FTI Draft Policies on Jan Lokpal and Electoral Reforms

FTI has agreed to the following draft position on the Lokpal Bill (all FTI documents are draft documents, subject to ongoing improvement).

1. What is the Freedom Team of India?

The Freedom Team of India (FTI) is a team of leaders who will, with due preparation, contest elections on a platform of world’s best policies to increase the liberty and prosperity of Indian citizens. FTI’s ideas are based on the philosophy of classical liberalism (which is the polar opposite of socialism). Classical liberalism insists on equal liberty for all, while ensuring accountability. We encourage you to consider FTI’s policy principles at: http://freedomteam.in/blog/draft-policies.

FTI’s members maintain and are required to always maintain the highest standards of integrity in public life. Through its code of conduct and other processes FTI guarantees the quality and integrity of its members.India can confidently entrust its future to FTI members, who are always ready to be held to account. FTI membership is seal of quality in public life.

2. FTI stand on the Jan Lokpal institution

FTI applauds Anna Hazare, Baba Ramdev and Arvind Kejriwal, among others, for their fight against deeply entrenched political and bureaucratic corruption in India.

For such effort to be effective, however, careful understanding of the causes of corruption is necessary. For instance, a question is sometimes asked: Why doesn’t FTI make its own draft Jan Lokpal Bill and share it online?

That is because FTI does not believe that (under the current system of socialist governance) a Lokpal offers a genuine solution to India’s rampant corruption. Therefore FTI does not wish to offer a draft Bill that will not meet the objective.

Instead, FTI offers more: a package of reforms which is guaranteed to achieve integrity in public life and increase India’s opportunities for prosperity.

This will be explained below.

3. India’s many problems have a common source: socialism

Before a doctor can successfully treat a disease, he must diagnose it correctly. He must understand its cause.

Team Anna believes that corruption arises because too many Indians are bad. If this is right, then the solution should be to punish bad Indians. FTI accepts that there are a large number of corrupt Indians who must be punished through an effective system of rule of law. FTI’s diagnosis, however, is focused on underlying causes, and therefore, in building a lasting solution.

FTI believes that corruption arises from poorly designed governance systems, based on the philosophy of socialism. FTI believes that no Indian is born corrupt but badly designed systems motivate them to become corrupt. The same Indians who are corrupt and incompetent in India often do wonderfully well (and honestly) in the West. A bad system can make a genius look like an idiot. On the other hand, through a good system, even “ordinary” people can perform great deeds.

Since the past six decades, all public policy in India is based on the socialist model, which empowers governments to directly operate businesses as well as to interfere with the free interactions of citizens. This creates strong incentives for politicians to sell favours (rent seeking) and thus become corrupt.

Socialist hypocrisy also permeates India’s electoral system, in which everyone knows that political parties spend tens of crores of rupees in each parliamentary election, but all candidates declare falsely that they spend less than Rs.25 lakhs.

In brief, it is the philosophy of socialism leads to hypocrisy, dishonesty, and corruption. Without removing this dreaded philosophy fromIndia, corruption can never be removed. Witch-hunts to identify “corrupt” individuals won’t solve the problem of corruption.

4. FTI’s solution to the problem of corruption

Under today’s socialistic dispensation, no political party can survive without corruption. Politicians need huge sums of money for elections which they have to raise through corrupt means. They also need the support of corrupt officials.

While an effective Lokpal can reduce corruption, this can only happen when systemic corruption has been first addressed. Systemic reform essentially involves two key steps:

a) Reduce the need for corruption by having an electoral system with a low barrier of entry for honest people, and a system that pays candidates a certain amount per valid vote cast; and

b) Reduce the opportunity for corruption by having policies that prevent governments from unnecessarily directing and interfering in citizens’ lives. FTI’s recommended set of policies are aimed at systemic reform, not piecemeal patchwork band-aids. Corruption will reduce very significantly should such systemic reforms be undertaken.

Numerous countries have low levels of corruption without any Lokpal or similar body. Examples of policies that reduce corruption (without a Lokpal) include:

• state funding of elections (e.g. Rs.15 per valid vote polled) to reduce the need to raise funds through corruption;
• high salaries for politicians to motivate competent people to enter politics;
• contractual appointments of senior bureaucrats (so they can be terminated if they fail to deliver integrity and high quality outcomes).

India should not vest excessive authority in unelected officials. Such authority can undermine democracy without necessarily improving governance. It is important to build systems that work, not systems that punish.

5. What will happen if we implement a Lokpal without eliminating the socialist policies?

a) Reality: A Lokpal can’t stop the generation of corruption India’s socialist policies put excessive power and discretion in the hands of decision-makers. Each law that allows a politician or bureaucrat to interfere in economic activity creates an opportunity for corruption. The Lokpal does not change such policies, nor reform the electoral system to reduce the need for corrupt money during elections. Therefore, the Lokpal cannot prevent the continuous generation of corruption. It will be far more effective if we change socialist policies.

b) Reality: The Lokpal can’t catch even a fraction of the corrupt A Lokpal will become viable and effective if only one per cent (or less) of India’s politicians and bureaucrats are corrupt. But when 99 percent of them are corrupt, then catching a few corrupt people here or there will hardly make a difference. The cancer must be addressed at the source.

c) Reality: Corruption “charges” will increase because of the Lokpal Because the corrupt will now have to factor in the (presumably slightly) higher probability of being caught, the “rate” they demand for their “services” will increase.

d) Reality: Corruption will be driven even more underground The Lokpal, under the current system, will merely drive corruption more underground – into more hidden methods. Greater outflows of corrupt money from India will occur to Switzerland or other tax havens. In this “game” of corruption, it is best to stop corruption in the first place, not to waste precious time and resources in chasing corrupt people across the world.

e) Reality: The big fish will escape Under the current system, big fish can easily access various sophisticated methods of corruption. They can also hire expensive lawyers to exploit loopholes in the legal system to delay and subvert justice, should any case be launched against them. In general, the big fish will escape scrutiny (or punishment) and the Lokpal will be forced to focus on small fry.

f) Reality: Government inefficiency will increase The Indian Constitution provides extraordinary protections to public servants. There is therefore virtually no way available for governments to punish public servants who do not perform their work properly. If their opportunities for corruption are reduced then public servants are likely to even further slow down their work, leading to total paralysis of governance. The Lokpal (if it becomes even slightly effective, and therefore reduces corruption) will end up putting a severe brake on India’s economic growth.

h) Reality: Lokpal could itself become corrupt Corrupt politicians and government servants have plenty of money to bribe investigative agencies – and judges. Under the current dispensation there is very significant corruption both in the government and judiciary. It is not difficult to see a situation, particularly with lowly paid Lokpal employees, when the Lokpal officials start accepting bribes.

i) Reality: Lokpal can’t deliver results because of India’s court system The Lokpal cannot deliver results because it does not control the courts. As Swami Aiyar has pointed out:

Even if the Lokpal controls the CBI, it will have no control over the courts. These seem incapable of convicting any resourceful person beyond appeals within his or her lifetime. Little will be achieved if the Lokpal initiates a thousand cases that then drag on for decades, with the accused out on bail.

FTI does not recommend scrapping the principles of natural justice for those charged with corruption. We need systemic reforms that include the policies outlined earlier, as well as a strong justice system to quickly and effectively punish the corrupt.

6. Other questions people have regarding the Lokpal

a) What are the mechanisms apart from Lokpal to stop corruption? Alternative mechanisms to reducing corruption have been outlined above. These are far more effective and involve two key changes:

(i) Reduce the need for corruption: ensure electoral reforms that motivate good people to enter politics, and pay a certain amount per valid vote cast to candidates; and

(ii) Reduce the opportunity for corruption: remove socialist policies so that people can undertake economic activity without unnecessary government regulation.

Currently, no political party offers such systemic reforms in India. Without political leadership, however, such reforms cannot be implemented. FTI is a platform for those who understand such reforms to step forward and contest elections. Only then will such systemic reforms be introduced, bringing an end to corruption.

b) Why does FTI not support the Lokpal, given that Hong Kong has a Lokpal-like model? Hong Kong is highly ranked on Transparency International rankings (currently No. 12, below countries like Australia and New Zealand which do not have any Lokpal).

Not very long ago, Hong Kong was a very corrupt country. Its reforms, do not include just an Independent Commission Against Corruption (ICAC, which started in 1974), but a wide range of policy initiatives such as good governance, world-best economic policy and high quality education. The existence of ICAC should not be seen in isolation from these broader reforms. Indonesia has tried to copy the Hong Kong model and has failed, because it has not adopted the free market economic model of Hong Kong.

As Offstumped has pointed out:

“Indonesia’s corruption eradication commission, one message screams out —Indiadoes not need to makeIndonesia’s mistakes with the proposed Lokpal Bill. It has been nearly 10 years since the KPK was established by law inIndonesia. Ten years on, no surprises: Corruption has not been eradicated fromIndonesia. Far from eliminating corruption, KPK continues to be at the centre of political intrigue inIndonesia.”

A Lokpal cannot succeed in removing corruption without a host of far more basic reforms. FTI believes that there is a place for Lokpal in India’s governance, but not today. Only in due course, as part of an entire suite of governance and economic reforms.

c) Won’t a Lokpal help create new government jobs? Indeed, the Lokpal will create new jobs but creating government cannot be a valid reason to have a Lokpal. Economic growth & prosperity is never created through government jobs. India needs policies of liberty that will create opportunities for millions to earn their livelihood.

d) Since the poor have to constantly interface with the state, won’t the Lokpal provide a check to corruption at lower level of bureaucracy? Unless economic policies and the system of governance is changed, villagers in India will not be able to escape from chronic corruption (such as corrupt tahsildars and other land records staff). Villagers, being illiterate, do not have the capacity or resources to lodge (and pursue) complaints with the Lokpal.

Villagers have not been able to utilise existing institutions like state vigilance bodies and police because of inability or fea. The Lokpal’s rules and procedures will preclude the possibility of justice for villagers. The corrupt will go scot free even if complaints are lodged against them, due to the sheer numbers involved.

Far better to build systems that preclude corruption in the first place. Trying to fix the problem of corruption after it has established itself is a far more difficult (even impossible) task.

e) What is FTI’s view on the level of corruption that can a Lokpal can reduce? The jury is out on this important question. However, for reasons given above, FTI believes that Lokpal will not reduce corruption, and will probably increase it and drive it underground.

f) How much will the Lokpal cost the taxpayer? This will depend on the nature and design of the Lokpal. But it will not be cheap. Unfortunately, there will be almost no social gain from this institution. So taxpayers will spend money on the Lokpal, even as the corrupt officials and politicians ofIndia continue their loot.

Conclusion

All Indians all angry with our corrupt politicians and bureaucrats. However, we should use our head, not our emotions.

FTI agrees with and supports, in principle, IAC people’s movement against corruption. But FTI believes that (at this stage – i.e., without changing the policies of socialism, and ensuring that good people are able to contest elections) the Lokpal will make no difference to the lives of Indians, and could even make things worse in a number of ways.

FTI therefore asks the Indian people to seek solutions that will actually work.

The people of India have awakened due to the IAC movement. But it is important to understand that the solution does not lie in a Lokpal, but in a package of reforms that will essentially abolish socialism and make Indians free.

FTI invites you to support the team to provide India with modern, effective governance.

It is hard to remove the socialistic mindset of Indian politicians who think that voters want such policies. It is up to the educated class to show voters that demanding subsidies and handouts from politicians is not the right way to eliminate poverty. They voter must demand good governance, good education, not charity.

The poor will become prosperous through freedom. On this journey, a social minimum (which includes high quality private school education for all children and a guaranteed top-up to eliminate poverty) will support those who falter on this journey towards freedom, integrity, and prosperity.

In simple language, let’s drain the swamp so that mosquitoes don’t breed. It is not a sensible idea to kill the mosquitoes, one at a time.

FTI demands that the Indian Government implement the electoral reforms detailed below to enable good people to contest elections

Please join FTI in demanding the following electoral reforms for dramatically better governance in India.

• For every 1 per cent increase in per capita GDP growth beyond 5 per cent per annum, all our representatives will get a one-off 5 per cent bonus.
• For every 1 per cent permanent reduction – defined as a reduction sustained for two years – in the number of people below the poverty line, MPs and MLAs will get a permanent 1 per cent increase in their base salary. Once the negative income tax system (to eliminate poverty) is established, the entire reduction in poverty can be incorporated permanently into the base salary.
• For every ten ranks that India rises on a sustained basis of two years in Transparency International rankings, there will be a 5 per cent one-off bonus.
• There will be a permanent 20 per cent increase on base salary upon India’s becoming the world’s least corrupt country for two years in a row.