Are you serious about removing corruption?

Dear All: I am reproducing two posts by my friend and FTI colleague Sanjeev below..I would recommend them as essential reading for anyone who is serious about tackling corruption. Do read and share – in particular with members who are active in the India Against Corruption movement. These points (related to cleaning the system) ought to be on the agenda of this movement – if we are serious about removing corruption.

*** Are you serious about removing corruption? by Sanjeev Sabhlok ***

Basically corruption can be attacked in one of two ways:

a) By ensuring that good people join politics – ‘rulers’ who do not demand bribes (positive solution)

b) By preventing already corrupt ‘rulers’ from receiving bribes (negative solution).

I’ve noticed that a lot of otherwise highly competent people advocate the NEGATIVE solution. But that is not actually a solution. It simply deals with the symptoms, and does not deal with the causes – the underlying MENTAL disease that afflicts the corrupt ‘rulers’.

NEGATIVE SOLUTIONS HAVE VERY LIMITED EFFECT

Let me discuss the negative solutions first. What are these solutions?

  1. Stop ‘criminals’ from becoming ‘rulers’ (the Quraishi solution)
  2. Stop corrupt ‘ruler’ from receiving corrupt offers from international firms (the Transparency International solution)
  3. Stop corrupt ‘rulers’ from stashing money in Swiss accounts (Baba Ramdev solution)
  4. Punish corrupt ‘rulers’ (Lokpal bill – Anna Hazare and IAC solution)
  5. Hang the corrupt (Baba Ramdev/ Chinese solution)

Now, ALL evidence so far is that these “solutions” don’t work (and they can’t!) Why not?

Imagine a malaria infested area near a stagnant pond. If you keep killing mosquitoes, or using half-open mosquito nets, or have people who WANT to be bitten by mosquitoes, then you CAN’T get rid of malaria.

Mosquitoes bite AT NIGHT. They are INVISIBLE. You CAN’T KILL ALL THE MOSQUITOES INDIVIDUALLY.

Similarly, the corrupt operate in INVISIBLE WAYS. They are blatant, but invisible. And there are LOTS AND LOTS OF THEM.

What’s the solution? Drain the pond. Make sure no mosquito can be born in the first place.

You don’t get malaria in the Sahara desert. Make sure you have a clean system.  POSITIVE SOLUTIONS ARE THE ONLY ONES THAT WILL WORK

So what is positive solution? It is very simple. It has JUST ONE MAIN OBJECTIVE: to ensure that good people are EASILY able to enter politics and become ‘rulers’.

It is positive, because it ensures that mosquitoes can’t get to breed in the first place. It doesn’t go about fighting each of the MILLIONS OF MOSQUITOES. Such good people will of course REDUCE unnecessary government intervention, and get out of the way of the people. They will ensure liberty. If any of them applies socialist policy, then the swamp will come back again.  Think of this as getting BUTTERFLIES instead of mosquitoes:

If we get good people (NOT MOSQUITOES) what happens then?

  1. The ‘rulers’ NEVER demand bribes.
  2. The ‘rulers’ RAPIDLY PUNISH those who offer bribes (or take bribes, below them).

And no one in the business world has any incentive to bribe (although that can’t be ruled out – however such business people will be very scared once honest people become ‘rulers’).

GONE! Corruption gone! Over. Finis.

The solution is therefore simple: ENSURE THAT GOOD PEOPLE CAN EASILY ENTER POLITICS AND BECOME ‘RULERS’.

How can we do it?

  1. State funding of elections
  2. Remove all limits to electoral funding
  3. Ensure the MOST RIGOROUS disclosure requirements for political donations
  4. Pay the politicians VERY WELL.
  5. Elect politicians who promote classical liberalism. [Details in BFN]

What will happen then?

People like me will find it worthwhile to contest elections and many such people will get elected. Today, people like me simply can’t contest elections, because the system is designed to REWARD THE CORRUPT and THWART people like me. Once good people have got elected, they will automatically (without having ‘fasts unto death’) establish effective systems to catch and punish any residual mosquitoes – the corrupt, etc. That’s when negative solutions can help.

But today, just by focusing on negative solutions while ALL OUR POLITICIANS ARE 100% CORRUPT, corruption will never be removed.

Drain the swamp. Q.E.D.

Following on from this blog post, the simple theory is this:

1) You must meet the participation constraint.

You must ensure that good people (honest, intelligent, competent*) are willing to participate in the governance of India.

2) You must meet the incentive constraint.

You must ensure that incentives are in place for such good people to not deviate into corruption.

[*Note: competent means people who understand capitalism and prosperity, and know how to run a very tight, minimal, but strong government]

That’s it. Don’t waste time on anything else. Just understand these two lines I’ve said.

And if you don’t understand what I’ve just said you have no business to be talking about corruption.
Please read BFN to understand why neither of these two constraints are met in India.  BFN also explains how you can help change things to ensure these constraints are met – by joining the Freedom Team of India

And so, this is the end of the lesson called Corruption for Dummies by Sanjeev Sabhlok.

***

Related Posts: Now, not just worried but also angry with IAC and Anna, Worrying about Anna..and some counter-intuitive stuff… Also see

Notes from a Live Chat on Corruption and Notes on tackling corruption

Also read: Why Good People don’t Join Politics and finally Let’s breach the head office of India’s enemies: its Parliament. पर्लिअमेंट में सेंघ लगाओ!

B Shantanu

Political Activist, Blogger, Advisor to start-ups, Seed investor. One time VC and ex-Diplomat. Failed mushroom farmer; ex Radio Jockey. Currently involved in Reclaiming India - One Step at a Time.

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20 Responses

  1. Rakesh T says:

    See the link, in which economic reform and political cleansing is talked about.
    http://www.youtube.com/watch?v=nuxzCVVyPtc

    The video talks about “Arthkranti-अर्थक्रांति It will fully Change India-Date-12-08-2011″ . The main presentation starts after 6 min.

  2. I tried for about 18 minutes to listen to this talk, but quickly realised that this man has absolutely no clue about economics.

    Had he just been a Keynesian economist I would have understood why he wants to the government to print money to ensure that every poor person has money to go into the hotels (!), but when Ramdev was talking about a transaction tax – which is severely regressive – and I recalled later that I had come across this model earlier (http://www.arthakranti.org/home) and rejected it outright, I basically stopped watching further. No time to wast.

    I see no reason why India must violate the results of CENTURIES of study of economics just because a quack “economist” is put forward by Baba Ramdev as a “solution” to India’s problems.

    I’d urge Anil Bokil (apparently a chartered accountant – which means he is otherwise very capable) to start reading basic economics texts, and when he has done that, to start reading Adam Smith and Hayek (among hundreds of others).

    After he has done that we can discuss. He would have realised well before that stage how foolish is his model.

    In searching for this man on google I also came across a critique of Anil Bokil’s proposal by Sharad Bailur, a classical liberal whose views I respect: http://sbailur.sulekha.com/blog/post/2007/03/arthakranti-by-anil-bokil.htm

    Sharad Bailur blows the Baikul model apart.

    It is important that Ramdev take advice from REAL economists, not quacks.

    We are ill-served by re-inventing the work of thousands of specialists. Let us make use of the tools already invented and use them in India.

    The public finance system I recommend for India are outlined here:

    http://sabhlokcity.com/2009/11/a-liberal-perspective-on-taxes-%E2%80%93-part-i/ and

    http://sabhlokcity.com/2009/12/a-liberal-perspective-on-taxes-%E2%80%93-part-ii/

  3. harsh jain says:

    This is perfect. Prahlad Pandey may be a fanatic and a social fool, we believe in him and his fantastic ideals. Though people say Parhlad Pandey is a corrupted , convoluted, irresponsible politician he is our idol. Jai Hind.

  4. Nanda says:

    This article is an insult to the intelligence of common man. Its an article which is marginally better than my 2 yr old daughters essay. Only dfference is my daughter’s essay say that her dad is the best person in the world and here this author says he is the best person Indian politics can get. Honestly, the mosquito story was disgusting, actually it could be used as an analogy for all cases, let alone the author’s case. Such advises sound hypocritic. It is hypocritic when you say ‘Stop criminals from rules’ is stupid and ‘allow good people to be rulers’ is intelligence. And Sanjeev Sablok obviously doesn’t like Baba Ramdev’s drape color, it shows up in this article. Simply put, there are tactical short term and strategic long term solutions for any problem. Brining black money, preventing criminals from politics etc are tactical and they provide faster benefits. This doesn’t mean Qureshis and Baba Ramdevs don’t want good people like Sanjeev Sabhlok in politics (well, some people like me may not want too good and extraordinary noble like Sanjeev Sabhlok to rule us), but it only means they are addressing short and medium term. Your formula of allow good people in politics is a theoritical wish list, has no practical reach, and has no connect with common man. If only election happens amoung intellectuals, your steps might work and good people like you could get selected. But in democracy, its the common people who vote and elect leaders, there are lot of emotions involved, not just brain, this is reality. Even if all your recommendations are implemented, I can bet my life and say you will not get selected as you will hardly make any sense to 99.99% of common men.

  5. Vijay Mohan says:

    Dear Sanjeev,

    I had similar opinion about the video and actually wanted to discuss with you!!

    Thanks for your comments.

    But he talks about state funding of elections.. in some way. that’s the only good.
    rest the presentation is prepared for Ramdev’s mission.

    Anyway When Ramdev told that Rajiv Dixit discussed economics from him , then I was sure .. there wasn’t any need to listen to him

    Thanks

  6. Vijay Mohan says:

    Dear Nanda.

    Economics all over the World is same .. its same for 100% of the India and world.

    Similar policies bring any country out of poverty and corruption.

    Take Indian Govt policies in Singapore and Hongkong .. I assure you they will be more corrupt than us.

    Indians usually are most ethical of all. The proof is ..inspite of so many restrictions there is still a social decorum.

    Doesnt matter If people listen or not understand or not … Satya meva jayate (The name of this blog)

    Regards,
    Vijay

  7. Khandu Patel says:

    I did not quite expect it from Sanjeev but he raises some valid points which deserve consideration.

    India needs to elect politicians who don’t just have integrity but to provide the pool from which leaders of distinction can be found is more easily said than done.

    Some parallels have been drawn between Anna Hazare’s movement and the crusade Gandhi led against the British. This has nailed the lie to the claim made by the Congress Party as the inheritors of the Gandhi legacy. But will things ever change in the minds of Indians? It is in this respect that no amount of legislation will ever change anything in India. A broom needs to be applied to clean the country of the very many false gods to which the Hindus of India are accustomed to pay obesience.

    This is only the beginning of the story. I would not be surprised to see the Congress leadership ride this out.

  8. G says:

    “false gods to which the Hindus of India are accustomed to pay obesience.”

    False or not, as long as the gods are from the West then the Hindu will spontaneously pay his respects. Now that Sri Marx is no longer in vogue, Neo-liberal theologists Friedman and Hayek are the new prophets of these brown apes of the West. I’d take an unproven prescription by an Indian who seeks inspiration from an Indian perspective and context any day over imitators who derive second-hand ego-validation by latching on to this or dominant economic/political ideology dominant at the time. We may fail in the short term but we will learn from failure to evolve an economic system that is suited to the Indian environment and which will not merely turn us into another ugly caricature of the West. It would do well for these people to take a closer look at the past thirty years at what has happened to the Western Economies which have followed the Hayek / Friedman path. The chronic economic instability, booms and busts, the nearly all pervasive economic insecurity, disparity between the handful of rich and nearly everybody whose quality of life continues to suffer, the denudation of essential public services and the ongoing effort to privatize basic human necessities like water, the daylight robbery of entire nations (e.g. Iceland) by Financial thugs… the list is endless. Sure, socialism is a failure. But so is absolute capitalism / neo-liberalism / classical liberalism. It is disheartening that all these simplistic Indian imitators can seem to do is latch on to another western teat that is even now starting to sputter dry, now that the Marxian one has nothing more to offer. Do the hard work, put your brains to the task and come up with something better. My vote for such people and not self-important “saviors” of India in the name of their Western economic Gurus/economic religions.

  9. Sudhav says:

    These are good points. There are however,some drawbacks in the basic reasoning.
    The point about state funding of elections is that one could argue that at present the State= Indian parliament = Congress/UPA in power, is and has been doing precisely that. The ‘corruption money’ is generated or taken out of the goverment coffers to fund Congress elections, ad infinitum and that is why Congress keeps winning. The problem with democracy is that every person of the land has an equally valuable vote, and the party with the biggest funds can and do’bribe’ the poorer voters with small monetary bribes eg 3Rs per kg of rice will be a big vote winner amongst the poor and hence more votes, getting the AICC back into power. The NEGRA is one of the worst things for India and democracy.
    Removing all limits to funding would cause similar problems as
    point 1.
    @V Mohan.. the point about Singapore and Japan is that their people have the basic commodities of life available and the State/ industry functions very efficiently. The infrastructure, built decades ago, is of top quality and the technology is amazing.Not so in India by a long stretch.

  10. Khandu Patel says:

    @G

    You are clearly taking a dig at Sanjeev’s liberalism and Nehruvian socialism which have exhausted their usefulness. As Hindu philosophies go, there are none that have been so worthy of study that they are on offer at Indian universities. It is as well to remember that they were made exinct in the Muslim rule of India. The British established universities which you deride so much are the only ones bequeathed to India. Without them and the new ones established on modern lines, India’s achievements would be a flat zero. Now I am all in favour of some reaching out of India’s past, but any program will have to be fashioned for the needs of modern times. That is how Roman law was renewed in the West.

  11. G says:

    @Khandu: Instead of “taking a dig” rejecting the mindset and the prescription that arises from it is more accurate. I don’t understand what you mean by India’s achievements would be a flat zero. It is too much of a sweeping generalization to be anything even remotely resembling the vast and complex reality of India’s past. Your fundamental mistake is to claim that I am advocating a mere repetition of the past while I am clearly asking for something “new” to emerge in the future. “fashioned for the needs of modern times” is not the same as copied or imported from Western schools of thought and ideology. This was the fundamental mistake that Nehru made with his blind belief in fabian socialism as his religion of choice. Today most Hindus have meekly followed the trajectory of their Western intellectual colonizers by chucking socialism and becoming proselytes of “free market capitalism”. It is the same dog-like Nehruvian docility to the West in different mental bottles. Don’t have much to say about universities expect that whatever the truth of your assertion these are not the only means of generating and transmitting of knowledge. If Indian/Hindu civilization depended solely on universities for survival and growth then we would have been nothing but a colony of Europeanized natives of South Asia, like all the nations of South and Central America are today. Since that is not the case…

  12. Khandu Patel says:

    @Sudhav

    You make precisely the same point which has excised legislators in the UK. The UK has wisely steered clear of funding. To the extent that politics has been accomodated in the scheme of things, the major parties are give free air time. This costs taxpayers nothing and came abouth through accomodation and without legislation. A British election can be conducted without funding from the state through the funds of the local membership. MPs are not required to spend their own money and are helped by an army of helpers who support the parties cause with no thought for their own advancement, at their own cost and without pay. In India except for the BJP which has been assisted by the Sangh (and I am sure the Muslim parties are similarly helped), Congress etc purchases their votes. State finance would have to be found to do all the bribing that is done in Indian elections to put in people and parties into power who have no right to it. Clearly, Sanjeev has not thought things through on the finance question.

    @G

    India has functioned in the past without elections for Parliament, courts etc. as a motley collection of states under the sway of foreign powers for the previous two thousand years. If that situation obtained today, Pakistan would overrun Kashmir, and then neighbouring states until the whole of India was swallowed up into an Islamic state. So where is the idea of a Hindu superstate to come from if it does not come from the service of the Hindu people? This has to come from the Vedic teachings of dharma as a social contract enjoining Hindus to the preservation and the defence of the motherland. Where rot has set in with this ideology is attempts to include Muslims et al in the narrative. That can come from the other Vedic injunction that the “world is a family”. That is as far Hindu universalism as a religion should go. We should not entertain some of the fancy notions that the Hindu right hold dear of the universalism of Hinduism which embraces the pre-Christian world as if there was deep understanding that permitted the ancient world. History shows that one of India did not even know much about the other end let alone the world.

    India at this point in time is in a crises of identity. The same causes that are toppling Muslim regimes and straining many others has manifested in India under despoting rule, even as it enjoys sanctions of elections. In the West, the Indian scams would have brought down the Government but Indian politicians and India is not beholden to any moral code. A moral crusador in Anna Hazare has risen to the fore to challenge the politics. The Lokpal legislation is no substitute for the politicians who are brazen enough not to resign. There are no shortage of court orders which the state has refused to execute. For a revolution which is what is being sought, a point will be reached where fore will have to meet force. We have already seen that the Government is not shy of using all the power at its disposal and it is not going to meekly submits its resignation and offer itself for re-election. In the absence of it being forecefully removed from power, it will not implement the law that will make the present category of politicians redundant because this is what this is all about.

    For the Christians of the West, and Muslims the justice of a cause like this is clear to the extent that the present Government cannot continue any longer and its removal by force is warrented: martial law, fresh elections etc. If Anna Hazare has found fault with the regime, he is certainly not standing to replace it. There is no replacement in the wings and this is why there will be no change without the intervention of the military which will only take place with the complete breakdown of order. I do not envisage such a situation which is most unfortunate for India, as the voice of the Indian military is too feeble by far.

  13. Sudhav says:

    @K Patel I agree that the final objective of A Hazare is unclear, at least to me. I, for one do not wish to see anarachy or the military taking over in India, it will be the unintended consequence of the demand for this JLP . Then people will say ‘is se atcha to Congress ka rule hi atcha tha’… which correlates well with what some people were saying as a result of the chaos created in and after 1947.
    The objective of toppling this corrupt goverment may well be laudible, but there needs to be effective goverment subsequently, by those who will replace the current goverment. If that plan is not well thought through, and is not executed efficiently, there will be unbearable chaos for the very people who are now on the streets and many others,people will beg to have Congress back in power. And that would have been so counterproductive and so so ironic.

  14. Sorry, didn’t have time to pursue the comments in detail but there was some scepticism about state funding of elections.

    Note I’m NOT asking for ADVANCE funding, but post-facto reimbursement.
    Second, state funding is pointless without a very strong disclosure of ALL expenditure.

    I know most people don’t have the attention span sufficient to read a book (BFN) or to understand basic economics, but you might dip in and out (depending on your interest) of these posts:

    http://sabhlokcity.com/2011/08/rahul-gandhi-no-no-government-funding-of-political-parties-but-payment-based-on-valid-votes-polled/

    http://sabhlokcity.com/2011/08/why-limiting-expenditure-on-elections-is-a-very-bad-idea/

    and of course http://sabhlokcity.com/how-to-remove-corruption-from-india/

    Note also that state funding (with full disclosure) operates in almost precisely the way I have recommended, in Australia. And it is very successful in reducing corruption.

    For the period 1 July to 31 December 2010, the funding rate is $2.31191
    per eligible vote (http://www.aec.gov.au/Parties_and_Representatives/public_funding/funding-guide.htm)

  15. Khandu Patel says:

    As the Lokpal agitation has shown, state funding is not central determinent for clean politics. State funding comes from taxes which themselves are voluntarily contributed for the public good. The major benchmark for the public good is for the avoidance of corruption. The naked theft that is ongoing in India is not by itself going to be cured by state funding. The issue of corruption has deeper roots in India and that it would not be so easily and simply cured. The best guarantee of good governance is the active and real participation of the people themselves, and the major component of it has to be that they need to pay for it as a cost through membership of political parties, from their own pocket as I have done when I stood for election, or through the support of the community or pillars of the community through donations. The State already funds the wages of members of parliaments when many in history have rendered service without pay. State funding of elections would bring into the game people who would be in it only to derive the benefits of the office unless the regime is already clean as is the case with Australia. Anna Hazare even though he has been likened to Gandhi has shown some vision. If his appeal for the people of India to come forward in the service of the country is translated ito reality, the only result state funding would achieve is to throw a lifeline to corrupt parties like Congress. State funding in the context would do more harm than good. It is also seems to be contrary to your free market aspirations.

  16. Alok says:

    Sabhlok raised some good points but I was shocked to see his self centred views. In two three places he mentioned himself as the ideal candidate. I agree with Nanda on this.
    I liked the analogy to the malaria infested pond but the parallels dont work in reality.
    What actually put me off was the closing line,”….And so, this is the end of the lesson called Corruption for Dummies by Sanjeev Sabhlok…”
    When Shatanu Bhagwat introduced Sanjeev as his colleague from FTI I was willing to read on. Now I know what to avoid here on Satyamev Jayate.

    @Harsh Jain: Prahlad Pandey is a good friend of mine. I never agreed with his views and have always said he himself is knee deep in corruption. Shirking one’s duty is a form of corruption.

  17. CHURCHILL KUMAR SHAH says:

    *** COMMENT EDITED ***

    As per November 2010 Report from Global Financial Integrity “From 1948 through 2008 the present value of India’s total illicit financial flows (IFFs) is at least $462 billion. These illicit financial flows were generally the product of: corruption, bribery and kickbacks, criminal activities, and efforts to shelter wealth from a country’s tax authorities.”

    *** NOTE by MODERATOR ***

    Pl do not post long copy-paste sections from articles; Instead post a link. Thanks

  18. Dear Sir.

    What is the definition of the good People?
    Even if we outline this definitation how shall we bring good people in the politics?
    I encounter these problems when i worked with Mumbai227 Team who want to bring good people in the BMC as a Corporator and today they are running out of Good candidates because good people wish to be good.

    Ashish A Pimple
    CIPL, Mumbai University, Kalina

  19. B Shantanu says:

    Somewhat related and worth a close read: 5 yrs back, India ‘legalised’ political corruption. Now, the time to end secret funding is here by Shekhar Gupta, 17 Sept 2022 from which a brief excerpt:

    Even when the late Arun Jaitley brought in these electoral bonds in his 2017-18 budget, he had conceded that it was only a partial reform. This was just the first step, he said, to take black money out of electoral funding. That was a reasonable point as until then rich individuals, corporates good or not quite so, property sharks, mining barons, criminals, smugglers, thugs, just anybody could bring cash in suitcases or wheelbarrows and give it to the political parties and leaders they believed in — or needed to cultivate. Now they were able to buy bonds from the State Bank of India from their white money.

    They had a further incentive in keeping it in the white domain because political contributions through these were tax deductible. It also enabled the political class to migrate to the same white environment because the contributions they received were tax-exempt. But, if it was the first step towards transparency, the exclusion of the logical next made it a remedy worse than the disease.

    This is how it worked out. A donor — usually a corporate — could go to the State Bank of India and buy the electoral equivalent of a bearer cheque or bond. These could just be given away to the party of their choice. Which, in turn, would deposit it into a designated bank account.

    The donor doesn’t need to tell anybody who the bonds are being given to, the recipient needn’t disclose where they’ve got it from.

    So, while the first step brought electoral funding from black into white money, the second brought in the cloak of anonymity.

    It was still like money being passed between interested parties in total darkness without the voter knowing who paid whom and how much. Or the citizen and any of the institutions knowing if any decisions could’ve been influenced by such payments.

    An anonymous contribution would still draw by default the suspicion of being a bribe. It was now worse than before. Fully legalised, tax-deductible electoral corruption.

    Let’s explore it further. The voter, the citizen did not know who was paying whom or whether any decisions were a quid pro quo for this. Who knows, for example, why massive tariff raises were suddenly handed out to one sector, say steel, when we had no way of ruling out a cartelised industry making a sizeable contribution of the same bonds?

    Further, while no one outside knew anything, the ‘system’ knew it all. After all, a PSU bank knows exactly who has bought or which political party has deposited what. The rest needs a simple matching of bond numbers. Determining who’s a friend is this simple for the ‘system’. The government of the day would therefore know not only who to reward but also who to punish if it so wished.

    Now you understand why we say the 65-year battle against electoral corruption was lost on 1 April 2017 and why the new electoral bonds, instead of cleaning up the system, ended up legalising it.