Corruption, in some cases, can have an economic benefit. Joel Waldfogel explains:
Since access to government clerks is normally allocated on a first-come, first-served basis, people pay with their time rather than their money. This is inefficient: Suppose you’re in a big hurry and would be willing to pay a lot to avoid waiting, while I don’t mind waiting. Then you could go ahead of me, making you a lot better off and me only a little worse off, which reduces our collective frustration. One way to achieve this efficiency would be to charge a higher price for expedited service. Yet, an expedited government service option typically does not exist. So, in some countries, the offer of a bribe in exchange for quicker processing is a common form of corruption—reducing the social cost of waiting in line.
However, Waldfogel finds that “[t]he benefits of corruption are not worth the costs,” and illustrates this by telling us about The Department of Motor Vehicles in New Delhi, where you don’t have to know how to drive to get a driving license. Read about it: it’s quite astonishing, and yet, if you live in India, utterly normal.
In fact, I can’t think of any kind of corruption in India where the benefits outweigh the costs. In most that come to mind, any benefits lie in avoiding costs that shouldn’t exist in the first place. Example: Until some years ago, one expedited getting a phone line by paying a bribe. Well, there shouldn’t be a waiting period for getting a phone anyway, the waiting period was there solely to get bribes out of people — discretion inevitably leads to corruption.
So what’s changed there? Competition. The private sector was allowed into telecom, and now I’m spoilt for choice in terms of who to get a telephone line from. No bribes required. Wherever there’s a government monopoly, and especially in a centralised system as in India where there is little accountability, there will be corruption. And corruption, as Delhi’s example shows us, can kill.
Of course, even if government involvement is removed from all spheres where it is not necessary, there will still be some areas where it will remain. For example, in granting driving licenses. (Can I provoke Yazad into writing a post about why driving licenses need not be given by the government?) So how are we to remove corruption from The Department of Motor Vehicles in New Delhi without removing the government. Well, here’s one way I can think of, off the top of my head, to enforce accountability:
Let every driving license bear the name of the officer who approved it. And in every accident case, let penalty points accrue against that officer’s name. After a threshold of points to account for bad luck, let fines be levied on the officer himself, with increments and promotions halted. With something concrete at stake, the licensing officers will thus be careful while giving out licenses.
Er, I really shouldn’t say things off the top of my head. Who’s going to enforce all this?
(Link via email from David Boyk.)