4 thoughts on “The fun and profit approach to anti-corruption”

  1. agree with the point on character assissnation and actual assisnation. experienced character assassination and seen from close quarter colleagues like j dey fall down to bullets. fight against corruption is a lonely battle

  2. agree with the point on character assissnation and actual assisnation. experienced character assassination and seen from close quarter colleagues like j dey fall down to bullets. fight against corruption is a lonely battle

  3. whenever someone has the power to exercise undue discretion on behalf of the masses, someone among the masses will not like it and will find ways of subverting this convoluted decision making by the “elites” … that motivation is the “demand” factor of corruption. the “supply” factor is the convoluted laws.

    those “elite dinosaurs” are – planning commission, PDS, IAS officers, Income Tax officers, UGC, finance ministry, heavy industries ministry, various ministries related to infrastructure development and many many octupusian arms of the Indian state. the masses are us.

    for any economic decision (which can be called a transaction) there are two parties with conflicting objectives. the buyer has his own need, desire and capability of payment for the goods/services he is buying and wants the maximum advantage for himself. the seller also has his own need, desire and capability of charging for the goods/services he is selling and wants the maximum advantage for himself which invariably is at conflict with those of the seller. the transaction will happen only at a mutually agreed price which both parties will judge to be the best compromise given the time/information asymmetry and immediacy of the need.

    the good/services could be skilled labor/unskilled labor/manufactured goods/food/services or any myriad things … the payment could be salary/perks/housing/barter/etc

    and in the economy there is not one buyer and seller but everybody is a buyer of something and seller of some other thing. the central problem is finding out the price at which the transaction should happen.

    there are two ways to find out this price –

    1. by a third party which dictates the price and is non negotiable after it is declared. usually this third party is some way or other related to the state. this first option goes by various names depending on how rigorously it is implemented … communism and socialism are the most common names.

    2. by trial/error/guess/estimate/luck/innovative-pricing/etc exercised by one or both of the interested parties. in this case the price is not fixed. may change from time to time and transaction to transaction. there is a relentless dynamic optimization at work given the constraints of asymmetric information and paucity of time.

    the second option goes by the much derided name of “market economy” or “capitalism”. and contrary to the pop opinion of left lunatics, capitalism is meant not to increase power of “capitalists” but to curtail their power and everybody else’s too.

    so what is the role of the govt in option 2 ? zero ? NO ! absolutely no.

    the role of the govt is try to remove the information asymmetry that naturally exists between the buyer and seller. and also to gently nudge the transaction towards some other transaction that may be more desirable for whatever reasons (for example gas based power may be more desirable than coal based power). the gentle nudges can be exercised in the form of differential taxation for example. banning or forcing the sale of anything is not gentle nudge and should be exercised with extreme caution.

    whenever the option 1 is exercised, there will always be some individuals from both the buyer side and seller side who will find out ways to influence the decision making by the third party. some of them may have disproportionate power (and these are our friendly “capitalists”) to do so and will carry it out ruthlessly. these are precisely the actions that generate corruption. calling for a Lokpal at this juncture is totally senseless …

    we need to rationalize the existing laws and make sure that option 2 is exercised whenever possible. we need to remember that market is not evil, it is the most powerful and fair institution in human society … any attempt to subvert it will result in disaster. market is the elementary force which organizes humanity just like gravity organizes the planetary system …

  4. whenever someone has the power to exercise undue discretion on behalf of the masses, someone among the masses will not like it and will find ways of subverting this convoluted decision making by the “elites” … that motivation is the “demand” factor of corruption. the “supply” factor is the convoluted laws.

    those “elite dinosaurs” are – planning commission, PDS, IAS officers, Income Tax officers, UGC, finance ministry, heavy industries ministry, various ministries related to infrastructure development and many many octupusian arms of the Indian state. the masses are us.

    for any economic decision (which can be called a transaction) there are two parties with conflicting objectives. the buyer has his own need, desire and capability of payment for the goods/services he is buying and wants the maximum advantage for himself. the seller also has his own need, desire and capability of charging for the goods/services he is selling and wants the maximum advantage for himself which invariably is at conflict with those of the seller. the transaction will happen only at a mutually agreed price which both parties will judge to be the best compromise given the time/information asymmetry and immediacy of the need.

    the good/services could be skilled labor/unskilled labor/manufactured goods/food/services or any myriad things … the payment could be salary/perks/housing/barter/etc

    and in the economy there is not one buyer and seller but everybody is a buyer of something and seller of some other thing. the central problem is finding out the price at which the transaction should happen.

    there are two ways to find out this price –

    1. by a third party which dictates the price and is non negotiable after it is declared. usually this third party is some way or other related to the state. this first option goes by various names depending on how rigorously it is implemented … communism and socialism are the most common names.

    2. by trial/error/guess/estimate/luck/innovative-pricing/etc exercised by one or both of the interested parties. in this case the price is not fixed. may change from time to time and transaction to transaction. there is a relentless dynamic optimization at work given the constraints of asymmetric information and paucity of time.

    the second option goes by the much derided name of “market economy” or “capitalism”. and contrary to the pop opinion of left lunatics, capitalism is meant not to increase power of “capitalists” but to curtail their power and everybody else’s too.

    so what is the role of the govt in option 2 ? zero ? NO ! absolutely no.

    the role of the govt is try to remove the information asymmetry that naturally exists between the buyer and seller. and also to gently nudge the transaction towards some other transaction that may be more desirable for whatever reasons (for example gas based power may be more desirable than coal based power). the gentle nudges can be exercised in the form of differential taxation for example. banning or forcing the sale of anything is not gentle nudge and should be exercised with extreme caution.

    whenever the option 1 is exercised, there will always be some individuals from both the buyer side and seller side who will find out ways to influence the decision making by the third party. some of them may have disproportionate power (and these are our friendly “capitalists”) to do so and will carry it out ruthlessly. these are precisely the actions that generate corruption. calling for a Lokpal at this juncture is totally senseless …

    we need to rationalize the existing laws and make sure that option 2 is exercised whenever possible. we need to remember that market is not evil, it is the most powerful and fair institution in human society … any attempt to subvert it will result in disaster. market is the elementary force which organizes humanity just like gravity organizes the planetary system …

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