Hurricane Sandy chased me out of Boston and since I could not get out via New York, I took a flight in the opposite direction to Mumbai. India has the most wonderful bookshops, full of the latest global hits at reasonable prices, but also Indian books that are not easily available abroad. Indian writers have a flair for the English language that is inimical and lyrical, reflecting the deep cultural respect for articulation, best summarized by Nobel Laureate Amartya Sen’s book titled “The Argumentative Indian.” 

Where else can you get the latest book by former CEO of Procter & Gamble India, Gurchuran Das, called “India Grows at Night ― A Liberal Case for a Strong State” (Penguin)? He basically asked the question: “How can a nation become one of the world’s emerging markets despite a weak, ineffective state?” The view that “India grows at night while the government sleeps” is what he calls a tale of private success and public failure.

I have not found anyone who has expressed the current issue so elegantly: “The big story of the 21st century’s first decade is how China and India have embraced the market economy and have risen. The common mistake is to think that the race between China and India is about who will get rich first. The truth is that both countries will become prosperous and reach middle-income levels. The race is about who will fix its government first. India has law, and China has order, but a successful nation needs both. If India fixes its governance, before China fixes its politics, India will win the race, as Raghav Bahl says. If neither succeeds, then both may get stuck in the ‘middle-income’ trap. To avoid that fate India needs a stronger state and China needs a stronger society.”

This week, China’s new leader Xi Jinping put in the national agenda the pressing need to tackle corruption. Dealing with corruption is today the highest priority in almost all economies, more so in emerging markets. Market forces alone will not solve corruption ― the state has to take a leading role, but which policeman can police himself?

At Mumbai airport, I picked up a remarkable new book by N. Vittal, former Central Vigilance Commissioner in India, the post of which was created in 1998 to investigate corruption against Class I Indian civil servants, including state-owned enterprises and bank officials. Entitled “Ending Corruption? How to Clean Up India?”(Penguin 2012), Vittal’s book is a valuable practitioner’s handbook on how to tackle corruption in large and complex bureaucracies.

Corruption is often tackled using the method of the policeman, as corruption is legally a crime, but he argues that you need to use the method of both a doctor and an engineer to treat corruption as a disease of the whole body politic and society, and adopting engineering principles to design an efficient and robust system of governance. All engineering systems need maintenance, which can be preventive, predictive and break down. He sees corruption requiring the extreme level of breakdown maintenance. He argues that combining the medical and engineering approach is the best formula for tackling corruption.

When I first started thinking about the issue of corruption whilst working in the World Bank, I thought that corruption was a problem of income transfer. If public servants are badly paid, they simply extract a “rent” from those who want public services and this income transfer equalizes the income between the underpaid public servants and the more highly paid private sector. Such transfers are unfortunately highly regressive, meaning the poor pay more than the rich.

There are really two types of rent ― one bureaucratic, the other political. For most technical and administrative jobs, it is possible to make a reasonable comparison between public service and private salaries. However, for political jobs that wield very large power, the cost of politics can be very large indeed. According to the BBC, the recent U.S. presidential elections cost $6 billion, and since the U.S. Supreme Court recently ruled that there is no limit on how much political donations each one can make to political parties, this means that the democratic process may favor those who are willing to buy influence.

Vittal examines the treatment of corruption from the perspective of politics, bureaucracy, judiciary, media, the corporate sector, and citizens and NGOs. He argues that the best antidote to corruption is sunshine and transparency. The medical approach is to strengthen the doctors, such as the judiciary, the election commission, and auditor-general and the anti-corruption agency. The engineering approach requires IT, media, education and bureaucratic reform to address the twin deficits of governance, the “trust deficit in government credibility” and the “ethical deficit” requiring people in power to uphold the values of protecting the public interest.

In the end, Vittal recognizes that corruption is about dealing with the weaknesses of people and how to select strong, ethical officials to put in positions of power. Making the right choices depends on society and each and every member of it. The strength of this book is that it is a serious one with practical insights, but written with charming humor.

Every Chinese knows the story of the black cat or white cat, as long as it catches mice. Vittal tells the Indian story of a rat being harassed by a cat. It consulted a wise owl, who advised that since the rat is weaker than a cat, then the rat should become another cat, which can fight back. The rat thought about it and came back the next day to ask the owl, “But how do I become a cat from a rat?” The owl wisely intoned, “I am here to give you policy directions ― implementation is your problem!”

As the Hong Kong and Singapore experiences have shown, when society feels strongly against corruption, something can be done about it. Change begins by taking the first step. 

By Andrew Sheng

Andrew Sheng is president of Fung Global Institute. ― Ed.

(Asia News Network)