Anatomy of a bribe seeker - Part 1

This is a two part series on corruption in public life and a new way of looking at it.

Bribery and corruption are rampant in most of the public institutions in developing countries. Economists call this type of transaction as ‘Opportunistic behavior’ or Rent seeking. It implies, the officer who is authorized to give sanctions and permissions, will seek personal gains by virtue of being in that place. This blog is an attempt to understand this phenomenon in terms of behavioral patterns of people who engage in these kinds of transactions.

Behaviour patterns of human being can be broadly classified based on its origin as ‘Learned’ and ‘Earned’ one. Earned behaviors are those with which we are born with and ‘wired’ in our human brains for thousands of years. Learned behaviours are those which we learn consciously from our parents, in schools, through our interaction with neighbors, friends and from other social institutions which we are part of.  Earned behaviors are generally of two broad types, ie Reciprocal altruism and Kin selection. This write-up is an attempt to understand the phenomenon of corruption from this vantage point.

Reciprocal altruism implies that co-operation between two un-related individual is conditional, based on reciprocity of give and take. It signifies that an individual in position of authority do a ‘favor’ to an another biologically un-related person only if the latter reciprocates in a particular way that is desired by the former. In simple language, he is altruistic to the extent of being reciprocated. It is like ‘I will scratch your back if you scratch mine’. It is the primary mechanism through which we interact with an ‘outsider’. In this context, he is seeking a reward, which may or may not be in the form of a bribe, as an act of reciprocity for doing a ‘favor’ like issuance of a driving licence, electricity connection, approval for some benefits etc.

This argument is not as simplistic as it initially appears. The natural question that one asks in that case would be why most of us don’t give or seek bribes in our daily transactions despite our actions are beneficial to many others. To answer this, we have to understand that, many of our actions are not necessarily framed as altruistic. Rather, they are framed as market transactions. For example, a Road transport bus conductor don’t seek bribe from us because his act of collecting money from a passenger, is framed as a market transaction, and not as an altruistic one.

A bribe seeker assumes his action as Altruistic when he has given authority to interpret rules where he can deny, delay, discriminate or disapprove a benefit. This tempts him to frame his action as altruistic. By framing it as altruistic, he creates a sense of entitlement and so seeks reciprocity and rewards. Sometimes, his discretionary power of selecting a particular beneficiary amongst many, itself is framed as he is altruistic to that beneficiary. The moment he himself frames his actions as altruistic, he is seeking reciprocity for his action from beneficiary.

However, this expectation of reciprocity will normally kick in only when the beneficiary is known, identifiable, and is in physical proximity to the authority (who ‘sanctions’ the benefit). Another criterion is that the beneficiary should himself acknowledge that the benefit he receives is an act of altruism and so has to be reciprocated. If these conditions do not get satisfied, this transaction will be considered as a ‘market oriented one’.

Even this leaves a lot of things unanswered.  We do see a lot many public officials not taking any bribes yet do altruistic work for the betterment of society at large, despite having a lot of discretionary powers and identifiable beneficiaries. They are found to be satisfied with their salary and other perks which they are legally entitled for.  If it has been an earned behaviour, all men in this earth should been behaved in similar manner. But it doesn’t happen so.

Public official want all their actions to be a rewarding experience. Without it, they neither are likely to act proactively nor perform to the expected level. Contrary to popular beliefs, rewards are not necessarily illegal nor morally distasteful. Fortunately, rewards can be either intrinsic or extrinsic in nature. Intrinsic rewards come in the form of intangibles like honor, fame, prestige, recognition, self satisfaction (by seeing the social benefits he had created through his action) etc. This sense of achievement is a reward in itself and the ‘honest’ officer would be contented with it. Human beings are endowed with a wonderful cognitive phenomenon of rewarding themselves for their own actions and hence can derive a self congratulatory message by themselves.

None will be having any objection towards intrinsic rewards. Even many of extrinsic rewards like medals; price money etc are instituted by government itself. Only those extrinsic rewards which are mostly in monetary terms, and are sought from the beneficiaries are considered illegal.

 Another way of seeking reciprocity is in the form of intrinsic rewards is by the way of expectation of building a credibility which is likely to be rewarded at the later stages. This is by creating a reputation of being an honest officer which may (or sometimes may not) be recognized and appreciated sooner than later. Remember, reputation is a fixed deposit in his ‘virtual bank’ which he believes, can be en-cashed later. This is termed as Delayed gratification.

                                                                                                                  Contd in Part 2

Anatomy of a bribe seeker- Part 2

Second dimension of our Earned behaviour is Kin selection. It refers to our preferences for own kin, which may be biological in nature (like his or her offspring, near and dears or blood relatives). However, it may also include people from own community, tribe or any other socially recognized identity such as caste. As a public servant, he may be inclined to shower benefits to his own kin and treat him as ‘more equal’ than others. Sociologists call this behaviour pattern as Nepotism and are considered as another form of corruption and so is punishable.

This kind of Nepotic behaviour is widely prevalent in almost all societies, both visible and invisible manner. Some of its manifestations are neither illegal nor prohibited by law but is considered as immoral and tasteless. For example, a father-political leader makes his son as ‘inheritor’ of his political career or film star father facilitates entry of his son in to acting. However, some of its manifestations are plainly illegal (like recruiting own son in government service or giving government contract to own men etc).

Kin selection happens because people would like to see themselves as ‘helping’ their own people. These acts are considered as a social virtue and so have a moral sanction. Recall how people despise men who did not do ‘anything for our own people’ despite being able to do so and how he ‘forgot’ his own men. People like to see their ‘own’ men in positions of authority so that he can get the ‘things done’. They refuse to trust ‘others’ and expect him to be sympathetic to his own men rather than being an impartial administrator.  

In a way, kin selection is a kind of  Nepotic altruism.  This is because; being Nepotic, is reciprocal in the sense that he is favoring a man of his own kin because he finds that the same altruism will be reciprocated in one way or other. This is also because, to reciprocate his altruistic behaviour, he needs some identifiable signals and hence kinship forms a signalling mechanism.

Both these earned behaviours, ie Reciprocal altruism and Kin selection, are hard wired in to human brain since time immemorial and was believed to be one of the prime reason for the physical survival of our Hunter gatherer forefathers. Only those men and women who could exhibit these behaviours were able to pass their gene to their next generation so these behaviours persisted over thousands of generations.

Men seek reciprocity because human beings are motivated by self interest (which is not same as selfish interest). A deeper understanding of self interest and hidden motivations will help us to tailor an incentive structure that focuses on intrinsic rewards and discourages illegal ones. In order to reduce, if not eliminate, corruption from public life, we have to understand the true nature and implication of this pre-modern behaviour pattern of human race. Based on insights from this understanding, following policy measures can be adopted in order to have more probity in public services.

a)      Introduce markets wherever feasible. We have seen how corruption got completely eliminated in Telephone allocation and Airline ticket booking. This is because, people stopped viewing these transactions as ‘altruistic’ and realized that they are market transactions and gets incentivised as such.

b)      Reducing discretions and rent seeking powers will help public authorities to see their acts not as an act of altruism but as a part of their ‘job’ for which they are paid for. For this to happen, rules and procedures may have to re-engineered and effective monitoring and supervision have to be instituted.

c)      Beneficiaries should not be made to physically present in the vicinity of public servant and all their communications should be in faceless manner. In other words, public servant should work behind a ‘veil of ignorance’. This will help public servant to see his acts as not as ‘altruistic’ but as part of his job for which he gets remuneration.

But much of the policy making aspects of governance cannot be fitted in to these categories.  A public servant has to take discretionary decisions, have to meet individuals and groups who may be benefited (or adversely affected ) by his action.  Most of the functions of the government are of the nature of ‘market failures’ and hence can’t be replaced with market forces. So how to go about under these circumstances?

Bribery as an extrinsic ‘reward’ is sought mainly because intrinsic reward mechanisms have either failed or proved inadequate. Without fixing this failure, any move towards curbing corruption would be ineffective.  Our excessive focus on disincentives and negative rewards like anti corruption watchdogs, punishment mechanisms etc are of limited impact. Primary focus of our anti corruption efforts should be on how we can institute an intrinsic reward mechanism which will obviate any temptation for seeking any extrinsic rewards. Public servants in least corrupt countries are motivated by the intrinsic rewards and recognition. These intrinsic rewards make them non- reciprocal altruists. On the other hand, officers in a highly corrupt country will be satisfied mostly by rewards in tangible forms and are not ready to be altruistic without any reciprocal (tangible) benefits.

In conclusion, I would like to summarize my argument like this. Our earned behaviours don’t make us honest to the extent we wish to see us in a modern civil society. It is our learned behaviours that help us make honest public life and efficient functioning of civil society possible. Societies differ mainly because they differ the in way which they learn new behaviours and attitudes. Key to eliminate corruption in public life lies in understanding the true nature and implications of our earned behaviour and understand the way in which this behaviour pattern can be changed by introducing learned behaviours on the top of it. 

Global trade and it's peace dividend- Part 1

The world which we are living today is the most peaceful one in the history of human civilization where in which wars, violence and homicide rates are extremely low when we compare the same with any other period in the human history. According to Steven Pinker, an Evolutionary psychologist at Harvard University, this was due to the pacification  and civilization processes that happened over the last few of centuries, owing to various social, economic, political and technological transformation. In the last few decades, this transformation been accelerated by the Human rights movement which further brought down violence again by a substantial degree
.

According to Emmanual Kant, 18 th century French philosopher, the triad of pacifying force that makes the world a peaceful one was

1) Democratic government, 

2) Engagement with International community  and

3) Open economies and global trade. 

There is a high degree of positive correlation between global trade and global peace. You can read a paper in this regard by Patrick J MacDonald here. Conventional wisdom says that, more the trade happens; more would be it's peace dividend. As per that view, this happens mainly because the trade create a large network of inter-dependencies and economic linkages amongst various stakeholders in different countries. These beneficiary stakeholders act as natural buffers against any kind violent aggression and wars. In other words, it assumes that if goods, services and capital flows freely across the state boundaries, its armies and navies are less likely march across those borders.

However, this explanation seems to be inadequate and not fully convincing. Global trade by itself did not prevent wars. European countries were much globalized and international trade as percentage of national GDP was much higher in the first decade of last century. Despite this, it could not prevent World Wars from happening. Similarly, India and China have nearly seventy billion US $ trade happening annually which did not lead to any easing of border tensions. Interestingly China – Taiwan trade exists despite China not even recognising Taiwan as a sovereign nation.

How then the Trade- Peace paradox be explained? Is there is causal relationship amongst the two? And if yes, in which direction the causality runs? Whether the Global trade happening owing to absence of war or the war does not happen because the trade is flourishing? To understand this in perspective, we need to go in to motives and incentives of the leaders and the elites who control the national narrative.

National leaders of modern times and princes of medieval periods alike, have an insatiable ambition for greater honor and prestige by expanding their power and influence. In pre-modern times, the easiest and perhaps the only way to achieve the glory were to annex a foreign land and expropriate its natural resources. National prestige and honor was associated with the physical resources which a country was endowed with. Control and physical possessions of agricultural lands, mines, forest and water resources, etc were the assets with which a Nation was turned in to a powerful one. So, countries fought against each other to posses it, hence the wars were a natural state of affairs and peace was an interim arrangement between two wars. Primary motive was not the land in itself, but the honor, social prestige and recognition associated with its possession. Honor was the most valuable and precious commodity for which every king was ready to send their army to the battlefields, whether it was Napoleon Bonaparte or William Kaiser.  

In medieval times, economic growth was a Zero-sum game and productivity was static. Wars and predations were the primary means to add wealth. In other words, the general belief was ‘I will be prospering only if someone else were doomed’. Trade were happening even in those times as well. However, it was not more than an exchange of surplus and not recognized as an engine of growth. Larger philosophy of it was to appropriate maximum foreign goods and gold from others so to equip own army so that wars can be fought better.

Trade during colonial times were more of exploitery in nature where colonial powers dictated the terms and nature of the trade. It was essentially between colonies and their 'mother' countries and not between two sovereign nations. There were no international bodies to regulate and promote trade and global finance system was not matured enough to fund it. Instead of promoting peace, it created trade wars and violent competition for annexing colonies and expropriating its wealth.

In the 20 th century as well, national leaders had an irresistible urge, but certainly to a lesser degree, to go for war against other countries mainly for economic gains. Increasing democratization had a softening impact on these kinds of impulses. However, Autocrats and fascist leaders were showing the same medieval age mentality for self gratification and establishment of ‘honor’ through national wars and annexing territories for ‘growing population and food’ which resulted in 2 world wars. Meanwhile on the second half of 20 th century, an ideologically polarised world had triggered a large number of conflicts in many parts of the world, both international and intra-national. Communism put the centuries old phenomenon of pacification in to a reverse gear. Global trade got much disrupted and distorted not just by tariff walls but also by  ideological walls and ‘iron curtains’.

                                                                               Continued in Part 2

Global trade and it's peace dividend- Part 2

Idea of ‘Gentle commerce’ or commerce as a positive sum, wealth creating enterprise is an idea of European Enlightenment. However, that idea went in to various trials and tribulations and finally blossomed to its fully matured meaning only by the end of 20 th century. Interestingly, too many related and simultaneous phenomenon happened in the last two decades of the 20 th century. One was the end of communism and the march of capitalism which lead to demise of an ideologically polarised world. Secondly, knowledge based economy was taking center stage of the global economic order. Thirdly, WTO platform was created to give an institutional framework to regulate and promote global trade. Besides, a large number of technological leapfrogs happened which lead to faster and cheaper movement of goods, service, capital and human beings which resulted in a more connected world than ever before.

 With the rise of knowledge economy, human brains became the most valuable commodity in this planet. Much of the wealth creation in today's world is happening owing to the human ingenuity, technical and scientific know-how, best organisational and management practices and less due to mines and oil wells. Trade among-st the nations became the ’cheapest’ way to gain a valuable product rather than raiding or conquering. Meanwhile, cost of war increased and it ceased to be a profitable enterprise. Gains from peaceful pursuits began to far outweigh any likely gains from wars and raids.

In the modern, post-Soviet world, recognition and honor comes largely from the economic gains that an individual makes out of peaceful pursuits by engaging in economic activities. Countries ceased to debate on ideological pathways, withdrew from war and channelized their aspiration to strive to be a commercial power.  National elites are now being recognized and honored not just by the size of their army they command or the territories they control, but more by the leverage they possess in global economy, the technical know-how and patent they hoards and the standard of living its citizen enjoy. Entrepreneurs and technology czars became new popular icons in place of star studded Generals and medal heavy veterans. Ambitious young men and women channelized their desire for honor and social mobility by pursuing commerce and entrepreneurship. Unlike their forefathers, now they are not required to go to battle fields and die for protecting their ‘honor’.

Knowledge economy also leads us to come out of the Malthusian mentality of scarcity and resource constraints. Primary resources for economic development in today’s world are neither land nor mines underneath, but practically inexhaustible resources in the form of human brains. Hence no country will be deprived of fruits of development and prosperity just by not having enough natural resources within it. In today’s world, all and every country has an opportunity to prosper, if the national government build right kind of institutions and pursue right kind of policies and programmes that are necessary for economic growth.

Global trade in modern times played a catalytic role in propagating this idea of ‘Peaceful emergence’. Trade became a Positive sum gain where both and all the partners involved in it gets prosper. This positive sum gain dynamics alters the incentive for violence. The central idea is 'your trading partner is more valuable when he is alive and exchange goods with you than he is dead and you expropriating his wealth'.  Those nations which opened its borders, not only exchanged goods and services but also ideas, attitudes, and dreams. Trade hence allow people to know more about ‘others’ and their cultures, values and so to respect his life, limbs, property and dignity. In other words, a free market put premium on empathy.

Such a network of inter-dependencies are not just economic changes but also are accompanied by change in attitude. French philosopher Samual Ricards named this phenomenon as ‘Gentle commerce’ where in which society engaged in commerce develops an attitude of ‘Reciprocal altruism’. This reciprocal altruism enables people to be altruistic, at least to extent it is being well rewarded by the market forces and other similar economic actors.

However, this ‘Gentle commerce’ would work effectively only if the trade is happening on account of human ingenuity and entrepreneurial efforts in an open economy and free market setting. If goods can simply mined and sell off to others without having to do any value addition, (for example, rough diamonds, crude oil etc) it will have an entirely opposite effect. Again, if ideas and free thoughts can’t be imported along with consumer goods, it is unlikely to create any positive impacts on society. (For ex, countries like Saudi Arabia). These insular societies starved of ideas from rest of the world will always remain a threat to a pacified world despite having exports and imports of gigantic size.

As a concluding remark, my whole argument can be summarized here. Global trade by itself do not bring peace. However, it has a catalyzing effect in generating certain political, economical and ideological forces that incentivise peace and peaceful resolution of conflicts. Whenever and wherever it’s catalyzing effect does not get effective, or the incentives for peace are outwitted by primordial notions of honor, faith etc, conflicts may happen and wars can erupt. However, even under these circumstances, a web of inter-dependencies and forces of economic integration created by global trade can reduce and contain any such conflicts to a manageable limit. So is the role of global trade in fostering and promoting global peace.

Tragedy of Commonsense- Why people persist with bad habits

My close friend Abhishek, who is in his early 40 s, leading a happy and healthy life is a sweet spoken gentleman, who smokes moderately and drinks occasionally. On a casual conversation, I once indicated him about adverse health impacts of smoking and chances of Cancer etc. I expected him to be defensive by arguing that he is addicted to it and despite knowing the bad consequences, he is unable to quit and similar lines of arguments.

However, surprisingly he was arguing for ‘positive virtues’ of smoking, such as increased alertness, boosting energy levels, and was completely dismissive about cancer and other ill consequences. He has a ready set of arguments to disprove that smoking does not result in cancer as he had a smoking uncle who lived up to 80 years, non- smoking aunt died of cancer etc. He was not ready to listen to any evidences or scientific studies and reports on smoking and its impact on health etc. I was amused to hear his irrational arguments and his defence against indefensible.

It was an eye opener for me and I tried to understand more about this psychological phenomenon. Later on, I was happened to hear about an interesting cognitive phenomenon called Cognitive Dissonance which was introduced by an American social scientist called Leon Fistinger in late 50 s. It then solved my riddle about why certain people uphold irrational believes and arguments despite having strong contrary evidence against such.

In common man’s language, it is like this. When people are people are committed to a belief or engaged in a habit (like smoking), any contrary evidence against such belief will create a ‘Dissonance’ in the mind of the believer. This dissonance produces a great amount of discomfort and leads him to put all his efforts to either completely eliminate it or at least reduce its intensity. The pathways he adopts for reducing this dissonance depends on upon a) his strength of belief, b) nature of dis-confirming evidence, and c) social support he gathers, to continue his present day belief.  

Accordingly, he chooses any of the 3 different pathways.

a)     Completely disowning the belief and thereby eliminating dissonance

b)     Attempting to rationalize the belief by searching for confirming evidence

c)      Living with the dissonance with all discomfort it carries.

Abhishek, like most others, in the above case opted for the second option where in which his stocks of arguments for rationalization were enough for him to reduce the dissonance to a tolerable limit. Even if his confirming arguments/evidences were weak and plainly stupid, for him it was appeared to be smoothing balm for mitigating the discomfort arising out of dissonance.

His propensity to cling to the existing believes, despite dis-confirmation is also rest on the availability and presence of a Social support system to with whom he can easily interact and exchange ideas. In other words, he will be searching desperately for similar people who have same amount of dissonance and they try to come together for mutually reinforcing arguments and rationalization. In many cases, particularly in religious beliefs etc, the pressure to have such social support tempts people for propagation and proselyting activities.

In other cases, when the dis-confirmation evidence is so strong to refute or ignore and his own belief was not that strong, coupled with the fact that the ‘believer’ does not have a believers community to take solace, he slowly but surely will disown the belief and come out of it to adopt new set of belief.

If the beliefs are very strong, then a few will prefer to live with the dissonance (with all its accompanying discomforts and pains) rather than disowning the faith. However, this is very less likely to happen and in most of the cases either of the above two will happen.

It implies, the course of action one will follow after dis-confirmation will depend on the complex interplay of a) His strength in existing believes b) Nature, strength and irrefutability of dis-confirming believes and c) Society in which he lives.

In other words, many times we ourselves don’t know exactly why we are doing what we do, or why we chose that pathway. But this vagueness and obscurity about our real motivation does not prevent us from making perfectly logical sounding arguments for our actions and decisions.

Lessons for Policy makers-

 Policy maker who wish to bring a socially desirable habits should realize that people are not going to be convinced by mere propaganda and passive social campaigns to give up their long held ‘believes’. There is also a fundamental mismatch between people who cause it and the people who are adversely affected by it. Hence, the asymmetry of cost and benefits will be played out against adapting socially desirable behavior.

We suggest 4 ways out –

a)     Top-down approach- Almost all the undesirable habits and practices have vanished from this earth through legal ban clubbed with its effective implementation. By legal ban, this practice will be vanished from everyday experience and may fall off from menu people s daily chorus. When enough time passed, no one alive would remember them to ‘justify’ it and hence will no longer would be raked up for debates. For example, none would debate on the desirability of Caste discrimination today unlike 60 years back when people openly argued that Caste system have a divine sanction and hence be kept alive.

b)     Social shaming- Habits which cannot be policed and punished effectively can be brought under control by social shaming. For example littering on street or open defecation. However, for it to happen , a critical mass of people have to support such initiative and have to take lead in ‘coercing’ others to follow it.

c)      Catch them at young -  Children is the best vehicle for bringing a desirable changes as new and fresh beliefs can be inculcated in them before they happen to practice any otherwise socially undesirable practices.

d)     Make it easy to practice the desirable behavior by creating supporting infrastructure, Eco-systems, incentivising such behavior both by financial and social rewards. Again, by lowering the entry barrier, more people are attracted towards it and hence a kind of social legitimacy and acceptance is achieved. Similarly, make it difficult to practice the undesirable habits by clear disincentives, high entry barrier and partial bans. (Example- smoking ban in public spaces etc).

People will change not when they are asked to, but when they feel that there is no other option left. They are heavily biased towards Status-quo and exhibit surprising degree of inertia. Hence, a policy maker has to design the strategy which is multi-pronged, keeping in mind the biases, incentive structures and cognitive dissonance that an individual had to encounter for adapting a new habit.