The importance of rules cannot be overestimated. Human societies differ not so much in the physical characteristics of people or their mental capabilities as they do in the rule-sets that define and distinguish them. If we have to understand why some societies prosper and others don’t, we could do worse than to examine their rules. Culture is another term for the collection of rules, and it more than any other factor determines how successful a society is.
Once you start thinking about the importance of rules and their impact on societies, it is hard to avoid the realization that all change depends on changes in rules. Rules rule our destiny more than we ordinarily suspect. It is more powerful than geography. Draw an arbitrary line on the land, separating people and impose different rules on them. Soon enough you will have the two different outcomes. East and West Germany, North and South Korea, India and Pakistan.
Rules change over time. Sometimes the change is exogenous (brought about by external forces), and sometimes it is endogenous (when people wake up to a new realization.) More about how endogenous changes of rules later. For now, let’s get down to specifics.
Kaushik Basu has recently proposed a change in one rule. Without getting into the details, let’s just note that the rule relates to bribery of public officials. More specifically, the rule says that in a case of bribery, both the bribe taker (in this case the person who demands the bribe) and the bribe giver (who in this case is forced to pay a bribe) are guilty of a crime and both have to be punished. Basu proposes replacing that rule with a new rule which would de-criminalize the giving of bribes, meaning only the bribe taker would be guilty of a crime, and the bribe giver would be considered a victim instead of a criminal.
The implications are too trivially evident for us to waste time on it. But waste time I will. If I know that by reporting the fact that I paid the man at the passport office money so that he will not delay my passport application, I too will be charged with a crime, it is absolutely unlikely that I will report the matter. The man at the passport office knows this too and is quite happy to make that extra money on the side. Under the new rule, I would report him because paying a bribe under duress is not a crime any more. The man at the passport office knows this and will be afraid to demand a bribe.
There are societies where being raped is akin to committing a crime. Not that the rape victim had a choice in the matter (being a victim rarely is) but the rule in those societies say that the raped person is guilty of a crime. So you can imagine there’s a negative incentive to report rape. Which in turn means that rapists routinely get away with rape. This rule has obvious advantage for violent men and it should not surprise us if we find that rape is more frequent in it relative to other societies where rapists are the criminals and the victim has the full protect of the law.
India is a “third world” under-developed impoverished country because the set of rules that India is subject to is bad. For India to develop, the rules have to change. How to bring about that change endogenously is the biggest challenge we face. But it is not an impossible task. We will be looking at that in a later post.
Related Post: “The Tangled Web — Part 3“. June 2007.
Categories: Random Draws