Corruption, when rife, has horrifying implications for everything. Research has shown that it affects economic growth, makes transaction costs go up, and stunts infrastructure. It also increases prices. Yes, corruption results in inflation. Fahim A. Al-Marhubi in an Economics Letters article in 2000, has empirically shown it, analysing cross-country data. India is reeling under ubiquitous corruption, by most of its government and private sector officials and politicians alike.

DISTRUST AND REGULATION

A 2010 article in the prestigious Quarterly Journal of Economics , written by Philippe Aghion, Yann Algan, Pierre Cahuc, and Andrei Shleifer, has postulated that the countries in which people have very low trust among each other tend to be more regulated, as people want more regulation and government intervention, despite the fact that they know that the government is corrupt. Regulations that create rents are associated with mistrust — since mistrust induces regulation, and regulation induces mistrust. It leads to multiple equilibria: good equilibria with trust and weak regulation, and bad equilibria with distrust and strong regulation. When people expect to live in a civic community, they expect low levels of regulation, and so invest in social capital. Their beliefs are justified, and investment leads to civility, low regulation, and high output. In contrast, when people expect to live in an uncivic community, they don't invest in social capital and remain uncivil and unproductive (subsistence state or factory production). Their beliefs again are justified, as want of investment leads to uncivility, high regulation, high corruption, and low production. Let us discern this revelation in the Indian context — which is a jungle of laws and regulations. The laws, however, don't have real teeth. A case in point is the Right to Information Act-2005, which can be even stronger minus a lot more exemptions and caveats. Due to the fact that as a people, we don't trust each other, we are an uncivic society.So, we always want more regulation, despite the fact that we know the implementing agencies that comprise ‘we the people' again are corrupt.

CULTURE OF GRAFT

Is this distrust and uncivicness among people while transacting business contracts a consequence of parental investments (i.e. an inherited culture of graft) in social norms and/or legal enforcement? Raymond Fisman and Edward Miguel in a 2007 article in the prestigious Journal of Political Economy have empirically analysed that corruption is a result of both socio-cultural norms and legal enforcement. So countries with weaker social norms and judicial enforcement of laws are more corrupt. The parking and traffic violations by the UN diplomats representing various countries in New York City prior to 2002 when the legal enforcement wasn't strengthened bear this out. . Fisman and Miguel analysed the data on the diplomats' abuse of immunity and found that ambassadors and diplomats coming from the relatively more corrupt countries i.e. those with weaker socio-cultural norms against corruption and less stringent legal enforcement, were traffic offenders in NYC prior to 2002. This also indicates that low corruption cultures are mainly a legacy of good law enforcement.

THE ANTIDOTE

So, what is the antidote in such an atmosphere that treats corruption as a given? One well-known remedy is to raise the incentives to be honest. Another is to design some really citizen-empowering laws that have real efficacy. Think of the RTI Act for example. Leonid Peisakhin and Paul Pinto had conducted a randomised field experiment in some Delhi slums to analyse the delivery of below-poverty-line cards. Their findings showed how the RTI law is almost as effective as bribery in the provisioning of BPL ration cards. A culture of trust and civicness is to be steadily developed amongst our people at large if we want to iron out corruption effectively. The gathering of many thousands of people at civil society anti-corruption rallies in Delhi is standing proof of how we actually are on our way to evolving this culture of anti-corruption.

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