $300 million in the next few years. The time has come when the newspapers don’t even mention $7 million corruption schemes. The game now is with $300 million prizes.

Time goes on. Crooks note that they have been helping the politicians get elected and in turn the politicians are providing them (the crooks) the cover for their theft. Why not become politicians themselves and cut out the middle-men?

So in about 15 years or so since the start of the small trickle of corruption, crooks start to get elected to office. At first, a few members of parliament and a bunch in the state assemblies. They get there and make money. And no one goes to jail. The word gets around.

More crooks enter politics. It’s the easiest way to make money. The competition among the crooks for higher political office intensifies. The winners start climbing the political hierarchy. Used to be that about 10 percent of the members of an assembly were crooks. Then when that became 20 percent, a crook gets to be the chief minister.

Time passes. The corruption is at a level that the prime minister is a crook. He shields the crooks immediately below him. The crooks at the highest level make $7,000 million. That’s sufficient money to buy the allegiance of the police, all sorts of investigative agencies, and all the judges that are needed. That is sufficient to buy all the journalists. That is sufficient to buy all the expertise needed to tamper with electronic voting machines.

At any level of the structure, except for the very top, corruption exists only because the level above it is corrupt. If a person is not corrupt, he will not tolerate corruption among his subordinates. At the first sign that there’s corruption in his organization, a non-corrupt person will fire those involved.

Conversely, if the top level is corrupt, it gives license to the next level to be corrupt — all the way to the bottom. There is a direct connection between the policeman in the corner accepting a bribe of a few hundred rupees and the chief executive of the country enabling a scam of a few billion dollars.

The policeman reads about the multi-billion dollar scams and trillions stashed away Swiss banks. He knows they get away with it, and justifies his taking a small amount saying that he needs it to make two ends meet. All petty bribes given and taken are given cover by corruption in high places, and justified on grounds that if it’s ok for them, it must be OK.

Corruption affects the economy along multiple dimensions and in complex ways. First order effects are easy to see. The chief engineer of a state electricity board takes bribes from the suppliers of equipment. The suppliers supply inferior parts and the power plants are not maintained.

Lack of power affects the economy of the surrounding area. More money changes hand for getting more of the scarce electric power. Costs go up. The economy produces a bit less than it could have.

The second order effects are more serious. Because corruption is a criminal activity that pays so well and does not extract a penalty, criminals get into politics. In India, politicians eventually make policy. Criminals are not very good at making policy that will help the country. In fact, their goal is to use the system for their benefit, and if that imposes costs on the people, it is not skin off their backs.

The second order effect is therefore lousy policy that retards economic development even more than the first order effects.

India is now at a stage that it is saturated with corruption. The prime minister enables corruption and gets away with it because it is said that he is “clean and honest.” The judges are for hire. The courts get into “telephone justice,” as Justice Stephen Breyer of the US supreme court put it. That’s when a political boss calls a judge to tell him how to rule.

India is at that stage when the politicians and journalists have figured out a business deal to protect each other. The government hands out awards to journalists and the journalists make sure that the masses are misled.

India is at that stage that the only reaction from the masses is “chalta hai.” It has become fatally wounded and does not have the will to stop the life blood spilling out of its guts.

India’s dire situation is a consequence of a very large number of very bad policy decisions taken over decades by people who, around mid last century, were not very smart; and after that by people who were not only not smart but were criminals.

Those acts of commission and omission have killed tens of millions. It will be impossible to estimate very accurately but the lower limit must be at least 100 million people who have died prematurely due to starvation and malnutrition in India since 1947 because of bad people at the top.

That’s more than Pol Pot, Hitler, Leopold II, Stalin, Mao, and all the other tyrants of the world put together killed.

Those leaders of India that killed so many must be charged with crimes against humanity. They must be made to pay for their criminality.

But instead their names are plastered all over the country. Airports, universities, roads, ports, bridges, institutions and every conceivable scheme is named after those same criminals.

Their descendants are getting ready to steal in the hundreds of billions. That will bleed the country even more. Tens of millions will die, slowly starving to death. Half the children of age below five in India are malnourished. Thousands of farmers commit suicide. India has the largest number of illiterates in the world.

And there are people who wonder why India is so pathetically poor. I sometimes wonder: of the two — the criminality of India’s leaders or the stupidity of its people — which is the greater curse.

What say you?

  • Oldtimer

    There is another reason corruption is the root of all evil in India. It underpins the divisive votebank politics we are all familiar with.

    If politics offered no pecuniary reward, dirtbags would have far less motivation to invest heavily in getting elected to public office. Because there’s a big reward — in at least hundreds of crores in a more prosperous India — there’s a rush to get elected anyhow. Pandering to block vote is one of the consequences. So we have rank scumbags blaming 26/11 on a Hindu conspiracy.

    If all that MPs, MLAs and ministers can earn is only their salary and (substantial) parks, a lot of political aspirants would drop out of the race, because there would be no RoI. Of course this does not totally eliminate the lot of bad guys getting elected, but will significantly reduce the bad guy pool size.

    Commies and Congress party workers are acutely aware of the fact to undermine corruption is to undermine votebank politics, and thereby themselves. That is why we often see them underplaying the danger of corruption.

  • http://sachinsstream.blogspot.com/ Sachin Tyagi

    You’ve hit the nail right on its head. Corruption flows top-down. You can’t fix it somewhere downstream and hope it stays fixed there. It won’t. Corruption has to fixed at its fountainhead. (No prizes for guessing where that fountainhead is in India.)

    I am not sure why so many people are incapable of figuring out this simple logical conclusion – if someone could have stopped an act of corruption but didn’t then it means that he too is involved. May be it’s a psychological thing that if you read it enough in newspapers or hear it enough on TV then you illogically start believing a corrupt to be an honest man with integrity.

    But yeah we really are up the shit creek without a paddle. Fountainhead won’t fix itself. Media(mostly) is in the same boat. And the only hope – education of masses – is also in the hands of those who would rather not want it.
    Here’s our man, MMS (Of Impeccable Honesty & Integrity) on education – http://bit.ly/gl8L9o

  • http://rexzilla.livejournal.com Rex

    People get the government they deserve – that’s the true result of democracy.

  • DesiGuru

    Oh well another corruption post :D
    Anyways I responded to you on your previous corruption post. Will add some more global gyan here too as I continue to be corrupt and free ride in this office :P

    All Im saying is that the answer is not that complicated. We are looking at a 1.2 billion population with a seriously low average IQ. When everybody’s corrupt there is a more simpler reason for it. The average junta deserves it. Yes you dont deserve it and thats why you are pissed but take the whole population and you will come to the simple conclusion that they deserve it. Take the example of Barkha Dutt. By any analysis she was a corrupt journalist by normal global standards. But she still has a program. Why does she still have a program. Because people still watch her. We are talking English speaking well aware people. They dont seem to care. Barkha Dutt is exactly what they… sorry We deserve. Remember if the majority of the english speaking junta stop watching her… They will fire her. Not the other way around.

    Try using economics for analysing Corruption and Im willing to bet that it will come out as the most rational and economically correct response by any individual with power at any level to the current Indian enivonment. Take appeasing the Islamic idiots of this country. It is also the most logical and rational response in most areas to come to power. Remember the Islamic idiots are maybe over 25% of the ‘Voting’ population.

    So What are we arguing about then. We are talking about a bunch of powerless losers unhappy about the winners choosing the correct logical and rational response to obtain power. Nothing else. Yes think of strategies to fight this corruption etc. But I have a hunch that they have got nothing to do with who is in power. Though anyday I would love a non Congress non Gandhi sucker government.

  • Praveen

    Hang the first guy who steals?

    But are we not against the death penalty?

    A better way would be to jail the guy and feed him Chicken Biriyani.

  • http://philip9876.com liju philip

    Are we not responsible for voting these morons to power in the first place? I mean what kind of an idiot will vote for a Mayawati who brazenly becomes 100 times richer every year. This is not to forget Lalu, Raja, Kalmadi, Chavan and the rest of the gang.

  • Dinesh

    Steal a little, and they put yo in jail. Steal a lot, and they make you king – Bob Dylan from Jokerman

  • http://ketpan.wordpress.com/ Ketan

    Atanu,

    This post was not as analytical as many have been in the past. I do not know why you did not emphasize (yet again) on the ‘enabler of corruption’, i.e., socialism/communism, that allows the government to levy heavy taxes on pretext of doing good for the downtrodden, and then restrict others from providing the services that government takes upon itself to provide. Yes, you gave the example of electricity board, but yet you just did not mention the ‘license-quota’ thing. I ask this, because you only had established this link in your many, many previous posts so clearly. Am I missing something here?

    Also, I think morality of politicians only reflects the morality of the pool of population they come from. I have very dismal impression of the overall standard of ethics of the population.

    I will give two examples:

    1. In Shirdi, where I had lived for 9 months and had gotten pretty intimate with the Trust employees, I came to know that young people, even graduates were leaving their jobs and trying hard to be get job as a watchman in the temple. The reason must not be hard for you to guess. On most days, the queue of devotees would be so long that one would have to wait at least for a couple of hours to gain audience. On days of festivities things were even worse. People might have to stand in queue for over 10 hours. The Trust used to have a separate counter also, wherein, one could pay a certain amount, get a receipt and join the queue at a point closer to the sanctum sanctorum. Some, who used to be celebrities – politicians, Bollywood stars would gain direct access. Close relatives/friends of employees would also get direct access.

    But apart from all the above ‘short cuts’, I came to know that many affluent people would pay bribes to the tune of a few thousand rupees to the watchmen manning the gates close to the sanctum and gain a direct access. Now, I do not need to elaborate further.

    There were very few devotees (my estimate would be ~ 0.5%; yes, around 1 in 200) who used to harbor a sentiment akin to “if I have to meet my God, I must not do anything unethical in the process and that I must bear some hardship”. Others did not bribe, because they did not have sufficient money or they felt that in terms of ‘input-output’, bribing or getting the receipt were not worth it, as as it is they would have set aside the entire day for Sai Darshan.

    That some devotees used to bribe and others used to accept them, and that young men were bribing the Trustees to land up a job as watchman is one aspect of the malice. What is really disconcerting is that, the devotees were the people who used to think that their Sai Baba was omniscient and omnipotent. That their Sai Baba could see all these wrong-doings, and yet, either these devotees found nothing wrong with it or much worse, they felt, by offering prayers, being servile, offering garlands, prashad and some money/jewelry they could cajole and flatter their omnipotent and omniscient Sai Baba into not just forgiving them, but being so benevolent and generous that He would even make them rich!

    [I just published the above anecdote as part of a new blog post]

    2. One of the darkest days of my life was when one of my class mates was telling that his dad had been elected a corporator of town in MP, & that in his tenure tenders for upgrading of drainage system were to be invited. He was boasting that the entire project would be for around Rs. 300 crores, & his dad would easily siphon off 10%. My initial thought was: “if his dad is corrupt, why is he openly telling all this? Is he not afraid of losing respect among peers?” But what shocked me further was that about more than 10 people present over there actually started seeing him with envy & awe! They further cozied up to him! I’m a coward, that I did not say anything at his face, but I minimized my interaction with him. Only 1 more person was disgusted by all this. All the 10 people were not aberrant, they were representative of the pool of population we have (from which ‘leaders’ come). How do I expect any large organization to be composed of people any different from the one I saw then?

  • http://ketpan.wordpress.com/ Ketan

    Atanu,

    I had just published a very long comment, which is not getting displayed. Perhaps, it might have landed in the spam folder.

    Thanks!

  • http://esotericrambling.blogspot.com Esoteric

    http://esotericrambling.blogspot.com/2011/01/competition-for-growth-and-graft.html

    You are right,it does flow top-down in India.However,I blame the political system for the ills rather than the corruption…unless you track this back to 14th August,1947 you wont understand why we have graft.Infact,its best to trace history from the time Mughal empire started.

  • http://esotericrambling.blogspot.com Esoteric

    To clarify,what Im saying is to root out corruption from public life,we might need some political steps apart from the investigations and punishing the guilty.Instead of checks on PMs power and Military’s power,we need more centralisation and then a direct way of choosing country’s leaders and put the faith in them..

    - Smaller states,to become more centralised.
    - Changing first past post to proportional representatives and a direct election of PM.
    - Creating military as a separate center of power with some checks.(right now there are more checks than required).Politicians need to fear a coup else the centralisation could backfire.
    - Reform judiciary,police,IAS,IPS,IFS to be more inclusive(less merit!) and reduce perks and become more performance oriented.In other words, merit is more important for judging performance rather then selecting the man for the job…this isnt rocket science folks with 110 IQ would know what DCs need to do..but they need to perform and be clean.

    these are some initial thoughts…

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  • TiredProf

    DesiGuru has it pat, with one small mod.: “We are talking about a bunch of powerless losers unhappy about the winners choosing the correct logical and rational response to obtain power luxury living.” Power is only a means to luxury living. If a small-time MLA crook could relocate to Sunnyvale and bang out Ajax he would probably get overall a much higher standard of living than he does now.

    Atanu, how could the previous 50 years of governance kill hundreds of millions of people, if their parents did not spawn them only to feed them to the rakshasas?

    Tigers stop breeding in captivity or if depressed. The more oppressed Indians get, the more they seem to breed. I understand your angst, but there is dharma in stepping aside when people get their just deserts. I know, it is heart-wrenching when innocent kids get their parents’ just deserts.

  • larissa

    You see people make fun of Hindus all around the world because they are said to lack courage and any sense of manliness. It is true. They put up with anything and cannot put up a fight for anything, and I mean anything, even the simplest things, they have no fighting spirit. A few Muslims in Kashmir are able to agitate the whole nation. Hindus could never agitate the whole nation like that in any way. Some people might be born for slavery and to be ruled over, bovines are all to be ruled and lorded over, as they have no discipline…
    I would not count on swamy, ne never goes through with his projects and stops half way, he is very unreliable as well and stops if someone persuades him to…

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  • vinayarakkhita

    The Three Pollutions have ruined India ie. Polticians, Police & Press.

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