The Banality of Corruption

The facts are pretty simple to state. A piece of land was sold by party A to party B for Rs 22 lakhs. The official price was Rs 7 lakhs, less than a third of the actual amount that changed hands. That means A received Rs 15 lakhs which he cannot account for. And it also means that B paid Rs 15 lakhs from sources which are also unaccounted for. Then parties A and B arrived at the land registration office to record the new title. The registration fee is 10 percent of the sale price, or Rs 70,000. Party B paid that. But that was not all. Also paid to the clerk in charge of recording the transaction a 20 percent bribe, or Rs 14,000. Only a part of that bribe goes to the clerk. The rest goes up the chain of command all the way up to the chief minister of the state. This is common knowledge.

I got to know the facts of this particular case from party B, a person I know quite well and trust not to misrepresent the facts.

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.

2 thoughts on “The Banality of Corruption

  1. idlinginc Thursday December 20, 2007 / 2:02 am

    Atanu,

    It is not evident to me why: “Everyone wins in this game–except the economy.” Perhaps there is something I am not seeing. Let me take a stab at explaining.

    We have these three levels:

    1. Feudal Lords – Politicians
    2. Bureaucrats – execution arm of (1). Responsible for collecting rent.
    3. Indians – Serfs – supposed to pay rent.

    In this particular case, bureaucrats did not enforce the full rent, which is exorbitant and gave a cost-efficient alternative, saving almost 1.35 lakhs. Bureaucrats seem to be helping the common Indians. However, the common perception is: it is morally wrong, because some law written by the feudal lords to collect rent is violated.

    Lets say the bureaucrats were honest, they collected the full rent. This would only flow into the pockets of the feudal lords, or increase the level of bureaucracy. Administrative costs for delivering one rupee of services is about Rs. 7. I guess close to 90% of taxes collected would be stolen by the politicians, by the very efficient workflows they have setup (defense contracts, irrigation projects, etc).

    The money saved by the serfs (with the help of bureaucrats) would be better utilized/invested.

    From my naive viewpoint, it seems to me that we would are better off with lower taxes. Thats where bribes help. If the laws were enforced fully, the vile and decadent pile of vermin at the top would only increase in power and number. They are clearly after money. The sacred duty of every Indian is to stop the flow of money to the Govt.

    Mancur Olson showed that kleptocracy at the top stunts the growth of poor countries. One of ways to stop kleptocracy at the top is to stop/hinder the flow of money to the top.

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  2. Notsure Tuesday December 25, 2007 / 1:23 pm

    Who is a feudal beneficary and who is a serf in indias case.
    The situation is convoluted as who is plugged in.
    Semi government organizations like SAIL, nearly all of banks, corps like Fertilizer corp of India and nearly all of government employees manage to tap into better educational infrastructure for their children and then even manage to get the government pay for higher education like IIT/RECs.
    So who paid the fair price?
    The not plugged in indian whose family did not have a government connected job…..
    Also “sacred duty”, reminds me of the trite “temples of modern india”, forget that nonesense and do look at the WHOLE world.
    A decent stable state has access to “flow of money” . “flow of money” to the government is not the problem. If the process id fair, if there a social consensus. India is on its way to address those issues or so I think as a not so impartial observer.

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