If you make corruption transparent, will it go away? Maybe

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.

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.