Mr.A.P.Singh
Director, CBI, CGO Complex
New Delhi 110013.

Dec 7, 2011

Dear Mr. Singh:

Please refer to the Written Complaint that I had submitted on November 28, 2011 to CBI through you, and on behalf the Action Committee Against Corruption in India (ACACI).

This letter is by way of additional information relating to the disclosure of offences committed under the Prevention of Corruption Act (PCA).

First, is the information from an article published in Schweitzer Illustrate in its November 1991 issue, which magazine is a highly respected and widely circulated magazine in German language, and published in Switzerland. This information discloses that the former Prime Minister, Mr.Rajiv Gandhi (now deceased), had about $2 billion in secret bank accounts in Switzerland, which is clearly disproportionate to his known sources of income as per his affidavit filed with his nomination papers upon becoming a candidate for Lok Sabha elections in 1991. This attracts section 13(1)(d) of the PCA. Although the information is two decades old, but you are aware that there is no time limitation for corruption cases under the PCA. Also even if Rajiv Gandhi is now deceased, his likely beneficiaries are his wife, Sonia, and two children, two of whom are public servants.

The second information is from Dr.Yevgenia Albats, a Russian scholar, holding a Harvard Ph.D and who was a member of the Inquiry Commission into KGB Activities which Commission was appointed by President Yeltsin of Russia. She subsequently authored a book titled: “A State Within a State: KGB in Soviet Union.” In that book, she disclosed the File Numbers contain evidence of the KGB payments to the then Prime Minister Rajiv Gandhi and his family members. This disclosure was confirmed by the spokesperson of the FIS, the KGB’s successor spy agency (equivalent of our IB and RAW combined) in a Press Conference in 1992, and reported by The Hindu, Times of India, and UNI. In 2002, the then External Affairs Minister Mr.Jaswant Singh had taken this matter up with the Russians and was informed by the Russian authorities that the GOI may send a senior representative of the RAW to Moscow to obtain authenticated records of KGB payments to Rajiv Gandhi and family.

Third, I have information that Mr.Rahul Gandhi was detained in Boston’s Logan Airport by US law enforcement authorities sometime in the later half of September 2001. He was in possession of $160,000 in cash which he did not declare upon arrival. US Customs require all amounts above $10,000 in cash to be declared, and if not every $10,000 instalment carries a 8 year imprisonment, if convicted. This means Rahul Gandhi was indictable for a prison term of 144 years. However, the then Principal Secretary to the PM, Mr.Brijesh Mishra, to my knowledge, had intervened with US Secretary of State, and arrangements were made get to Mr.Gandhi released.

In his deposition to the US authorities before returning to London Mr.Gandhi had declared that the money was his, and he had drawn it out of his secret account in Pictet Bank, head quartered in Zurich, Switzerland. I may mention here later that while studying in Rollins College, Winter Park, Florida, USA, Mr.Gandhi paid his Tuition and other fees to the College from his secret accounts.

Hence, if you record these informations as part of the FIR, then after doing the preliminary inquiries that the CBI is entitled to Letters Rogatory may be obtained. The ACACI then would be pleased to assist the CBI in its investigation abroad armed with these LRs.

Yours sincerely,

(SUBRAMANIAN SWAMY)

I believe India has to take two simple steps and we will transform our nation. The first is to introduce complete transparency in government and in all its actions other than national security. Nothing but public exposure ensures accountability. Corruption breeds in dark corners. The second is to have enforcement of the law without fear or favour. Prosecute and punish the guilty regardless of their standing. This means law enforcement agencies have to stop being the handmaidens of those in power. Power not only corrupts. It also protects the corrupt.

Wow! That is profound and deep. Two simple steps!! That’s all it takes. It’s a great blessing that someone has finally listed those simple steps. And there we all were beside ourselves with worry about what to do about the massive corruption (which Mr Purie helpfully lists in his editorial.)

Just two steps. Not fancy steps but simple steps. As easy as 1-2-3. Introduce complete transparency. That’s step one. Step two: enforce the law. You’re done. Just like that.

Oh, by the way. I have figured out the solution to interstellar travel. Two simple steps. First, invent a warp-drive engine that will push spaceships at superluminal speeds. Second, get on board and go where no man has ever gone before.

Now will someone please inform the Nobel Committee to give me that prize in Physics already!

Seriously now, will someone inform Mr Purie that those steps are not taken primarily because they are impossible, not simple.

Here’s the short version. The government makes the rules. Or rather the people who constitute the government make the rules. If they had wanted “to introduce complete transparency in government” so that they would be held accountable by the public, they would have done so, wouldn’t they? So what’s the simplest explanation for why they have not done this “simple” thing? That perhaps the people in government are not retards and they will not make rules that puts them behind bars.

Such naïveté should only be encountered in a Panglossian world within the covers of a novel (Voltaire’s Candide, for example.) The editor in chief of a large-circulation news magazine (I was about to write “respected news magazine”) should be more worldly wise.

He writes, “Prosecute and punish the guilty regardless of their standing.” I wonder if he knows about the misdeeds of the Nehru-Gandhi clan? How about the shenanigans of Ms Antonia Maino, aka Sonia Gandhi, Mr Manmohan Singh’s boss?

Here’s something that Mr Purie will be well advised to read. Mr Subramaian Swamy’s Jan 8th op-ed in the Pioneer, “Call Sonia to the Dock.”

The Italian fixer and small arms supplier to the LTTE, Ottavio Quattrocchi, who was nailed as the catalyst in the deal by the CBI, in return for a hefty commission, had escaped from India in 1993, then from Malaysia in 2002 via a rigged court judgment obtained by collusion, and from Argentina by the same CBI fudging the records — all achieved under three different and consenting Prime Ministers.

But like the law of Karma, the scam keeps re-surfacing from one window or another. The latest is the ITAT quasi-judicial order, which under the law cannot be appealed against in the High Court unless it can be proved that a “substantial” law has been violated by the order. There is no such violation. As I see it, the ITAT order therefore holding the Italian fixer guilty and the government of the day as of liars, is final and has to be executed by the government. That means also re-opening the CBI case against the Bofors scam.

This scam is stuck in Sonia Gandhi’s political throat — it was “Q” who got a big slice, and so too the Jamshed Dadachandji-managed “Gandhi Trust” of the family referred to by Martin Ardbo in his diaries (in which Sonia is residual legatee], and the then brother-in-law of Sonia Gandhi, Walter Vinci, who was married to Anushka. He was grafted by Sonia on Rajiv Gandhi’s delegation to Sweden on March 26, 1986. This was to ensure that as PM, Rajiv signed the deal — to ensure the March 31, 1986 deadline set by Bofors Co., was met by “Q” to earn his dirty commission via AE Services. Since the deal was consummated, Vinci has bolted with his loot, abandoning Anushka.

As Union Law & Justice Minister 1990-91, the files sent to me by Prime Minister Chandrashekhar made it obvious that Rajiv was just a facilitator, but nevertheless an unforgivable accessory in the Bofors scam. The real operator however was Sonia, alias Antonia Edvige.

It will be a cold day in hell when Ms Antonia will be in the dock. Why? Because when you make so much money, you can also buy the judges and the investigative agencies. And you can buy yourself a rubber-stamp prime minister. And you can buy yourself a pliant president — especially if the president is implicated in scores of shady deals including suspicion of being an accomplice to murder.

Mr Purie writes that “power protects the corrupt.” Why he does not understand the implications of what he writes is puzzling.

Anyway, here’s a short take on power and corruption that I had written in October 2005. (I have been pondering power and corruption for a while.) Titled “Absolute Power and Corruption.” I reproduce it here in full.

Just a few weeks ago, we learnt that the KGB poured cash into the pockets Indian communist leaders and handsomely bribed the leaders of the Congress Party which was then under the control of Indira Gandhi. This past week we learn from UN sponsored investigation that Natwar Singh and the same Congress Party led by Sonia Gandhi has been bribed rather handsomely by the Iraqi dictator Saddam Hussain.

Is the Congress Party corrupt? It is like asking, is the Pope Catholic? Or asking, is Bill Gates rich? Or the more earthy question, does a bear shit in the woods?

The corruption of the Congress Party is not a new thing, however. In 1938, Sri Aurobindo wrote:

All this [referring to certain dishonest financial practices] promises a bad look-out when India gets purna Swaraj [full independence]. Mahatma Gandhi is having bad qualms about Congress corruption already.

Power corrupts, as Lord Acton famously observed, and absolute power corrupts absolutely. It is a nice aphorism but in India’s case, it is the corrupt that get power and the absolutely corrupt get absolute power.

I think that people seek political power in India fundamentally because it allows them to gain personally by corrupt means. The politicians are best placed to engage in corrupt practices because the economy is a command and control economy. So it is not that they become powerful and therefore later become corrupt. It is the other way around. It is the already morally and ethically bankrupt that seek power and attain it because they are corrupt. The honest and the good don’t have what it takes to reach the pinnacle of political power. They cannot compete with the criminal class from which the politicians rise to the top of the heap.

Mr Purie is in exalted company in his recommendation for how to fix corruption. Swami Ramdev believes that compulsory voting alone will solve the problem. Oh dear. Lamentable. I wrote this is June 2008 — “Swami Ramdev’s Peculiar Beliefs.”

But why does he want to force everyone to vote? Because “the corrupt political system can be made clean and transparent by making it mandatory for everyone to vote.”

What the heck was that?!

I fell off the chair when I read that. I suppose when he made that statement, his audience uncritically accepted his wisdom. They did not fall off their chairs. They did not ask why. That is par for the course, isn’t it? The gurujis and the netajis make totally asinine pronouncements and no one bothers to call them on it.

And the press? What do the press do? Let me compose a ditty in Hindi:

muh mein aayaa buk diye
jo bhi suna chaap diye

{Translation: (The high and mighty) say whatever comes to their tongue without reflection, (and the press) just print uncritically whatever they hear.}

How on earth is voting — even forced voting — going to solve the problem of corruption? Does the great swami know what is the cause of corruption? Can he please explain what his reasoning is for believing that corruption is a result of an insufficient number of people voting?
. . .
Corruption is related to power. I am not talking about Lord Acton’s famous observation that “power corrupts, and absolute power tends to corrupt absolutely.” I am taking about the power that one gets from controlling something and which control affords one the means to extract rents — and corruption is basically extraction of rents.

The cop at the corner has the power to extract something out of the wrong-doer. The bureaucrat has the power to extract rent because it is within his power to give or deny permission. The politician has the power to favor this or that industrialist and grant the license. Everywhere there is power to coerce, there is corruption.

The more things the government controls, the more power the politicians and bureaucrats — the people who constitute the government — have and consequently greater the corruption. Show me someone who has political power, and I will show you a person who is corruptible, and what is more, is most likely corrupt.

The larger the involvement of the government in the economic affairs of the state, the greater is the reward for being a politician because the chances of raking in the moolah is all the greater. Therefore the larger the government, the more likely it is to attract precisely those kinds of politicians who have the greatest greed and therefore the most corruptible.

Socialist governments control the most and therefore they are the most corrupt. India’s corruption of the political class is a direct consequence of the socialistic government India has. The way to get rid of corruption in Indian politics is to reduce the size and power of the government to meddle in the affairs of the economy.

How to reduce the size and power of the government? Not simple at all. You have to start off with getting the public aware of the problem. The press should have been doing this all these years. But we know how independent the press is, don’t we?

So the press route is out. The citizens have to organize and take on the job of informing the voters. If sufficient number of voters vote for a reduced government and a liberalized economy, it will happen. It will take years and lots of blood sweat and tears but it will happen.

Until then, we will have to read about “two simple steps” from prominent politicians and their friendly journalists.

The bottom line: India is the world’s largest kakistocracy. Let’s first understand why and we may have a shot at fixing it.

Related Post:

The Judgement Seat of Vikramaditya. Aug 2009.

You must please read that post. It is about our favorite prime minister, the man who has enabled more corruption than any other single human on the face of the earth.

A billion or so. We cannot imagine such large numbers. Then there are the leaders of these billions. They stash away in off-shore banks billions that they steal from their countries. These guys are well-fed, enjoy extreme protection from terrorists — often they are the guys who hob-nob with the terrorists, anyway.

Kleptrocrat leader of a 3rd World country

Omar al-Bashir, the Sudanese president, has siphoned as much as $9bn out of his impoverished country, and much of it may be stashed in London banks, according to secret US diplomatic cables that recount conversations with the chief prosecutor of the international criminal court.

Some of the funds may be held by the part-nationalised Lloyds Banking Group, according to prosecutor, Luis Moreno-Ocampo, who told US officials it was time to go public with the scale of Bashir’s theft in order to turn Sudanese public opinion against him.

“Ocampo suggested if Bashir’s stash of money were disclosed (he put the figure at $9bn), it would change Sudanese public opinion from him being a ‘crusader’ to that of a thief,”

Note that the leaders of the advanced industrialized economies, aka developed countries, know about the kleptrocracy that keeps the third world in miserable hunger. But it is not in their interests to reveal this to the people. Wikileaks, as Ocampo notes, changes public opinion. It educates the people.

A leader of another desperately poor extremely underdeveloped starving nation utterly misgoverned by unimaginably corrupt kleptocrats

Note that the people are starving but the leaders are plump and comfortable. The people’s desperate struggle to keep body and soul together is in contrast with their leaders’ billions in Swiss banks. Sudan is a small country (45 million population) relative to India. Still Mr al-Bashir’s $9 billion is peanuts compared to what Indian political and business leaders have accumulated: a staggering one thousand five hundred billion ($1,500,000,000,000) abroad.

Having so much money, these leaders can then talk to the leaders of the advanced industrialized countries as peers. They are in it together. The 3rd world leaders are members of the club. They confide in each other and exchange words that they would not want the rest of us to hear.

“You know, the problem with the unwashed masses is that they are too uppity,” one may say to the other at a nice little cosy lunch at one of their fancy mansions in the capital of some third world country. “They are the cause of terrorism, don’t you know.”

The people, of course, don’t know what their leaders really think about them. They are fed the usual crap by the newspapers and TV — which incidentally are packed with puppets of the regime.

Here’s how Elliot Abrams in a “Council on Foreign Relations” op-ed, Dictators, Democracies, and WikiLeaks (Dec 1, 2010), puts it

The second and most important reason foreign leaders ask for secrecy is that they are protecting themselves from their own populations. Dictators and authoritarians don’t tell their people the truths they tell us; their public speeches are meant to manipulate, not to inform. Instead of educating their citizens, as one might have to do in a democracy, they posture and preen on state-owned television stations and in state-controlled newspapers. Their approach is striking: Tell the truth to foreigners but not to your own population.

Wikileaks allows us a peek into what’s really going on behind the scene. It tells us that one “Prince Charming” believes that Pakistani-funded Islamic terrorism is not really as much as a threat to India as a bunch of Hindu radicals.

Some of us have always suspected that the US (and previously the USSR) has the leaders of third world countries on their payroll. Wikileaks provides evidence.

One thing we need to remember. The US is the most powerful nation on the planet. It did not get there by not fixing the rest of the world to suit its purpose. It had to — and has to — control the third world. It cannot post US soldiers in every nook and cranny of the world. The simplest way to get around that is to buy up the third world leaders. India is not an exception to that strategy.

That brings me to another related point. The US wants “buyable” third world leaders. The US will be very unhappy if India gets a prime minister who cannot be bought. So it will do its best to support someone pliable (say, for example, a half-breed whose loyalties are divided between two cultures and countries) and do its best to prevent an Indian nationalist to get to New Delhi.

Wikileaks will tell us if this theory of mine is correct.

There’s no need to belabor the point: wikileaks tells us what we need to know. It is one of the best instruments of public education. We — the citizens of India — have the responsibility to throw out the kleptocrats who have ruled India for so many decades. It is up to us to free India from the kakistocracy that the Congress has made it into.[2]

If even after this, the public does not wise up and drag the kleptocrats to the gallows, then of course they deserve the hunger and deprivation they suffer.

It’s all karma, neh?

NOTES:

[1] My definition of the third world — “desperately poor extremely underdeveloped starving nations utterly misgoverned by unimaginably corrupt kleptocrats” — is only an operational definition. The etymological definition of course differs from it. The Wikipedia puts it nicely.

The term “Third World” arose during the Cold War to define countries that remained non-aligned or not moving at all with either capitalism and NATO (which along with its allies represented the First World) or communism and the Soviet Union (which along with its allies represented the Second World). This definition provided a way of broadly categorizing the nations of the Earth into three groups based on social, political, and economic divisions.

The term continues to be used colloquially to describe the poorest countries in the world.

[2] Kakistocracy – government by the most corrupt and the least principled. See this Feb 2008 post for more on that: Of Kakistocracies, Principals and Agents.

In the Western tradition, the idea that the sun revolves around the earth — geocentrism — is known as the Ptolemaic model. It was a notion that led people to explain astronomical observations such as the movements of planets with convoluted arguments and constructs. In 1543 Copernicus provided an alternative hypothesis — heliocentrism — which placed the sun at the center of the solar system, and was later confirmed in 1610 by Galileo Galilei. From geocentrism to heliocentrism was a “paradigm shift” (a term much abused in the modern day.) That shift in perspective allowed people to think correctly about the Solar system.

Some people in India need a paradigm shift when thinking about Dr Manmohan Singh, the unelected (and unelectable) but appointed prime minister of India.

Currently we have what I call the “integritism” model — the conjecture and assumption that Dr MM Singh is a man of honesty and integrity. I coined that term based on what the Wiki describes as “integrity“:

Integrity is a concept of consistency of actions, values, methods, measures, principles, expectations and outcomes. In ethics, integrity is regarded as the quality of having an intuitive sense of honesty and truthfulness in regard to the motivations for one’s actions.

Integritism and Hypocritism

Working under the integritism model, people come up with astonishingly stupid statements. It leads them into convoluted arguments to explain why Dr Singh appears to behave paradoxically. The equivalent of epicycles and complex mechanisms are pulled out of the bin to show that while he appears to be dishonest, he is actually not. Take for instance this article, “Why did the 2G scam occur right under Manmohan Singh’s nose,” which starts off with

Amid the growing bewilderment among all sections of the people about the succession of corruption cases tumbling out of the cupboards of the Government, one question remains an enigma, about the 2G spectrum scam. How did the admittedly and inarguably the most honest and humble Prime Minister India has seen, preside over such brazen actions of then Telecom Minister A.Raja? {Emphasis added.}

Admittedly? By whom? And inarguably? That argument has not been made ever in the Indian media. Argument by assertion is no a valid form of argument.

It is an assertion that MMS is honest, an assertion not borne out by facts. Widely known and accepted facts? Yes, the author of that article goes on at length to state facts that enormous sums have been stolen by people whom MMS directly controls. And yet the author, in contradiction to the facts that he or she presents, continues to write absolute nonsense by asserting a proposition that is contradicted by evidence. This is what is called “cognitive dissonance” in polite company, and in honest company simply called stupidity.

But all is not bleak, I think. Some people are beginning to bring about the revolution that India needs in thinking about Dr Singh. I call it the paradigm shift to “hypocritism” — from Wiki,

Hypocrisy is the state of pretending to have beliefs, opinions, virtues, feelings, qualities, or standards that one does not actually have. Hypocrisy involves the deception of others and is thus a kind of lie.

Let’s take an example of someone who has recognized the problem with integritism. Madhu Purnima Kishwar writing in Outlook in an article titled “Honestly Speaking” starts off with

I fail to understand why almost every commentator, every TV anchor, every editorial writer feels compelled to pay ritual obeisance to the “personal honesty and integrity” of Dr Manmohan Singh while dealing with the scandals emanating from his cabinet colleagues. They do so even when there is clear evidence that the Prime Minister was well aware of various shady deals, as in the case of Telecom scam, and that he did nothing to stop the brazen economic crimes indulged in by his ministerial colleagues over the last 6 years.

Corruption is not only about personally accepting monetary bribes and stacking them away in hidden bank accounts overseas, buying benami properties or accepting diamond sets for your wife. Corruption can come in insidious avatars, such as knowingly turning a blind eye to the misuse the entire machinery of governance to serve private ends of a few individuals, even to the point of endangering national security. For example, not a single person has been punished thus far for supplying sub standard bullet proof jackets to the police handling the 26/11 terrorist attack in Mumbai. Not surprisingly, we are right now witnessing yet another scam involving sub- standard bullet proof vests.

You must read Kishwar’s article to remind yourself of the laundry list of absolutely despicable corrupt acts that Dr Singh has enabled. Enabling corruption, condoning corruption, helping shield the corrupt from the consequences — that too is corruption.

The paradigm shift — pardon me for using that term — India needs is from integritism to hypocritism. The moment you posit that “Dr Manmohan Singh is a despicably dishonest man,” you can explain why scams amounting to billions of dollars are routine under his watch. It no longer is a mystery. In another country where the people are vigilant and care about truth, honesty and integrity, he would have been impeached and locked up. Well, if not locked up, he would have been tarred and feathered.

Taking Credit under False Pretexts

I was asked the other day when did I reached the conclusion that perhaps Dr Singh was indeed a truly despicably dishonest man. It was years ago that I had heard from absolutely reliable sources that when he was the finance minister in P.V. Narasimha Rao’s government, he had brought to PVNR a budget that was just a re-hash of the socialist nonsense that previous governments had been following. PVNR took a look at it and told Dr Singh that it was garbage and he should frame one which will liberalize the Indian economy.

Dr Singh, the unimaginative bureaucrat that he was (and is), did as he was told. So essentially the liberalization of the Indian economy was PVNR’s idea, not Dr MM Singh’s. I did not care either way: liberalization was good and I was happy that at least India became a somewhat liberalized economy. But as time went on, I noticed that Dr Singh started taking credit for something that he probably did not even support, leave alone being the author of. I realized that he lacked integrity. The Copernican Revolution had happened in my mind. What was missing was Galileo’s telescope to see the evidence.

That started coming out. Scam after scam and Dr MM Singh was there to oversee them all. Yes, it was clear that he was truly a despicably dishonest man. Proof that he had fancy little to do with liberalization aside from taking dictation is also there if only we care to see. He has not done one bit of liberalization. In fact quite the contrary. Look around and see.

Dr Brown Nose

I cannot imagine a less honest person. He follows orders. And he is the master of brown-nosery. I recall reading what he said about the “National Rural Employment Guarantee Scheme” — that was “Sonia Gandhi’s gift to the country.”

WTF-ery does not get more acute.

NREGA is a income-distribution scheme. Our incomes are taxed and then the government spends it on giving money to people for getting their votes. Where does Antonia Maino aka Sonia Gandhi come in? Does all the tax money go into her personal bank account and become her personal property? And then she takes a few billion from her personal account in a Swiss bank and pay for NREGA? WHISKEY. TANGO. FOXTROT.

Did the Indian media ever ask Dr Singh what he meant by saying that Sonia Gandhi gave it as a gift to India? No. The main stream Indian media has great people like Vir Sanghvi and Barkha Dutt (ach Poo!).

Dr Divide and Rule

Dr MM Singh is a despicably dishonest person. His is the politics of divisiveness. He is dividing the country along religious lines just to keep his Muslim vote bank intact. He addresses the nation not as “My dear fellow Indians” but as “My dear Hindus, Muslims, Sikhs, Christians” etc. What a fucking (pardon my French) douchebag.

Now if you will excuse me, I will have to end this as I feel nauseated just talking about MMS. I have to go and throw up — which is a pity since I had a good breakfast and now it will all go down the tube. It is a pity that India had a lot of promise but MMS has flushed it down the tube.

Related Posts:

1. Manmohan Singh is a Despicably Dishonest Man. May 2010.

2. Manmohan Singh is really and truly a Despicably Dishonest Man. June 2010.

“The JPC probe (into alleged irregularities in the 2G spectrum) will serve to humiliate the Prime Minister Manmohan Singh and he may resign which is what Sonia Gandhi wants,” Swamy said.

“The Opposition should take care that they don’t play Sonia Gandhi’s game,” he said after meeting Shiv Sena chief Bal Thackeray at the latter’s residence in suburban Bandra in Mumbai.
. . .
On whether the Opposition was playing into her hands, Swamy said “I think if the PM were forced to resign at this juncture, you are empowering Sonia Gandhi…so that she is free to bring in Rahul Gandhi as the Prime Minister.”

“I have urged Balasaheb (Thackeray) to organise a rally against corruption and he has agreed for it. It will be held at the Shivaji Park,” Swamy said.

Sonia Gandhi was “Gangotri” (fountainhead) of corruption in the country, Swamy said. “I requested Balasaheb to lead the country and get rid of the rampant corruption,” he said.

So how do I feel about Bal Thackeray being asked by Dr Swamy to join in the fight against corruption? Absolutely positively. I think the problem of corruption is deep and extensive. It has taken decades to grow its tentacles and now it threatens the choke the life out of India. In my imagination, it appears like a hydra-headed monster. The more people take up arms against the monster the better. Bal Thackeray is welcome to add his voice and lead his followers to battle against corruption. We all have to do our bit.

Let’s cry havoc and let slip the dogs of war amongst those who are bent on destroying the country.

Note “reduce barriers to business and clean up corruption.” Reduce business barriers? OK, the government erects them; only it can remove them. But it does not have an incentive to do so because those in power actually gain from them while the country loses. The story is the same with corruption. Sure the average smalltime crook is into corruption. But for massive multi-tens-of-thousands of crores corruption, you have to be in government. The high level corruption eventually trickles down and gives support to the petty corruption that the average person encounters daily.

I think a reasonable case can be made that the biggest enemy of India is the government of India. It began with the British, and the job was eagerly taken over by FNehru, and from then on, with only a short few breaks, the FNehru clan has presided over the destruction.

I repeat that here because it bears repeating: The Indian government is the greatest barrier to India’s development.

I am quite sure that this realization is not novel and certainly I am not unique in having it. Scores of able observers before yours truly have noted it. The great Milton Friedman is one of them. In a talk he gave in India in 1963 — nearly half a century ago — he said:

[Westerners] think in terms of the large, modern corporation, of General Motors, Genera Electric, and other industrial giants. But it was not firms like this that produced the Industrial revolution; they are, if anything, its end products. The hope for India lies not in the exceptional Tatas or similar giants, but precisely in the hole-in-the wall firm, in the small and medium size enterprises, in Ludhiana not Jamshedpur; in the millions of small entrepreneurs who line the streets of every city with their sometimes miniscule shops and workshops. If the tendencies so evident in Ludhiana could be given full rein, and not hampered and hindered in every direction by governmental interference and control, India could achieve a rate of growth that would exceed today’s fondest hopes.

As this final remark suggests, the correct explanation for India’s slow growth is in my view not to be found in its religious or social attitudes, or in the quality of its people, but rather in the economic policy that India has adopted; most especially in the extensive use of detailed physical controls by government. {Emphasis added.}

Nearly half a century later, the government still exerts its baleful control over the economy. Why does the Indian government use “detailed physical controls” that are evidently so damaging to India? Because that’s the way to expropriate part of the wealth the economy produces. It engineers shortages by controlling the supply. Shortages raise prices significantly above costs which end up as profits for the controllers. This is typical monopolistic behavior.

The higher the degree of control, the greater the profits. The greater the profits, the greater is the incentive to become the controller. If being the controller affords, say, $10 billion in profits, then it is worth spending a few billion to become the controller. Also, since these profits can only be had if one is criminally dishonest, it stands to reason that it will attract the most corrupt and indeed that in the competition for control, the most criminally corrupt will emerge victorious.

So here’s the whole sordid story in outline. Certain misguided ignorant people (who need not be named here) got control of the government when the British let go of their control. The new bunch was led by one particular guy who is notable for his hubris (that he knew what’s best for everyone in every sphere) and his ignorance of his own incomprehension of how an economy works. Between the father who commanded unquestioned obedience and the uncle who thought he knew it all, India was screwed.

Hubris and ignorance among the powerful is a potently destructive mix and a sure recipe for disaster. The outcome is the disaster we see today. They set up the command-control-license-permit-quota raj. It is the best way known to humanity to retard economic development.

But what’s worse is that it set up the conditions for attracting criminals to politics. Mid last century, the degree of corruption in Indian politics was high but compared to what is the norm today, it was as if the politicians of the past were veritable saints.

It’s a downward spiral. Reports of corruption in the tune of billions of dollars have lost their power to shock and surprise. At the highest levels of the government there are criminals, and the general public just takes it as business as usual. Fact is that most people are totally unaware that those billion-dollar corruption deals affect their wellbeing, and theft of public money is coming right out of their pockets.

There is a significant middle-class educated population which is capable of actually comprehending the connection between the corruption and government control. But having the capacity to comprehend is not the same as actually comprehending. Trouble is that they have not had this connection actually explained to them. The education system does not clue them in. Then of course they are too distracted by bread and circuses (or pizza and cricket, if you please) to figure it out. But even if some of them have figured it out, they are a minority and worse still, a minority that does not bother to express its outrage.

The story becomes even more dismal when you consider what the criminals do to remain in power. They tax the productive sector of the economy and hand out largess to the unproductive sector in exchange for their votes. As the saying goes, robbing from Peter to pay Paul will always ensures Paul’s support.

To summarize: Control of the economy does two things. First, it reduces economic activity and consequently growth. Second, it gives rise to rent, which then attracts the most criminally corrupt to gain control of the government. Rent-seeking rather than good governance becomes the sole aim of those in government. The criminally corrupt are not competent to make good policy given that it was not their public policy brilliance that brought them to power. Besides, good policy generally entails a reduction in government power and control of the economy. So why would they do it even if they were advised by others who know better.

This does not have to be a counsel of despair. The reason I keep harping on this is because I believe that comprehension precedes positive change. We must first admit that there is a problem, then we have to understand the causes of the problem, then we have to figure out how to address those causes, and then do what is required.

To my mind, we have to reach, teach and breach. Reach those good citizens who are fed up of the rot, teach them the causes of the rot, and together breach the bulwark behind which the criminals govern India.

Related Posts:

The Congested-Shortage Economy. April 2010.

Manufactured Shortages and Corruption. June 2006.

Mohan Murti’s article is an exception to the fashion that holds that Dr Singh is a nice man. I have been saying for a while that Manmohan Singh is a despicably dishonest person. Wake up, India, and see the rot that infests the nation. The greatest enemies of the nation are those who rule the country and they are stealing your and your children’s future.

Here are a few excerpts from Murti’s article, which is a must-read:

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allays. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”

An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”. [The Indian regime presided over by Manmohan Singh -- AD]

A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that enquiry,” the article concluded.

“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”

The Telegraph of the UK reported the 2G scam saying: “Naturally, India’s elephantine legal system will ensure culpability, is delayed.” [Emphasis added.]

It is worth recalling why Manmohan Singh is the prime minister. He is pliable, as he lacks a backbone. He follows orders without questioning, since he lacks any sense of decency, ethics, and morality. His master gives him orders and he meekly goes about doing what he is ordered to do. He’s a rubber stamp. Anyone else with even an iota of shame and humanity would long have quit that dishonorable position. But not he. He is blissfully unaware of the low status he holds.

Not one but scores of mega scams pass unnoticed by him. Corruption is so rampant in India under his “leadership” that people have become inured to it and the next multi-billion dollar scam does not even evoke the mildest surprise. Practically all the news channels and agencies in India drink deep from the well of corrupt money that the politicians have. They are complicit in the rape of India that Manmohan Singh and his cohorts are engaged in.

But this cannot last. As Lincoln said, you can fool some of the people all the time, and all the people some of the time, but not all people all the time. The Italian and her Indian lackeys will pay a price for the rape of the land. It is up to us to see that the day of reckoning is not too far.

Prime Minister Nehru categorically ruled out any proposal for appointing a high power tribunal to enquire into and investigate charges of corruption against Ministers or persons in high authority, for the main reason that, in India, or for that matter any other country where there was a democratic set-up, he could not see how such a tribunal could function. The appointment of such a tribunal, Mr. Nehru felt, would “produce an atmosphere of mutual recrimination, suspicion, condemnation, charges and counter-charges and pulling each other down, in a way that it would become impossible for normal administration to function.” More than half the time of the Press conference was devoted by Mr. Nehru to deal with this question of appointing a tribunal to enquire into cases of corruption as recently urged by India’s former Finance Minister, Mr. C.D. Deshmukh.

The original item was published exactly 50 years earlier in the Hindu: January 9, 1960: Enquiry into charges

Remember that Nehru’s Congress party and his progeny have been at the helm of affairs which has led to India to become one stinking filthy heap of corruption. Corruption cannot be eradicated from Indian politics as long as that fact does not change. (Hat tip: Sri.)

Bardhan notes that “dignity politics” is one of the debilitating factors. He writes:

. . . even when the [lower classes and castes] come to power, the issue of basic social services gets low priority in comparison with larger symbolic issues of dignity politics (particularly in North India). A perceived slight in the speech of a higher-caste political leader resented by a lower-caste one will usually cause much more of an uproar than if the same leader’s policy neglect keeps hundreds of thousands of children severely malnourished in the same lower caste. The issue of job reservation for backward castes catches the public imagination more fervently than that of child mortality or school dropouts that afflict the majority in those communities. Thus the demand from below for those basic social services is as inarticulate as their supply from above is deficient.

About the demand and supply of basic social services — a missing market of sorts — I too have concluded that the demand arises from an awareness of what is excepted expected, which awareness depends on the basic education system. Public education — by which I mean the education of the public about matters of civic, economic and social importance — is missing. I think that the focus of the government-controlled education system is on raising the peak education level of an elite (the IITs, IIMs, IISc, etc) rather than raising the education level of the citizenry broadly. My cynical conjecture is that the political leaders do understand that they their feet will be held to the fire if the people become aware of the misgovernance.

A lot of books with rousing titles such as “Imagining India” and “India Unbounded” have become hits. Most of them studiously avoid mentioning the dysfunctional — perhaps out of concern for sales figures or perhaps from a fear of displeasing the political powers that be. What we need to do is to look at issues that most would rather sweep under the rug and pretend that they don’t exist. Corruption, for instance, is widely regarded as a problem but I would argue that it is a symptom of deeper causes which are intertwined with other deep causes which form the basis for a whole host of symptoms such as corruption, poor educational system, lack of accountability, the persistence of social conflict, etc.

Bardhan notes that India’s heterogeneity poses problems that don’t arise in more homogeneous societies:

In very recent years, there are some faint signs that good governance is being rewarded by the electorate in some areas. Collective action in demanding and ensuring good governance is, however, particularly tricky in India on account of the extreme heterogeneity of social and economic interests involved, which always makes unified movement on goal formulation, agenda setting and policy pressure difficult to achieve for diverse groups, who in anticipation of this difficulty often opt for populist handouts and clientelistic arrangements instead. As a society we are much more diverse than, say, Japan or China, and coordination on most issues is more difficult here than in those countries. Sociologists have pointed out that extreme social heterogeneity in India is also a major cause of hierarchical industrial relations with attendant mutual distrust and labour supervision problems, and relatively low labour productivity in Indian factories.

I think that the way out of this problem is for the state to be totally blind to the markers of heterogeneity. For instance, the state must not ever inquire about the personal attributes of a person that have no bearing on social services. Thus, the state must not discriminate on the basis of religion. Whether or not a citizen is eligible for economic assistance, for example, should depend on the merits of the case and not on what that person’s religious affiliation is. The moment the state privileges one group over another, it invites the social evil of group-based divisive politics and, as Bardhan puts it, “populist handouts and clientelistic arrangements.”

India’s governance is arguably bad. The party that has been almost exclusively in control of that misgovernance is the Congress party which has been the fiefdom of the Nehru-Gandhi family. The incompetence of the party and that family has been demonstrated beyond the shadow of a doubt. But as I have argued before, they are not there through some divine edict; they are there because the people of India find misgovernance by the Congress and the Nehru-Gandhi family acceptable. The fault, dear reader, lies in Indians and not in the leaders that they freely elect.

This summer for teaching an undergraduate course on economic development (Econ171) at Berkeley, I naturally considered the major factors that affect — and effect — economic growth and development of an economy. The major headings included growth models, energy, infrastructure, urbanization, education, agriculture, and one other topic which I will come to presently. It should come as no surprise that the government of India — being one that professes a sincere commitment to economic growth and development — actively intervenes in all of those areas. There are government departments and ministries at the central and state levels.

Digression: Ministries

Actually, it is an understatement to say that the government intervenes in the economy. One would be hard-pressed to find even a minor matter related to the economy that the government does not interfere in and control. There are ministries. Here are a few, from the Govt of India directory:

Ministry of Agriculture
Ministry of Chemicals and Fertilizers
Ministry of Civil Aviation
Ministry of Coal
Ministry of Commerce and Industry
Ministry of Communications and Information Technology
Ministry of Consumer Affairs, Food and Public Distribution
Ministry of Corporate Affairs
Ministry of Culture
Ministry of Defence
Ministry of Development of North Eastern Region
Ministry of Earth Sciences
Ministry of Environment and Forests
Ministry of External Affairs
Ministry of Finance
Ministry of Food Processing Industries
Ministry of Health and Family Welfare
Ministry of Heavy Industries and Public Enterprises
Ministry of Home Affairs
Ministry of Housing and Urban Poverty Alleviation
Ministry of Human Resource Development
Ministry of Information and Broadcasting
Ministry of Labour and Employment
Ministry of Law and Justice
Ministry of Micro, Small and Medium Enterprises
Ministry of Mines
Ministry of Minority Affairs
Ministry of New and Renewable Energy
Ministry of Overseas Indian Affairs
Ministry of Panchayati Raj
Ministry of Parliamentary Affairs
Ministry of Personnel, Public Grievances and Pensions
Ministry of Petroleum and Natural Gas
Ministry of Power
Ministry of Railways
Ministry of Road Transport and Highways
Ministry of Rural Development
Ministry of Science and Technology
Ministry of Shipping
Ministry of Social Justice and Empowerment
Ministry of Statistics and Programme Implementation
Ministry of Steel
Ministry of Textiles
Ministry of Tourism
Ministry of Tribal Affairs
Ministry of Urban Development
Ministry of Water Resources
Ministry of Women and Child Development
Ministry of Youth Affairs and Sports

There are commissions and independent offices:

Central Bureau of Investigation (CBI)
Central Information Commission
Central Vigilance Commission (CVC)
Comptroller and Auditor General of India (CAG)
Election Commission of India
National Commission for Backward Classes (NCBC)
National Commission for Minorities (NCM)
National Commission for Scheduled Castes (NCSC)
National Commission for Scheduled Tribes (NCST)
National Commission for Women (NCW)
National Commission on Population
National Human Rights Commission (NHRC)
National Manufacturing Competitiveness Council (NMCC)
Office of the Principal Scientific Adviser
Planning Commission
Telecom Regulatory Authority of India (TRAI)
Thirteenth Finance Commission
Union Public Service Commission (UPSC)

And more:

Directorate of Public Grievances (DPG)
Department of Atomic Energy
Department of Space

Act 2: Cars with Flashing Red Lights

Lots of union and state ministers there. Lots of commissioners. And department heads. All going around in cars with red flashing lights on the top. Traffic is controlled when these people travel on city streets, doing whatever they are supposed to be doing. And bureaucrats to support them. That means a lot more cars with red flashing lights on top. Lots of pushing of files and granting of permissions. Lots of god alone knows what in various offices scattered across Delhi and state capitals.

There is no economic activity, however trivial, that is not under some ministry, commission, or department of the government of India. In most cases, the control that government agencies exert over them is comprehensive and exhaustive. That economic growth and development has largely eluded India for decades is a well established fact. Is it possible that it is precisely because of the government control that development and growth has not happened? It could be. Lack of economic freedom is correlated with poorly functioning economies. But why? I believe that the answer is one word: corruption.

That’s one topic that I find to be at the heart of all economic development and growth. It is striking that the topic does not receive much attention. I was recommended a textbook by an Indian author on development economics. The book did not have a chapter on corruption. It’s like having a textbook on thermodynamics and neglecting to refer to entropy.

I decided against using the book. Besides, it was not particularly suited for a well-rounded understanding of the subject.

ACT 3: The Missing Ministry

But fortunately, there is a large and growing literature on corruption, much of it easily accessible on the internet. I used that for the course and spent considerable class time in discussing the role of corruption in development.

Now here’s a point I am trying to make over here: It appears that corruption is one factor that matters significantly in economic development and yet there is no ministry dedicated to controlling corruption. There are ministries by the truckloads, ranging from the important to the trivial: from infrastructure to micro enterprise to energy to earth sciences (I did not know that) to civil aviation (a vanishingly small portion of Indians can afford aviation) to culture (really!), ad infinitum.

One could cynically observe that no special ministry of corruption is necessary as corruption is a horizontal issue that runs across all the verticals, and indeed that they are all implicitly ministries for corruption.

Digression: The CVC Mystery

Actually, there is something called the “Central Vigilance Commission (CVC)” but it is not easily clear what it actually does. The website says,

Powers and Functions of CVC

* to exercise superintendence over the functioning of the Delhi Special Police Establishment (DSPE) with respect to investigation under the Prevention of Corruption Act, 1988; or offence under CRPC for certain categories of public servants and to give directions to the DSPE for purpose of discharging this responsibility;

* to review the progress of investigations conducted by the DSPE into offences alleged to have been committed under the PC Act;

* to undertake an inquiry or cause an inquiry or investigation to be made into any transaction in which a public servant working in any organisation, to which the executive control of the Government of India extends, is suspected or alleged to have acted for an improper purpose or in a corrupt manner;

* to tender independent and impartial advice to the disciplinary and other authorities in disciplinary cases, involving vigilance angle at different stages i.e. investigation, inquiry, appeal, review etc.;

* to exercise a general check and supervision over vigilance and anti-corruption work in Ministries or Departments of the Govt. of India and other organisations to which the executive power of the Union extends; and

* to chair the Committee for selection of Director (CBI), Director (Enforcement Directorate) and officers of the level of SP and above in DSPE.

* to undertake or cause an inquiry into complaints received under the Public Interest Disclosure and Protection of Informer and recommend appropriate action.

That sounds good. But going from what is reported in the popular press about anyone convicted of high-level gross corruption (not one actually reported in the last 60 years), one would have to conclude that corruption at high levels does not exist in India at all. At most one hears of the conviction of people involved in petty corruption — such as throwing a poor man who sold diluted milk in jail, or some common burglar being apprehended and successfully prosecuted.

Small fry, yes; big fish, caught and let go; great whites, you must be joking.

What’s the CVC actually done? I poked around the website for a good while and it appears they do nothing worth reporting on their site. It’s a mystery.

Act 4: Wealth Accumulation

It may be true that not all politicians in India are corrupt. Of the tens of thousands of politicians, there must be at least a handful that are not corrupt and have not accumulated immense wealth. But to use an expression favored by economists, to a first approximation all politicians are corrupt. The exceptions are not known but the exceptionally corrupt are widely recognized. Corruption is so endemic to the class of politicians that it does not evoke even mild surprise, leave alone any outrage.

Here’s an example. The late YSR Reddy was chief minister of Andhra Pradesh for the second term. He died in a helicopter accident last month. Unverified reports say that he was wealthy. How wealthy is hard to estimate. But here’s a partial list that is going around. I stress again that this is only alleged and I am not representing this as a fact.

Assets gained by YS in his 5 years as Chief Minister

• Raheja Corporation land allocation for Infrastructure ( 200 acres in first phase and 300 acres in second phase)- CM’s son gets 50 percent share

• 500 acres in the 1000 acres allocation to Gangavaram port

• Brahmani Steels investment – Rs.40,000 crore – CM’s son gets 50 percent stake

• Indu and Brahmani Infotech companies get 250 acres with 50 percent stake to CM’s son.

• Rs.3500 crore investment for a six million tones Cement factory at Kamalapuram in Kadapa district.

• Rs.6000 crore Hydro electric project -1200 MW in Sikkim – CM son gets 50 per cent stake

• 1000 acres bought in and around Bangalore – land cost Rs.Three crore per acre.

• Rs.250 crore commercial complex on Bannerghatta Road in Bangalore

• 25 acres land in Hyderabad, Kukkapally Housing Board location.

• 90 acres in benami bought in IT corridor area of Gacchibowli .

• 151 acres of granite mining lands in Prakasam district, Cheemakurthi ( world famous for its black and gold granite stone ) in benami company ( Gimpex ).

• Mauritius shell companies 2 I Capital , Flury Emerging Capital purchase 125 crore worth shares in Sandur Power Ltd –

• Benami subsidiaries : Bhagavat Sannidhi, Carmel Asia Holdings, Harish Infra, Classic Realty, Janani Infra,Marvel Infra ,Silicon Builders, Capstain Infra, Shalome Infra, Inspire Hotels

• Purchase of Assigned lands -1000 acres in Kandur village and 500 acres in Chitwel village of Kadapa district.

I quoted only a bit of a fairly long list that is available at the Shadow Warrior blog. I am sure that YSR Reddy is not exceptional; similar lists must be available for other ministers, past and present. No one particularly cares that corruption is part of the DNA of this society.

Digression: Public versus Private Corruption

Allow me to introduce you to “Atanu’s First Lemma of Private Corruption“: Public corruption establishes the upper bound to private corruption.

It is my natural modesty that prevents me from calling it a law. And besides, a lemma is a stepping stone to a larger theorem or thesis that I wish to establish one of these days.

But seriously, we have to examine the problem of corruption in India. After considerable thought I have concluded that the basic problem of India’s underdevelopment rests on corruption. By focusing on corruption we can understand the entire system. Once we understand the system, we can propose what is to be done about improving it. First, however, we have to give corruption the undivided attention that it deserves.

A ready response whenever the topic of corruption is raised is, “Corruption happens everywhere. It is not only in India. Heard of Enron? And a thousand other instances of corruption in developed and underdeveloped countries?”

Yes, corruption is not unique to India. Indians are not unique. They are humans and share all human characteristics with the rest of humanity. The point to note is that the impulse to be corrupt occurs in all people. The difference lies in the opportunity that the environment presents for the expression of that basic instinct. In India, for reasons that we could go into later on, the environment provides the most fertile ground for corruption to flourish. The genes are the same; the environment allows differences in their expression.

The upper limit to private corruption, as I said before, is established by public corruption. Which implies that the lower bound to public corruption can be estimated by the revealed private corruption. Let’s take a recent example. Satyam, a large private sector technology firm head quartered in the above mentioned state of Andhra Pradesh, was recently in the news. Its boss, one Mr Ramalinga Raju, fiddled with the books to the tune of a few billion dollars for a number of years. I conjecture that he did it because he was fairly confident that he would get away with it. Could it have been possible that this assurance came from knowing that the political powers were even more corrupt? Does public sector corruption provide the cover that private sector operators depend on for protection? Whatever be the details of the Satyam case, it can be reasonably asserted that without the involvement of the government of the state, Mr Raju could not have been all he was.

Andhra is not the only state where there is public corruption. It is a fraternity, a sacred brotherhood even. Regardless of which political party or ideological persuasion, they are all in it. Which is why you don’t see party A (in power) prosecute party B (not in power) for corruption that the latter indulged in when in power. Party A now has the opportunity to rake in the spoils of their reign. After all, the party fought tooth and nail mostly so that it could have the opportunity to make a killing. They would be insane to forego the primary benefit of being in power — make money. This means no political party has an incentive to do anything that limits their opportunity to gain from corruption. This means religiously avoiding throwing stones since they are living in very fragile glass houses.

If the level of public corruption cannot (in the ordinary course of events) come down, then the ceiling for private corruption keeps rising. I conjecture that in the past, the amount of public corruption was lower (and so was private corruption) and that it has been monotonically increasing with time.

Act 5: The Big Picture

Now it is time for the First Law of Corruption: Corruption at any specific level provides the upper bound for the degree and extent of corruption at the next lower level.

Here’s what that implies:

1. If the boss is honest, he will not tolerate dishonest business under him.

2. If the boss is dishonest, the people under him have his permission to be dishonest.

3. If the boss is dishonest, the people under him are safe being dishonest — he couldn’t fire them because they could rat on him.

4. If the boss is dishonest, he will not tolerate honest people working for him — he cannot have a hold on them and they could rat on him.

5. If the boss is dishonest, he will eventually convert those work for him to be dishonest.

Basically, in any hierarchical organization, the degree of corruption increases with the level in the organization. If the lowly clerk at the government office is corrupt, it means that the whole structure is corrupt and the most corrupt are at the top of the organization. Public sector organizations — such as the list of ministries listed above — draw their inspiration from the top. The government is a collection of such organizations. The people who form the top level of the government can therefore be expected to be the most corrupt.

The corruption of the captains of the private sector is bounded by the corruption of the top level operators of the government. If you hear of the corruption of a mega super corporate head honcho, be assured that he (and to a first approximation they are all males) has the support of the top level of the government.

Final Act: Why?

Corruption is seriously like a cancer for an economy. It eventually kills it. Like a cancer, corruption has something to do with the DNA at the cellular level of the organism. Damage to the DNA leads to cancer. Somehow at some time, corruption enters the economic system. It then keeps growing. Like a cancer, it can start off in one localized spot and then it metastasizes. The best response to cancer is to catch it early and excise completely the tissue that is cancerous. It is too late when the cancer has spread to other vital organs.

I have concluded that monopoly power allows corruption to take hold. Healthy competition is not consistent with corruption. The market mechanism largely kills institutions and firms that are corrupt. The government, however, has monopoly power in many sectors, and therein lies the possibility of corruption. It is not guaranteed that all governments will be corrupt. Only some, and only those which are based on flawed constitutions. But that is a different story for another day.

Government monopoly power gives the leaders of the government the power to be corrupt. Then if these leaders do become corrupt, the corruption trickles down the organizational structure. And then it spreads side ways: the private sector is becomes part of the game. Sometimes they are forced to join the game. The rules say that the government has the right to allow or prohibit the establishing of certain businesses. Those who are willing and able to pay the government for the licences, are allowed in.

Given enough time, basic human nature will ensure that corruption will monotonically increase with time in a license-permit-quota control raj. The socialist government of India, created by the Congress, for the Congress and of the Congress was bound to degenerate to this state of affairs.

India is poor because it is corrupt. No other factor can adequately and fully explain its horrifying poverty.

India was the motherland of our race, and Sanskrit the mother of Europe’s languages: she was the mother of our philosophy; mother, through the Arabs, of much of our mathematics; mother, through the Buddha, of the ideals embodied in Christianity; mother, through the village community, of self-government and democracy. Mother India is in many ways the mother of us all.
[Wikiquote]

It is hard to reconcile today’s India with the great civilization that India once was. Something must have gone wrong. Durant wrote, “A great civilization is not conquered from without until it has destroyed itself from within.”

Was it corruption that destroyed India from within in the past? And is it now in its final phase being totally destroyed by corruption?

That whole day, the man considered his wealth and made big plans about all the things he would buy and how happy he would be. His imagination ran wild. He was rich. Richer than everyone he ever knew. But then suddenly he remembered the monk at the edge of the village. The monk had given him the diamond without the slightest hesitation. The man ran back to the monk outside village, fell to his knees and said, “Sir, tell me how can I get the inner wealth and contentment compared to which all external wealth is worthless?”

End of my retelling of the story that I got in an email. The email said that the story was from HinduismToday.org.

I cannot access that site from India. (My ISP is TataIndicom Broadband.) I suppose the “secular” government of India does not allow it. Sites preaching jihadi hate meet the exacting standards of the Indian government’s stamp of secularism. But kafir ideology is prohibited. So if you have the misfortune of living under the dispensation of the “secular” Indian government, you could use this online anonymous proxy server and type in http://www.hinduismtoday.org/ in the address bar.

BTW, do drop a note to Mr Manmohan Singh telling him how much you appreciate his government’s efforts at not allowing the corruption of Indian minds by blocking the HinduismToday site.

[This post filed under the categories "Freedom of Expression," "Ruled by Monkeys," "Stupid Monkeys" and "Corruption."]

Postscript: I have heard from several people across the country saying that they are able to access the HinduismToday site. I still cannot access it unless I go through an anonymous server. Therefore it could be that Tata Indicom may be involved in this instance of censorship.

“Tell me more,” says I. “You were talking to someone on the phone just now and you said ‘890′. What was that about?” I asked.

“That’s the price that I was negotiating for transporting one metric tonne of goods between Mumbai and Raipur,” replied RL.

I had no idea of how this truck transportation business works. For no particular reason I inquired further.

“So how many metric tons does a truck normally carry?” I asked.

“About 35 tons,” RL said. “But that’s above the allowed limit. The limit for the average two-axle truck is only 16 tons. But if you stick to that, the numbers don’t work out.”

“So you mean to say that the trucks are overloaded?” I said.

“Of course. At the allowed 16 tons max, it would cost 1200 rupees per ton to move material. So we just pile on whatever to break even. It’s a competitive market,” said RL.

“But then aren’t there checkpoints along the route? Don’t they figure out that the trucks are overloaded? Are there weighing stations where the trucks are weighed to see that they are within the limits?” I asked.

“Yes of course. There are many RTO checkpoints. The deal is simple. Every month, for each truck, there’s a schedule of payments. Say between Mumbai and Raipur, the rate is Rs 20,000. Once you pay that for a truck, you are free to load the truck to whatever the truck will bear, never mind the legal limit,” RL said.

“And how many trips does that cover?”

“About 5 round trips a month. On an average it takes three days each way. Works out to about Rs 2,000 per transit. But it allows you to keep the costs down and therefore it works out for all concerned,” says RL. “It’s routine stuff. Once you pay the 20,000 rupees, there are not more hassles. You only pay at one central location and the money is divvied up among the various stakeholder along the way,” replied RL.

“And who are the stakeholders?” I ask.

“You know, everyone. All the way up to the concerned state and central government ministers. There is a regular schedule.”

“Wow! That’s really neatly done. So even the top politician must be getting his cut,” I said.

“Naturally. It would not happen otherwise. Everyone has to have his share, otherwise this could not happen,” said RL.

“What’s the deal?”

“Let me give you the short version,” RL said. “The truckers have to carry more than the legally mandated load. Otherwise it would be too costly per ton. To get around the legal limit, you have to bribe the RTO — the road transportation officials. There are many check points along the route. It helps that the bribe is collected at one point and that too for the entire month. Otherwise it would take too long. Anyway, the collections are passed on to various people, all the way to the top. Government ministers and other bureaucrats, you know. But this scheme works only because there are other interests tied to it.”

“Like what?”

“Consider the truck manufacturing companies. They make more money because they sell more trucks which are rated at a lower carrying capacity. So they are not interested in raising the legal load limit. But the overloading of trucks is good for the RTO. They make money in bribes. That’s not all. The government builds roads. Right? OK, so they get contractors to build roads that are rated to carry say 16 tons per truck. Naturally with trucks carrying 32 or even 45 tons, the roads get f**ked. The contractors make money from repaving the roads frequently. The kickbacks from the contractors for road repairs ends up in may pockets, mainly the politicians. It’s huge. Road repair is huge business,” RL said.

“Is that all?” I asked.

“No, there’s more. It’s a dirty business but then what do I know. I have been in this business for a couple of decades and that is why I know the ins and outs of this one. What do I know about what goes on in say the tire business. Or the container shipping business. You don’t know about the trucking business but I do. But then we are equally ignorant about all the rest. It looks as if this sort of corruption cuts across every aspect of business in India. I have to play the same game because otherwise I could not survive in business.”

“Surely you could refuse to pay the bribes and refuse to ply overloaded trucks,” I said.

“No I cannot. I cannot refuse to play this game because no one can survive in business if one refuses the deal. Never mind me, you cannot survive in politics if you refuse to play along. A fellow got elected as the MP for a constituency close to where I live. He’s not a career politician. It just so happened that family was owed some favor and he got a ticket from this party and he won. Quite a decent fellow, actually. But totally naive about how things work.

“He didn’t know what he was expected to do and how much he was supposed to charge for the deals that he was supposed to help with as a member of parliament. Anyhow, the people who needed to get their interests taken care of had to help the MP learn the ropes. They put people in his office who would tell him which document to sign and how much he was to be paid for each of his signatures. Like I told you, the guy is a decent fellow. He does not know now but in a year he will know the game. And he has to participate in it. Or else,” said RL.

“Or else what?” I asked.

“Else he won’t get elected. If he refuses to take bribes, the work will not get done. More importantly, the political party that he is part of will not make the money that they need to fight the next elections. If he is clean, he would be throwing a spanner in the works. He will be replaced by someone who doesn’t have scruples. He either plays the game or he is out. In a year he will be as corrupt as the rest of the bunch. OK, so he may have got the job of an MP when he was naive and stupid but by the middle of his term, he would have learned what he needs to learn to survive. Why on earth do you expect otherwise? If the guy giving you orders, your boss, is corrupt, just to keep your job you have to be corrupt. Else you don’t play. You don’t get a ticket. You are a spoiler. You wreck the whole deal. You are not a part of the team. They will find a more complaint person.”

I had heard enough. We moved on to less trivial matters. But I continued to worry about the issues raised in that conversation.

It is collectively rational for people to not be corrupt but it is individually rational to be corrupt in a corrupt system. Corruption does not work bottom-up. It works top-down. If the guy at the top is corrupt, you are forced to be corrupt. Why forced? Because you don’t get to make the rules. You only get to decide whether you want to play the game based on the rules that have been dictated by the guys on the top.

The guys on the top make the rules. And if they are corrupt, that’s just the way it is.

I spent this summer talking about matters that lead to economic development. I was teaching a course on economic development at Berkeley. Corruption and its corrosive effects on economic development was a major theme. I tried to get the idea across that poor countries are poor because the system they have in place makes it impossible for non-corrupt actors to play a role. More depressing is the realization that corruption itself causes the poverty that makes the corrupt make the rules. I put it this way in the course — “The corrupt gain power and the absolutely corrupt gain absolute power.”

It is perhaps naivety that makes the so-called leaders like say APL Abdul “Dr” Kalam lecture school students about the moral incorrectness of bribery. Or perhaps it is just plain obtuseness. But I think it is more likely that it is plain pragmatism that motivates people in high places to emphasize corruption at the mundane level while turning a blind eye to corruption at the top — at the level of central government ministers and bureaucrats — because the guys at the top owe their exalted position because they are corrupt. Absent moral turpitude, they would not have reached the top.

Corruption at the lower levels is a survival mechanism. The small-time businessman like my friend RL is just a pawn in the game. He does not have any more influence on how the system is defined any more than he can dictate the laws of physics. The guys at the top, the guys who make the laws, they are the guys who define how the great economic game is to be played. And eventually this great economic game determines how much stuff is produced. Because of the rules of the game, the amount of stuff produced is lower than what is potentially achievable. Dividing up the production is the next innings. There too they have a good racket. Instead of figuring out ways to increase the amount produced, they are busy figuring out who should get how much of the limited stuff. And the division is made strictly upon the calculus of who is going to vote which way.

India is famously touted as the largest democracy in the world. What that means is that the people decide who is going to make the laws. That the system throws up the most corrupt as the framers of the rules that define the economic game is not surprisingly a dire consequence of the choices that the people make. It is not a comforting thought that over the decades of India’s existence as a politically free nation, the people have consistently voted into positions of power those who are arguably the most venal of the lot. But then, is it reasonable to expect something else? Can a people who are almost absolutely ignorant of what the system really is be expected to know what is in their interest? A majority of us are not even literate — and even those of us who are literate, are woefully ignorant of how the system works. I readily confess that I don’t know what the great big machinery of the government of this huge nation is up to. How can I expect that the person who cannot even read the railroad timetable be able to decide which public policy is good and which is not?

So if this is not to be a counsel of despair, I should at least hint at what I consider to be the solution. I think that we — the ones who are have the ability and means to engage in this conversation — have to get out priorities straight. I get asked to support this or that organization which is trying to feed poor school children a mid-day meal. I get impatient at those kind of meaningless and ultimately futile gestures. They perhaps believe that by feeding a bunch of kids meals is going to fix the problem. I don’t deny that it is not important to feed kids. After all, the kids have not committed any crime that they should starve. What I don’t understand is why people don’t take a step back and see that the problem is that there is not enough stuff to go around, and the reason for that is that too much effort goes into extracting rents and too little in figuring out how to make more stuff.

There isn’t sufficient stuff to go around because there are no roads. That’s just an example of what’s missing. No roads is just an example. But the lack of roads is only an instance of what happens when corruption is the name of the game and the rules are made by the abjectly corrupt. I think that it should be the headlines on the newspapers. Instead what occupies the national attention has to do with how made how many runs in some cricket match. Or why someone should not have twittered the words “cattle class” — that matters and not the unspeakable fact that half of India’s children below five a chronically malnourished.

Deva, deva!

The three — corruption, nepotism and the Congress party — form India’s most enduring triumvirate. It is hard to think of one without thinking of the others because they characterize India’s politics and political landscape like nothing else conceivably can. The Congress party is the fiefdom of one family — being part of that confers the inalienable right to be the boss. Nepotism gains a whole new meaning in the hands of the Congress. Chronic, acute and pervasive corruption at the highest levels of governance India could only have been engineered by the political party which has held the reins of power for practically all of India’s existence since 1947. So it was with incredulous wonder that I read two news items yesterday.

The Times of India reports that there “is a wave of resentment in the Congress against sons and daughters of leaders jockeying for party tickets to contest the October 13 assembly elections.”

Maharashtra Pradesh Congress Committee (MPCC) general secretary Hussein Dalwai confirmed that there was large-scale anger among the rank and file of the organisation. “The workers are asking if their job is to only stick posters. They are opposed to the growing trend of `gharanashahi’ (family rule) in the state. The central leadership has been apprised of the sentiments of party cadres, ” Dalwai added.

What is the world coming to when Congress workers are questioning the value of nepotism — the key defining characteristic of the Congress party! What next — question the right of the Nehru-Gandhi family to rule India into perpetuity?

The irony meter has overloaded and crashed. That’s a pity because how would we now measure the degree of irony embedded in this other news flash: “Corruption retarding India’s growth, says Indian PM” (Telegraph.co.uk).

Manmohan Singh, the Indian prime minister, has said that corruption is the single greatest threat to the nation’s economic prospects.

In a speech given to an anti-corruption corruption (sic) in New Delhi, Mr Singh described the damaging effect that bribes, extortion and fraud have on all levels of life in India.

He said that graft meant infrastructure projects were late, over-budget, and often poor quality, while labeling India’s opaque business practices “a fertile breeding ground for the evil of corruption.

“The pervasive corruption in our country tarnishes our image [and it] discourages investors who expect fair treatment and transparent dealings with public authorities,” he said.

See what I mean — how on earth can you measure the irony. He’s a public official in charge of all the other public officials in the country, and he moans and bitches that the public officials under him are corrupt and that corruption is the biggest threat to the economy’s prospects. Is he blatantly admitting his absolute spinelessness and ineptitude or is he not?

This is par for the course for him. He has no idea that the position he holds is powerful enough to fix the problem which he speaks so pitiably about. It is true that he was appointed to that position for his loyalty to the ruling family (loyal lapdogs do get to sit around in the living room) but he could have at least pretended to be his own man once in a while. At the very least, he should stop drawing attention to his ineffectiveness and spinelessness. But no, the man does not have that basic sense.

Anyhow, Mr Manmohan Singh is apparently not smart enough to have figured out what the genesis of India’s corruption is: governmental control and mismanagement of the economy. Perhaps Gareth Price, head of the Asia programme at Chatham House, a foreign policy think tank, could clue him in. Here’s what Price is quoted to have said in the Telegraph piece:

“The fastest growing sector of their economy is IT and that is the only sector that is completely outside the government’s control.”

He said that the history of graft in India was the product mainly of three things. “Firstly, the British bureaucratic legacy to the subcontinent. The British created so many rules that anyone could be shut down if, say, a factory inspector found that a bucket of sand was missing, making the place a ‘fire hazard’. So the inspectors would be bribed simply not to shut the place down.

“Secondly, after Independence India had a Soviet-style system of quotas, in which the licences that you received permitting you to produce a quantity of something basically determined how profitable you would be. So the government would be bribed to hand out licences.

“And the third thing is that the tax system is extraordinarily complex and condusive to corruption. Recent attempt to simplify it met with resistance mainly from business who were afraid they’d end up paying more rather than less.”

The mind simply boggles that the prime minister of India displays publicly his complete and utter lack of comprehension of a matter that is so crucial. Granted that he cannot fathom the issue but could he not pay attention to what others who have pondered the matter at some length are telling him?

Here I list a few things that the government should do:

* Dismantle the legacy bureaucratic system that the British created. Their objective was to extract and exploit the economic system. They put those controls into place. The government of a politically independent India must not have the same objective as that of a colonial power.

* Punish the corrupt — starting at the top of the heap. There is no point in going after lowly milkmen or lecturing little kids about the evils of corruption.

Start at the top — because that is where the rot starts. Criminals are over-represented in India’s legislative bodies. They make laws. Criminals making laws is beyond mortal comprehension.

Heed T.S.R. Subramanian, who retired as India’s most senior civil servant in 1998. Beckett quotes from TSR’s book, “GovernMint in India”: ” “Since no part of the Establishment has an interest in punishing corruption, trying for a more sweeping solution quickly leads into the realm of blind hope.”

Suspend politicians facing criminal charges, as civil servants are suspended pending trial. Establish a fast-track court just for government officials so that cases are resolved expeditiously. Persuade judges to make an example of a few political wrongdoers as a public flogging for the rest.

[Link: Solution to India's Greatest Failure. ]

I too approve of public flogging of high public officials. (Near the end of a pretty long October 2005 piece, titled “The Ownership Society“, I argued why.) You have to hit them where it hurts — their dignity. I am happy to note that Kautilya had a similar view. According to this March 2006 article in the Economist:

Kautilya, writing 2,300 years ago, offers a helpful observation: as punishment for the theft of public property by government servants, he recommended smearing the offenders with cow dung and ashes.

Anyway, corruption in India is here to stay as long as the corrupt rule the roost. India is corrupt because the people choose to elect the criminally corrupt. That you can lay at the doorstep of democracy as practiced in India. The only hope of reforming India lies in reforming Indian democracy. But more about that later.

Here’s a news item which reports that medical post graduate studies involve bribes of up to Rs 2 crores (around $ 400,000.)

The TOI report on MBBS seats sold for between Rs 12 lakh and Rs 40 lakh by two private colleges in Chennai barely exposes the tip of the iceberg. The scam gets bigger, more brazen as medical graduates embark on specializations that are necessary for a successful career. The price this year for a post-graduate seat in radiology in most leading private colleges across the country is Rs 2 crore while in cardiology, gynaecology and orthopaedics are priced around Rs 1.5 crore.

It should be obvious why this sort of thing can happen. It is not quantum mechanics. It is a predictable consequence of what I call “engineered scarcity.” Briefly the problem can be stated as

To address not just this question but a whole family of related questions, I propose a general theory of “Power, Scarcity, and Corruption.” Basically, the three form a nexus, with mutually reinforcing influences. Scarcity in general is not a chronic condition in any functioning economy; it has to be engineered. Given economic freedom, people work their way out of any transient scarcity. For persistent scarcity to exist, it has to be carefully nurtured. The motivation for engineering scarcity is that it allows the consolidation of power. This is Econ101 and even a superficial reading of the chapter on monopolies is sufficient to persuade one that monopolies do restrict quantities to maximize “profits.”

The relationship between power and scarcity is bi-directional. You have to have power to engineer scarcity, and through that engineered scarcity you gain power. Political power allows you to dictate policies that give you monopoly control and then you use that for gaining even more political power. Then of course, where there is scarcity, corruption cannot be far behind. Corruption is therefore a mechanism which allows the collection of rents that arise from the scarcity.

If scarcity were to vanish for some reason, both the corruption and the power to extract rents would disappear. For those in power, therefore, the primary objective is to somehow maintain an artificial scarcity both for maintaining power and for gaining from the corruption.

Now back to our educational system. The government has a monopoly control of the sector through many institutions such as the Ministry of Human Resources and Development, the University Grants Commission, etc. Licenses and other requirements force the private sector from fully and freely participating in providing education. The resulting scarcity gives the government a handy lever for manipulating voting blocks. Quotas and reservations are handed out to favored groups. And more directly, the bureaucrats and politicians extract rents from handing out the licenses and permits to those who have the deepest pockets. ["Power, Scarcity, and Corruption." Sept 2007.]

How does the arithmetic of corruption in education work? I gave an illustrative hypothetical example in May 2007:

Some institution wants to start a medical college somewhere in India. It applies for a license and is told off the record that the price is Rs 20 lakhs (approximately US$ 50,000) per seat. For the 200-seat license applied for the price is Rs 4,000 lakhs, to be delivered in unmarked bills in a large plain brown envelope. That “fee” is routed through the licensing bureaucracy with appropriate payoffs to different people—the lion’s share ending up in the appropriate political hands. After all, securing top positions at the bureaucracy is not cheap; and running elections is a costly business.

The firm having paid the whopping fee to operate a medical college, now has to recover its costs. Perhaps its actual cost of training a medical student is Rs 5 lakhs per year. It adds on a “special college entry fee” of say Rs 10 lakhs (remember to bring in unmarked bills in a plain brown envelope) to the normal tuition fees. The hapless students are forced to pay because seats are limited. The four year medical training which should have cost only Rs 20 lakhs if free entry were allowed into the field now has to pay Rs 30 lakhs, and perhaps gets substandard training. Further down the line, doctors are in short supply and therefore they command some market power and thus are able to recover their costs. The patients suffer but that is why they are patients—they suffer.

Engineering shortages is what the government does very effectively. Engineer scarcity in sufficient number of sectors, and you have engineered a very poor economy. India’s poverty is engineered by the government. There’s really no earthly (or even heavenly reason) for India to be a “third world” country. The decades of governance by the Congress has effectively destroyed India’s potential.

The government has done the most damage to India through its stranglehold on education. By destroying the education system, it has destroyed the capacity among the people to perceive the problem in the first place. It is like the human immunodeficiency virus which causes AIDS: HIV acts by attacking the immune system itself. Similarly, hitting the education system destroys the capacity among the people to ever understand what ails the education system and why.

Here’s an example of the lack of understanding of what’s wrong. The news item linked above ends with this:

Another senior expert, who has held prestigious posts at the national level, says he has urged the UGC to hold centralized examinations like JEE for admissions to both MBBS and PG courses. “It’s a national shame to commercialize education. Besides, death of merit affects the quality of medical education. When money is paid, these colleges ensure that the exit is definite. The students pass, qualified or not,” he said.

I have added the emphasis in the above quote. The “senior expert” does not even realize that it higher education and “commercialization” go together. That commercialization can be legal and in the open (as it is, say, in the US) or it can be part of the underground corrupt system. The latter is an inefficient system that arises out of the government monopoly control of the system. Of course, governments don’t do things without a reason. The reason in this case is that it allows the government to extract rents through bribes. The people in government gain at the expense of the economy.

Related post: Lynching is too good for some.

He does offer a few practical suggestions: Suspend politicians facing criminal charges, as civil servants are suspended pending trial. Establish a fast-track court just for government officials so that cases are resolved expeditiously. Persuade judges to make an example of a few political wrongdoers as a public flogging for the rest. [Emphasis added.]

Public flogging as a deterrent, eh? How quaint. Now where have I read that before? Ah yes, over here! In October 2005, in a post titled “The Ownership Society” I wrote:

Imagine for a moment the following rules. The CEO of the state electricity board is given the ownership of that entity. The job description: “provide power now and build capacity so that there is sufficient capacity for the next 5 years” (assuming that it takes 5 years to build capacity.) If the CEO fails to do that, the entire salary paid to the CEO will have to be repaid and the person—who may have left the job by the time the shortfall is detected—will be publicly flogged in the town square.

Now this rule should be made fully clear to the prospective candidates and anyone who takes up the job must know the consequences of failure. It is because people know up front that they are shielded from the consequences of their failures that they fail in the first place.

I really don’t care whether the power I use in Pune is provided by a public firm or a private firm. As long as I know that if I suffer, those who are responsible for my suffering also suffer, I would be quite content. More importantly, I believe that if the penalties are made sufficiently appropriate, these failures will not happen very frequently.

I don’t really care if there is a Ministry for Power in India or not. What I would care about is that if there is one, the man or woman who wants to have the power and the glory of being the minister, would also be flogged publicly for any problems that arise as a result of their tenure.

I don’t really care whether the railways are run by the government or not. But if there is a train accident, the rule should be that the railway minister will be flogged publicly and given as many lashes as there are deaths due to that accident.

Public flogging of public officials is the answer to the problem of public officials not taking their charges seriously. Not just corporations. Take politicians. Any election promises they make about how they will change the economy must be taken seriously. And then if they fail to deliver, hold their feet to the fire. Candidate A claims that he will make something happen, then as elected leader A, he becomes the owner of that something. If he does not deliver—you guessed it—public flogging.

Want to be the prime minister of India? No problem. Take ownership of the country and set goals that you say you will achieve. If the goals are not achieved as promised by you, public flogging over an extended period of time. What this will do is to bring the right sort of people into public life. People who know what they are capable of doing and who will not mess with the fate of millions knowing that their behinds —literally— will be on the line.

Flogging is a simple enough measure to implement. It does not require high tech equipment. What it does require is a judiciary that can impose the punishment and carry it out.

Corruption in an organization? Here is my solution which will fix it pretty fast. Suppose Mr A has been involved in corruption. Don’t just flog Mr A, get his boss (Mr B) and his boss’s boss (Mr C) and flog them as well. Why so? Because Mr C will be extra vigilant and keep on Mr B’s case and tell him to be on the lookout that no one under him is into corruption.

What this multi-level flogging does is this. It makes managers liable for corruption in institutions that they control. That is, it gives the managers ownership of the organization they control. Irrespective of how deep the organization is, if a person at a certain level is corrupt, include the two higher levels and flog those two individuals as well.

You may think that I am not really serious. But I am. I am dead serious about this. You want to make India the least corrupt economy on earth, get serious about dealing with the problem for just a few years. After a few dozen high level officials have been publicly flogged, corruption will be a thing of the past which children will read about in their history books.

You may say that instead of flogging, why not just impose a fine on them. That would not hit where it hurts. Merely fining someone who has lots of money is not pain enough. The penalty has to have a sting. Here is what I mean. In Finland, the penalty for a moving traffic violation such as speeding is monetary but it is indexed on the income of the person. A dotcom millionaire was fined $93,000 for speeding.

So flogging should do very well in India. Those in high positions value their pride. They depend on their image. If they penalty is public flogging, they would cease and desist from doing what exacts that penalty.

Public flogging of public officials is a proposal which can transform Indian society more than all this talk about empowering the citizens that we are getting dizzy from reading in the newspapers. Everyone and his brother is advancing all sorts of wooly ideas about how to transform India. Here is an idea that will not see the light of the day of course, but it has the real power to transform.

I once again argued for public flogging in Mar 2006 in a piece titled “Terrorism, the way out” and wrote,

Dr Manmohan Singh and the leader of the Government of India, Ms Sonia Gandhi, would never feel the pain of terrorism. A thousand – or even a million – Indians could perish at the hands of terrorists without having the least effect on those leaders. At most their security will be strengthened a bit more, more public funds will be spent on getting them more black commandoes as bodyguards, more road and air traffic disrupted when they travel, more citizens will be inconvenienced to protect the leaders from terrorists. The leaders will never be inconvenienced to protect the people, however.

Is there a way out? An economist would respond, “Yes, get the incentives right.” My proposal is to create the mechanism which would transmit the pain of terrorism to the leaders. In a sense, I advance the creation of a nervous system that carries the pain signals to the brain. The incentive mechanism I propose involves public flogging but is not limited to that.

After every terrorist attack, the Prime Minister, the head of the government (if not the same as the PM), the Home Minister (who is in charge of security), the police chief in whose jurisdiction the incident occurs, and the Defense Minister should be publicly flogged, with the number of lashes equal to the number of deaths, within two weeks of the incident. So for the Varanasi terrorist attack, Dr Singh, Ms Sonia Gandhi and the others listed above (I don’t know their identities) should be flogged by 21st of March in the courtyard of the Rastrapati Bhavan.

Aside from the public flogging, the other measure would be to fine them 1 percent of their wealth for every 100 deaths. This means, after 10,000 deaths under their watch, they will have all their wealth confiscated.

What would this accomplish? Firstly, it would put the fear of the lash into them. They would have the incentive to actually reduce the chances of terrorists succeeding. For instance, right now they would for political reasons molly-coddle Islamic preachers sermonizing the slaughter of infidels. Or they may be considering increasing the number of buses and trains between India and Pakistan. Or they may be advocating more porous borders with Pakistan and Bangladesh. When they know that these measures will increase the incidence of fatal terrorists attacks, they will not be so careless with the lives the citizens.

Second, the fines will help with the compensation to the families of the victims of terror attacks. Indian leaders have enormous wealth – from foreign gun deals, from cattle feed, from handing out licenses and permits, and from dipping extremely sticky fingers into the public till. Some of that wealth could be given back to the people.

Insult to their dignity and their behinds combined with injury to their pockets will work wonders.

Now let’s be realistic. Public flogging of the criminals occupying the highest levels of the government will happen a little after hell freezes over or a certain blue-turbaned man grows a spine, whichever comes later. Criminals don’t have an incentive to create incentives that deter criminals. We do have criminals in government, don’t we? A public watchdog organization reports that the new parliament of 543 members will have 143 MPs who have criminal cases pending against them. Of these, 71 have serious criminal charges such as murder. Being charged is not the same as being guilty, of course. But guilt can be established pretty efficiently and quickly, if the system was designed properly. But why on earth would criminals be interested in putting that system in place which would condemn them?

Let’s repeat what TSR wrote (quoted right at the top), “Since no part of the Establishment has an interest in punishing corruption, trying for a more sweeping solution quickly leads into the realm of blind hope.”

Deva, deva!

Why do they do that? That’s the biggest puzzle, perhaps second only to the puzzle in the Mahabharata.

(In the Mahabharata, someone asks, “Of all the wonders of the universe, which is the most wondrous of all?” It is one of those occasional geniuses who replies, “Man sees death and mortality all around him all his life. But he is never quite fully persuaded of his own mortality.”)

* * *

The Bofors gun kickback story is as well known as it is old. To refresh your memory, see Seema Mustafa’s short piece of May 6th in ExpressBuzz titled “It’s the Bofor’s ghost again.”

Bofors is a story that will just not go away. It cannot for reasons that Congress president Sonia Gandhi cannot fathom. And the reasons are many. It was the first case where kickbacks in a defence deal were confirmed. It was the first case that the Indian media pursued in great detail, and with tremendous enthusiasm.

It was the first case that actually established a trail between middlemen, high flying ‘foreign’ connections and the Nehru- Gandhi First Family of India. It was the first case that brought down a government, that astounded not just the middle class but also the villagers, and that assumed a dynamics of its own that is still able to generate heat during an Indian election.

It is a story where the middlemen might be dead but the Italian businessman Ottavio Quattrocchi, a close friend of Sonia Gandhi, is alive and kicking. During his days in Delhi he told this columnist on more than one occasion that he was not really such a good friend of Sonia Gandhi, at a time when his was one of the few names to have been cleared for free entry into then Prime Minister Rajiv Gandhi’s residence. Quattrocchi has subsequently changed his tune, and now when he is actually not such a good friend of Sonia Gandhi, he makes it clear to any reporter who manages to meet him abroad that they are great friends, and know each other extremely well. Obviously, in saying so the wily Italian businessman has managed to make it clear that he knows a lot more than he is saying, and that if the Indian government does manage to get his head into the noose, he will talk. And talk happily.

. . .
The result is that in the intervening years the CBI was unable to collect evidence, although it is available in plenty, to pin Quattrocchi down in courts abroad; he himself evaded the law and the supposedly vigilant Indian machinery to get back to Italy; his accounts in London that had been frozen as these could establish the trail to the kickbacks were released as the Indian government sat back and deliberately let the reminders lapse; the money was withdrawn by him almost immediately; and then when he was arrested by Argentina under an Interpol notice issued at the time of the Bofors case, the government ensured that the case was completely botched up and Quattrocchi was able to walk out a free man.

And now to complete the circle, on the eve of the elections the CBI, under instructions, has withdrawn the Interpol notice against him and the Italian friend of Sonia Gandhi is a free man. This has been done during the elections, after it has become increasingly clear that the Congress might not be able to form the government.

And everyone knows that in case a government here is able to get Mr Q to justice he will squeal. And that could be worrisome for some.

The BJP has made some valiant noises on the deal but has not been able to explain why it did not pursue the case with the same vigour as the V P Singh government had. The Congress has been defending the decision on the record, but privately Congressmen tell critical reporters, “what do you expect us to do, we have to defend this or we will lose our job”. Of course Priyanka Vadra and Rahul Gandhi do not see what the fuss is about, but obviously they know the answer for if there is no need to fuss, there was no need to prime the CBI to save the Italian businessman. It has been a shameful deed, a gross violation of the law, and while there is sufficient information to damn the CBI, the fingers are now pointing very directly at those who are in power and in control. Prime Minister Manmohan Singh is amongst those responsible. He makes a penchant of honesty; this is the time for him to explain these murky developments.

Clearly there are problems, and Bofors will not go away from media memory just because the Nehru-Gandhi family wishes it so. They should also realise that by misusing the official machinery to save Quattrocchi from the long arm of the law, over and over again, guilt and not innocence has been established. And in the public perception this is enough to keep the Bofors ghost alive. And the favourite pastime of ghosts, as we know, is to haunt.

PM Manmohan Singh is a dishonest man and is a disgrace to the proud and noble Sikhs, a disgrace to India, a disgrace to the worthy economics profession. He lacks pride in his own self. He’s a toady — one who flatters in the hope of gaining favors. A sycophant. He is what we call in Hindi भाड़े का टट्टू, a horse for hire. Granted that he is basically a civil servant and is trained to follow orders. But surely, he could have been his own man after being appointed the prime minister. Or perhaps he was appointed precisely because of his flexible morality and his ability to follow orders.

Talking of criminals brings me back to the question which I asked right at the top: what will the UPA government not do to protect the criminally corrupt? Quattrocchi is one famous case. Another case involves one Mr Hassan Ali Khan, a sometime resident of — of all places — Pune, the city where I unpack my bags.

You may be familiar with Mr Khan and his reported around $8 billion in some foreign bank. In case you want the relevant facts, please read Mr Arun Shourie’s press statement of May 12th, “The Predictable Scandal.”

That this [UPA] Government, the Government that has let Ottavio Quattrochi take away the money that had been frozen on orders of the courts; this Government which then used the CBI to let the man off the hook completely; this Government in which corruption has reached levels that were unheard of till now; this Government which has been consistently soft on terror, that this Government should now have stooped so low as to help an operator like Hassan Ali Khan by sending forged documents to a foreign Government is entirely in character.

Based on what they have been told by officials of intelligence agencies as well as of the Enforcement Directorate, the media have reported that Hassan Ali Khan

• Has been known to be connected to Dawood Ibrahim
• Has been known to have been channeling very large amounts from unknown sources into the Indian stock market
• Has had 8 to 9 billion dollars in the UBS and other banks of Switzerland
• Has been responsible for hawala transactions of over Rs. 35,000 crore through Swiss banks.

Go read it all.

The most basic rule of the social contract between the government and the people is that the government is not willfully criminal in intent and action. That contract has been repeatedly and severely violated. That the government did so and still continues to expect support from the people speaks to how enormous its contempt for the people is.

Here’s Shourie once again:

Once again, the country is being held up to ridicule – once again, the world is being shown how the Government of India will bend our laws and institutions to help the worst sorts of criminals and their associates, exactly as banana republics do.

The biggest puzzle for me is whether the people of India deserve the contempt that the Congress government holds them in. That puzzle will be solved within the week — if the UPA comes back to continue its rape of India, the people would have demonstrated that they deserve the contempt that the Congress party has for them.

PS: You may have guessed from this rant that I am very very upset. That happens. You may wish to read “Of Kakistocracies, Principals, and Agents” to understand where I am coming from.

Institutions defined most generally are essentially ideas. They are big ideas, ideas that are persistent and which have a profound effect on the populations that evolve, and adopt, the ideas. Examples of powerful institutions – therefore powerful ideas – are easy to find: markets, state constitutions, legal systems, systems of governance, and so on. The institution called democracy is also an idea. The instantiation of an idea — its embodiment or implementation or incarnation – varies from place to place, and from time to time. How an institution is implemented depends on, among other things, preferences of the population and on the available technology. As tastes and technologies change, institutions can be implemented differently, and generally they are more efficiently implemented as time goes by.

Just as an example, consider the idea (which is not really an institution but let’s go along for now) of the Carnot cycle, the theoretical basis of a heat engine. Nikolaus Otto developed the first four-stroke internal combustion engine in 1876 and that was an instantiation of the Carnot cycle. As you can imagine, that engine must have been crude compared to what we have today in our automobiles. Technological improvements increased the efficiency with which the idea could be implemented.

The generalization that I am aiming at is that technology allows us to implement ideas more efficiently. But whether that technology is used or not depends on factors that are often not technical. For instance, if the improvement in the efficiency of the implementation of an idea goes against the interests of the existing power structure, that improvement will be blocked.

Democracy as Implemented

My thesis in this post (which is a follow up to the previous post on the subject) is that democracy is an idea which has been implemented in a certain way for many decades now in India. Now that technology has advanced since then, it is perhaps time to redesign it to make it more efficient and effective. It is time to make some needed changes. The most important of these changes is in giving citizens more control over how much the government spends on discretionary items.

Let’s just for the moment define discretionary items as those that are not public goods (such as law and order, national security, etc.) In the previous post I had mentioned three discretionary items: a grant to a foreign university, haj subsidy, and “earthquake relief” to a foreign nation. These are not public goods by any stretch of the definition of the term, and it is perfectly feasible for private citizens to make up their own minds whether they wish to contribute to those ventures. The government, by making those decisions on behalf of the citizens without their express and explicit consent, is violating their private property rights. This is not a trivial matter and this has to stop.

As an idea, democracy has its merits. But whether a particular implementation of the idea is socially beneficial or not is an empirical matter. In my opinion, democracy as implemented in India is seriously flawed. The most basic flaw in the implementation is that it is really imperialism in disguise: there are the rulers who have most of the power and consequently the citizens have little power. Here democracy basically means that one gets to vote occasionally and then too the choices are dismal: what’s generally on offer is a collection of criminals to choose from. That criminals routinely contest elections is a damning indictment of the flawed implementation of democracy I am talking about.

Degenerate Democracy

The democratic political system in India has degenerated into a criminal enterprise. We are really caught in a vicious cycle. The system attracts criminals because the opportunity for rent-seeking are tremendous; the more criminals enter the system, the more they increase their power and the rents increase and this attracts even greater criminals. Things have come to such a pass that if you are honest, conscientious, decent, moral, and ethical, you have absolutely no chance of ever holding political office.

Just to expand on that, let’s examine the public sector. The government runs railways, airlines, schools and colleges, broadcasting, telecommunications, banking and insurance related institutions, and other commercial establishments. It is not as if these activities cannot be done by the private sector, and done extremely efficiently. There is absolutely no reason for the government to do all this except – and that is the main point – that it gives those in government an opportunity for rent-seeking.

Let’s remember that the range of activities that the government has control over is wide. It of course has monopoly control over some, such as the railways, and until recently in airlines and telecommunications. Then in some areas where it is not the monopoly provider, it still has a presence and often the playing field is tilted towards the public entities and against the private participants. Finally, whether or not the government participates in the activity, it has near absolute control over all private participants, dictating who can enter and on what terms. That is the licence-control-permit-quota raj. The government is omnipotent and that is where the corruption begins.

Control and Corruption

So let’s examine absolute and discretionary control over something. Monopolists have control over the quantity that they wish to supply and hence control the price. That is how they extract what economists call rent – the economic profits that arise from the price being much above costs. Rent-seeking is the term economists use. It should be part of the lexicon of the average citizen because that is at the core of much government activity.

Let’s say that the government decides that education should be under its control. Regardless of the rhetoric employed, it is not that the government is the only agency which can deliver education effectively and efficiently. Indeed, the government is the last entity that can do so. The reason that it controls education is that it can extracts rents from controlling education. In India, the government decided who has the licence to run an educational institution. This is at the discretion of the political and bureaucratic apparatus. By limiting access, it raises the costs, and these are passed on as high prices. The rents can then be extracted by pricing licenses. The chronic shortage of good educational institutions is the predictable result.

If the government has the power to control the education sector, it implicitly has the power to extract rents. That applies for the scores of sectors that the government controls. If you add up all the sectors that the government indirectly or directly controls, it amounts to a very impressive deal. So therefore the opportunity to make a substantial pile of money attracts the most avaricious and therefore the fierce competition to gain political control.

Corruption in India, as elsewhere, is a direct consequence of the gain from control. So if we were to reduce the power of government, we have an avenue for reducing corruption. The technology exists for transferring that control from those in government to the citizens. We just have to implement that change.

In the next bit, we will explore this topic in some detail. In the meanwhile, be well, do good work, and keep in touch.

Spencer warned that “the ultimate result of shielding men from the effects of folly is to fill the world with fools.” That observation holds with special force in the context of the misgovernment of India. If the policy makers (the bureaucrats and politicians) are shielded from the ill-effects of their policies, they have little incentive to act prudently. Eventually, as the stock of bad policies keep building up, the country ends up in ruin. We have to remember that in the main, the success or failure of an economy is solely determined by the quality of its public policies.

Allow me a couple of examples to illustrate what I mean.

First, the state of Indian roads. They are generally really shoddily constructed, very poorly maintained, and unimaginably congested. Corruption in the public works department ensures that it could not be otherwise. The residents of the cities suffer and have been doing so for so long that it is taken as normal. That’s just how it is, the person on the street says, and struggles on. The policymakers, in sharp contrast, don’t suffer bad roads and traffic congestion. The roads are cleared of traffic when the top politicians have to use them. Often times, entire stretches of roads are repaired and paved over urgently within a few days in anticipation of a visit by some politician. High level officials (such as judges) and bureaucrats travel around in cars with red flashing lights and traffic yields to them — as if they were imperial rulers riding rough shod over the plebs.

What if the politicians had to use the Indian roads regularly? What if they had to ride the local trains in Mumbai to get to work?

Second, electrical power. The chronic shortage of power is entirely man-made in the sense that is a direct consequence of bad policies. Those who made these bad policies don’t ever suffer a shortage of power, however. In the areas where they live, power is always available by decree. What if power to their residences and offices were turned off first? What if they had to suffer the summer heat without electrical fans and airconditioners?

Ubiquitous bad road and chronic electrical power shortages are just two examples of scores of other ills that arise from the bad policies that are made by people who are insulated from the consequences. One of the most disturbing aspects of current Indian reality is Islamic terrorism. In my view, Indians are suffering because the policymakers don’t suffer Islamic terrorism.

According to the Home Ministry figures, over 7,000 Indians have been killed, mostly but not exclusively by Islamic, terrorism. Average people going about their daily grind end up as terrorist targets, as do the ill-equipped cops and other professionals in charge of public safety. The politicians and high level bureaucrats never die. In fact, every terrorist attack only leads to increased security for them. Thousands of special commandos are deputed round the clock to protect them. So what incentive do they have in actually preventing terrorism?

I think that one of the first steps that needed to be taken is to bring the effects of terrorism on the policy makers. For every act of terrorism, the security of the politicians should be reduced. I do believe that if this were done, they would do their best to see that the police and other law enforcement people are successful in removing terrorism by its roots.

Related posts:

March 2006.Terrorism, the way out.

The people whose business it is to do their utmost to ensure security fail to do their job and the people suffer as a consequence of that ineptitude. All they do after a terrorist attack is to make a bunch of ineffectual and inane statements, and don’t feel motivated to prevent future attacks with any vigor nor make the terrorist pay. Why? Because they don’t feel the pain.

Pain matters. If due to some neurological injury, you were to stop feeling pain, you could be in dire danger. Pain signals that the body is injured and that steps need to be taken to mitigate the threat and to take appropriate action to heal the already damaged part.

Terrorism threatens the body of the society and damages it. It is when the pain of the terrorism inflicted wound does not reach what constitutes the “brain” of the society – the policy makers who control the mechanisms that can prevent terrorist acts and can respond appropriately when they do happen – that society is in danger. The solution is therefore simple: the brain has to know that it will feel the pain if and when injury occurs to the body. Only then will the brain be motivated to seek appropriate mechanisms for stopping terrorists, and be prepared to deal forcefully with terrorists if it does occur.

NOTES:

1. Spencer is one of the greatest of the dead white men that I admire. Why? Read his essay “The Right to Ignore the State” (1884) to know why. [Return]

Underdevelopment, poverty, and all other ills that plague India are an unavoidable consequence of poor public policies and choices.

One does not have to know criminology to suspect that criminals cannot make good public policy makers. For support of this position, one has to look at the dismal record of the criminals in charge of public policy in India. It is not that every single politician in India is a criminal; only that a significant number of them are criminals. But it is unbelievable that even one member of the Indian parliament should be a criminal. That we don’t rise in revolt against this outrage shows that we have come to accept it as par for the course and have resigned ourselves to it. Worse, it could mean that the Indian population is so morally bankrupt that it finds crime so normal that it elects criminals to political power.

All this lends support to the claim that the people deserve the government they get. Perhaps because the people in general are immoral criminals that they accept — perhaps even promote — criminals to represent them. The resulting Hobbesian existence — solitary, poor, nasty, brutish and short — the majority live is something that they are ultimately responsible for. Until the people change, there is no possibility of a change of leadership, and the consequent change in the circumstances.

But there is still some hope; as long as there is life, there is hope. India has not yet descended to the depths plumbed by its western neighbor because it still has as part of its civil society people who deeply care about the quality of leadership. One organization of note is the Association for Democratic Reforms. I got introduced to it when I met one of its founder members, Prof Jagdeesh Chhokar, in New Delhi last week.

ADR’s mission is “to work towards improving and strengthening democracy and governance in India.” I will leave you to take a look at their many achievements since they started in 1999. Here I would like to share with you some statistics that ADR has compiled. (Thanks to S Ramachandra for forwarding the files.)

Here’s an excerpt from a press release dated July 10th, 2008:

The coming general elections to the Lok Sabha do not forecast a bright future if the composition of the Lok Sabha 2004 at present is any indication. There are 120 MPs with criminal cases against them out of 543, or 22.1%. Among the major parties, the BJP has 29 MPs with a criminal record, the Indian National Congress (INC) 24, the SP 11, RJD 8, CPM 7, BSP 7, NCP 5 and CPI 2.

The number of cases of serious crimes is 333, with several MPs having multiple cases. If we look at violent crimes like murder, attempt to murder, robbery, dacoity, kidnapping, theft and extortion, rape, other violent crimes like assault using dangerous weapons or causing grievous hurt, the Samajwadi Party (SP) leads with 80 cases, followed by BSP 43, BJP 17, INC 16, RJD 9, CPM 5, CPI 1, NCP 2. Other crimes like cheating, fraud, forgery, giving false oaths to public officials and so on have BSP 23, RJD 22, INC 21, BJP 11, SP 11 and CPM 6. [Emphasis added.]

Becoming informed is the first necessary step to bringing about change. So do talk, write, blog, etc., about this. Spread the word. Most of all, blog about this frequently enough that it becomes impossible to not know about it. And put your money where your mouth is — for starters, you could help support ADR. They need Rs 3 crores (US$ 750,000) for the coming 2009 Elections campaign.

For the record, I am publishing their proposal below.

Strengthening Indian Democracy:

Proposal for the coming General Elections in 2008-09

Association for Democratic Reforms (ADR: www.adrindia.org)
July 8, 2008

About ADR

ADR was founded in 1999 by a group of Professors from the Indian Institute of Management (IIM), Ahmedabad and some alumni to work towards strengthening democracy and governance in India by focusing on fair and transparent electoral processes. Since its founding, it has worked with over 1000 NGO partners around India, disseminating information on candidates and political parties to voters. ADR has also worked closely with the media, the Election Commission of India and eminent citizens around the country. Its founder was elected as a Young Global Leader by the World Economic Forum in 2008.

The major impact of ADR’s work is at four levels:

1. Lobbying lawmakers and implementers (various Courts, Election Commission, parliamentarians, etc.) to institute laws and procedures to increase accountability and transparency
2. Strengthen the monitoring of candidates and political parties on accountability, funding and for transparency.
3. Increase awareness among the public about important facts and issues regarding candidates, funding, political parties, elections and democracy.
4. Cause a shift in the profile of candidates winning elections towards people with clean backgrounds.

Sample Impact of ADR’s work

Here is a representative list of impact achieved by the activities of ADR:

1. ADR filed and won two landmark judgments on candidate disclosure of criminal and financial records from the Supreme Court in May 2002 and March 2003.
2. Made transparent the financial details of political parties using the Right to Information Act in 2008 after 14 months of persistence with the Income tax Authorities and the central Information Commission.
3. Has established a network of over a thousand NGOs around the country to do Citizen Election Watch for all major elections since December 2002, disclosing candidate background information to the media and the public.
4. Has initiated Civil Society non-partisan Election Watches in different states:
a. In the Lok Sabha 2004 Elections, 19 States and 5 Union Territories carried out Election Watches.
b. Have conducted Election watches in about 20 states
5. Bihar Election Watch in Oct-Nov 2005 resulted in intense pressure on the Chief Minister designate for the first time perhaps in decades to have a Council of Ministers without any known criminal record.
6. Clearance of lakhs of rupees of outstanding dues to the Government for rent, electricity, phone bills, etc. by Members of Parliament (MPs) before standing for (re)elections.
7. A measurable impact in the fielding of non-tainted candidates by applying pressure on political parties to filed clean candidates.

Objectives for Lok Sabha elections April-May 2009

The coming national elections in April-May 2009 provide a unique opportunity to leverage the network already in place, and the information already collected, to carry out a campaign to further improve democracy. ADR wishes to take a campaign to:

1. Improve the profile of candidates contesting elections: ADR has already achieved this in the past in state assembly elections, but we expect to take this nationwide through the proposed campaign. Political parties have started reacting to media exposure and have begun cleaning up their Act (e.g., see in Sample impact for Bihar)
2. Enable voters to make an informed choice: As of now, the information available to voters is limited, and the existing database of over 25000 candidates with ADR will be used to raise voter awareness significantly.
3. Help keep election expenses transparent and within the legal limit: Again, information dissemination is key.
4. Strengthen democracy by making candidates and parties more accountable to voters and citizens: Our experience shows that in pockets where dissemination was intense, the candidates and political parties did respond. The campaign will take this nationwide.
5. Create a platform or platforms beyond the elections to help citizens and Governments work more closely together: We will use our network of over thousand NGOs in the campaign to achieve this.

ADR has information on all major National and State elections in India since 2002. Specifically, ADR will disseminate information to voters around the country through following means:

1. Traditional print and electronic media,
2. The Internet (though its reach is still limited in India),
3. The network of NGOs,
4. Through mobile technologies(which has grown rapidly in the recent past) ,
5. And Voice technologies.

One time support needed for Lok Sabha elections April-May 2009:

ADR is currently supported for its establishment expenses by the Ford Foundation. However, it does not have financial support for next year’s general elections. This involves 543 seats to the Parliament (Lok Sabha), and involves around 670 million voters. It is the largest democratic election held anywhere in the world. We estimate that a modest $750,000 can help us do the campaign. We are looking for a one time support for these elections.

How the fund will be utilized

The broad strategy is to use the existing information base, supplement it with more research, and disseminate it steadily starting now until the general elections. As mentioned earlier, this will be done traditional print and electronic media, the Internet, the network of NGOs, mobile and voice. Previous experience of such limited campaigns in Gujarat and UP showed good results with positive reaction from political parties.

For instance, we will build Member of Parliament profiles, political party profiles, and election expense information from our existing data base. Dissemination will be done in English and Hindi (the major language that about 35% of India knows) at the very least. We also hope to do it in 7 other major languages.

It is a Faustian bargain and the people of India have started to pay and will continue to pay for a few decades. They will pay because they will suffer the predictably adverse effects of electing self-serving venal politicians with the morals of pond scum and the ethical standards of bottom feeders.

A news item in today’s The Pioneer (via Sandeep) is titled “Only corruption is guaranteed in NREG, reveals study.” That report is about a Transparency International study. Wow! Really? NREG guarantees corruption? Who would have guessed!!

Here’s what I wrote in 2004 November:

Here, I will go out on a limb and predict that if ever this EGA is implemented, it will actually increase the level of poverty and the number of poor in India. It will drag those at the margins of poverty deeper into poverty. The only guaranteed effect will be an absolute increase in the amount of corruption and some politicians will make obscene amounts of money.

Take a look at the entire set of posts on NREGS and if you know the guy who is responsible, send him a copy with a yellow post-it attached saying, “I am disgusted with you, sir. Please quit.”

Evidently he is widely regarded as a spiritual guru. But however spiritual his claim to fame may be, I can’t help but wonder how can an adult who is clearly able to function normally be so mistaken about the nature of the world as to actually hold the positions that the article claims he does. Does spirituality or whatever it is that is his main calling so shield him from the everyday material world that he is totally and completely disconnected from reality?

According to the article, his goal is “to stop commercialisation, industrialisation and criminalisation of the political system of the country.” Fair enough even though I am not very clear what “industrialization” of the political system actually means. Quote:

“There are some good political leaders also, but the fact is that most of them lack vision and are steeped in corruption. Commercialisation and criminalisation of Indian politics is an insult to the freedom and democracy of the country,” he said.

One can’t argue with that. His solution?

“There is an imperative need to make voting compulsory. Given the fact that the literacy level in the country is not very high, the popular mandate is not genuinely reflected during balloting. It is then important that everyone votes,” he reasoned out.

That’s a jaw-dropping, absolutely astounding, brain-numbing recommendation! He talks about democracy but does not give any indication that he actually understands that democracy is not just about voting. If the idea of democracy has any content at all, then it has to be about informed choice. People who have no clue should not be allowed to vote because their voting cannot but make the system worse off. Uninformed voters are as likely as a group to choose wisely as a group of lobotomized cretins are likely to engineer a cybernetic system — that is, not likely at all.

[Note: I am not making the claim that illiterate voters are necessarily uninformed or unwise voters. I believe that being illiterate is likely to be correlated with being less informed. I make no claim about literate people being more or less wise than illiterate people either. In any case, I would not make wisdom a precondition for voting eligibility. It is hard enough to figure out if a person is informed; figuring out wisdom is probably impossible.]

There are two objections that I have to his idea of making voting compulsory. I suppose he makes the assumption that if everyone were forced to vote, then the winners of elections would more accurately reflect the choice of the population. I am OK with that assumption. But in reality, in a country of around half a billion voters, that is a costly exercise.

I don’t blame swamiji for not knowing this but there are simpler methods known for accurately determining the population characteristics than going to the expense of tabulating the entire voting population’s preferences. It is called statistical sampling. With a well-designed and properly conducted sample survey, one can make the sample statistics come close to the population statistics to any arbitrary degree of precision. The results of such a sample survey (where as little as 0.1 percent of the population is surveyed) will be no different from the result of forcing half a billion people to vote.

That first objection is a mere technicality, if you please. But the more substantial objection is that instead of making voting compulsory, voting should be a privilege granted to only those who demonstrate that they are qualified to make a choice on the matters under discussion. (In fact, I feel that if people were not given the automatic right to vote on turning 18 years old but had to actually qualify to vote, the outcome would be a rush to qualify and vote. You would not have to compel anyone to vote because it would be a badge of honor that one is qualified to vote.)

I learn from the article that he claimed that voting is mandatory in 32 countries. (I hope Rediff has fact checkers on its staff.) Perhaps in a small country of a few million people, one may be able to get away with it. But for a practical matter, even if you pass the idiotic legislation making voting compulsory, the cost of enforcing it would be prohibitive. Once again, I think that the good swami is obviously a man more at home with matters spiritual than with matters of mundane practicality.

But why does he want to force everyone to vote? Because “the corrupt political system can be made clean and transparent by making it mandatory for everyone to vote.”

What the heck was that?!

I fell off the chair when I read that. I suppose when he made that statement, his audience uncritically accepted his wisdom. They did not fall off their chairs. They did not ask why. That is par for the course, isn’t it? The gurujis and the netajis make totally asinine pronouncements and no one bothers to call them on it.

And the press? What do the press do? Let me compose a ditty in Hindi:

muh mein aayaa buk diye
jo bhi suna chaap diye

{Translation: (The high and mighty) say whatever comes to their tongue without reflection, (and the press) just print uncritically whatever they hear.}

How on earth is voting — even forced voting — going to solve the problem of corruption? Does the great swami know what is the cause of corruption? Can he please explain what his reasoning is for believing that corruption is a result of an insufficient number of people voting?

OK, I know that it is not my station to be giving lectures to gurujis, but as it is my blog, I submit this as my reasoning on the causes of corruption, and what should be done to fix it. Since I have already tried your patience severely going on and on about voting, I will keep this one brief. (Yes, dear reader, I can be brief when I want to be )

Corruption is related to power. I am not talking about Lord Acton’s famous observation that “power corrupts and absolute power corrupts absolutely.” I am taking about the power that one gets from controlling something and which control affords one the means to extract rents — and corruption is basically extraction of rents.

The cop at the corner has the power to extract something out of the wrong-doer. The bureaucrat has the power to extract rent because it is within his power to give or deny permission. The politician has the power to favor this or that industrialist and grant the license. Everywhere there is power to coerce, there is corruption.

The more things the government controls, the more power the politicians and bureaucrats — the people who constitute the government — have and consequently greater the corruption. Show me someone who has political power, and I will show you a person who is corruptible and most likely is corrupt.

The larger the involvement of the government in the economic affairs of the state, the greater is the reward for being a politician because the chances of raking in the moolah is all the greater. Therefore the larger the government, the more likely it is to attract precisely those kinds of politicians who have the greatest greed and therefore the most corruptible.

Socialist governments control the most and therefore they are the most corrupt. India’s corruption of the political class is a direct consequence of the socialistic government India has. The way to get rid of corruption in Indian politics is to reduce the size and power of the government to meddle in the affairs of the economy.

(Told you, I can be brief.)

In the tainted MLAs’ section, it is the Bharatiya Janata Party which leads the pack with 25 MLAs with a criminal record. The Congress comes second with 8 MLAs while the JD(S) has 7.

Out of the 25 MLAs in the BJP with a criminal record, seven are in the Cabinet. They are Krishnaiah Shetty, Sriramulu, Shobha Karandlage, Aravind Limbavali, S A Ravindranath, D Sudhakar (Independent) and Goolihatti Shekhar (Independent).

Among the 25 MLAs with a criminal record, three have murder or attempt to murder charges pending against them.

In the Congress, there are 8 MLAs with a criminal record, of which three have murder or attempt to murder charges pending against them.

Of the 7 MLAs in the JD(S) with a criminal record, two have murder or attempt to murder charges pending against them.

Isn’t the title of this post a contradiction in terms? How can criminals be lawmakers? Are they making laws or breaking them? Or are they “lawmakers” just so that they can get out of the reach of the arm of the law?

I just hope and pray that these MLAs got elected by fraud. Because otherwise I would be forced to face up to the reality that the criminality of these MLAs reflect the characteristics of the voters.

How we spend money depends crucially on two factors: whose money is being spent and what are the objectives of the person who is doing the spending. As long as the money belongs to the person who is spending it, it is hard to object to what he or she does with it — unless it for some clearly destructive purpose. If Mukesh Ambani digs into his pockets and decides to give $5 million to Stanford University, it’s his money and none of our business. But if the money is someone else’s, then what it is spent for and by whom matters. In the case of the US$ 6.5 million grant to Cambridge university, the money belongs to the people of India, the spender is some politician or the other who wants to win favor with his or her Nehru-Gandhi overlords.

If this sort of public corruption is does not outrage the Indian public, it means that they are immoral, ignorant and stupid. It could just be apathy but it could also be a total lack of a sense of fairness and justice. My bet is that it will go largely unnoticed. Let’s hang out head in shame as it does say how immoral, ignorant, and stupid we are collectively.

I mentioned above that it could be some politician who is behind this corruption. I wonder who it could be. I don’t have the faintest clue. But perhaps I do. Here’s one. It was about the Rural Employment Guarantee Scheme.

The Hindu of 27th May carried a news item ( “Tell all job scheme is Congress brainchild“) which quotes Dr. Manmohan Singh as saying:

“I request that you should carry the message across to people that this right [to employment] has been given to them by Soniaji. This right has been given to them by the Congress party… If you assist in implementing this law in a proper manner, you will be able to lay a strong foundation for creation of goodwill for our party and our beloved leader, Ms. Sonia Gandhi.” [Emphasis mine.]

I am not making this up. The Prime Minister of India actually used the words “Our beloved leader.” What about “the Great White Hope”? Our beloved leader, the great white hope!

All bow to the Great White Hope, Our Beloved Leader, the Dispenser of Rights to Employment to Indian Natives, the Giver of Gifts to Fight Poverty. Long live the Great White Hope.

How I wish that the GWH–OBL had come to India’s rescue, say, 30 years ago. But better late than never.

Now at least when the message is heard far and wide across this GREAT nation that our beloved leader has gifted employment to hundreds of millions, the gratitude of the brown natives will know no bounds and they will kiss the earth and vote the family of the GWH–OBL into power to continue to deliver to them gifts from the GWH.

It has been variously reported that the Our Beloved Leader’s family has a fair bit of money tucked away in sundry accounts but I did not realize that the family had that much money in the bank to fund the NREGS. I was laboring under the illusion that it was the Indian taxpayer who was funding the NREG, which I had written about earlier and decided that it will guarantee greater poverty. Well, now that Dr MM Singh has assured us that it is being personally funded by the GWH–OBL, I am reassured.

To answer Vaidyanathan’s question: the Indian mind may or may not be decolonized but certainly the minds of leaders like Manmohan Singh’s mind will never be decolonized.

Credit Robert Zoellick for knowing how to put the best face on a profound embarrassment. On Friday, the World Bank president announced in a press release that the bank had “joined forces” with the government of India to “fight fraud and corruption” in that country’s health sector. This is happening at the same time that Mr. Zoellick’s colleagues are hounding bank anticorruption chief Suzanne Rich Folsom, the person primarily responsible for bringing the scandals to light.

Joining forces with the government of India to fight corruption is reminiscent of joining forces with General Musharraf to fight terrorism. One bank managing directed is reported as saying that she is “encouraged by the Indian government’s “strong resolve” to deal with corruption.” Exactly like the strong resolve of the fox in guarding the hen house. We can now all sleep soundly since the Indian government has resolved to . . . whatever.

If your corrupt government is strongly resolved to deal with corruption, you might be a third world country.

PS: Let’s remember that all the stolen money is a WB loan to India. That means, we, the tax-payers in India, have to ultimately pay back all the embezzled funds.

I asked B what would have happened if he had refused to pay the bribe to the clerk at the registration office. His reply, delivered in the most matter of fact manner, was that the registration would not have happened. The transaction would not have been officially recorded and recognized.

What struck me most was the banality of the whole process. The Webster’s New Millennium Dictionary of English defines the adjective “banal” as “pertaining to compulsory feudal service” and “commonplace; tired or petty.” What an astonishingly apt word to describe the state of affairs in India in general.

The government makes the rules. It is the feudal lord. The citizens are serfs. They are compelled to bow and scrape in front of the representatives of the government. As representatives of the government, both the bureaucratic office bearers and their overlords–the politicians–know how to extract rents. Every regulatory hurdle that the serfs have to clear, the more opportunity these representatives of the government have of extracting rent. That is why the bureaucracy expands, and that is why political office is so dear.

It is a multi-person, multi-period prisoner’s dilemma game with perfect information. Everyone knows what the payoffs are to every participant. And we are stuck in it. There is no possibility of anyone unilaterally deviating from the move they make — without losing out. So the game continues. The government makes more and more rules, then it puts the bureaucracy in place to enforce them. The people play along, paying the bribes as they go along. Everyone wins in this game–except the economy.

Thank you, Mr Nehru, for without your and your descendant’s socialism, we would have not understood the banality of corruption. Thanks for making criminals of ordinary citizens. Thanks for creating the largest kleptocracy in the world.

The NEGS is not novel. Maharashtra has had an employment guarantee scheme for decades. According to Sharad Joshi, it “has produced few permanent assets. And the EGS in Maharashtra is synonymous with corruption. Government officials concoct false registers of attendance.”

Corruption is not unexpected when money is involved and the transaction is between officials who have the power and control over the money, and the poor unemployed labor who would be willing to take only a share of whatever is due to him or her. It has been variously estimated that only about 25 percent of any relief money actually reaches the intended beneficiary. Politicians and bureaucrats steal the majority of funds.

Now reports are surfacing that the damned scheme is beset with corruption. That news would surprise you if you are in the habit of being surprised to learn that bears shit in the woods, or that astrologers prey on the gullible.

Any competent economist could have foretold the likelihood of such a scheme actually delivering what its proponents claimed. But then, one may recall that among the promoters was Dr Manmohan Singh, who I believe is a fairly high-ranking official in the Indian government and reportedly has some influence on Indian policy matters. I further believe that the “Dr” in front of his name has something to do with a formal degree in economics. So how does one explain his apparent support of such a wrong-headed policy, a policy that guaranteed corruption? One may be inclined to be kind and generously explain that by saying that perhaps Manmohan Singh does not understand basic economics and should go back to school.

Or one can be a realist and say that Dr Singh does understand economics but even more acutely he understands what is likely to brighten the political fortunes of his bosses. Dr Singh should have known from his years as an economist and an observer of Indian reality that the thousands of crores of rupees will simply be siphoned off by the intermediaries. But he cynically promoted the scheme for political reasons. It is not the first time that he has done so and is unlikely to be the last.

If the leadership is corrupt, is it any wonder that the schemes that they cook up are riddled with corruption? Now at least they should rename the scheme as “The National Rural Corruption Guarantee Scheme” and be done with it.

India is a large country and Indians are definitely not slackers when it comes to ingenuity, hard work, and drive. The resources required for creating a large supply of quality educational institutions are well within the reach of the Indian population. There is ample evidence to suggest that whenever some sector of the Indian economy has been unshackled, the people and corporations in India have produced results. So how does one explain the state of affairs in the Indian educational system? Why does the government continue to maintain a stranglehold on the system even though it leads to such obvious failings? More importantly, why do the Indian leaders go around begging foreign nations for assistance with improving the education system when Indians themselves are fully capable of helping themselves with creating great educational institutions?

Consider this report in the Indian express of 21st August: “Help us build eight new IITs, with money and faculty, India tells Japan” (Hat tip: Ashish Asgekar.)

Within a week of the Prime Minister’s Independence Day announcement of eight new IITs, India today asked Japan for helping in building these institutions, sources told The Indian Express.

The government’s request comes in the wake of a massive infrastructure upgradation exercise in the higher-education sector being planned by the government, which includes seven new IIMs and 30 new Central universities.

India is not just looking for “financial assistance” but also “technical expertise” in building state-of-the-art infrastructure for these new institutions.

(See also a related report in the Times of India of 9th August: “Japan to help in setting up IIT”.)

So here’s the puzzle. The physical and human resources exist domestically to solve India’s educational problems; yet the Indian leaders go around begging other governments to help improve the system. Wouldn’t it be far more rational and exceedingly dignified to just unshackle the educational system from the clutches of the government and let the people of India work out their own educational system? So what gives? Why don’t they do that?

To address not just this question but a whole family of related questions, I propose a general theory of “Power, Scarcity, and Corruption.” Basically, the three form a nexus, with mutually reinforcing influences. Scarcity in general is not a chronic condition in any functioning economy; it has to be engineered. Given economic freedom, people work their way out of any transient scarcity. For persistent scarcity to exist, it has to be carefully nurtured. The motivation for engineering scarcity is that it allows the consolidation of power. This is Econ101 and even a superficial reading of the chapter on monopolies is sufficient to persuade one that monopolies do restrict quantities to maximize “profits.”

The relationship between power and scarcity is bi-directional. You have to have power to engineer scarcity, and through that engineered scarcity you gain power. Political power allows you to dictate policies that give you monopoly control and then you use that for gaining even more political power. Then of course, where there is scarcity, corruption cannot be far behind. Corruption is therefore a mechanism which allows the collection of rents that arise from the scarcity.

If scarcity were to vanish for some reason, both the corruption and the power to extract rents would disappear. For those in power, therefore, the primary objective is to somehow maintain an artificial scarcity both for maintaining power and for gaining from the corruption.

Now back to our educational system. The government has a monopoly control of the sector through many institutions such as the Ministry of Human Resources and Development, the University Grants Commission, etc. Licenses and other requirements force the private sector from fully and freely participating in providing education. The resulting scarcity gives the government a handy lever for manipulating voting blocks. Quotas and reservations are handed out to favored groups. And more directly, the bureaucrats and politicians extract rents from handing out the licenses and permits to those who have the deepest pockets.

So now it becomes clear why the government would not liberalize the educational sector and instead shamelessly go with a begging bowl to foreign government. The begging bowl into which the foreign government throws its money is in the hands of the government. This gives the bureaucrats and politicians even more power. If instead the government were to relinquish its monopoly control of the educational system, they would lose power as the private sector steps in and removes all scarcity. And with no scarcity, corruption also disappears. This, of all things, cannot be allowed to happen.

It is India’s misfortune that it is governed by a rapacious, stupid, narrow-minded, immoral, shameless bunch of politicians and bureaucrats. But then, it is hard to see how it could be otherwise given that we have a “democratic” system and the basic characteristic of a democratic system is that it reflects the wishes of the people. Democracy is a cruel joke when instituted among a population that is not informed.

It’s all karma, neh?

Think about it.

Why do different societies end up with governments that differ qualitatively? The short answer would be that it is so because societies themselves differ qualitatively. People — not individuals — deserve the government they get. Leaders reflect the soul of the people they represent. A society’s leadership cannot be corrupt, morally bankrupt, myopic, unethical, illiterate and stupid unless the people as a collective are themselves so. Enlightened leadership is the lot of people who are themselves enlightened. Leadership is endogenous.

“Many countries, including the U.S., have lawmakers who run afoul of the law, and it’s not uncommon in developing countries for those fleeing the law to find sanctuary in political office. Brazilian legislators, for example, have been accused of entering politics to take advantage of a law that grants them immunity from criminal prosecution in office.

“Few countries, however, can match India’s numbers. Following the 2004 election, almost a quarter of the 535 elected members of India’s national parliament have criminal charges registered against them or pending in court, according to the Public Affairs Center, an Indian elections watchdog. Half of those with charges pending against them face prison terms of at least five years if convicted.”

That is from the Wall Street Journal article of May 4th which beings thus:

“Since late 2005, Mukhtar Ansari has been confined to this ramshackle town’s jailhouse, accused of conspiracy to murder. That charge and 27 other criminal cases lodged against him over 19 years have done little to derail a long political career.

“Now, the 40-year-old Mr. Ansari is running again for re-election in Uttar Pradesh, India’s most populous state. He’s expected to sail back into office in elections next Tuesday, thanks to a potent mix of divisive politics and political largess. His brother, Afzal, locked up with him in the Ghazipur District Jail, is a member of India’s national parliament in New Delhi.”

So national and state legislatures have a large number of criminals. These people were not foisted upon the population; they were elected by the people. India has a representative government and the political leaders represent the people. The leaders reflect the basic characteristics of the people. These representatives then go on to elect the head of state, the President of India. The president then represents the collective characteristics of the elected representatives of the people.

Well you made your bed, now sleep in it, as my granny used to say. Good luck, people of India.

[This post inspired by the UPA and this.]

Dr MM Singh. VP Singh. The monsters created for gaining political power by legislating divisions of the country along caste and religious lines are beginning to have a life of their own.

Soon to be released, the sequel to the hit drama, “August 1947: The First Cut.” New updated imported Gandhi. Bigger bombs. In production, “August 2017: The Final Cut.” Totally new cast, with hundreds of specially recognized castes. Supporting mega roles by ISI in Bangladesh and Pakistan. Islamic terrorists and RDX will blow you away. You can’t miss it. You won’t be able to.

The most damaging thing India is currently doing to stay poor and divided instead of realizing its great potential of being a superpower is its politics of creating a new caste system and enshrining it in its constitution. . .

Unfortunately, the current government in Delhi is trying to enshrine a caste-based quota system in the educational system of India where your categorization based on the caste you were born into in pre-Independent India will give you a certain quota in higher education. This is in addition to existing job quotas based on similar considerations, different standards of your qualifications and performance in tests as well as your current economic status. In other words, an attempt to bring about forced equality of result instantly.

It may be called creation of a new Soviet-type system of equal distribution based on your caste. One cannot imagine a worse selection of historically failed ideas and social and political systems based on them. This is something India should do without if it wants to be a powerhouse economy and a great society in the future. Equal opportunity in building human capital is what is needed, not forced equality of result through discriminatory quota systems for various castes and religions that would inflict much harm to the future of India.

A much better and positive alternative is to create educational opportunities for all regardless of caste and history. An educational system that gives a full range of choices where equality of opportunity in a merit-based system leads to realization of one’s potential. That is the vision of the future India deserves and not a divide-and-rule caste-based potential to break up India.

Pretty close to what I hold dear: equality of opportunity, not equality of outcome.

If there is one thing that makes me see red, it is senseless discrimination in general and unfair treatment of people. But when it comes to discrimination based on a person’s religion, I abhor it with every fiber of my being. It disgusts me and I feel nothing but contempt for people who discriminate based on religion (or lack of religion, in some cases.) One of the distinguishing features of a civilized society is that it does not treat people differently based on their belief systems. Those societies that do discriminate based on belief systems are retrograde, regressive, backward, ignorant, bigoted, intellectually bankrupt, and generally deserve the derogatory label “third world country.”

Indian polity discriminating among its citizens based on belief places India squarely among a tribe of nations that has no place in a modern civilized world. India, with all its cell phones and back offices, belongs to 7th century Arabia.

It was in the 7th century Arabia that the best and the most enduring example of discrimination based on belief was created. Its founder, Mohammed, declared that the world is divided eternally on the basis of belief: those who believe in his prophet-hood and the one true moon god he called Allah are the good, and those who do not are bad. And it is the holy obligation of the good to make an offer to the bad which simply says, “Believe as we do and you don’t have to pay a tax; if you don’t convert to our belief, and also refuse to pay the tax, you will be killed.”

That 7th century creed was simple and direct. You are either with us in our belief or against us. Convert, or pay the tax, or die. Mind you, there was no compulsion – you are free to choose.

When I first learnt of that principle of Islam, I was disgusted and revolted. Its violent intolerance of any other belief system is insanely inhuman and goes against every humanist and rationalist tradition that has ever been developed by humankind. That intolerant faith has migrated around the world with devastating consequence. Hard to believe, but when you are forced to dump your half-ounce tube of toothpaste into the garbage bin at the security check at the airport, you are suffering the consequence of that insane xenophobia – “hate those who don’t believe in the exact same supernatural being and don’t obey our wishes” – given voice 14 centuries ago.

I don’t find anything even remotely useful in Islamic theology or philosophy. At best it is childish and ignorant. But what I find abhorrent and distasteful is its insistence that based on a person’s non-belief in Islam, the person can be killed. I must stress this point so as to remove all chances of misunderstanding. I don’t want the pseudo-seculars calling for a fatwa on my head. I have no problem with any useless, childish, ignorant ideology; my concern is only that I am against any ideology which actively discriminates against people who do not subscribe to that ideology. So it is not Islam’s moronic theology that bothers me; it is Islam’s discrimination against what they call the “infidels” that I find sickening and revolting.

I have used Islam merely to epitomize what I consider to be a cardinal sin (if you pardon the expression) of discriminating against people based on beliefs. In a civilized society, there is no justification for belief-based policy. Any country that discriminates against people based on their belief is a theocratic dictatorship that its citizens should be ashamed of. India, to my extreme shame and utter disgust, is a third world country that discriminates based on a person’s beliefs.

The prime minister of India, Dr Manmohan Singh, is calling for discrimination based on a person’s belief system. Basically, the argument goes thus:

(1) Overall, x percentage of people in the nation profess X belief
(2) But in organization A, only y percentage (less than x) of X believers are present
(3) So, to increase y to x, active measures need to be taken

In the above, “A” is every school, college, place of employment (both public and private), army, judiciary, police, and so on.

Seems reasonable, doesn’t it? Or is it? Let’s reason for a bit.

Why, one wonders, is it important that every institution, profession, or organization should have proportionate representation of various faith systems? I can understand it if it were a “parliament of religions” or something. But why is faith important when it comes to say a car factory or an institution of higher education? I know that it is one of the basic principles of pseudo-seculars but we non-pseudo-seculars have a right to know what the reasoning is behind this basic assumption. What bearing does the profession of a particular belief have on the nature and functioning of the institution or the organization that all faiths have to be proportionately represented?

Here is a thought experiment for Dr Manmohan Singh. (I realize that my writings will never reach the good Dr Singh, but perhaps someone in the main stream media would like to bring this point up one of these days.)

Imagine, Dr Singh, that everyone in India magically by the grace of Allah embraces Islam at the stroke of midnight Nov 3rd 2006 (my birthday, as it happens). Nothing else changes: on Nov 4th, all people go to the same job as before, attend the same school, have the same income, live in the same houses as before, etc. Every economic parameter remains the same. Clearly, then Muslims will be 100 percent in every organization and institution (private, public, or otherwise) and no belief-based reservations can be implemented. Note however, that the poor among the population will continue to be poor, those who did not have access to jobs or to education will continue to have no access to jobs or to education.

The number of people who are poor and deprived will be no different on Nov 4th from Nov 3rd. Those, who for whatever reasons, were poor and illiterate will still be poor and illiterate. Moreover, not just their present stations, their future prospects will be no different also: if they were unable to secure a job before, they will continue to be unable to secure a job. Do you see that the personal religious belief of a person does not matter and should not be the basis for national policy? If public policy had to be made, it would have to be made based on some criterion other than religion. Do you see, Dr Singh, that then you will have to address the actual problem which has nothing to do with a person’s religion? I will not abuse your intelligence by pointing out that those policy instruments are available to you now — even before 100 percent conversion — and there is no reason that you should not promote those policies now.

Dr Singh, if you are paying attention, you may have figured out that what I am getting at is this: it is not the faith of a person that should concern the government of a nation that puts on airs about being a superpower, but rather about the economic status of a person. And if you are really concerned about improving the economic status of a person, then you should try to give the person an equal opportunity to the person to succeed. I stress equal opportunity because I wish to distinguish it from equal outcome. The government can at most ensure equality of opportunity but cannot — and should not — ensure equality of outcome. You must understand the distinction and I am going to attempt to do precisely that.

Equality of opportunity matters.

Another thought experiment. Suppose group A (group defined under any criterion, religious or otherwise) children have the same opportunity to become pilots as the members of group B, but refuse to do so. So the outcome is that among the airlines, you find that qualified people from group B are pilots and none from group A. The outcome is clearly different although the opportunity is the same. And a follow up question: would you, Dr Manmohan Singh, fly on a plane that is flown by a pilot from group A who was hired for government mandated proportionate representation reasons and who does not know how to fly a plane?

I know, policy makers are exempt from the ill-effects of the policy they make. You, for instance, will only fly in planes flown by qualified pilots, irrespective of how many caste-based reservations you introduce into the nation’s commercial airlines; and you will be treated by the most qualified doctors, without regard to their caste or their religion. But still, it is an interesting question you may wish to contemplate when you have a free moment. Think equal opportunity, not equal outcome.

Dr Singh, it is conceivable that despite equal opportunity, the outcome is different for reasons that range from personal preferences to innate abilities. Enforcing equality of outcome is silly and misguided. My parents cared for their children and provided equal opportunity to us. We ended up at quite different stations in life, however. I see nothing wrong in the outcome as long as I recognize that we all had the same opportunities. I imagine it would have been silly of my parents to insist that all their children should weigh the same, or even end up earning the same income.

Anyway, getting back to what I call your “minority equality” policy: why should the government deny a person an opportunity based on the person’s faith? I do suppose you realize that positively promoting Peter based on his faith is the same as discriminating against Paul for his different faith? Here is a thought experiment: assume that I, an infidel, should get the job but the employer is forced to hire Mohammed Islam because of your government mandated minority hiring policy. Do you note that I am being denied a job based on my religion? Do you see shades of 7th century Arabia policy?

What if I am desperate enough – my aging parents are depending on my getting that job – would I be better off converting to that “minority” religion? So what your policy is doing is in effect taxing me for being a non-Muslim in one sense, and in another sense, is giving an incentive for me to convert to Islam.

Dr Singh, I am sorry but I have to ask you this: why is the government of India in the business of promoting what you call a “minority” religion? I have a great deal of respect and regard for educated people. I expect educated people to be decent and thoughtful. People who have attended the best institutions of learning around the world, like you have, must be intelligent and decent. Unlike most other generally untutored politicians, you have a PhD in economics – a subject I know to be not for the intellectually challenged. So it pains me to see you stoop so low, even more than it pains me to see mullahs calling for the murder of innocents. At least the mullahs are blood-thirsty brainwashed ignoramuses and have not had a decent thought in their heads ever. What is your reason for this abject divorce from reason and fairness?

I am not done. I have attempted to show that your policy is morally repugnant. The next time it will be my unfortunate job to explain why the policy of “equal minority representation” is economically stupid.

1. Copy this url to your address bar: http://techbytes.co.in/experimental/bypass.php?url=http://

2. Append the url of the blocked blog. So if you, for instance, want to reach mysite.blogspot.com, you will construct the url http://techbytes.co.in/experimental/bypass.php?url=http://mysite.blogspot.com/

3. Hit Go.

Pakistan is buying US$5,000 million worth of military hardware, including F-16s from the US. India is subsidizing that purchase to the tune of US$25 million in cash. I am sorry about India’s niggardly gesture — it should be giving Pakistan at least US$ 100 million. After all, dhimmis have to pay jizya and at US$ 25 milllion, it works out to be a very low per capita. [Here is the relevant news item. And here is the explanation of what I mean.]

The jizya tax is traditionally imposed on non-muslims (dhimmis) living in a Muslim majority state. The dhimmis can avoid the tax by converting and many did and still do. A tax is a negative subsidy; a positive subsidy to induce conversion is also effective in many instances. So, if being a Muslim were to confer benefits that would not be available to non-muslims, it would induce conversion.

Arjun Singh is giving an incentive to non-muslims to convert into Islam. The poor family in my neighborhood are thinking of converting to Islam because it would help their son get into college on the Muslim quota that Mr Singh is establishing.

I strongly believe that the government should not be in the business of converting people. But I guess Mrs Sonia Gandhi’s government, because it is secular, has to prove its secular credentials by converting the kuffars.

People cope, somehow. When faced with severe shortage, they are willing to pay seemingly impossibly high prices. The monumental struggle to somehow gain access to the limited seats in educational institutions that middle-class Indians have to face is stunning to behold. The pity is that this shortage is entirely man made, a manufactured shortage. The persistence of this shortage can only be explained by understanding that those who have engineered it gain immensely from it. It is a bureaucratic and political racket that has its own logic and compulsions. All sorts of shady businesses have evolved to cater to its needs. Academic corruption is one such business, as illustrated by the next anecdote.

A friend, Anil (not his real name), who I had gone to school with came over one evening to my sister’s place to visit with me. My sister’s son had just finished his 10th grade exams and Anil started discussing his son’s 10th standard exams with her. Anil said that he had “to do some fielding” in his son’s case. What the heck was that, I asked.

It seems that he got an anonymous call a week or two after the exams. The caller said that Anil’s son was not doing too well in two subjects, and offered to have it taken care of for Rs 25,000. Anil was apprehensive, like pretty much all parents, that his son may have not done too well in some subjects. Not willing to take the risk of having his son fail, he agreed to pay the amount. Did the caller say which subjects, I asked. No, all this is very urgent and one does not go into the finer details, said Anil.

The 10th grade board exams are critical. Parents are willing to be party to deep corruption because they are unwilling to risk failure. The number of seats in good junior colleges (11th and 12th grade) are seriously limited. Miss a good junior college and you may end up not getting to a decent college. Your life can be ruined if you don’t get good grades in the 10th board exam; and if you are afraid that the grades will not be good, you could try to ensure that by paying some shady operator who would fix the grades. That is called “fielding.”

Corruption is a basic fact of life in India. It is fairy simple to understand why this is so. India is a socialistic economy. Socialism is short for “shortages.” Shortages imply high price. Generally the list price is far below the “market clearing price” and the gap between the two is bridged through a payment in “black.” The degree of socialism in a sector is correlated with the amount of shortage, and the amount of shortage is correlated with the amount of corruption. It is an unholy trinity: socialism, shortages, and corruption.

In a recent report (from the World Bank or some such organization) claimed that the education sector was the most corrupt. The amount was around Rs 27,000 crores (or US$6 billion) per year, and it was more than the figure for corruption in politics, bureaucracy, police, organized crime, etc. (I don’t have the reference handy and will update this later. So don’t quote me for now.) I am not surprised at all.

Corruption is a corrosive and it poisons the blood of the economy. But it is a symptom of a deeper problem: shortage. Most shortages are engineered. One way to manufacture an artificial shortage is to declare something illegal. The US experience with prohibition epitomizes this. The resulting shortage gave rise to massive corruption. Another way to manufacture shortage is to exercise monopolistic control in the supply of goods and services. The government of India is a past master in this variety of manufactured shortages.

Monopolies are capable of tremendous damage to an economy. Over the centuries, people have figured that where possible, monopolies must be broken, and if for some reason they are dictated by economic logic, then monopolies have to be regulated so as to mitigate some of the harm they would otherwise do. The regulation of monopolies naturally falls as one of the roles of the government. Clearly, the government cannot be expected to break up or regulate a monopoly business if the government itself is the monopoly supplier.

The lesson is then clear. The government of India must get out of the business of education and it must constitute an independent regulator which will make the rules for the private sector provider of educational services. Furthermore, the education sector will gain immensely from allowing foreign institutions to do their business in India. Corruption will be a thing of the past as soon as the shortages disappear.

It is time to stop the insanity of government mandated shortages. If logic is insufficient to persuade us that corruption is a consequence of shortages, there are many significant examples in recent history where this was demonstrated. When will the masses rise up and revolt against the socialism in the education sector?

Is the Congress Party corrupt? It is like asking, is the Pope Catholic? Or asking, is Bill Gates rich? Or the more earthy question, does a bear shit in the woods?

The corruption of the Congress Party is not a new thing, however. In 1938, Sri Aurobindo wrote:

All this [referring to certain dishonest financial practices] promises a bad look-out when India gets purna Swaraj [full independence]. Mahatma Gandhi is having bad qualms about Congress corruption already.

Power corrupts, as Lord Acton famously observed, and absolute power tends to corrupt absolutely. It is a nice aphorism but in India’s case, it is the corrupt that get power and the absolutely corrupt get absolute power.

I think that people seek political power in India fundamentally because it allows them to gain personally by corrupt means. The politicians are best placed to engage in corrupt practices because the economy is a command and control economy. So it is not that they become powerful and therefore later become corrupt. It is the other way around. It is the already morally and ethically bankrupt that seek power and attain it because they are corrupt. The honest and the good don’t have what it takes to reach the pinnacle of political power. They cannot compete with the criminal class from which the politicians rise to the top of the heap.

…

The Russians were also extremely active in trying to influence Indian opinion. According to KGB files, by 1973 it had on its payroll ten Indian newspapers as well as a press agency. The previous year the KGB claimed to have planted 3,789 articles in Indian newspapers — probably more than in any other country in the non-communist world. By 1975 the number of articles it claimed to have inspired had risen to 5,510. India was also one of the most favourable environments for Soviet front organisations.

OK, so far so good. An instructive story indeed. But what lesson does one draw from it? That the Soviets tried but failed to influence India materially? Maybe. But I don’t understand the position of one reader of The Acorn when he wrote:

What an amazing story. One of the (then) world’s superpowers pumps in millions, and yet, our democratic institutions have been strong enough to withstand them.

The article says that between 3 and 5 thousand stories had been planted in the Indian press and that the prime minister had been bribed. The press and the prime minister’s office, I guess, are important democratic institutions. They were compromised. It hardly speaks to the strength of our democratic institutions.

Now the rejoinder may be this: “Yes, but don’t you see the Indian voter, so wonderfully perceptive, immediately saw through those thousands of planted stories and recognized the corruption of the Congress decided to vote them out of office? Amazing rectitude and foresight and perspicacity of the Indian voter, isn’t it?”

Indeed it would be, if only this were true. The average Indian voter did not read newspapers and therefore whether they contained planted fake articles or they contained the wisdom of the ancients is not material. The average Indian voter could not even know about the corruption at high levels, especially when it come to the party of Gandhi (happily ascribing the old man’s virtues to Nehru’s children). This was so because the average Indian voter was an illiterate rural voter who was as likely to read the doctored papers as I am likely to read the Pravda—hardly likely since I am illiterate in Russian.

What scared the holy crap out of the average Indian voter was the rumor that the government of Indira Gandhi was out to castrate him. It all started with the idiot Sanjay Gandhi forcibly administering vasectomies on some hapless poor people in a misguided but well-intentioned effort to stop the population explosion. To the above mentioned average Indian voter, castration and vasectomies are synonymous. It was their fear of losing their gonads and being turned into eunuchs that did the trick, not some imagined resilience of India’s “democratic institution.”

It is not hard to determine the source of the confusion about India’s much trumpeted democracy. It arises from the mistaken belief that democracy is about going to a voting station periodically to cast a vote for a party of one’s choice. True, democracy is about choosing who you want to give the power to govern you. But is it not just choice, it is about informed choice. How one can be informed about parties and people who are so far removed from one – geographically, socially, economically, psychically – and with the additional handicap of being illiterate, is a mystery to me. To me, democracy means a lot more than an uninformed horde putting its thumb impression on a symbol (most people cannot read) and the choice is sometimes dictated by a harmless petty bribe, and sometimes by the more pernicious promises of the politicians such as free power or job reservations.

Democracy is not about the periodic general elections in which the choice is increasingly limited to a gallery of the most corrupt thugs in the constituency. It is about democratic institutions such as a free and informed system of electing of public-spirited political leaders, a free market, an efficient legal system which recognizes property rights and enforces contracts without delay, a police force that prevents crime instead of doing crime, a rule of law that recognizes all its citizens as equals and is blind to religion and creed, etc, none of which are developed in India.

There is no reason on earth why we don’t have a good democracy in place. Or maybe there is a good reason. India’s feudal past could explain it to some extent. With a long history of being serfs and slaves, bending in servitude comes naturally. True, voting allows a person to choose, but serfs and slaves can vote the feudal lord into power pretty effectively.

We need democracy in India now. Since democracy is of the people and by the people, the people have to be at the very least informed and not ignorant. We the people have to become literate and educated before we can truthfully boast of being the largest democracy in the world. Until we become literate and educated, I would not speak too loudly of how great a democracy we are.

Ascribing the failures of the KGB to a mysterious maturity of the Indian democracy makes one feel good but lulls us into complacency that we have arrived and there is no need for any futher effort.

Related link: See the IndianExpress report “KGB paid Congress, CPI, media” for more gory details.

Justice was served and how! The police registered a case of robbery against both of them. The passersby not only beat up the child, but they beat up an adult they suspected was an accomplice. They beat up the suspected accomplice so mercilessly that the man is unconscious and his identity is unknown.

Swift merciless justice was meted out by a bunch of average citizens of Mumbai for a petty crime. Was the man really guilty and if so, of what? Does a 10-year old child deserve mercy and compassion? I don’t suppose the upright citizens of Mumbai who beat up the child had time to ponder these questions.

They beat up a child, a 10 year old child, for snatching a purse. Then they handed the child over to the police. Did the police register a case of deadly assault against those passersby who beat up the child? No. The police registered a case of robbery.

The people who beat up the child are powerless. They had to find someone weaker than themselves to vent their rage upon. They would not be able to lift a finger against others who are more powerful but who steal not Rs 20 but millions of times more. The bigger criminals go about with red lights flashing on top of their speeding cars. Those “alert Mumbaikars”, as the MidDay reporter calls them, would shit in their pants if asked to mete out justice to the real criminals.

They beat up that little innocent child and handed him over to the police. The police threw the child in a children’s remand home — for attempting to steal a few rupees. In the meanwhile, Telgi, the criminal who stole hundreds of millions of rupees, is being given extra-ordinary medical care in prison because apparently he suffers from depression which, according to a Times of India report, is due to “too much thinking.”

They beat up a child because they cannot beat up the crooked politicians. Career criminals–some of them charged with murder, rape, and abduction–call the legislative bodies of India their home. Reports surface every now and then about how a significant number of the members of Parliament have criminal cases pending against them.

A bunch of adults ganged up against a child, who for some unknown reason snatched a purse with small change in it, and beat up a little child. Ganging up against an adult is bad enough but to beat up a child is unforgivable. The lack of humanity is stunning. Where is the outrage at this criminal act? Should the police officer who registered a case of robbery be charged with dereliction of duty for not charging the people who beat up the child?

They beat up the child because they don’t value children. They don’t value children because there are too many of them. You cannot stop at a traffic light in Mumbai without being faced with children begging for a few rupees. To those who beat up the child, these are mere nuisances and not human beings. Beating up a child is just another aspect of the dehumanization that results in neglected, uneducated, under-nourished, unwanted children.

I read a lot of press about how India is a fast developing (and according to some how India is already a developed) economy. Projections of how many cell phones and how many computers per capita India will have by such and such a year fill glossy magazines and engage scores of management gurus. I know a little secret: cell phones and computers will not make caring humans out of mindless morons.

“Ill fares the land, to hastening ills a prey, where wealth accumulates and men decay.” Thus wrote Oliver Goldsmith.

Now if you will excuse me, I would like to go and throw up from the disgust I feel at the zero degrees of humanity displayed by the “alert Mumbaikars.”

From the archives: India’s Real Criminals.

Greater Vehicle, Lesser Vehicle, no matter.
All vehicles will be towed at owners’ expense.

It all began innocently enough. Three friends meeting in Pune’s Koregoan Park quarters to have lunch and chat. We finished lunch at a roadside dhaba and walked back to Shrikant’s car parked in a quiet little street only to find that the car was missing. Scrawled on the spot next to where the car should have been was a message in chalk: “Bund Garden Road.”

We surmised that the car had been towed to the Bund Garden road transportation police office. Less than an hour ago we had parked the car in front of a bank branch at a spot that was marked “Parking for Bank Customers Only”. It was Sunday and the branch was closed. It was not a busy street and it was a convenient place to park under a bit of shade on a scorching summer afternoon. But now the car was gone. My heart sank because my laptop was on the backseat and I conjured up images of someone breaking into Shrikant’s car just to take the laptop.

We took an autorickshaw to the police station about three kilometers away. I was relieved to see that my laptop was still on the backseat of the impounded car. The constable who towed the car showed up eventually after a half hour wait. The car, he claimed, was illegally parked. Shrikant explained very patiently that there were no signs which prohibited parking the car. The constable insisted that it was parked in a no-parking zone and that there was a sign attesting as much a little ways up the road. Shrikant countered that there was no way anyone could figure out that parking in that spot was prohibited because no signs were posted along the stretch of road we passed before we parked.

What followed was a mini-drama: Shrikant was patient and conciliatory; I was indignant and angry that we were being needlessly hassled for no fault of our own; Girish was silently observing the proceeding from a distance maintaining an amused reserve that I found admirable. We had already wasted an hour and a half trying to retrieve the car. The private operator towing truck was parked close at hand and the constable was leisurely having lunch with the operators of the truck. A camaderie born out of extended mutually beneficial association was evident between the cop and the towing truck operators. They depended on each other.

The cop (whose name I eventually noted down) insisted that we had to pay a fine of Rs 250 for illegal parking. But, he said, that he would consider the case settled if Shrikant paid him Rs 100. Shrikant said that he would not pay Rs 100 but would be happy to pay the Rs 250 penalty provided the cop would come with him to the spot where the car was parked and show where the infraction was. The ultimatum from the cop: pay a Rs 100 bribe or pay Rs 250 to reclaim the car. Shrikant said he would pay not just the penalty but twice the penalty if the cop would just show him how any person could reasonably figure out that it was illegal to park at the spot we had parked at.

The cop figured that we were tough customers and would not be intimidated into paying the bribe. So he escalated the case to his superior, an officer who was in the little two-room dilapidated police post. We entered the office to find the officer in his undershirt asleep on a cot in the backroom. He heard the dispute and concluded that we either pay Rs 250 or we don’t get the car back. I told him in no uncertain terms that this was extortion.

To cut a long three hour story short, Shrikant paid the fine of Rs 250 and then insisted that the cops return with us to the spot where the car was towed from and show us where the sign was. He would pay double the fine if the cops proved that we were at fault. There was a sign about 20 meters ahead of the parking spot which said “No Parking 100 meters ßà”. It was small, nailed to a tree, aligned parallel to the road, and could not be seen unless viewed directly across from the road.

The sign had to be there for the whole scheme to work. It was part of the trap. They merely show up and tow any car parked there by mistake and extract a bribe. I asked the owner of a cigarette kiosk across the road how often the cops show up to tow cars from this spot. He said about half a dozen times most days.

One of the cops finally admitted that it was not our fault but neither was it their fault. The fault, he concluded, was the Pune municipal corporation’s for improper signage. Shrikant cornered the guy. Do you have any children? Do you teach them to be good or do you teach them to be dishonest? How do you sleep at night? The guy squirmed uneasily. He was not entirely devoid of a moral sense, although he was clearly not willing or unable to reason. He said that since we had paid the fine, we had admitted to our crime.

Later in the evening we were recounting this to a friend, Sunil. He said, “You guys should never have argued with the cops. You had no idea what you were up against. The cops are ruthless and could have cooked up some story and thrown you in a lockup. In the end it would be their word against yours. They would have claimed that you were attacking them.”

That was almost exactly what our confrontation was headed towards, I said. At one point, the inspector, who had bothered to get out of his cot and put on a shirt to come out, claimed that I had used abusive words towards the constable and threatened to throw me into jail. There was nothing any of us could have done. The cops knew that they had the authority and the means to really give us a bad day. In fact, they depended on this power to extract bribes from their hapless victims, the very people they are supposedly hired to protect. It was protection money they demanded and they got regularly.

Cops have figured in local news recently. Stories of rape and violence by cops is common enough for the cartoonist RK Laxman to pen a strip in which a mother cautions her young daughter to be careful out in the streets because there are cops around.

Sunil claimed that Asians are the most corrupt in the world. As a businessman, he recounted half a dozen stories of harassment by various officials of government agencies that he has to deal with, from excise departments to income tax to customs. Nitin, another businessman friend, added his own stories to the litany of woes that business people appear to take for granted and as cost of doing business in India.

Anecdotal evidence at best but it lends credibility to the findings of agencies that rate Indiaas one of the most corrupt economies of the world. (See India, the World’s Largest Kleptocracy on this blog.) It is disheartening to hear how pervasive corruption is in India. An industrialist recently recounted his encounter with an official from the state-owned power company. The official offered to fix the industrialist’s power bill because “he was paying too much for electricity.” The industrialist finally had to bribe the official to not tamper with the bill. The bribe was needed because of the fear the official could have disrupted the power supply to the manufacturing unit out of spite. It reminded me of the caution that joggers in NY’s Central Park were given: carry some cash just in case you are mugged because if you don’t want to get caught with no money—it could enrage the mugger.

Corruption is a corrosive force that attacks the moral, commercial, and ethical fabric of the society. Its perceived pervasiveness perpetuates it and sanctions it in a perverse positive feedback loop. Everybody knows that corruption exists. It is common knowledge: not only do you know, you also know that everyone else knows, and everyone knows that everyone knows, and so on. You know that the guy at the top takes in millions in bribes. You justify your little bit of dishonesty by noting that the really rich get away with it and so why should you not take a bit just to make ends meet.

Take the lowly cop whom we encountered. He probably is paid around $100. He is merely trying to make ends meet and provide for his family. His illegal towing is an adaptation to a system which is materially poor. His victims also adapt and pay the extortion because they cannot afford to fight the cop. Neither the crook (the cop in this instance) nor the victim can afford the luxury of a moral stance. Locked within a dysfunctional system, we are playing a repeated Prisoner’s Dilemma game of full information. We are not born inherently flawed; we merely adapt to the system we are born into and which we appear to be powerless to alter. Our apparent moral turpitude is not so much nature induced as a rational response to a structural feature of the environment we live in. We are players in a Thomas Hardyesque fatal drama where the script is seemingly unalterable.

Shrikant asked me on the way back from the police encounter if ever the low quality of our public service will ever improve. It is an important question that we need to answer for ourselves. Like always, whenever I am confronted with a problem, my instinct is to seek the underlying causes that give rise to the symptom which we perceive as the problem. What are the structural features of our society that make corruption so integral to it? Why and when did it arise? If we fully understand its genesis—both in human nature and in the social system that humans create—perhaps then we may have a handle on a possible solution.

I believe that corruption is a rational response to a materially poor system. Material poverty is necessary but not sufficient for corruption to take root. Corruption, in turn, makes the possibility of escape from material poverty more difficult. In its most general formulation, material poverty arises from an imbalance between the resources available to a population and the size of the population.

I will investigate this a bit more in coming days.

The chief engineer of XYZ makes about $2 million a year in kick-backs from suppliers because the going rate is about 10% of the budget that the chief engineer controls. Just to put that figure in perspective, that is about 500 times the per capita GDP of India. When promoted to “technical director” from the rank of a chief engineer, the annual take of the person goes up to $5 million. Which is why the going rate for the promotion is about $3 million. Merely having one’s tenure as the technical director extended by six months costs about $1 million.

The private sector suppliers of these public-sector monopoly enterprises compete amongst themselves and the competition is primarily based on how much they are willing and able to give back in kick-backs to just be awarded the contracts that often range from a low $5 million to upwards of a $100 million. Merely being awarded contracts is not the end of the game. Getting paid for work done and material supplied is also a huge challenge. Without regular kick-backs, payments can take years and could easily doom the private sector supplier.

As I said, my brother is a small-time distributor for a bunch of suppliers. To get business from these public-sector enterprises, he has to deal with chief engineers and other such people in charge of making purchasing decisions. What he is compelled to do to run his business, I don’t really know and even if I did, I would leave it unsaid here.

The question that I persistently seek the answer to is this: Why is India so abjectly poor? There is no single factor, of course. But pervasive corruption has to be one of the most important factor among the mix of factors such as a poor culture, questionable ethical standards, a cargo-cult democracy, widespread illiteracy, stupid economic policies, and so on.

India is rated as one of the most corrupt countries with a “corruption perception index” (CPI) of 2.8 and is tied in the 90th place (out of 145 surveyed) with countries such as Gambia, Malawi, Mozambique, Russia, Nepal, and Tanzania according to Transparency International Corruption Perceptions Index 2004 which notes that “corruption is rampant in 60 countries, and the public sector is plagued by bribery”. Finland, New Zealand, Denmark, Iceland, Singapore, Sweden, Switzerland, Norway, Australia, and the Netherlands hold the first ten positions as the least corrupt countries. Haiti and Bangladesh are tied at rank 145 as the most corrupt countries. One cannot fail to appreciate the correlation between how corrupt a country is and how poor it is. Correlation hints at possible causation but in itself does not imply causation and definitely cannot tell in which direction the causation holds. Are corrupt countries corrupt because they are poor or is it that they are poor because they are corrupt? Perhaps there is some circularity in the causal chain and poverty and corruption are mutually cause and consequence.

Corruption leads to economic waste because it is an inefficient way of doing business. If 10% of capital expenditure that a public sector enterprise is paying for ends up in the pockets of its office-holders, it means that capital equipment does not get replaced or maintained as it should. If the supplier has to pay kick-backs to get business, it will have to cut corners in the quality or quantity of material supplied. Economic rent seeking behavior is not productive and in India millions of man-years must be wasted in unproductive rent-seeking. Public sector monopolies represent a resource sink precisely because they a ridden with corruption from top (the bureaucrats and politicians who appoint the high-ranking public sector officials) to the bottom (the clerk who will not push your file to the next desk without being paid his Rs 100).

So what is to be done? Surely lecturing school-children about the evils of corruption is not sufficient. First we need to be aware of what is going on and who is beind the going-ons. Investigative journalism comes to mind. Where are the watch-dogs and what are they doing? An informed citizenry is the best defense against the kleptocracy that exists today. Next, when investigation reveals corruption, the matter should be rigorously prosecuted to its logical end. And one must get one’s priorities clear when doing so, and not hound a poor milkman for diluting milk and believe that justice has been served.

Here is my proposition. Let it be known that any corruption above a certain figure (say, $1 million) is an offense that will attract the death penality. Between half a million to a quarter million, it will be mandatory 20 year rigorous imprisonment. Then every month, take the harsh step of convicting about 10 and hang them. In a year, the number of people who find corruption in the millions of dollars attractive will fall. This is simple economics: when the price goes up (death), the demand for the thing (getting one more million dollar in one’s Swiss bank account) goes down.

Finland remains the least-corrupt country in the world, according to the latest annual index compiled by Transparency International, a Berlin-based organisation. The index, which measures perceived levels of corruption, focuses on the misuse of public office for private gain. The United States ranks as the 18th least-corrupt country, only a little less so than Chile. Botswana is reckoned to be less corrupt than Italy.

India ranks 83 in the list of least-corrupt countries. Finland is the least corrupt and ranks first; Singapore is fifth; Botswana is ranked 30th — thus leading India by about 50 places.

In the Indian neighborhood, there are no clean countries. On a scale where 10 is the cleanest, India gets a score of 2.8 (with a standard deviation of 0.4, a fairly low standard deviation.) Compared to that, China scores marginally higher at 3.5 but has a greater standard deviation of 1.0 and therefore the estimated error is larger.

The Islamic Republic of Pakistan and the Islamic Republic of Bangladesh both score — surprise, surprise — lower than India. Pakistan gets a 2.5 with a large 0.9 standard deviation, and Bangladesh has the dubious distinction of being the least uncorrupt country of the 133 surveyed by Transparency International and has a score of 1.3 (std deviation 0.7).

I suppose if Sri Lanka were in that list, it would get a higher score than India. And I also suppose that the northern states of India (UP, Bihar, etc.) would be more found to be more corrupt than the southern states (Kerala, AP, TN).

Corruption and Underdevelopment

It is no mystery that underdevelopment and high degrees of corruption are highly correlated. There are causal links between the two and most likely these are bi-directional. Corruption is endogenous in most systems and clearly reflect the dominant cultural traits.

In India, the web of corruption probably has a bureaucratic core. A vast bureaucracy that is instituted to control every aspect of economic life creates the incentives for individual and institutionalized corruption. Then the “democratic” political system uses that bureaucracy to extract rents that are used for fueling the vast political machinery.

Dismantling the bureaucracy would be the first step to fixing the problem of corruption in India, followed by reduction of the public sector. This would lead to reduced rents that political parties could extract through the bureaucratic machinery and have the salutary effect of getting rent-seeking thugs out of the political system in India.

India’s development is critically dependent on reducing corruption.