Economist's Notebook: Corruption

Over at the World Bank's blog site comes this interesting tidbit about efforts to control corruption in India. Students of development know that the two main areas of focus in development are increasing human capital and the building of stronger institutions.  The term institutions refers to everything from the rule of law to the protection of private property rights to effective bureaucracies and the control of corruption.  These are all combined into one because they all have huge impacts on both the amount and effectiveness of private investment as well as the efficient and effective governance of the economy.

Corruption is one of the big symptoms of ineffective and weak institutions and is considered a major obstacle to growth.  But how to combat it when it is so entrenched in many societies - so much so that it is often considered part of the legitimate compensation for a public sector job - is an open question.

Here is one novel response.  A group called 5th pillar in India has distributed the zero rupee note with the idea that when a public official asks for a bribe for something that is supposed to be provided at no charge, you hand them the zero rupee note as a form of protest.  In other words it is a consumer driven approach to combating corruption.  But how it is really supposed to work is not clear to me.

This excerpt from the blog provides some explanation:

Anand explained that a number of factors contribute to the success of the zero rupee notes in fighting corruption in India. First, bribery is a crime in India punishable with jail time. Corrupt officials seldom encounter resistance by ordinary people that they become scared when people have the courage to show their zero rupee notes, effectively making a strong statement condemning bribery. In addition, officials want to keep their jobs and are fearful about setting off disciplinary proceedings, not to mention risking going to jail. More importantly, Anand believes that the success of the notes lies in the willingness of the people to use them. People are willing to stand up against the practice that has become so commonplace because they are no longer afraid: first, they have nothing to lose, and secondly, they know that this initiative is being backed up by an organization—that is, they are not alone in this fight.

This last point—people knowing that they are not alone in the fight—seems to be the biggest hurdle when it comes to transforming norms vis-à-vis corruption. For people to speak up against corruption that has become institutionalized within society, they must know that there are others who are just as fed up and frustrated with the system. Once they realize that they are not alone, they also realize that this battle is not unbeatable. Then, a path opens up—a path that can pave the way for relatively simple ideas like the zero rupee notes to turn into a powerful social statement against petty corruption.

It seems to me that after a while no one will care that you hand them a zero rupee note, but maybe I am wrong.