How an Indian Entrepreneur Learned to Love Paying Bribes(npr.org)
npr.org
How an Indian Entrepreneur Learned to Love Paying Bribes
http://www.npr.org/blogs/money/2010/04/how_an_indian_businessman_lear.html?ft=1&f=1001
7 comments
"This may be more rational than it seems. In some cases, bribes may make economies work better, says Rema Hanna, a Harvard economist."
I'm sorry, what? Bribes are a symptom of broken government where government workers have a lot of authority to do things, but no incentive to do the right thing.
I'm sorry, what? Bribes are a symptom of broken government where government workers have a lot of authority to do things, but no incentive to do the right thing.
"I'm sorry, what?"
I think you are missing the point. Rema Hanna, the economist quoted in the article, is not championing bribes as the optimal solution.
She is simply observing that some systems that are not efficient can become more efficient as the result of bribes.
So you can read that quote as: "In some cases [including cases of broken governments where government workers have a lot of authority to do things but no incentive to do the right thing], bribes may make economies work better."
I think you are missing the point. Rema Hanna, the economist quoted in the article, is not championing bribes as the optimal solution.
She is simply observing that some systems that are not efficient can become more efficient as the result of bribes.
So you can read that quote as: "In some cases [including cases of broken governments where government workers have a lot of authority to do things but no incentive to do the right thing], bribes may make economies work better."
She's apparently saying the most trivial statement possible about bribes: if nothing works the way it should but something will work if you bribe someone, then bribing these people will make these things work. Well, duh.
Exactly. And I think there's a corollary: If officials can get bribes for doing something, they WON'T do it WITHOUT a bribe. So nothing will work the way it should. Bribes perpetuate the same red tape problem they appear to "solve."
Her statement is like saying "what you need is some alcohol to help you deal with the pain of your alcoholism."
Seriously, corruption is maybe the worst possible thing for a country's economy. This article argues that it's the single biggest reason why poor countries are poor. And it's a hard problem to solve. http://reason.com/archives/2006/03/01/why-poor-countries-are...
Her statement is like saying "what you need is some alcohol to help you deal with the pain of your alcoholism."
Seriously, corruption is maybe the worst possible thing for a country's economy. This article argues that it's the single biggest reason why poor countries are poor. And it's a hard problem to solve. http://reason.com/archives/2006/03/01/why-poor-countries-are...
Although it can be solved. Let me preface this by saying that I usually dislike privatization of public utilities. When I moved from Salvador to São Paulo, one of the biggest differences I saw was in the cartórios (civil registry offices, I guess; it's a place you go to when you want you signature oficially recognized or other bureaucratic tasks like that). Back in Salvador, where they are public, bribes are the only way to get anything done. Real state agents, for example, hire "despachantes" to bribe the right people in the "cartório" so they can make real state deals in a reasonable amount of time. Here in são paulo the cartórios are private and there is competition, so they are very efficient, and bribeless.
I guess what I want to say is that bribes usually come from giving too much power to someone. If there is a surrounding structure stopping any single person from deviating too much from the rules it gets very hard to bribe anyone.
I guess what I want to say is that bribes usually come from giving too much power to someone. If there is a surrounding structure stopping any single person from deviating too much from the rules it gets very hard to bribe anyone.
Well, I can see how you can do a local optimization for a select number of businesses that has the money to offer bribes, and that in turn can be good for the local community.
But for the economy as a whole it can't ever be good.
But for the economy as a whole it can't ever be good.
Whether she champions for bribing or it seeme to be that her observations of the form "bribes can make things in the economy move smoother, and might actually contribute to growth" dangerous to me.
One should not forget that bribes contribute to black money (nobody declares it and hence no tax on it). So if a business invests "X" amount in money which is legitimate and if they invest "Y" amount as bribes they would never show the amount spent on bribes in their books. But they have to make a profit on the total amount invested (X+Y) and one way they might go about is by shortchanging the customers (either low quality or poor service). The argument that in an open market a competitor can offer a better price/service ratio wouldn't fly since any entity entering the business would have to spend some amount as bribe money. So all in all in my opinion the customer ends up paying more (or getting less for what he paid for). Given this I wonder how bribes can positively contribute to overall growth.
One should not forget that bribes contribute to black money (nobody declares it and hence no tax on it). So if a business invests "X" amount in money which is legitimate and if they invest "Y" amount as bribes they would never show the amount spent on bribes in their books. But they have to make a profit on the total amount invested (X+Y) and one way they might go about is by shortchanging the customers (either low quality or poor service). The argument that in an open market a competitor can offer a better price/service ratio wouldn't fly since any entity entering the business would have to spend some amount as bribe money. So all in all in my opinion the customer ends up paying more (or getting less for what he paid for). Given this I wonder how bribes can positively contribute to overall growth.
One brilliant comment from the article - that he loves bribes now that he is established, and the pay-wall locks out upstart competitors.
Same thing happens in the USA, even in Pennsylvania.
You hire a bunch of people, then after a few years, you can get money from the state on a per-employee basis to keep your people here and not move to say, Ohio. The startup business does not have such access to those funds. So your per-employee costs drop but the startup's costs do not.
You hire a bunch of people, then after a few years, you can get money from the state on a per-employee basis to keep your people here and not move to say, Ohio. The startup business does not have such access to those funds. So your per-employee costs drop but the startup's costs do not.
People like him make it tougher for the common man to survive, because we all have to pay bribes or nothing is done.
Poor, or old or retired people are forced to pay bribes for basic amenities. We have to pay a bribe to get our income tax +++return+++. My old mother (78) was hospitalized and had to pay a bribe to get her insurance money. The list is endless.
For the last month, we've been out of +water+. This is because all the neighboring houses have an illegal connection which pulls the water from the main line. Of course, they've paid a bribe for it.
Its not funny, and its not fun. And it does not make the economy go smoother, _except_ for the rich.
For the last month, we've been out of +water+. This is because all the neighboring houses have an illegal connection which pulls the water from the main line. Of course, they've paid a bribe for it.
Its not funny, and its not fun. And it does not make the economy go smoother, _except_ for the rich.
Surely if everyone is paying bribes it's no longer a bribe but just an accepted way of oiling the cogs?
Well if everyone starts paying the bribe and if there are limited resources, then sooner or later the bribe amount is going to adjust itself to reflect the supply and demand.
I was shocked when I first learned that German companies, as late as 10 years ago or so, could deduct from taxes the foreign bribes they paid.
I was shocked when I heard that it became illegal. How is a country supposed to compete in foreign markets then? All it means is that now other countries and companies will do business in those countries where bribes are required.
Also, I think bribes might still play a big role even in supposedly "civilized" countries. People just find other ways to bribe and make gifts.
Also, I think bribes might still play a big role even in supposedly "civilized" countries. People just find other ways to bribe and make gifts.
What kind of proof is necessary? I've never heard of receipts for bribes.
If you wanted to do business hire a local politician who'll do the leg work for you.
Ironic last line:
"Now he spends most of his time drawing",
"He hated it it ... he wanted to be an artist.
Paying bribes went against his principles, he says".
http://boingboing.net/2010/02/05/zero-rupee-note-that.html
http://blogs.worldbank.org/publicsphere/paying-zero-public-s...
tldr: just calling out a bribe-taker in the right way can change their behavior.