A Vignette on corruption

I came across this on one of the blogs I regularly follow. Sharing this because I think this is relevant, and we all talk about corruption et al all the time. Once again.. your opinion on the matter will be appreciated :)

The original post can be found here.

Let me tell you a story. It’s a vignette of what I consider to be important although it may appear to be rather trivial. Perhaps its apparent triviality is what should astonish us. But allow me to first recount a conversation I had the last week.

A close friend of mine was visiting me one evening. Let me preserve his identity by just identifying him as RL. I have known RL since the first grade. Born to a Marwari business family, RL has done reasonably well in business. I asked how things were with his business of arranging trucking services all over India. “Same old, same old,” says RL.

“Tell me more,” says I. “You were talking to someone on the phone just now and you said ‘890′. What was that about?” I asked.

“That’s the price that I was negotiating for transporting one metric tonne of goods between Mumbai and Raipur,” replied RL.

I had no idea of how this truck transportation business works. For no particular reason I inquired further.

“So how many metric tons does a truck normally carry?” I asked.

“About 35 tons,” RL said. “But that’s above the allowed limit. The limit for the average two-axle truck is only 16 tons. But if you stick to that, the numbers don’t work out.”

“So you mean to say that the trucks are overloaded?” I said.

“Of course. At the allowed 16 tons max, it would cost 1200 rupees per ton to move material. So we just pile on whatever to break even. It’s a competitive market,” said RL.

“But then aren’t there checkpoints along the route? Don’t they figure out that the trucks are overloaded? Are there weighing stations where the trucks are weighed to see that they are within the limits?” I asked.

“Yes of course. There are many RTO checkpoints. The deal is simple. Every month, for each truck, there’s a schedule of payments. Say between Mumbai and Raipur, the rate is Rs 20,000. Once you pay that for a truck, you are free to load the truck to whatever the truck will bear, never mind the legal limit,” RL said.

“And how many trips does that cover?”

“About 5 round trips a month. On an average it takes three days each way. Works out to about Rs 2,000 per transit. But it allows you to keep the costs down and therefore it works out for all concerned,” says RL. “It’s routine stuff. Once you pay the 20,000 rupees, there are not more hassles. You only pay at one central location and the money is divvied up among the various stakeholder along the way,” replied RL.

“And who are the stakeholders?” I ask.

“You know, everyone. All the way up to the concerned state and central government ministers. There is a regular schedule.”

“Wow! That’s really neatly done. So even the top politician must be getting his cut,” I said.

“Naturally. It would not happen otherwise. Everyone has to have his share, otherwise this could not happen,” said RL.

“What’s the deal?”

“Let me give you the short version,” RL said. “The truckers have to carry more than the legally mandated load. Otherwise it would be too costly per ton. To get around the legal limit, you have to bribe the RTO — the road transportation officials. There are many check points along the route. It helps that the bribe is collected at one point and that too for the entire month. Otherwise it would take too long. Anyway, the collections are passed on to various people, all the way to the top. Government ministers and other bureaucrats, you know. But this scheme works only because there are other interests tied to it.”

“Like what?”

“Consider the truck manufacturing companies. They make more money because they sell more trucks which are rated at a lower carrying capacity. So they are not interested in raising the legal load limit. But the overloading of trucks is good for the RTO. They make money in bribes. That’s not all. The government builds roads. Right? OK, so they get contractors to build roads that are rated to carry say 16 tons per truck. Naturally with trucks carrying 32 or even 45 tons, the roads get f**ked. The contractors make money from repaving the roads frequently. The kickbacks from the contractors for road repairs ends up in may pockets, mainly the politicians. It’s huge. Road repair is huge business,” RL said.

“Is that all?” I asked.

“No, there’s more. It’s a dirty business but then what do I know. I have been in this business for a couple of decades and that is why I know the ins and outs of this one. What do I know about what goes on in say the tire business. Or the container shipping business. You don’t know about the trucking business but I do. But then we are equally ignorant about all the rest. It looks as if this sort of corruption cuts across every aspect of business in India. I have to play the same game because otherwise I could not survive in business.”

“Surely you could refuse to pay the bribes and refuse to ply overloaded trucks,” I said.

“No I cannot. I cannot refuse to play this game because no one can survive in business if one refuses the deal. Never mind me, you cannot survive in politics if you refuse to play along. A fellow got elected as the MP for a constituency close to where I live. He’s not a career politician. It just so happened that family was owed some favor and he got a ticket from this party and he won. Quite a decent fellow, actually. But totally naive about how things work.

“He didn’t know what he was expected to do and how much he was supposed to charge for the deals that he was supposed to help with as a member of parliament. Anyhow, the people who needed to get their interests taken care of had to help the MP learn the ropes. They put people in his office who would tell him which document to sign and how much he was to be paid for each of his signatures. Like I told you, the guy is a decent fellow. He does not know now but in a year he will know the game. And he has to participate in it. Or else,” said RL.

“Or else what?” I asked.

“Else he won’t get elected. If he refuses to take bribes, the work will not get done. More importantly, the political party that he is part of will not make the money that they need to fight the next elections. If he is clean, he would be throwing a spanner in the works. He will be replaced by someone who doesn’t have scruples. He either plays the game or he is out. In a year he will be as corrupt as the rest of the bunch. OK, so he may have got the job of an MP when he was naive and stupid but by the middle of his term, he would have learned what he needs to learn to survive. Why on earth do you expect otherwise? If the guy giving you orders, your boss, is corrupt, just to keep your job you have to be corrupt. Else you don’t play. You don’t get a ticket. You are a spoiler. You wreck the whole deal. You are not a part of the team. They will find a more complaint person.”

I had heard enough. We moved on to less trivial matters. But I continued to worry about the issues raised in that conversation.

It is collectively rational for people to not be corrupt but it is individually rational to be corrupt in a corrupt system. Corruption does not work bottom-up. It works top-down. If the guy at the top is corrupt, you are forced to be corrupt. Why forced? Because you don’t get to make the rules. You only get to decide whether you want to play the game based on the rules that have been dictated by the guys on the top.

The guys on the top make the rules. And if they are corrupt, that’s just the way it is.

I spent this summer talking about matters that lead to economic development. I was teaching a course on economic development at Berkeley. Corruption and its corrosive effects on economic development was a major theme. I tried to get the idea across that poor countries are poor because the system they have in place makes it impossible for non-corrupt actors to play a role. More depressing is the realization that corruption itself causes the poverty that makes the corrupt make the rules. I put it this way in the course — “The corrupt gain power and the absolutely corrupt gain absolute power.”

It is perhaps naivety that makes the so-called leaders like say APL Abdul “Dr” Kalam lecture school students about the moral incorrectness of bribery. Or perhaps it is just plain obtuseness. But I think it is more likely that it is plain pragmatism that motivates people in high places to emphasize corruption at the mundane level while turning a blind eye to corruption at the top — at the level of central government ministers and bureaucrats — because the guys at the top owe their exalted position because they are corrupt. Absent moral turpitude, they would not have reached the top.

Corruption at the lower levels is a survival mechanism. The small-time businessman like my friend RL is just a pawn in the game. He does not have any more influence on how the system is defined any more than he can dictate the laws of physics. The guys at the top, the guys who make the laws, they are the guys who define how the great economic game is to be played. And eventually this great economic game determines how much stuff is produced. Because of the rules of the game, the amount of stuff produced is lower than what is potentially achievable. Dividing up the production is the next innings. There too they have a good racket. Instead of figuring out ways to increase the amount produced, they are busy figuring out who should get how much of the limited stuff. And the division is made strictly upon the calculus of who is going to vote which way.

India is famously touted as the largest democracy in the world. What that means is that the people decide who is going to make the laws. That the system throws up the most corrupt as the framers of the rules that define the economic game is not surprisingly a dire consequence of the choices that the people make. It is not a comforting thought that over the decades of India’s existence as a politically free nation, the people have consistently voted into positions of power those who are arguably the most venal of the lot. But then, is it reasonable to expect something else? Can a people who are almost absolutely ignorant of what the system really is be expected to know what is in their interest? A majority of us are not even literate — and even those of us who are literate, are woefully ignorant of how the system works. I readily confess that I don’t know what the great big machinery of the government of this huge nation is up to. How can I expect that the person who cannot even read the railroad timetable be able to decide which public policy is good and which is not?

So if this is not to be a counsel of despair, I should at least hint at what I consider to be the solution. I think that we — the ones who are have the ability and means to engage in this conversation — have to get out priorities straight. I get asked to support this or that organization which is trying to feed poor school children a mid-day meal. I get impatient at those kind of meaningless and ultimately futile gestures. They perhaps believe that by feeding a bunch of kids meals is going to fix the problem. I don’t deny that it is not important to feed kids. After all, the kids have not committed any crime that they should starve. What I don’t understand is why people don’t take a step back and see that the problem is that there is not enough stuff to go around, and the reason for that is that too much effort goes into extracting rents and too little in figuring out how to make more stuff.

There isn’t sufficient stuff to go around because there are no roads. That’s just an example of what’s missing. No roads is just an example. But the lack of roads is only an instance of what happens when corruption is the name of the game and the rules are made by the abjectly corrupt. I think that it should be the headlines on the newspapers. Instead what occupies the national attention has to do with how made how many runs in some cricket match. Or why someone should not have twittered the words “cattle class” — that matters and not the unspeakable fact that half of India’s children below five a chronically malnourished.