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April 5, 2011
Reducing Bribery by Legalizing the Giving of Bribes
Here's some very clever thinking from India's chief economic adviser. In order to reduce bribery, he proposes legalizing the giving of bribes:
Under the current law, discussed in some detail in the next section, once a bribe is given, the bribe giver and the bribe taker become partners in crime. It is in their joint interest to keep this fact hidden from the authorities and to be fugitives from the law, because, if caught, both expect to be punished. Under the kind of revised law that I am proposing here, once a bribe is given and the bribe giver collects whatever she is trying to acquire by giving the money, the interests of the bribe taker and bribe giver become completely orthogonal to each other. If caught, the bribe giver will go scot free and will be able to collect his bribe money back. The bribe taker, on the other hand, loses the booty of bribe and faces a hefty punishment.
Hence, in the post-bribe situation it is in the interest of the bribe giver to have the bribe taker caught. Since the bribe giver will cooperate with the law, the chances are much higher of the bribe taker getting caught. In fact, it will be in the interest of the bribe giver to have the taker get caught, since that way the bribe giver can get back the money she gave as bribe. Since the bribe taker knows this, he will be much less inclined to take the bribe in the first place. This establishes that there will be a drop in the incidence of bribery.
He notes that this only works for a certain class of bribes: when you have to bribe officials for something you are already entitled to receive. It won't work for any long-term bribery relationship, or in any situation where the briber would otherwise not want the bribe to become public.
Posted on April 5, 2011 at 8:46 AM
• 50 Comments
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They say orthogonal, but I think they mean diametrically opposed.
That sounds like extortion rather than bribery.
I thought Congress had all ready legalized bribery by calling bribes "unlimited campaign contributions".
I prefer the system of lobbyism, where bribe taking and bribe giving is both legalized.
They tried this in Slovakia. It didn't yield the desired effects though and has recently been changed back to as it had been (e.g. both giving and taking being illegal). I don't know the details for either change, just saying.
"He notes that this only works for a certain class of bribes: when you have to bribe officials for something you are already entitled to receive."
Which in many third world countries is precisely the situation: you have to bribe to get what you're already supposed to get.
Oh, wait, only in third world countries? Maybe not.
What governments should do is make taking a bribe a death sentence crime. Take a dollar bribe, get executed. How much is the bribe taker's life worth to him? At the very least, it would make bribery likely only in important matters. While you might not want that, that's already the situation, as the rich can always afford bribes. At least the petty bribery that really affects those least able to pay for bribes would be cut down.
Once we've done that, then make lying to any citizen by any official equally a death sentence crime.
Wallah! No more government by Friday!
The Economist has an article every month on how corruption is the single biggest friction in India's economy.
Last week it was about how foreign companies won't invest because it's impossible to get anything done.
This week it's about how, despite a massive food program, malnutrition is rampant because intended monies are siphoned off.
Heck, someone started a website called - IPaidABribe.com. Both to embarrass the taker, and to establish a market price for various services.
Who would have thought it - a politician agreeing with Murray Rothbard!
Of course, he wrote about it in 2007.
I've heard similar ideas floated relating to prostitution. Particularly in developing countries with serious human / sex trafficking problems, some humanitarian groups have proposed legalizing prostitution but keeping solicitation of prostitution illegal. Give the prostitutes (who are often victims of kidnapping / slavery) legal protection and prosecute the johns. Haven't heard how that has worked if / when it has been tried though...
This would surely create opportunities for people to merely claim that they had been required to give bribes, or that all or part of legitimate payments were in fact bribes.
@jb: This is precisely the situation in Canada. Prostitution is perfectly legal here. Communication for the purposes of prostitution, living off the avails of prostitution, and running a common bawdy house, are not.
But this differs a bit from the proposed Indian bribery law in that the johns can still be convicted of the communication charge, so the mechanism doesn't work.
And it really doesn't work - we still have prostitution in Canada (like everywhere else) and there are neighborhoods that are struggling to drive out the trade.
Maybe this is the solution to the "War on Drugs." Make buying and using drugs perfectly legal, but make selling them and trafficking them illegal. Then arrange the law so the person who buys the drugs gets their money back if they turn the seller in.
Not sure how fair or ethical that is, but it sure would put a dent in the sale of drugs, since the current incentives are for everyone to keep their mouths shut.
Drug addicts still would not really have an incentive to turn their dealer in, since they would lose their drug supply.
Most likely such a legislation would spawn a lot of wannabe vigilantes who would buy drugs only to turn the dealer in.
I agree, however, that the perspective is "interesting".
@Paeniteo: "Drug addicts still would not really have an incentive to turn their dealer in, since they would lose their drug supply.
Most likely such a legislation would spawn a lot of wannabe vigilantes who would buy drugs only to turn the dealer in.
In the former case (drug dealer incentives), even if only 1-5% of users turned dealers in (if for no other reason than to use the money to buy from another dealer) it would put a dent in the industry.
In the later case (non-user vigilantes), that would definitely put a dent in the industry as well.
Of course, it could backfire. "If you turn me in" or "if I get arrested" then "my buddies will kill your family" may become a way of balancing the scale of incentives.
But is an interesting take on it.
I believe part of the reason for that in Canada is that, when you get right down to it, prostitution is one of those crimes for which entrapment is far too easy; and in the simple case of one officer and one suspect, it's impossible to prove that there wasn't coercion/entrapment involved.
Living off the avails of prostitution, on the other hand, involves a money trail and other witnesses...
Isn't this called entrapment? Is that a good thing now?
@Peter Purve: Isn't this called entrapment? Is that a good thing now?
Technically, entrapment is when law enforcement coerces the person to commit the crime when the person otherwise wouldn't have committed it.
I could definitely see such bribery laws as being most useful for political opponents to set up politicians they don't like.
Seeing a lot of downsides to this law, but it does make for interesting dialogue.
@Bruce Stephens: exactly what I was thinking... Too easy to make the claim without any evidence. What would be the standard of proof? A receipt maybe ;-)
Hush hush, please don't tell the italian PM, he has already a lot of ideas to mind his own business.
@MB: "Too easy to make the claim without any evidence. What would be the standard of proof? A receipt maybe ;-) "
Very good point. Plus, unfortunately, in the political world, people get convicted in the court of public opinion based on soundbytes even if the accusation has no basis in reality.
I like the James Carville quote regarding the Gifford's shooting: "Everything about the shootings points to politics except the evidence."
While I won't comment on incident specifically, I think the quote makes sense in terms of all the conclusions people make based on soundbytes and speculations, whereas actual evidence is incidental.
One of the UK's "red tops" pointed out that in Nigeria it was legal for their Football (socca) officials to take bribes... Providing it did not effect the outcome of a game...
Not sure if it is true but this Indian law appears to be the same.
Because as detailed above I take a bribe and put the money in my pocket and then don't do anything the person bribing me has not had the bribe compleated (ie I have not delivered) so with respect to,
"... once a bribe is given and the bribe giver collects whatever she is trying to acquire by giving the money..."
they are not entitled to their money back, nor am I open to prosecution because in reality the bribe was "just a gift"...
It would seem to me that the standard of proof would be the usual "beyond reasonable doubt." Which means a single undocumented report would not result in a conviction, but could result in an investigation that could produce credible evidence.
In the same vein, an organization has started printing zero rupee notes as a way for people to show disapproval of bribes and shame the bribe takers.
"In another experience, a corrupt official in a district in Tamil Nadu was so frightened on seeing the zero rupee note that he returned all the bribe money he had collected for establishing a new electricity connection back to the no longer compliant citizen."
Seems like a simple (and hopefully effective) way to change social attitudes and hence the economics around bribery.
India is building a massive biometric ID database of all its citizens, among other reasons to ensure the intended beneficiaries of subsidies get them, rather than have them skimmed off by corrupt middlemen bureaucrats.
China has the death penalty for corruption, and regularly applies it, but corruption is still rampant.
As Miles said, the SCOTUS already took care of this for the US, the only difference being that neither party is at fault.
It sounds good in theory, but you're hitting the wrong side of the equation. The War on Drugs (and most other "War"'s) target the supply side. In order to win, one must target the demand side because a supply will always form wherever a demand exists, especially in economically troubled times (or areas).
Michael Levine advocated this in his book "Deep Cover" a long time ago. If the description is accurate, he would certainly be an authority on the subject:
"Levine was considered to be the D.E.A's number one undercover agent, having arrested over 3,000 individuals over twenty-five years..."
It's also important to note, though, that he advocated going after the politicians who facilitated things for the large dealers. He also supported reforming the "suit"-heavy organizations and claimed their only real accomplishment was eroding civil liberties and filling prisons with "nonviolent, small-time working stiffs, casual drug users, to serve out mandatory minimum sentences." It's a nice insider perspective.
Although with prostitution, I vote for decriminalization and a baseline set of regulations to protect the ladies and the public. I don't see how a porn director can pay two people to have sex, but a guy buying it for himself serves time. Or jail time for a "crime" that provides provable benefits to the public and no provable harm. There's just something wrong with the whole thing.
@ Fazal Majid
Yeah, it just changes who needs to be paid off. Make sure the head investigators and the judges get those "perks" they've been wanting and you don't get executed for it.
"Although with prostitution, I vote for decriminalization and a baseline set of regulations to protect the ladies and the public."
Indeed, a recent court case in Canada found that the criminalization of activities surrounding prostitution is unconstitutional.
The finding as I understand it was that the current laws take a perfectly legal profession, and surround it with prohibitions on the very things that would enable those working in the profession to do so safely:
- establishing a secure workplace (the crime of keeping a 'common bawdy house')
- visiting, being the landlord of, or taking someone to, the above secure workplace (all crimes related to 'common bawdy houses')
- carefully screening clients or having them screened by an agent/pimp (the crime of communicating for the purpose of prostitution, and living off the avails of prostitution if it's a third party doing the vetting)
- working as a security guard at a brothel (the crime of living off the avails of prostitution)
- technically, being the dependent child of a prostitute (if your parents feed and clothe you and pay for your asthma medication and soccer league dues by prostitution, you're probably committing the crime of living off the avails)
The case will almost certainly work its way up to the supreme court, so time will tell what the outcome ends up being.
I'd be concerned about the opposite problem showing up - people who have not been asked for a bribe, or were asked but didn't have the money, alleging that they did pay a bribe, so that some hapless civil servant gets locked away, and they get some money to bribe the next guy with.
@dragonfrog at April 5, 2011 1:12 PM
The text you quoted is from Nick P, not I.
Sounds like an Indian variation on American lobbyism. A Belgian approach to the problem would consist in simultaneously announcing stiffer penalties for bribery as well as a one time regularisation for offenders willing to come clean - takers and givers alike - in exchange for a substantial tax on the monnies or other advantages having changed hands, this in order to generate a "dissuasive" effect.
This process would be repeated every few years. Although such a system would be absolutely useless in efficiently fighting a practice as old as humanity itself, it would guarantee the government a regular additional source of income, in the process avoiding lenghty and resource-intensive trials, nine out of ten they would lose anyway due to general judicial incompetence.
The general idea to keep in mind in these matters is that solving the problem for many governments usually is less important than trying to capitalise on them using a seemingly plausible sounding method or pretext. Hence also the often heared expression in IT "If you're not part of the solution, you're probably a consultant".
It strikes me that this would be extremely effective in developing countries, but not in situations of organized corruption. This kind of law would provide a protection for citizens against bureaucrats and enforcement agents. It only addresses outward facing bribery situations, because if the briber approaches the bribed the briber has no incentive to expose their monetized request for special treatment. I would love to see a law like this take affect in Iraq/Afghanistan to help cut down on bureaucratic corruption, but it would unfortunately never help, even modified for scale, to combat systematic corruption and contract favoritism.
People keep speaking of lobbying as if bribery were the standard means of influence. Forgotten is the fact that the people with the most expertise in a business are the ones who engage in it. If you make a cogent, well-informed argument, talking to each representative individually before they've promised their vote to anyone, and have a track record of being right, then you end up with influence (and the larger the business, the more constituents who are potentially harmed by poor legislation, and the more likely it is that legislators will listen).
Developing the track record for being right takes time and effort, though. I've read dismayed reports from influence groups who walk in and start 'lobbying' and find no one is listening right off.
Also, short-term benefit to a narrow business sector can mean long-term problems to business overall, but business lobbyists don't have any more knowledge or expertise in 'the big picture' than the legislators do.
This is very cute, but doesn't really address the fundamental developing-country problem of public officials and police officers being paid way too little, so that even relatively small (by rich-country or rich-local-citizen standards) bribes make a huge difference in their living standards.
But really the workarounds are pretty obvious, from inventing various forms of less-traceable bribe to coupling the bribe with some other criminal act or admission of criminal behavior to just randomizing service so there's no proof the gift to a public official actually led to action. And of course ratting on one bribetaker would lead to the enmity of the rest of the corrupt establishment (as it does now) so unless you were moving out of town of out of the country, simply not being tainted with a crime (what, no deals for people who turn state's evidence?) wouldn't cut it.
Worse yet, the hard-to-trace bribery methods would be much more expensive, cutting poorer people out of the loop entirely. Just look at the size of the salaries US organizations have been paying ex-congressfolk.
Prostitution has been legal in New Zealand (among the safest countries in the world) for several years.
Drugs were decriminalised in Portugal several years ago - the addiction rate has dropped by about 30%, and organised crime has gradually left to go to countries where they can exploit the market.
Our problem is that we are still emerging from a very conservative period of history in the West.
Not very clear how the law will distinguish 'Harassment Bribes' from 'Non-Harassment Bribes' and penalise bribe givers for the latter.
Indian bureaucracy is complex and indeed deliberately designed so, in order to make it difficult for even a honest citizen to get something that is his due without inordinate delays or costs.
In such cases it can be argued either way as to whether, in a particular case, the bribe giver has fulfilled the requirements for getting the given service thereby making it a 'Harassment Bribe' and keeping him on the right side of the law.
And the bigger problem in India, although less visible, is the 'official' bribery that involves politicians, bureaucrats, media persons and businessmen. This law will fail pathetically to prevent that.
The argument is specious.Though it sounds very convincing to begin with,it is very idealistic and opens multiple possibilities.One is of the "giver" framing the "taker".Even worse is the possibility that the "taker" who is equally aware of the law starts asking in "kind" rather than cash viz.sexual favours which can muddle things further.
If only there was a way to regularize the bribes and make them part of the "low paid" public servant's official compensation. Instead of increasing their salaries, have published "user fees" that partially go to the servants providing the service. They could even be tiered for fast service, slow, etc. Right now the public servants have little incentive to actually do any work. The bribe is an incentive for them to get something done, which is no small feat in an Indian bureaucracy. Having some of them work on commission could make things a lot more efficient. Yeah the poor would have to pay, but they pay now anyway, and they could get subsidized in other ways.
Why on earth would someone bribe an official to get something in return and then find it in their best interest to recant for a full refund? This is utter BS logic.
The only way this is in the best interests of the bribe *giver is if the intended action/recompense does not follow the payment.
In other words, the only reasons to return a product you wanted enough to pay for is A) you find it cheaper elsewhere, or B) it is defective. If you never wanted it in the first place, you wouldn't have paid for it.
Seems absolutely ridiculous to me, sorry to say. If you bribe someone who doesn't fulfill their end of the bargain, it's arguable as to whether or not the party who accepted the bribe did anything wrong at all except take your money! In contrast, the person *offering the bribe has done something wrong no matter the outcome.
Dumb x 1000.
Oh wait, I see, it only works for the types of bribes that no one ever makes because they don't have to. Brilliant!
Prostitution is completely legal in Canberra Australia.
Streetside solicitation is banned. Brothels are legally run in designated light-industrial areas; those areas are typically otherwise empty at nighttimes.
I was too young to remember the debate when the legalisation was introduced, but I have a vague memory it was done to reduce official corruption in regards to prostitution.
It's a non issue here; the health department monitors the brothels. Occasionally there's a newspaper article if an underage worker is found, but otherwise I never hear anything about it. Neither political party pushes the issue at election times.
This reminds me of an idea of Donald Kaul's some time ago regarding how to fix point-shaving in college basketball:
Make it legal to shave points.
Jb: They have tried it here in Sweden and now they are desperately trying to export it although they cannot prove its the least bit effective. Few outside the government circle thinks it worked well.
Just another flavor of the well-known "prisoner's dilemma", where incentives and behaviour depend on whether it is a one-time transaction or a long-term relationship.
How will the briber prove that a bribe was given/accepted? It's his word against the government official's. There's no receipt.
The hack of the century, I think not. Of the ones we know about lately, this is nothing compared to stuxnet.
This will probably hash out as similar to HBGary. Simple attack combined with some sloppiness.
@ Bob K,
Did you mean to post over in the "Epislon hack" blog page?
Not exactly germane to the angle of this particular story, but just a couple of days ago a colleague (who has worked in development quite a lot) compared bribery in developing countries to the tipping of waiters/other service staff in the US. This comparison really struck me...
It certainly works for US politicians, not 'bribes' but 'political contributions'. See how easy that was.
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