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    This blog highlights effective ideas in the fight against poverty and exclusion, and analyzes the impact of development projects in Latin America and the Caribbean.
  • Legal bribes?

    6
    Sep
    2012

    By

    Legal bribes

    About a year and a half ago, the economist Kaushik Basu – then a Cornell professor on leave as Chief Economist for the Ministry of Finance in India- proposed legalizing some forms of bribing.

    Some highlights:

    There are different kinds of bribes and what I am concerned with in this paper are bribes that people often have to give to get what they are legally entitled to. I shall call these harassment bribes.

    …..

    The central message of this paper is that we should declare the act of giving a bribe in all such cases as legitimate activity.

    …..

    The main argument is that such a change in the law will cause a dramatic drop in the incidence of bribery.

    But can this work?

    Yes, according to Basu, based on a simple Game Theory model.  But we need evidence.

    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.

    …..

    What is being argued is that […] at the time of committing harassment bribery, both parties know that the giver has immunity and that the taker not only has a heftier penalty but also has to return the bribe.

    …..

    But to the extent that it does create mistrust between the bribe giver and the taker in the post bribery situation, it means that the comfort zone within which bribery occurs in today‘s world will cease to exist and the upshot will be a decline in the incidence of bribery.

    Such a sexy idea raised many eyebrows and got Dr. Basu a gleaming article in The Economist, and prime airtime on CNN.

    Dr. Basu was a student of Amartya Sen, who included transparency guarantees as one of five freedoms in “Development as Freedom”, based on a series of lectures he delivered at the World Bank.

    So now that Dr. Basu has been named the World Bank’s chief economist, perhaps it is time to test if this intriguing idea can be as effective against corruption as randomized audits on public accounts or public campaigns that provide citizens with key information.

    Read the paper

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