Economist Explains Why Paying Certain Bribes Should Be Legal

from the taking-them?-not-so-much... dept

Wed, Apr 6th 2011 8:14am — Mike Masnick

With a big bribery scandal continuing to unfold in India, it's a bit interesting to see Kaushik Basu, the chief economic advisor to India's Ministry of Finance, make the argument that paying bribes should be perfectly legal. Before you jump to conclusions, you have to realize he's just saying that paying bribes should be legal. Accepting them should remain against the law. As it stands now, both the bribee and the briber are guilty of a crime, and he thinks that's a mistake.

Under current Indian law, Basu writes,
once a bribe is given, the bribe giver and the bribe taker become partners in crime. It is in their joint interest to keep this fact hidden from the authorities and to be fugitives from the law, because, if caught, both expect to be punished.
But if the law were changed as Basu suggests,
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.
... In other words, the interests of the bribe taker and the bribe giver are no longer aligned.

The argument is that this way, there's less incentive to actually have bribery, because if someone demands a bribe, you can pay it, but then you can report it and get the person in trouble:

In Basu's world, you pay the bribe and get your refund. Then you go to the authorities and report the clerk who collected the bribe. If the clerk is convicted of taking the bribe, he has to pay you back, and faces additional penalties. You get your money back, and you face no charges.

Of course, the clerk knows that you have this incentive to report him. So, Basu argues, he'll be less likely to demand the bribe in the first place. These kinds of bribes, which Basu says are currently "rampant" in India, will become much less common.

Of course, the link above, to the Planet Money discussion about this, notes that there would be some unintended consequences. Certainly, it wouldn't remove all bribery, as many people willingly pay bribes to try to get favors, and in such cases, this would make the power of those bribes even stronger, since they'd have something to hold over the bribe-taker. To deal with this Basu is suggesting that this idea of making it "legal" should only apply to bribes people are pressured to pay to get something they're legally entitled to receive -- and not for things like a company paying off the government to get a contract. Still, another unintended consequence is that it could increase false accusations of bribery. So it's not a perfect solution by any means, but it is interesting to think about.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: bribes, economics, kaushik basu

37 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Josh in CharlotteNC (profile), 6 Apr 2011 @ 8:46am

Downsides
There are some big issues here. I agree that it could have a positive effect in some situations, but the downsides could be immense. If paying of the bribe is legalized anywhere there is competition between scarcities - and that if convicted, the bribe taker has to pay it back - it would greatly benefit a person or company with more cash than their skill at competing. This could make it difficult for more efficient, disruptive technologies or companies to have a chance to push out legacy players.

Government contracts was already mentioned. I'm not sure how India handles certain things, but consider fishing licenses, where the government only gives out a certain amount. Same situation for taxi permits. Bribing an official would have almost no risk - bribe as much as you can afford, knowing that you're most likely going to get it back - and be rewarded with the license where the guy who couldn't afford the up-front bribe doesn't get it.

What about private businesses and vendors bribing another company to choose them over another vendor?
[ link to this | view in chronology ]
- ChurchHatesTucker (profile), 6 Apr 2011 @ 9:14am
  
  Re: Downsides
  Bribing an official would have almost no risk - bribe as much as you can afford, knowing that you're most likely going to get it back - and be rewarded with the license where the guy who couldn't afford the up-front bribe doesn't get it.
  
  Assuming you have an interest in getting a license next year, you're better off leaving the corrupt guy in place to ensure that you can once again get to the head of the line the next time.
  [ link to this | view in chronology ]
- pixelpusher220 (profile), 6 Apr 2011 @ 9:56am
  
  Re: Downsides
  I fail to see how legalizing the one who offers the bribe differs from having undercover law enforcement people doing the same thing.
  
  This is legalizing something that is morally wrong because you aren't enforcing it properly.
  
  Maybe the scale of the corruption is so bad you can't possibly enforce it, but still seems like the wrong way to 'fix' the problem.
  [ link to this | view in chronology ]
  - Christopher (profile), 6 Apr 2011 @ 12:03pm
    
    Re: Re: Downsides
    The problem is that not everyone finds things like this 'morally wrong' and the 'majority' don't have the right to force their viewpoint on the minority in this case, because there is usually no physical injury to the majority.
    
    Yes, have it illegal to take a bribe.... but don't punish the people who pay the bribes because it is the only way to get things done, punish the people who MAKE IT so that is the only way to get things done.
    [ link to this | view in chronology ]
Greevar (profile), 6 Apr 2011 @ 9:07am

Simplifiy it.
Just make all giving and accepting bribes to government officials illegal. That should include campaign "contributions". Every candidate should be required to campaign on the same amount of money and report all expenditures of that money to a government campaign funding office that issues these funds. Failure to do so would result in the candidate to be subject to repaying all funds immediately upon notice. Candidates that fail to be elected are not required to repay spent campaign funds if all funds are properly accounted for and approved by the campaign funding office. Unspent funds shall be returned to funding office within 7 working days after all polls are closed. That should take care of corruption better than the current system the governments use.
[ link to this | view in chronology ]
- Chris Rhodes (profile), 6 Apr 2011 @ 9:25am
  
  Re: Simplifiy it.
  Who issues the funds for campaigning? The government?
  [ link to this | view in chronology ]
  - pixelpusher220 (profile), 6 Apr 2011 @ 9:49am
    
    Re: Re: Simplifiy it.
    Yep. Given that the next campaign is likely to be multi-billions of dollars in just direct donations (not Citizens United laundered money) it would certainly be cheaper if the government funded the campaigns.
    
    If you want to spend you're own money, you're more than welcome too, but the official campaign events won't be tainted by donations from any source.
    
    I read something about Australia's elections. Free speech is countered by harm to the country and corporate money in elections is classified as a threat to the country. Sounds rather nice frankly.
    [ link to this | view in chronology ]
    - Greevar (profile), 6 Apr 2011 @ 9:58am
      
      Re: Re: Re: Simplifiy it.
      No. No private funds. All candidates work from the same resources. They should be elected on the merits of their character and skill, not their financial advantage.
      [ link to this | view in chronology ]
      - Greevar (profile), 6 Apr 2011 @ 11:27am
        
        Re: Re: Re: Re: Simplifiy it.
        If people want to contribute their own time to the campaign, that's another story. Volunteering for a campaign can only be done so in a way that a candidate has persuaded you to support their efforts. You can't buy or coerce volunteers, there's no such thing as paid or forced volunteers. This is how it should be done. Candidates should be utilizing the support of his constituents to persuade others to offer their votes and support to the election of the candidate. In other words: grass roots campaigning should be the rule, not the exception.
        [ link to this | view in chronology ]
      - Anonymous Coward, 6 Apr 2011 @ 12:13pm
        
        Re: Re: Re: Re: Simplifiy it.
        This, this, THIS. ^^
        
        I can't hit insightful enough times.
        
        "They should be elected on the merits of their character and skill, not their financial advantage."
        
        This I believe would eliminate 99% of incumbents and career politicians.
        [ link to this | view in chronology ]
      - Chris Rhodes (profile), 6 Apr 2011 @ 7:23pm
        
        Re: Re: Re: Re: Simplifiy it.
        And the funds will come from taxpayers, like me.
        
        So when the KKK wants to put up their candidate, the government will gleefully point a gun at me and tell me to cough up the cash he needs to run for office.
        
        Great.
        [ link to this | view in chronology ]
        
        Greevar (profile), 6 Apr 2011 @ 8:33pm
        
        Re: Re: Re: Re: Re: Simplifiy it.
        So you'd rather have the rich people buy the kind of government they want instead of making it about who's the best person for the job and level the field? If you're going to sit on your hands waiting for a perfect solution, you'll be waiting for a long time. At least this way, it takes money away as an advantage and an incentive for corruption.
        [ link to this | view in chronology ]
        
        Chris Rhodes (profile), 7 Apr 2011 @ 7:11am
        
        Re: Re: Re: Re: Re: Re: Simplifiy it.
        So you'd rather have the rich people buy the kind of government they want instead of making it about who's the best person for the job and level the field?
        
        My vote is not for sale. Is yours?
        
        If not, how is their level of spending relevant to the votes they get? They can buy all the air time they want; at a fundamental level, I look at the candidates, their positions, and their past actions to decide who to vote for. I don't tally up the amount they spent on campaign buttons and go "Wellp, guess he should be the winner!"
        
        But put a gun in my face and tell me that every idiot who comes forward deserves a portion of the money in my wallet merely so he "has a chance", and we have a problem. No thanks. Trying to support freedom by stealing is a self defeating proposition.
        [ link to this | view in chronology ]
        
        Greevar (profile), 7 Apr 2011 @ 8:49am
        
        Re: Re: Re: Re: Re: Re: Re: Simplifiy it.
        "My vote is not for sale. Is yours?"
        
        It's disappointed how you think the voters really matter in an election. They don't for other than maintaining the appearance of a democracy. They (the special interests) use money to manipulate who you know about so you will only vote for the people that have already been groomed to follow the will of the rich and powerful corporations.
        
        It's very simple. People don't vote for candidates they don't know about. Campaigning builds awareness. It's advertising and more money gives the ability to reach more people. The candidate that can reach more people will have an advantage over the candidate that doesn't have the funds to advertise as widely as her or his opponents. Money shouldn't be the driving factor in who gets the most ears and eyes. If a candidate wants to win an election, they should do it by the quality of their character, their conviction to serve the people they represent, and their ability to do an excellent job, not by the fact that they bought more opportunities to be in front of our faces than the other guy. All of this and I haven't even touched on how much money they spend smearing the other guy.
        
        That's why we have two party elections every term. When election day approaches, how many party candidates do you see in the media? You see just two because the other guys either don't support the lobbists or don't have the money to buy enough of the spotlight to be relevant. How many parties are represented in the televised debates? Three at the best, but the third party falls off the radar after the incumbent parties select their champion.
        
        That's why there should be strict controls over how much money is spent on campaigns and where the money comes from. If there's a limit on how much they can spend, they can't push other candidates out of view. If they want to win an election, they need to get as many volunteers as they can to get out there and get the word out that their candidate is best representative for them. If you can't rally people to your campaign by the merits you bring to the job, you shouldn't be in office.
        
        Public office such as congress, governor, or the presidency are positions that affect the lives of millions of people and I, for one, want the people who will do the best job, not the people with the money to buy the most ads. That's the sad fact we deal with today. The guy with the most money to buy the most eyeballs typically gets the best chance to win an election. It doesn't guarantee success, but it thins out the competition immensely.
        
        And to that all, I also think we need a more accessible and better aggregated record of politicians' performance in past offices (i.e. voting records, bills sponsored/authored etc.) so we know if this person is going to do what's best for everyone and not simply pamper their rich friends.
        [ link to this | view in chronology ]
Khstapp, 6 Apr 2011 @ 9:11am

Not guilty in both directions
The guilt should rest with who initiated the bribe, either the clerk demanding the bribe or someone offering one. Clerks could 'accept' an offered bribe because so long as it is reported in a timely manner the clerk isnt a party to the crime. You create a disincentive to use bribes because one partner nearly always has the incentive to sell the other out.

Would it stop all bribes? No, but collusion Is
always a risk in white collar crime.
[ link to this | view in chronology ]
- Beta (profile), 6 Apr 2011 @ 9:21pm
  
  Re: Not guilty in both directions
  The clerk never demands and the supplicant never offers. The clerk explains that the forms are not in order in a certain tone of voice, and gives a certain look. The supplicant pulls a document out of a fat wallet, which is left open and unattended. It's a matter of deniability. To be explicit is to expose oneself to the law; if one party makes it explicit, the other will smell a trap.
  [ link to this | view in chronology ]
WysiWyg (profile), 6 Apr 2011 @ 9:16am

Safety first?
Obviously under such law no-one would accept a bribe unless they had some way of ensuring that they weren't reported. And I shudder to think about how that system would be.
[ link to this | view in chronology ]
Anonymous Coward, 6 Apr 2011 @ 9:22am

I do think that would work, there are more incentives:

- He won't be able to do it again if he rats the first one, so he gets black balled.

- The PR nightmare could destroy revenues, you can see this even today for things that are legal, think TEPCO, BP and others.

So no, it probably wouldn't work, people would continue to operate in the shadows and the only form to stop this is actually to bring light to the process, not with promises of security for people to step into the light and as mentioned before it can have severe adverse effects.
[ link to this | view in chronology ]
- Anonymous Coward, 6 Apr 2011 @ 12:15pm
  
  Re:
  As I read it, it is about people using their power as a protection racket.
  
  It isn't about allowing bribes for things one is not entitled to (government contract), it is about things one is entitled to (for example, in the US, Social Security).
  
  What commenters appear to be missing, is that corruption appears to be so bad, that bribes are being paid to receive government services that are entitled (this happens in Baltimore with building inspections, the going rate is $20/visit paid in a book of matches when the inspector asks for a cigarette, a clean building needs this bribe to get the seal of a approval, a bad one still won't get one).
  
  Currently, if someone is insisting on a bribe to pay what you are due (as a tax payer), you can go without, or be a criminal. If things were changed such that you could prove the asker was a criminal and be safe yourself, it should reduce the bribery. It is about petty (but cumulatively high) graft, not about contracts.
  [ link to this | view in chronology ]
  - Simon Chamberlain (profile), 7 Apr 2011 @ 3:06am
    
    Re: Re:
    "corruption appears to be so bad, that bribes are being paid to receive government services that are entitled".
    
    Basically this, yes. Been a while since I was in India, but I was talking to an American cafe owner there, when he said 'sorry, got to go, need to get back to the shop - the police are coming round for their bribe'. It's just endemic. And seemingly not just for legitimate services, but to avoid being hassled.
    
    (Also heard anecdotally that police must pay big bribes to get plum jobs, e.g. Goa - where they can shake down tourists and take bribes in exchange for ignoring drug offences).
    
    So this seems like a good idea - though paying police and other officials more would reduce the demand for bribes, presumably.
    [ link to this | view in chronology ]
Joe, 6 Apr 2011 @ 9:24am

This reminds me of an article I read comparing prostitution laws in Sweden and Finland. Sweden, in an effort to fight human trafficking, changed the laws to make the buying of sex illegal, but not the selling. Thus shifting the punishment from both parties to the instigator, much like the bribery case in India. The strategy is apparently working when they compare the rates of human trafficking to Finland.
http://www.thelocal.se/9621/20080110/
[ link to this | view in chronology ]
- Christopher (profile), 6 Apr 2011 @ 12:06pm
  
  Re:
  Sweden shouldn't have even made the buying of sex illegal. If they TRULY wanted to get rid of the human trafficking, they would have made prostitution totally legal and put STIFF penalties into place if you are found to be moving people around as slaves.
  
  Life in prison type penalty for the first offense!
  [ link to this | view in chronology ]
Anonymous Coward, 6 Apr 2011 @ 9:27am

This is the stupidest shit I've ever read.

"Once a bribe is given, the bribe giver and the bribe taker become partners in crime."

So, I can walk up to the Chief of Police in India, offer a bribe, and we're both criminals under the law?
[ link to this | view in chronology ]
- The eejit (profile), 6 Apr 2011 @ 9:49am
  
  Re:
  Only if he accepts. You rolled a natural 1 on your Read check.
  [ link to this | view in chronology ]
- Anonymous Coward, 6 Apr 2011 @ 9:49am
  
  Re:
  if he accepts it, yes
  [ link to this | view in chronology ]
Joseph K (profile), 6 Apr 2011 @ 9:45am

Try and See
My attitude on ideas like this is always the try and see approach. I can think of a lot of reasons why it wouldn't work, but the real test is if it does work Trial and error is so much more illuminating than any sort of speculation. Of course, asking lawmakers to have the presence of mind to promptly eliminate laws that don't work would be more than a little naive.

Nonetheless, I like the idea of trying this on other vice crimes, like prostitution as another commenter mentioned. Or also on drug sales. Though I don't approve making any drug sale or use illegal, at least only making the sale of drugs illegal would be an improvement.
[ link to this | view in chronology ]
JTW (profile), 6 Apr 2011 @ 9:58am

This is the Prostitution in Sweden model
Interestingly enough, I just read about this same model for prostitution in Sweden. It is not illegal to sell sex, but it is very illegal to buy (or facilitate) it. The pimps are cut out because the women can safely go to the police, and the potential johns have to be much more careful about breaking the law since the full force of the law falls on them. http://www.vancourier.com/Feminist+lawyer+outlines+Swedish+prostitution+success/4398890/story.html

Sure there are flaws (like johns who "silence" their victims) but the experience in Sweden shows that these are no worse than the system they replace.

This is also the opposite of "joint and several" liability here in the US. This deserves some more discussion, Mike!
[ link to this | view in chronology ]
- Christopher (profile), 6 Apr 2011 @ 12:08pm
  
  Re: This is the Prostitution in Sweden model
  The best solution would just to have legalized prostutition, realize that women have a right to sell their own bodies, and moved on.
  
  The fact is that the ONLY thing this does is push prostitution underground, where anything at all can happen and pushes men who aren't getting any to go out and rape women.
  [ link to this | view in chronology ]
Kris B, 6 Apr 2011 @ 10:09am

Great idea!
I think this idea is phenomenal. It shows genius on the part of Mr Basu and flies in the face of perceived realities. SO...it will probably work.

I find it wildly humorous that so many have posted without reading the full article. This only applies to services that a citizen are ALREADY ENTITLED TO (drivers license, public health care, water/sewer services) and has jack shit to do with campaigns, government elections, etc. We need a crafty term for 'kids who don't read good'...illiterate has too many syllables for them to understand.
[ link to this | view in chronology ]
Jesse Jenkins, 6 Apr 2011 @ 11:01am

Briber or Bribee?
This could be interesting. I recall reading about the ABSCAM FBI sting when I was younger, but had my memory refreshed when I later read "Charlie Wilson's War". As described, the FBI set up agents/actors who attempted/succeeded to bribe congressmen for political favors. This type of law would have made it perfectly legal for that type of activity, if I get this right, but it might end up also improving the quality of our government! Hard to foresee all the "blowback", but heck, anything might be better than what exists today. IMHO.
[ link to this | view in chronology ]
Some Other Guy, 6 Apr 2011 @ 11:08am

Possible bribery solution:
Grant immunity to whichever party to the bribery reports the other first?
[ link to this | view in chronology ]
- The eejit (profile), 6 Apr 2011 @ 11:53am
  
  Re: Possible bribery solution:
  Wonderful! Introduce the Prisoner's Dilemma into politics. Great Idea! Shame it's patented. IMM'ASUIN'YOU!
  [ link to this | view in chronology ]
Anonymous Coward, 6 Apr 2011 @ 11:11am

So if I bribe someone, I can then blackmail them to do whatever I want for the rest of their/my life in fear of me reporting them. Not sure if that's a good idea either.
[ link to this | view in chronology ]
- Anonymous Coward, 6 Apr 2011 @ 11:23am
  
  Re:
  (I suppose you can make blackmail illegal, but politics just isn't that simple. People will deny the blackmail, and the politicians will deny accepting any bribes, but they will be surrounded by people trying to bribe them. If someone gives a politician a box of chocolates, that can be considered a bribe if they later pass legislation in their favor. The politician will then argue that it wasn't the bribe that caused him/her to pass the bill, but it was because he thought it was a good bill. People will mail items and laptops and all sorts of stuff to the politician in ways that make it difficult for the politician to refuse the 'bribe' or know where to send it back to, sure they can throw the items away upon receiving them, but then how do you prove that they weren't accepted. The politician would be surrounded by people trying to give them stuff in return for favors in ways that are hard to refuse or even know how to refuse. Politics is a lot more complicated than what this article makes it out to be).
  [ link to this | view in chronology ]
Chief Elf (profile), 6 Apr 2011 @ 12:49pm

Get rid of all crime laws?
>"another unintended consequence is that it could increase false accusations of bribery"

Doesn't every criminal law have the possibility of increasing false accusations?
[ link to this | view in chronology ]
- Christopher (profile), 7 Apr 2011 @ 6:39am
  
  Re: Get rid of all crime laws?
  Unless you put into place statues of limitations? Yes, it does. However, the real point is that a good 90% of our criminal law is people trying to push 'morality' on other people outside of the big 4 morals which they shouldn't be doing.
  [ link to this | view in chronology ]
  - Christopher (profile), 7 Apr 2011 @ 6:59am
    
    Re: Re: Get rid of all crime laws?
    Statues...... I meant to say "Statutes"...... bad day here.
    [ link to this | view in chronology ]