Tuesday, April 25, 2006

Indian Ethics of Bribing

The “om-guy” has brought up some interesting issues in his comments that have prodded me to ponder the ethics of bribing (politicians and bureaucrats, mainly) in a corporate setting. I have concluded that bribing can be an ethically neutral or non-bad act.

Indian fledglings in their mother’s wombs know as well as you and I that setting up any multi-crore business unit (I am thinking mostly manufacturing/infrastructure here) in India requires bribing certain government folks. I would like to stress this point of necessity – bribe is REQUIRED to get such a project completed. We shall not go into the gory details of where and when and to whom bribe is given. My point is best illustrated with a simple example.

Let us now consider a hypothetical case where I set up a 1000 crore steel plant in some backward area of, say, Himachal Pradesh (reasons of cheap power and labor etc.). I pay the minimum possible bribes, say a total of 20 crore, to get permissions etc. for the project. Take note that this is not the kind of project that someone else would set up if I did not. Consider the huge list of positives that come out this: contribution to India’s economy, employment to hundreds of laborers, development (through ancillary economies that will build up around the project) of the backward area, value to shareholders of the company, etc. etc.

As a person with utilitarian leanings, I’d have to say that my act of bribing would then be an ethically non-bad act. By giving a large undue benefit to a few handfuls of assholes, I would have benefited thousands to different extents. This example is obviously widely applicable in industry.

PS: Note that there are some hidden ethical costs here - a small harm is being done to all the shareholders by disbursing their rightful money to the assholes. Also, I’d be furthering the system of bribes etc. Yet, I think the overall effect is positive.

22 Comments:

Anonymous Anonymous said...

hahaha ... i like the way you justify bribing... where the shareholder is really being defined is you. In india most of the corp are owned and managed by famiies. i am presuming you are one of them. Utilarian view point holds good but it is as per your convniance... you spoke alot about bribing the police as being wrong. i persay believe bribery is good for india as it helps in alot of ways progression. i dont want to argue on that. but your point of saying that bribery is good in corp cause its making you richer.

9:30 AM

 
Anonymous Anonymous said...

to add to that isnt that what we call double standards...

9:31 AM

 
Blogger Misanthrope said...

nope, i don't think it's double standard. saying things like "bribing is wrong" etc sound nice but are too simplistic. a case-by-case analysis is more fruitful.

in my hypothetical situation, i would own perhaps 50-60% of the shares of the company in a family owned company scenario. there would still be hundreds of other smaller shareholders, many of whom would have invested a significant amount of their money in my company. and u cannot really refute my other points about providing employment to hundreds, ancillary economies etc.

i totally disagree with you when u say bribery is good for india. i have heard arguments like "bribery makes things run faster and more effectively" etc., but the fact is that absence of bribery would not really effect this speed or efficacy. it's BECAUSE the system is so dishonest that is takes so long to make decisions, give out licenses, privatize airports, etc. etc.

12:01 PM

 
Anonymous Anonymous said...

om

bribing isn't the exact same thing as black money... so, tell me... how does all this utilitarian explain why indians don't pay their taxes fully?

11:03 AM

 
Blogger Misanthrope said...

thanks, goo, for making that distinction.

most important reason why they don't pay taxes is because they are a bunch of misers and unethical assholes who'll make money any way they can. but here is another big reason - u make money black bcoz u won't have to pay tax on it. most of the reason for black money is just more money for u to spend. but u also NEED black money if you wanna bribe someone (can't pay by check, can you?) or if u wanna buy a decent house. in delhi, it's almost impossible to buy land without some significant part of the transaction being black.

11:12 AM

 
Anonymous Anonymous said...

om

let me point out your utilitarian argument seems to be a faulty one...

consider the petty bribe...

if you bribe in the traffic case, you save 800 R, and the officer gets 200 R... you, as a kanjoos marwari, get a pleasure point, and the cop, as a douchebag, gets one also... the population of india gets some - 1 femto pleasure point... even with a billion people, that's less than a pleasure point...

utilitarian considerations should drive you to bribe... oh, wait... i forgot the pleasure you get from acting all righteous...

and if you have a problem with my attributing values... that is the problem with precious utilitarianism... it is unworkable...

11:26 AM

 
Anonymous Anonymous said...

om

note that is "the indian pop. gets some - (to be read minus) femto pleasure point..."

11:27 AM

 
Blogger Misanthrope said...

you answered the question yourself, Mr. Categorical Imperative. you totally forgot the pleasure i get from acting all righteous. i don't get any pleasure from saving 800 bucks either - doesn't mean all that to me.

so, in fact, utilitarian considerations should drive me to not bribe. and you are taking a very simplistic view of utilitarianism. any philosopher would know you can't really assign "values". but you can gauge somewhat what increases/decreases utility, which, in my interpretation, is happiness.

and, for the record, i use utilitarianism in a very loose sense. strictly speaking, i am not good enough to be a utilitarian. i do think laws should be made (and i think they are made) accordning to utility considerations. as for myself, i simply want to maximize my own happiness, like i would claim everyone does.

12:52 PM

 
Anonymous Anonymous said...

om

so that seems problematic... if utilitarianism is your standard, then acting in line with utilitarianism should be your standard of righteousness... i don't understand what the righteousness derives from, if it isn't the case that it comes from util... isn't that your real standard then?

so, no... i didn't answer ur question for you... it seems like you're caught in a web of circular reasoning...

and i think you are forgetting the philosopher bentham and his calculus...

... and your last lines, somehow purportedly vindicating your position, are a cheap way out... i thought misanthrope pushed this idea of rationality etc to this nauseating degree... why does he retreat when pushed even a little?

3:31 PM

 
Blogger Misanthrope said...

ok - i hope this clears up the confusion. as far as general rules and laws for the public go, i find utilitarianism a good standard. to that extent, i guess i can be called a utilitarian.

for me as an individual, my dharma is simply to maximize my own utility. this is a much more selfish view than utilitarianism.

i guess one could say that i would find violating a utilitarian-based law (taxation etc.) unrighteous, even if it maximizes one's own utility.

basically, i would call many actions wrong even tho they maximize the doer's utility. maximizing ur happiness would usually require wrong actions then. rationality lies in maximizing ur own happiness, not in doing right or wrong.

3:59 AM

 
Blogger Pragav said...

It is a well proven fact that a little corruption is in fact good for the economy. Just like investing your money, if you are not losing a few% every annum - then you are not taking the appropriate risk to maximize your returns. Similarly, corruption in developing economies sometimes makes the market more efficient due to more efficient allocation of resources. Just thought would lend an economic perspective as well.......

8:38 AM

 
Anonymous Anonymous said...

om

i am afraid you don't know what a fact is...

that "fact" is not well proven, neither in the theoretical case nor in the real world...

the reason is... you can't show me an economy with NO corruption... there just isn't one...

so you don't have the ideal case to compare it to...

even if there was one, and it was unsuccessful, you would have a hard time showing the causal relationship between the lack of corruption and the inefficacy... it could be it failed because a theoretical blunder, or because it was run by a whore-mongering scumbag...

this business abt allocating resources more efficiently... can't that be taken care of with a theoretically satisfactory system, that isn't plagued by corruption?

of course it can...

and so, the comparative "more efficient" is not well founded...

so, in summation... you are a liar... and business and economics are pseudo-subjects...

11:55 PM

 
Blogger Misanthrope said...

i second most of goo's opinions, though not in his impassioned style.

that "fact" is certainly not proven.

allocating resources more efficiently - i don't see how. please elaborate. your bribes are being allocated to assholes' swiss banks, and the stockholder's money could have been utilized to expand further, etc etc.

9:05 AM

 
Blogger Pragav said...

That's complete bull crap... I didn't say corruption leads to efficiency...what I said was that an economy with some corruption (and especially in developing economies) is better than having no corruption at all and is analogous to having a portfolio which is completely vested in government backed low risk secured bonds which provide a very low return vs. investing some portion of it in high yield high risk bonds in companies which face a higher risk of bankruptcy.

In return for getting a licence approved or a few obstacles removed, a businessman with better business prospects that will provide a higher return would be someone who would be willing to pay a bribe in order to reap above market average returns and thus benefiting the entire economy from a macro perspective.

We are not living in an utopain world -- if you want to fix something, it is not going to take place overnight...

Statistically, you can also control for factors other than corruption to see how similar economies are performing..

I would also like to point out... I didn't say a lot of corruption is good... but having little corruption in an economy is better than 0 corruption... I am not going to delve into the ethical and moral outcomes of corruption

Last but not the least - I would like to address your accusation of being a liar... Making one's opinion known doesn't make him/her a liar

10:06 AM

 
Blogger Misanthrope said...

(i don't think your analogy works at all... how is a system with some corruption parallel to a higher risk bond? no connection here...)

pragav, the only argument u made abt this issue was in your 2nd paragraph. this argument is deeply flawed. you think a businessman with better prospects would be more likely to be willing to pay a bribe? i don't this is true. i guess there is a tenuous argument to be made that a person who's more ambitious is more likely to bribe and vice versa. but still, a person who's willing to bribe is also much more likely to be a cheat who's setting up the business to make a quick buck or milk the company for whatever it's worth. i think this offsets the ambition effect. there are many other objections too. in a corrupt system, very often the person who gets the project is just the person with the most black money (or just he most money) instead of other less moneyed but more ambitious and able folk. also, in an honest system, the best businessman would simply get a project (or, in a non-compete kind of situation, this businessman would not face any unnecessary obstacles anyway). so your hypothetical businessman could save the money needed to remove obstacles and use it elsewhere.

1:45 PM

 
Anonymous Anonymous said...

om

you didn't comment with your opinion...

you disguised bullshit as a fact... that makes you a liar... because you are using the normativity of "facthood" to give your bullshit credibility...

and you still don't seem to get the point... why should i believe that some simulation is actually like an economy? modern science tells us that the world is really sensitive to minute changes... simulations don't take that into account...

the actual fact is that you don't know what an economy with no corruption is like... and you can't single out the lack of corruption as a deleterious factor... so any statement you make about the comparative goodness wrt the degrees of corruption is not well founded...

as misanthrope pointed out, your comparison also has no groundedness in reality... you come up with some metaphor but why should i believe that the metaphor is well fitting?

...last but not least... you remain a liar... see how you used the word "statistically", when no statistics were present... that's a lie...

2:24 PM

 
Blogger Pragav said...

I based my opinion on facts presented in many development economics papers that have been critically reviewed by nobel laureates... I am sure the intelligence of these individuals on such matters far exceeds yours

as far as the term statistically is concerned, I was trying to say that you CAN isolate different variables..

Simulations help us predict... Also, the studies i am referring to were made from historical real world data...


My original comment was made to the blogger of this website... not to a third party with whom I had never any intentions of entering into a debate

Last but not the least, I find all your arguments extremely flawed...Why? I wish I had the luxury of time to come back with a more detailed answer with "statistics" that would satisfy you and with sources that you could cross reference but I have been working for over 20 hours today and the least of my concerns right now is to spend another minute arguing with someone who doesn't have the civilty to accept or respectfully disagree with other people's opinions rather than just indulging in false accusations...

10:53 PM

 
Anonymous Anonymous said...

om

how weak? you find my arguments flawed but you don't have the time to respond to them, yet you have the time to whine about 'ad hominem arguments'...

it's funny how you have checked this blog enough times to respond 3 times in your incredibly busy day... sounds like you are making a bunch of excel spreadsheets...

to the real matter:
can you supply the titles/assoc. names of those papers that are by Nobel Laureates? i am sure you cannot... because i am yet to hear of the Nobel Laureate who condones corruption...

you still don't seem to get it... your comment has no grounding in logic... you are claiming that corrupt systems being better than non-corrupt systems... where will you find a non-corrup system to compare with? HISTORICAL DATA? where will you get it from?... there is no historical data of a non-corrupt system... there hasn't ever been one... and EVEN if there was such data, you would not be able to effectively isolate the lack of corruption as the corroding factor of the economy... the problematic factor could be a theoretically flawed system... or perhaps some other kind of factor - like laziness (a cause of inefficiency not like corruption)...

finally, the reason i called you a liar is because you are a follower... misanthrope has spoken about your type in a previous post, i believe... if not, i'll say it...

one should not just appeal to apparent "higher intellectual" authorities for guidance all the time... and they shouldn't appeal to them for vindication... they should think for themselves...

people who use normative authorities to pay the garbage forward are liars, and they ruin society... if you can't explain your belief, you aren't justified in believing it... and if your explanation is incorrect, well... you aren't justified there either...

excuse my misspellings and/or my grammatical mistakes...

12:00 AM

 
Anonymous Anonymous said...

om

ah i found one:

"you are claiming that corrupt systems being better than non-corrupt systems..."

should be:

"you are claiming that corrupt systems are better than non-corrupt systems..."

and i said "non-corrup" somewhere... should be non-corrupt...

12:03 AM

 
Anonymous Anonymous said...

om

woah! i never saw misanthrope's response... it is so shitty, that it begged for response...

basically, you are saying... you can do whatever makes yourself happy... so looking at that, why should i think that your statements/actions have any normative effect? bribing makes people who bribe happy because it makes life convenient for them... so it seems like you have no right to criticize them... perhaps, you should get off the high horse...

were you trying to say that we should have basically utilitarian laws for the public, but that you should be able to break them... or maybe everybody should be able to break them...

i don't get it... "it don't make any sense"...

i am not Mr. Categorical Imperative... what i do like is WD Ross and J Dancy...

i think you should read these two thinkers... because they really are the bomb... your conundrum has an answer... it's that ethics isn't straightforward... and perhaps it isn't abt rules... it's something more...

9:21 PM

 
Anonymous Anonymous said...

om

i don't think the last post was so well put... and im committed to taking over your blog :-D

bribing, according to my scenario... even petty bribing seems to maximize utility globally... you are paying a lower fine... the cop gets the money directly... and third parties are basically left uneffected... maybe femto minus points for them...

so perhaps, now you'll talk abt the system... but you don't really believe in the system, because of your large company example... but you defended that by taking into account utility... (go back to top of this post)...

so, now you talk abt maximizing your happiness... which comes from what? does it come from being a hedonist... i dont think you are condoning straight hedonism... that leads to anarchy... and it seems to be in line with petty bribing... ok so let go of that...

it seems that it comes from being on the righteous side... but how is an action defined as righteous (aka good)? i have no idea... it seems that you are extracting what is righteous from traditional morality... so r u just abt being traditionally moral?

that seems odd, because you throw away traditional morality in previous posts... disparaging it... quite rightly...

so, overall it seems like you think of yourself as an oracle... knowing what is right and wrong, almost supernaturally... might i say, AOY is getting to you...

but to be less vicious... i think what you are pointing to is the WD Ross kind of ethics...

11:36 PM

 
Anonymous Anonymous said...

jai

i completely agree with the om guy.... i dont like the way misanthropic is justfying his argument..

11:00 AM

 

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