According to the Transparency International’s Global Corruption Barometer 2013, released on July 9, a good 54 percent Pakistanis believe that corruption has increased a lot during the last two years. The police and public service (mainly revenue services) have scored the highest on the corruption perception index. Their score is 4.3 on a scale of 1-5 where 1 means clean and 5 means extremely corrupt.
More than 80 percent of the respondents rate these two institutions as the most corrupt in the country. Interestingly, political parties do not lag far behind with a score of 4.2. If reforms are on the agenda of the government in power and if we really want to control corruption in Pakistan, then the disruption of the unholy alliance of the three Ps – the policeman, the patwari (low revenue official) and the politician – should become the top priority on the reforms menu.
One thing is, however, encouraging. According to the Transparency International survey, more than two-thirds (69 percent) of the respondents have shown their willingness to fight corruption. This means that people are now more sensitive to the problem of corruption and the ruling elite can no longer afford to brush this problem aside.
We have a robust media and an independent judiciary. Both have worked as effective watchdogs against corruption in the last few years. Their focus has, however, remained on the big scandals involving millions and billions of rupees. The corruption that ordinary people face almost every day (of the policeman, the patwari, mobile credit officer and the lower courts etc) has never been a serious concern either for the government or for the watchdogs.
Some analysts argue that since our economy is small, the volume of corruption is not as high as is generally portrayed. This approach to corruption estimation is totally fallacious. The leakage out of the public money in the form of commissions and kickbacks etc is only one aspect of corruption. Although, according to rough estimates, over 50 percent of public money allocated to brick and mortar projects through the PSDP is wasted through corruption, yet it is only the tip of the iceberg. The problem is really more severe in nature. The damaging impact of corruption on economic growth and other development outcomes is far greater than outright embezzlement of public funds.
It has been established via empirical studies that corruption inhibits economic growth. It acts a stumbling block to the development of entrepreneurship in a society through diversion of talent from the productive sectors of the economy to sectors with high potential of rent-seeking. This assertion is vindicated by the fact that our youth still hanker after public sector jobs, even if they are low paid. It can be argued that this is due to unemployment and the fragile private sector which is unable to absorb the labour force. But the question is: why is the youth reluctant to undertake small enterprises? Certainly one major factor for seeking public sector employment is the potential of rent-seeking such jobs offer due their monopolistic nature.
A driving licence can be issued only by the office of the traffic police. An FIR can be registered only in your local police station and a case can be arbitrated only by a judge with relevant jurisdiction. This brings us to another point. Lack of competition and undue monopoly power breed corruption and generate opportunities for rent-seeking. Encouraging competition and reducing monopolies can turn out to be effective strategies for reducing corruption.
Wrong technological choices and bad public policies also have a lot to do with corruption. A big project involving huge purchases will be preferred to small projects due to potential of kickbacks and commissions. So the point is that corruption should not be taken only as the amount drained out of public allocations. The total amount that changes hands might be smaller when measured in terms of GDP or public allocations. But the huge potential of the economy and the people, which remains untapped due to widespread corruption is the real cost that should not be ignored while calculating the price of corruption.
What explains the pervasiveness of corruption in a society? Most of us think it is due to some sort of moral decay in the society. This thinking essentially implies that social norms and values determine the level of corruption in a society. But the point here is that social norms and values are different in different countries. Further, norms and values change very slowly and if corruption is function of norms and values, then it will perhaps take centuries to change. However, the role of values and norms in corruption cannot be ruled out. For example, in cultures like ours loyalties to clans, families and kinship networks often take precedence over public duties.
A more pertinent example highlighting the importance of social norms and value system in shaping the developmental outcomes is that of Italy. Professor Edward Banfield in his book ‘The Moral Basis of a Backward Society’ while writing about a village in Southern Italy writes “In a society of amoral familists, the law will be disregarded when there is no reason to fear punishment. Therefore, individuals will not enter into agreements which depend upon legal processes for their enforcement unless it is likely that the law will be enforced and unless the cost of securing enforcement will not be so great as to make the undertaking unprofitable”. On the other hand, Northern Italy is much better in terms of variables like adherence to rule of law and meritocracy. Social capital is comparatively strong and corruption is low in this part of Italy.
But the ‘norms-determine-all’ thesis does not convey the whole picture. Had norms been the main determinant of the level of corruption in a country, would Singapore have managed to largely eradicate corruption in a decade or so? And how did England abolish ‘old corruption’ of sinecures, sale and purchase of public offices etc? This was made possible through wide-ranging political, economic and civil service reforms. Norms do not change that fast but incentives and policies can. That is why economists emphasise the need for appropriate incentives and organisations for controlling corruption.
Public functionaries are given some powers of discretion to interpret and implement such regulations. This, in turn, provides them the opportunity to indulge in corruption. The policy implication is: reduce excessive regulations, minimise discretion, and strengthen accountability.
The perverse incentive structures also need to be set right, which essentially requires doing away with rent-seeking opportunities and abolishing inequities in pay and privileges among various public service groups and cadres. In a corruption-ridden environment, even some honest officials may become disillusioned, and surrender to the temptations of bribery and misuse of authority.
Corruption is not in the DNA of a nation or employees working in a particular institution. It is in the system and unless we change the system by introducing reforms aimed at demolishing outmoded governance and incentive structures, the three Ps will continue to score high on the corruption scorecard.
The writer is a graduate of Columbia University.
Email: jamilnasir1969@gmail.com

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