Friday, September 21, 2007

Greed is good?

I must confess to entering the first class of Government, Society and Business with some trepidation. It immediately conjured a vision of endless and inconclusive talk-talk amongst the poor professor and the class participation warriors. Add to this me being strategically located in the last row of class, and I thought I had the perfect combination to catch up on sleep leftover from the last 3 terms.

No such luck. And thank god for that! This subject has clearly been a winner. Not one class has gone without spirited debate, and the manner of teaching has been excellent .Prof M sure knew how to provoke the debater in you, and I’ve seen him skillfully draw out even the most tongue-tied of my friends. Not that the CP warriors needed any motivation…

However, my beef in this class relates to one topic. Bribe taking. While most people would expect a harangue against bribe taking and giving, Prof M did exactly the opposite. He showed graphically how a bribe might represent society’s response to allocate scare resources for specific economic activity.

Without going into the technical mumbo-jumbo, simply put a bribe is described as an economic mechanism designed to ensure that inefficiencies in production and distribution of resources, which could be due to government diktats, are resolved to the satisfaction of the sector that requires it. Take for instance infrastructure vs. housing. If the government mandates that a ceiling price for cement (incidentally that is what is the situation in India right now) and does not back it up with strict implementation, it is a recipe for bribe taking.

Without the proper monitoring in place, all that happens is that the housing sector offers the cement suppliers, a purchase price which is a notch above the ceiling price. Lo and behold! There is insufficient supply to the infrastructure sector, with the cement being diverted to the housing sector and a bribe taker’s paradise on our hands.

The prof’s advice? Look at things in context and you might actually see the relevance of bribes. But I disagree with the rationalization. Slapping one another does not make us friends. How will you explain the economics of bribes to the poor people at the ration shop who have to bribe the officer to get provisions? Or the monies which should be doled out by hapless people for sundry governments certificates?

Do two wrongs make a right?


Divya Bijlwan said...

Well written. The Mickey mouse graphs can always be manipulated to prove any point. Dont be misled.

btw, thanks for writing the notes for the rest of us.
How about some graphs too. ;)

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