Beyond the “lokpal” bill

The recent events in India have captured the world’s attention – the New York Times did two pieces on this theme in a week- and the country seems enraptured with Anna Hazare’s fast unto death for the passage of the anti corruption Lokpal bill. The problem is that what happens even if the bill passes? What are the next steps? Does the existence of the bill miraculously eliminate corruption from public life? Does it deter politicians and civil servants from acts of nepotism and chicanery? Is the legal system ready to imprison those whom it so recently worshipped? In short does the mass hysteria over the Lokpal bill really get at the roots of the problem of corruption in India or is it merely the first shot in a very long battle – a battle which sorely needs both analysis and development of a long term strategy.

There are a number of theories how developing countries like India can tackle corruption at its roots. The two most prevalent are the “wholesale/retail” theory and the second is the “ broken windows” theory.

According to the “wholesale/retail” theory, the best way to attack corruption is to focus on the large projects which have substantial payoffs. Curtailing these payoffs will lead eventually to a cleaner public life. To that end one should therefore focus on the procurement process – making it clearer and more transparent. Using the Internet to publicly detail and follow all large government procurements could deter the advent of agents and people willing to bend the rules to benefit some individuals. Followed by a detailed monitoring of financial outflows, argues this approach, would lead to a more honest system that people could believe in and that this would invariably” trickle down” into all transactions at the retail level as well. Economic growth coupled with this trickling down would eliminate the retail or “tea money” type of everyday corruption. That at least is the theory.

The “broken windows” however starts from the other end. The theory derives from the way crime was reduced in metropolitan cities in the U.S in the eighties and nineties by its focus on small and petty crimes. Originally the  “broken windows” theory was a criminological theory of the norm setting and signaling effects of urban disorder and vandalism on additional crime and anti-social behavior. According to this theory monitoring and maintaining urban environments in a well-ordered condition would prevent further vandalism as well as an escalation into more serious crime. A successful strategy for preventing vandalism is to fix the problems when they are small. Repair the broken windows within a short time, say, a day or a week, and the tendency is that vandals are much less likely to break more windows or do further damage. The theory thus makes two major claims: that further petty crime and low-level anti-social behavior will be deterred, and that major crime will, as a result, be prevented. This theory can be applied to everyday corruption as well.

A major factor in determining individual behavior is social norms, internalized rules about the appropriate way to act in a certain situation. Humans constantly monitor other people and their environment in order to determine what the correct norms for the given situation are. They also monitor others to make sure that the others act in an acceptable way. In other words, people do as others do and the group makes sure that the rules are followed. But when there are no people around, as is often the case in an anonymous urban environment as well as in most petty corruption cases, the monitoring of or by others does not work. In such an environment, corrupt individuals are much more likely to get away with their graft. When there are no or few people around, individuals are forced to look for other clues—called signals—as to what the social norms allow them to do and how great the risk of getting caught is. An ordered and clean environment sends the signal that this is a place which is monitored, people here conform to the common norms of non-criminal and non corrupt behavior. A disordered environment where the common wisdom is that “everybody does it” or that “there is no other way but to bribe to get your way” sends the opposite signal: this is a place where people do as they please and where they get away with that, without being detected. As people tend to act the way they think others act, they are more likely to act "disorderly" in such an environment and thus multiply the petty acts of corruption over a larger and larger area. So if there is a stringent application of the law for all petty crimes of extortion – starting with “tea money” or “bribes to evade transport fines” among others- this will slowly percolate the society creating an environment where larger corrupt acts will be seen to be unacceptable and hence less prevalent.

And what is the empirical evidence about the efficacy of either strategy in real life?

South Korea started opening up all its procurement on the Internet. KONEPS (Korea Online e-procurement system) was created in 2002 to win public confidence by improving transparency and efficiency in procurement administration. In the past, procurement works for entire public institutions had been processed in paper based form and manual works, which required that business people personally visit the government offices frequently and register repeatedly with each procuring office. Since its creation KONEPS has become the world's largest cyber market reaching an annual trade volume of USD 43 bn by 2005. It is estimated that transaction cost worth about $4.5 billion have been saved yearly and 90% of this value has been related to cost savings in requiring information and visiting government agencies for private agencies. What is left unstated is that it managed to eliminate a great deal of public corruption as well.

New York had the police more strictly enforce the law against subway fare evasion, public drinking, urination, and the "squeegee men" who had been wiping windshields of stopped cars and demanding payment. According to the 2001 study of crime trends in New York by George Kelling and William Sousa,[3] rates of both petty and serious crime fell suddenly and significantly, and continued to drop for the following ten years.

One can argue that in dire cases like India, what is required is the application of both of these theories simultaneously!