I came across this quote/definition while reading a chapter extract from C K Prahalad's "Fortune At the Bottom of the Pyramid". It has been a long time since i have given corruption some serious thought and this statement made me think quite a bit. At the end of an intense thinking session I had number of perspectives and insights into the economic and ethical implications of corruption as we deal with it in our day to day lives.
While thinking of the economic implications of corruption I got the following insights into the nature of corruption:
- As long as there is a consumer surplus in a price regulated environment (most government services are price regulated so as to make them affordable to all strata of the society), there is always a scope for corruption. Those consumers that hold a higher surplus are more likely to seek a more privileged access (be it in the form of reduced processing time or a higher evaluation in a dispute like situation) and are more likely to encourage the practice of corruption. Even people who enjoy the slightest of a surplus may give in to corrupt practices. Any form of governmental price fixing or supply restrictions on privately provided goods and services can also lead to a market for "privileged access" (read corruption) in the private sector.
- According to C K Prahalad, the most important factor that aids corruption is the lack of transparency in government processes, which in turn makes the completion of a transaction with the government a highly time consuming experience. This in turn causes the people at the "bottom of the pyramid" to consider the time value of money and therefore forces them to add to their costs in two more dimensions, one the price paid to the broker or intermediary who is getting the work done, and two the bribe needed for the government official to perform his duty. I couldn't agree more with his analysis on this subject.
- As much as private enterprises could raise the the cost of essential goods and services, given the flexibility that they hold in differential pricing, they may turn out to be a better alternative than fixed price government services. Public perception is very forgiving towards the private enterprise in providing a differentiated service/good at differential prices. Effectively private enterprise in a slightly regulated market could possibly reduce the need for corruption in a society where there is a high differential between the haves and the have not s.
These are not observations that have no technical basis, these can be proven using various economic models of demand and supply and i am quite convinced of the truth in these arguments.
On a more philosophical note, i found quite a few ethical applications of the term corruption as taken in the context of "privileged access".
When we tip the security guard so that he sorts our mail more carefully than that of our neighbors, or we tip the waiter a little more so that we get the most prized "romantic" seats at the restaurant, or when we pay that extra tip to the gas delivery boy expecting a more prompt delivery of the gas cylinder, aren't we all giving in to our perceived need of a "privileged access"? In effect are we all being corrupt in these simple actions that we perform day to day without giving it a second thought!
There are a lot more personal and professional scenarios in which i could try to apply this definition of corruption, focusing mainly on the words "privileged access" and i find it fascinating that so many routine actions of mine fall into the bucket of "corruption".
Perhaps there is a different definition of corruption when it comes to ethical and moral actions that I need to seek out ... but for today my quest stops here ... more perhaps sometime later in the year ...