Atanu Dey On India's Development

Hauled from the archives: The Three-ring Anti-corruption Circus is in Town

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Dumbo is in town

Elephants

Alright, time to get down to some serious work. The weekend is here and I have places to go, people to meet. And of course I have to get back to reading and writing. So while I do that, here’s one old post hauled from the archives. It’s from August 2011 and titled “The Three-ring Anti-corruption Circus is in Town.

Below the fold I quote a bit from the start of that post to lure the reader into the tent.

In his book, The Fatal Conceit, F A Hayek noted that “the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” A study of development economics can be seen as a series of depressing lessons on how people afflicted with fatal conceit meddling in areas that they don’t understand end up making a mess, and the resulting needless misery and suffering of untold millions of absolutely innocent victims.

A proper study of economics teaches humility. We are limited beings: our rationality is bounded, our knowledge finite, our information local, our comprehension imperfect. Attempts at the grand design to reach the commanding heights are guaranteed to fail. Look behind any economy that has failed to develop, and you will see the dead hand of powerful ignoramuses throttling the living.

India figured prominently in the development economics course as a case study of how a potentially rich country has been engineered to be desperately poor. It is a demoralizing tale of how people are trapped into poverty because of their bad luck of having been born into system which is designed to be poor.

India’s poverty is engineered, it is by design.

Two fun facts about India stand out starkly. First, India is a very poor country, and second, India is a very corrupt country. But note that while the average Indian is definitely poor by contemporary world standards, the average Indian is not any more morally bankrupt than the average human. Although I don’t have any hard evidence, I am convinced that Indians are at least average when it comes to honesty, intelligence, diligence, social capital, and the rest of it. So how do one explain India’s poverty and corruption? Is one the cause and the other the consequence? Which came first? Or is there another hidden variable which is the cause of these two?

It is my belief that the hidden variable is India’s lack of freedom. The stress is on “hidden” — Indians don’t know that they are really not free. There is a lot of talk about India having attained freedom in 1947. But all that is really cheap talk. With regards to freedom, India is no more free than it was under the British Raj.

The evidence is overwhelming that India’s political leaders are almost uniformly corrupt. It cuts across political party lines. Public corruption is not contained in some specific geographic region. It is not bounded by linguistic or religious divides. The percentage of criminals in the various state and central legislative bodies far exceed that in the general population. What’s more, that percentage has been increasing with time. And the magnitude of the corruption has also been increasing. The average corrupt deal was in tens of crores of rupees a couple of generations ago — small change compared to the deals these days which is counted in billions of dollars.

If Indians are not characteristically uniformly dishonest, how is it that India’s politicians are so acutely dishonest? Perhaps the system selects the most dishonest and the least principled.

Here’s how it works. . .

Go read it all.