June 27, 2013, 7:43 pm

The good economist in Dr.P.B.Jayasundera seems to have been overpowered by the bureaucrat tinged with strong political affiliations that he has become of late. He urges the public to refrain from bribing and pay taxes [The Island, June 24, 2013]. This is perfectly sensible as bribes are a form of taxation but collected by individuals for their personal benefit and not for the benefit of the general public. When rulers could say ‘I am the state’ Dr.Jayasundera’s admonition made perfect sense. Here is a story that clarifies the situation well.

Once there was a kingdom plagued with ransom payment [kappam ] and bribery and the principal perpetrator of these crimes was the prince who was heir apparent. The king died suddenly and the prince became king and ransom payment and bribery vanished overnight. The ministers went to congratulate the new king on his good fortune and his competence in administration. The king was surprised that the ministers had so misread the situation and chided the ministers for the poverty of their minds. Said the king: ‘I stopped enforcing ransom payments and taking bribes soon after I became king as now I have free access to the exchequer. Why tax the public twice over?’ [This was better told in the back page of an issue of the Journal of Political Economy, a few years ago].

If people pay more money in taxes, The Family will have enough money for their own benefit from the exchequer itself and ransom and bribery will cease to be. This thrice blessed land will become the ‘honesty hub’ of Asia. Another hubbub. What a brilliant idea!

But put on your economist hat, please Dr.Jayasundera. Take the phenomenon of bribery as a market phenomenon. Politicians and bureaucrats have a commodity to sell and there are people who want to buy this commodity. This commodity [in this instant mostly services] is available mostly free from bureaucrats, who by regulation have the authority to issue them. Since the 1972 constitution, all bureaucrats are mere peons at the beck and call of ministers or of even young boys who are children of powerful politicians. Poor chaps, they have no choice but to obey willy-nilly. The people who have authority to issue these permits etc. are monopolists as others have no authority to issue these licences. As monopolists they can sell these permits to those whom they prefer and keep others out of permits to undertake economic activity. They will charge a fee for that service and that is the bribe you pay. A man wants to start a TV station and he can buy a permit to do so from government. A woman wants to get a route permit to run a bus. She can buy a permit from the relevant authority. A man commits murder and the police have evidence against the killer likely to stand up well in court. That man buys his freedom by paying the right authorities to suborn the evidence. There is a demand for a service and there is a supply of that service. The supplier [government] is a monopolist, so his power to manipulate prices and to discriminate among buyers is enormous. That is the nature of the market for bribes.

The market exists because government has authority to issue licences. These licences exist because laws and regulations exist to force economic agents to pay for licences. And the regulations have been framed and enforced by people who desire to make money for themselves out of the transactions. And the process of issuing licences is not transparent. So was born the ‘permit raj’ condemning Indian politicians and bureaucrats to make ‘a republic of bribery’.

Licences to operate on certain frequencies of the electro-magnetic spectrum are highly lucrative and ministers and bureaucrats who have the discretion to issue these licences gave birth to the ‘2G Scandal’. So with ‘Coal Gate’ and many another. In Sri Lanka, government bought railway locomotives fixed with ship turbines from France. Government bought a thermal power plant from China which is more closed down than functioning. There is high enthusiasm to buy several airplanes for money losing airlines because there is good money for authorities in that purchase. Five million dollars per piece will make a nice morsel.

The way to reduce bribery is to cut off the demand for these services either by abolishing the rules and regulations which prescribe these procedures or making the processes of issuing licences entirely transparent. For that latter purpose, we need among other things a Right to Information Act. Government will not enact such law that closes the flow of money to them. Normal humans do not behave like that and our politicians who form a strange variety of the species are least likely to do so. If electorates choose normal humans avoiding murderers, gangsters, thieves and bribe takers to represent them, civilized life is feasible. Otherwise do not complain. The public gets what they deserve.

Ransom payments are the outcome of a different mechanism. If law and order prevails, officials enforcing law and order will receive their wages and no more than their rightful wages. Its absence entitles police officers to earn extra income, which make many of them quite rich. [Newspapers are full of this phenomenon after a senior police officer was arrested for complicity in a crime of this nature.] And they feed the growth of a lawless society. Politicians can make money either directly or through agents who can threaten murder or other mayhem unless they are paid ransom. Absence of law and order is also the atmosphere in which politicians can destroy their opponents and stop opposition party political work. Nobody not in government has a chance of undertaking sustained serious political work in electorates anywhere in the country. We observe these men and women in action every day in our lives.

If police ensures law and order, this source of income and this source of power will vanish. Who in power would be fool enough to enforce law and order? The public has a duty to stand up against these barbarities at all times and especially at election times. If they don’t, they must live in this thrice blessed land of ours offering flowers three times a day at temples for all sorts of gods. May the latter help the former.

The good Doctor Jayasundera is looking in the wrong place for the ill. Ask a quack for a remedy.

Usvatte-aratchi

island.lk