India is not manageable anymore, and it has to split into thirty different
countries. India, the world’s largest kleptocracy, is at crossroads. James
Roberts points out the traditional power base of the ruling Congress Party is
benefiting from the corruption. This includes 700 million people in rural India
who are involved primarily in farming, many of whom benefit from generous
government subsidies and are therefore tolerant of graft in these programs. But
as more people move from farms to cities in search of middle-class jobs, that
power base shrinks.
In contrast, the middle class faces daily demands for bribes to process
government-mandated documents ranging from $45 for a driving license, $110 to
be admitted to hospital, $130 for a marriage certificate to $100 to a customs
officer at Mumbai Airport because a wife’s name did not match her husband’s in
their passports. In addition, beyond insult from petty bribery, there is
injury from more sordid corruption.
I declare the self-determination of peoples to pursue any state of their choice.
As we saw after the Cold War, numerous new states were born out of the ruins of
the Soviet Union as the various republics decided that smaller states were
preferable to an enormous and oppressive federation. Small is beautiful!
Greece has proven it cannot function as a single state, but only as a
confederation of city-states, such as the cities of ancient Greece. Each city
must be a different state with its own political system. Athens might adopt
democracy, Rhodes monarchy, Salonica pure capitalism, Piraeus anarchy, and
Patras socialism. Greece now is not a democracy, but a dysfunctional
kleptocracy.
Northern India has largely returned to normal after the country’s worst power
outage in 10 years. Indokleptocrats do not give a damn, unless it brings
kickbacks! The blackout left more than 300 million people without power.Sixty
percent of the usual power output in the eight northern states affected had been
restored by mid-morning, largely by drawing electricity from the eastern and
western grids.
Derek Scissors points out that tapping into rising middle-class anger, former
Indian soldier-turned-activist Anna Hazare used hunger strikes and other
Gandhian tactics to try to change politics as usual. Citizens are better
educated and better informed (e.g., via Twitter), and they are demanding changes
in business as usual. Hazare is pushing for the creation of an anti-corruption
watchdog to be called Lokpal, from the Sanskrit lok (people) and pal
(protector), which would have jurisdiction over all government officials. Indian
Prime Minister Manmohan Singh initially rejected the proposal on grounds that it
could undermine parliamentary democracy.
Scissors notes versions of the Lokpal legislation have existed for decades but
foundered on special-interest opposition and constitutional questions.
Reflecting the expansion of the middle class, Hazare has had more success with
his version of Lokpal, and some variant is likely to pass the legislature in the
next few months. Indians remain divided on Hazare’s approach, with some viewing
it as an emotive and misguided attempt to promote a utopian one-step solution.
No matter one’s view of Lokpal, it does not get at the most important issue.
Lokpal targets corrupt entities within the state, but the problem is the very
notion of state activity!
The northern power grid had crashed in the middle of the night, on increased
demand due to high summer temperatures. This kind of breakdown shows that the
system needs some big overhaul to increase credibility and increase the
confidence in the system of India.
The black market is also directly connected to recent headlines claiming that
India has lost more than $400 billion due to illegal capital flows. Some of
this is the result of ill-gotten gains from crime, which were illegally earned
and ideally would never have existed. Other funds are lost either because they
fled domestic restrictions or because India restricts capital movement.
Scissors points out that despite progress in the reform era, India retains tight
capital controls even by the standards of emerging markets. What would count
elsewhere merely as citizens and companies investing overseas — and bringing
benefits back home in terms of financial returns, resources, corporate assets,
and so on — is not permitted in India. As in all economies throughout history,
people follow their self-interest and invest abroad anyway, but no benefits flow
back to India, because the investments are deemed illegal by an interventionist
state.
In some incidents of corruption, the Indian government’s guilt is directly
apparent. The Commonwealth Games, for example, were plagued by lack of
competition in contract awards. In other cases, the harm comes to the state, not
the people, which should not be defined as corruption or any sort of problem in
the first place.
Economic growth in India has slowed to its lowest level in almost a decade, and
the government recently scaled back plans to invest around $1 trillion in
infrastructure projects over the next five years, becaue Indokleptocrats can
make more kickbacks from military purchaces!
The largest bribes originate in the military industry. Military procurement is a
corrupt business from top to bottom. The process is dominated by advocacy, with
few checks and balances. Most people in power love this system of doing business
and do not want it changed. War and preparation for war systematically corrupt
all parties to the state-private transactions by which the government obtains
the bulk of its military products. There is a standard 10% bribe to kleptocrats
for military purchases.
Participants in the military-industrial-kleptocrat complex (MIKC) are routinely
blamed for mismanagement, fraud, abuse, bribes, and waste. All of these unsavory
actions, however, are typically viewed as aberrations, malfeasances to be
covered-up, while retaining the basic system of state-private cooperation in the
trade of military goods and services and the flow of bribes. These offenses are
in reality expressions of a thoroughgoing, intrinsic rottenness in the entire
setup.
India is wrestling with how to deal a decisive blow against corruption. Scissors
asserts the answer is plain: Deal a decisive blow against state interference in
the economy. To help, the U.S. should offer a proposal for a bilateral
investment treaty (BIT) that liberalizes Indian investment. This would sharply
reduce the incentives for corruption. It also might serve as political cover for
future Indian governments that want to make the difficult choices needed to
defeat corruption in its many forms.
