How Do You Eliminate Bribery? Make It Legal – By Steven Dale

Post by Steven Dale

It’s summer and I’m catching up on my reading and one of the most intriguing things I’ve read in a long time is a working paper by Kaushik Basu, the Chief Economic Adviser to the Ministry of Finance of the Government of India.

As everyone knows, India has a severe problem with bribery. Basu’s ingenious idea to curb the problem is (get ready for it) to make bribe-giving legal.

Bribe-taking, however, would remain illegal. Such an arrangement, Basu argues, would sever the incentive towards collusion that characterizes the act of bribery. Based on lessons learned from the classic Prisoner’s Dilemma game, the incidence of bribery should drop dramatically.

Basu admits the plan is not without its flaws, but his insightful and creative logic should give all policy-makers pause for contemplation.

You should read it. It’s not short, but it’s easy-reading and well worth the effort.

Too often our policy is tied up in morality. What should be right and what should be wrong. The idea that bribery should be made legal goes against all common intuition.

But if we agree as a society that bribery is something that should not be tolerated (and I doubt there’s anyone who would disagree with that position), then the end goal should be about ending bribery no matter the policy imperative that gets us there.

Yes it is absurdly ironic to make bribery legal in order to eliminate bribery. But so what? If it works, who cares?

All policy should be so creative, insightful and problem-oriented.

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  1. Matt the Engineer
    Love it. I have a similarly counter-intuitive plan for removing bribery at the political level: secret ballots. If you can't prove to Exxon that you voted for the offshore oil drilling bill, what is their incentive to pay you?
  2. I don't understand it. If I want something from Austrian government (a new driving license with a new picture, a new passport, a land register excerpt,...) I have to pay an amount of Euros to the government. In India it is free and they have to pay a bribe to get it? And now the new proposition is, they have to pay to the government? Or the have to pay to the officers again and the officers give this money legal into their own pocket? ???
  3. Matt the Engineer
    In India if you want a new passport in a reasonable amount of time, you need to pay for the passport and bribe an official to put it through*. You are performing an illegal action, as is the official, so neither has an incentive to report the illegal behavior - if you report the official you'll be arrested as well. If you report it without going through with the bribe you have no proof a bribe is required, and no arrest is made. But under this new scheme you can pay the bribe then call the cops on the official. Or the official won't ask for a bribe since they know you might do this. * I have no direct knowledge this is true, just some info from a documentary I watched once.
  4. If I want a new passport at home, my government promises me, I have it in my hands within a week. Anf if its not so, the officers get problems from their employers. Our local government cleared out the building regulations and in certain cases I can build a house without bureaucracy. I think, it would be better to make the public administration more transparent and the administration guarantees its work within pre-defined time and traceable steps. In our days I can find the whereabout of a parcel very fast, why not of a handled document at the administration? Ricardo Semler a fascinating entrepeneur of Brazil wrote in one of his books, some laws and decrees in Brazil are wilful made to make processes slowly - to accelerate it with a bribe.
  5. Bribe is the lubricant against sand in the works of the administration.
  6. and then tey pay to the (two) parties...
  7. Matt the Engineer
    Sure. But what incentive does either of the parties have to vote for the offshore oil drilling? You can say you're voting for it, then vote your conscience. And blame the other guy.

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