"This may be more rational than it seems. In some cases, bribes may make economies work better, says Rema Hanna, a Harvard economist."
I'm sorry, what? Bribes are a symptom of broken government where government workers have a lot of authority to do things, but no incentive to do the right thing.
I think you are missing the point. Rema Hanna, the economist quoted in the article, is not championing bribes as the optimal solution.
She is simply observing that some systems that are not efficient can become more efficient as the result of bribes.
So you can read that quote as: "In some cases [including cases of broken governments where government workers have a lot of authority to do things but no incentive to do the right thing], bribes may make economies work better."
She's apparently saying the most trivial statement possible about bribes: if nothing works the way it should but something will work if you bribe someone, then bribing these people will make these things work. Well, duh.
Exactly. And I think there's a corollary: If officials can get bribes for doing something, they WON'T do it WITHOUT a bribe. So nothing will work the way it should. Bribes perpetuate the same red tape problem they appear to "solve."
Her statement is like saying "what you need is some alcohol to help you deal with the pain of your alcoholism."
Seriously, corruption is maybe the worst possible thing for a country's economy. This article argues that it's the single biggest reason why poor countries are poor. And it's a hard problem to solve.
http://reason.com/archives/2006/03/01/why-poor-countries-are...
Although it can be solved. Let me preface this by saying that I usually dislike privatization of public utilities. When I moved from Salvador to São Paulo, one of the biggest differences I saw was in the cartórios (civil registry offices, I guess; it's a place you go to when you want you signature oficially recognized or other bureaucratic tasks like that). Back in Salvador, where they are public, bribes are the only way to get anything done. Real state agents, for example, hire "despachantes" to bribe the right people in the "cartório" so they can make real state deals in a reasonable amount of time. Here in são paulo the cartórios are private and there is competition, so they are very efficient, and bribeless.
I guess what I want to say is that bribes usually come from giving too much power to someone. If there is a surrounding structure stopping any single person from deviating too much from the rules it gets very hard to bribe anyone.
Well, I can see how you can do a local optimization for a select number of businesses that has the money to offer bribes, and that in turn can be good for the local community.
But for the economy as a whole it can't ever be good.
Whether she champions for bribing or it seeme to be that her observations of the form "bribes can make things in the economy move smoother, and might actually contribute to growth" dangerous to me.
One should not forget that bribes contribute to black money (nobody declares it and hence no tax on it). So if a business invests "X" amount in money which is legitimate and if they invest "Y" amount as bribes they would never show the amount spent on bribes in their books. But they have to make a profit on the total amount invested (X+Y) and one way they might go about is by shortchanging the customers (either low quality or poor service). The argument that in an open market a competitor can offer a better price/service ratio wouldn't fly since any entity entering the business would have to spend some amount as bribe money. So all in all in my opinion the customer ends up paying more (or getting less for what he paid for). Given this I wonder how bribes can positively contribute to overall growth.
Comments
"This may be more rational than it seems. In some cases, bribes may make economies work better, says Rema Hanna, a Harvard economist."
I'm sorry, what? Bribes are a symptom of broken government where government workers have a lot of authority to do things, but no incentive to do the right thing.
"I'm sorry, what?"
I think you are missing the point. Rema Hanna, the economist quoted in the article, is not championing bribes as the optimal solution.
She is simply observing that some systems that are not efficient can become more efficient as the result of bribes.
So you can read that quote as: "In some cases [including cases of broken governments where government workers have a lot of authority to do things but no incentive to do the right thing], bribes may make economies work better."
She's apparently saying the most trivial statement possible about bribes: if nothing works the way it should but something will work if you bribe someone, then bribing these people will make these things work. Well, duh.
Exactly. And I think there's a corollary: If officials can get bribes for doing something, they WON'T do it WITHOUT a bribe. So nothing will work the way it should. Bribes perpetuate the same red tape problem they appear to "solve."
Her statement is like saying "what you need is some alcohol to help you deal with the pain of your alcoholism."
Seriously, corruption is maybe the worst possible thing for a country's economy. This article argues that it's the single biggest reason why poor countries are poor. And it's a hard problem to solve. http://reason.com/archives/2006/03/01/why-poor-countries-are...
Although it can be solved. Let me preface this by saying that I usually dislike privatization of public utilities. When I moved from Salvador to São Paulo, one of the biggest differences I saw was in the cartórios (civil registry offices, I guess; it's a place you go to when you want you signature oficially recognized or other bureaucratic tasks like that). Back in Salvador, where they are public, bribes are the only way to get anything done. Real state agents, for example, hire "despachantes" to bribe the right people in the "cartório" so they can make real state deals in a reasonable amount of time. Here in são paulo the cartórios are private and there is competition, so they are very efficient, and bribeless.
I guess what I want to say is that bribes usually come from giving too much power to someone. If there is a surrounding structure stopping any single person from deviating too much from the rules it gets very hard to bribe anyone.
Well, I can see how you can do a local optimization for a select number of businesses that has the money to offer bribes, and that in turn can be good for the local community.
But for the economy as a whole it can't ever be good.
Whether she champions for bribing or it seeme to be that her observations of the form "bribes can make things in the economy move smoother, and might actually contribute to growth" dangerous to me.
One should not forget that bribes contribute to black money (nobody declares it and hence no tax on it). So if a business invests "X" amount in money which is legitimate and if they invest "Y" amount as bribes they would never show the amount spent on bribes in their books. But they have to make a profit on the total amount invested (X+Y) and one way they might go about is by shortchanging the customers (either low quality or poor service). The argument that in an open market a competitor can offer a better price/service ratio wouldn't fly since any entity entering the business would have to spend some amount as bribe money. So all in all in my opinion the customer ends up paying more (or getting less for what he paid for). Given this I wonder how bribes can positively contribute to overall growth.