If you make corruption transparent, will it go away? Maybe
China is perceived as being less corrupt than India. But, given the varying state in attitudes towards change, that is unlikely to last.
Ask people what upsets them most about the divide between the rich and the poor and you usually find it is not so much the inequality itself, but where that inequality came from.
Few people mind clever entrepreneurs being super rich and, oddly, inherited wealth as long as it is considered to have been honestly come by and it has an inheritance or wealth tax attached to it doesn't much bother people either.
What does bother them is high levels of undeserved corporate pay; rewards for failure; and most of all, fortunes won via corruption of one kind or another. They also loathe cheating officials who get rich on the back of bribes and abuse of their positions.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Authorities all over the place know this: that's why our papers are full of politicians promising actions of one kind or another against the world's tax dodgers and benefit cheats and why in developed economies, governments make sure bureaucratic bribes don't really exist.
It is also why the Chinese authorities make such a big deal out of clamping down on corrupt bureaucrats: they know that social unrest is rarely more than a particularly greedy official away.
But what happens when the state just isn't up to the job? China regularly vows to stamp out corruption. But it has 50 million-odd state employees, and the frequency with which they end up being convicted of all manner of shenanigans suggests that bribery and the like remain as common as ever.
It is the same in India, where bribery is entirely routine: everyone accepts that if they want to register their house, get a driving licence, get their electricity connected, get admitted to hospital or even report a crime to the police, they will need to pay at least one person along the way and probably several.
The upshot? In 2010, India ranked 87/178 and China 78/178 in Transparency International's survey of perceived corruption.
It could be worse of course. But both countries are far too poorly placed on the list to be able to claim the stable property rights, legal process and clean governance necessary for a full transition from developing economy to developed. Bad governance doesn't just irritate people. It kills economic potential too.
So what can make this change? Could it be the victims themselves? A newish website (2010) has been set up in India to help them have a go Ipaidabribe.com.
Go to it and you can enter the details of bribes you have been obliged to pay who, where, why and how much. That not only establishes "the market price of corruption" as the website puts it, but it brings the whole thing out into the open, providing a forum for people to exchange information about both paying bribes and how to avoid paying bribes.
It also brings risk to bribe takers for the first time: its founders (Swati and Ramesh Ramanathan) hope that the experiences already reported on the site will show patterns of corruption in particular departments and start to shame government departments into cleaning up their acts.
Will it work? It is probably too early to say. But it is off to a good start. So far, over 15,000 bribes have been reported and you, hopefully along with a few government officials, can have a look at a breakdown of them to see where anti-corruption action is most urgently needed (the Bangalore Police Department it seems).
The idea has also spread to China where several anti-bribery websites sprung up last summer. However, things aren't going so well there: the Chinese authorities say they are anti-corruption but it appears they are also against the population doing anything about it: all of those sites appear to have been shut down within a matter of weeks of launching.
I'm not crazy about either of them right now, but if I was forced to bet on either China or India as a long-term economic winner, this is yet another reason why I think I would choose India.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
-
Energy bills to rise by 1.2% in January 2025
Energy bills are set to rise 1.2% in the New Year when the latest energy price cap comes into play, Ofgem has confirmed
By Dan McEvoy Published
-
Should you invest in Trainline?
Ticket seller Trainline offers a useful service – and good prospects for investors
By Dr Matthew Partridge Published
-
Beating inflation takes more luck than skill – but are we about to get lucky?
Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
By Merryn Somerset Webb Published
-
Rishi Sunak can’t fix all our problems – so why try?
Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
By Merryn Somerset Webb Published
-
Young people are becoming a scarce resource – we should value them more highly
Opinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
Ask for a pay rise – everyone else is
Opinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
By Merryn Somerset Webb Published
-
Why central banks should stick to controlling inflation
Opinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
By Merryn Somerset Webb Published
-
How St Ives became St Tropez as the recovery drives prices sky high
Opinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
By Merryn Somerset Webb Published
-
The real problem of Universal Basic Income (UBI)
Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
By Merryn Somerset Webb Published
-
Why an ageing population is not necessarily the disaster many people think it is
Opinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
By Merryn Somerset Webb Published