(Warning: Does not contain a SARS joke, a mention of Bidwai or nudity. Also, it is too long. And also serious.)

Sandeep writes interesting stuff. But then he tends to deface whatever he has written, leading me to suspect that he has a tortured artistic soul that has masochistic inclinations.

But I digress. He has written a couple of posts (1, 2) about Playwin lotteries. He is concerned that the poor and ignorant among the citizens of Karnataka are developing an addiction for Playwin lotteries and ruining their lives. He thinks that the Government should ban these lotteries.

Or, to be precise, he implicitly assumes that the default legal position ought to be that lotteries are banned, hence it is the Government’s fault for allowing Playwin to peddle lotteries to Kannadigas.

What’s wrong with Sandeep’s arguments? Well, here are a few:

Banning consensual crimes is not easy. Consensual crimes are actions like gambling, pornography, prostitution (assuming that the prostitute isn’t coerced into it), drinking, smoking, doping, etc. where both the perpetrator and the “victim” are doing it voluntarily. Of course, it is always possible to claim that even these allegedly victimless crimes have unwitting third-party victims (such as the families of those who buy Playwin lotteries, as Sandeep points out). But the point is that these alleged victims aren’t going to complain. This means that the police continually have to be on the prowl to catch the consensual criminals, and they have to be intrusive

Laws against consensual crimes are necessarily vague. Why?
Because a narrow ban will invariably have loopholes, while a broad ban will prohibit many legitimate activities. Take the Playwin example. Is it enough to just ban lotteries? Surely it is not beyond human ingeuity to devise some other form of gambling and not call it a lottery? For example, let us say that Playwin introduces something it calls the “Coffee Lottery” which goes as follows:

For a price, you can buy a ticket which is a bet on the price of coffee 6 months from now. You can take either a “sell bet” or a “buy bet”

Sell bet. If you take this side, you quote a price per kilo and if the actual price is higher than this, then you gain the balance. If it is lower, you lose the balance. You gain or lose this amount from the person who has taken the opposing buy bet.

Buy bet If you take this side, you quote a price per kilo and if the a?tual price is higher than this, then you lose the balance. If it is lower, you gain the balance. You gain or lose this amount from the person who has taken the opposing sell bet.
Playwin brokers the deal, pockets the price of the ticket and it sets the reference date and the reference coffee market to set the reference price.

Is this gambling? Would you ban this? Read it carefully before answering.
Yes?
Sure?

Oops. You have banned a perfectly legitimate activity, trading in Futures It turns out that tickets such as the above are useful devices for farmers and traders to minimise their risk at a small expense. (How? If you’re interested, ask me and I’ll tell you. I don’t want to make this any longer)

The example I gave was not hypothetical. Futures could not be introduced in India till a few years back because the 19th century Indian Contract Act did not recognise “gaming contracts”.

So what did they do? They amended the Contract Act and I bet the amendment started with something like “Notwithstanding anything specified in…” i.e, they added an exception to the law.

Exceptions and special cases to laws are bad because they make the law ambiguous and confusing. Ambiguous and confusing laws are bad because then you need a bureaucrat or a judge to interpret what the law or guideline actually means. Such interpretative powers increase the scope for corruption.
Not convinced? Take another example. When India had prohibition, there was a flourishing racket in medicinal exemptions to the no-alcohol rule.

“So we just have more stringent laws against corruption” I hear Sandeep say. If only it were that easy. Firstly, more laws mean more confusion. It means more government officials to check on potentially corrupt government officials. We know how that works.

Secondly not all corruption is illegal. A legislator walks upto the minister and tells him: “I know that gambling is a bad thing for the poor people, but surely it is a harmless pastime for the rich? So why ban horse racing? There is a horse-breeding industry in my constituency which is in the doldrums because of this ban. Employment is down. Make an exception for horse racing and I’ll support you if you make a bid for chief ministership”.
Is such a deal illegal? No. It is legitimate political activity. Is the legislator genuinely concerned about unemployment in his constituency or is he paid off by the horse-breeding industry? Who knows? And what difference does it make? In either case, we’ve ended up with more laws, exceptions to laws, special cases and discretionary powers.

Look at the scenario I have outlined above once again. For a moment in your mind replace “minister” with a “mafia don” who runs an extortion-and-protection racket. Do you see any difference between the minister’s behaviour and the don’s? I don’t. The minister might be sincere, but so might the don. When you have arbitrary and intrusive laws, the difference between the Government and the Mafia reduces. So don’t be surprised when we elect Mafia dons to be ministers; we are electing the right people for the job.

It leads to hypocrisy – and a general disrespect for the law. Sandeep, if gambling is illegal and you find your friends doing it would you turn them over to the police? The more private and consensual vices are criminalised, there will be more such activities which are illegal on paper, but which most people wink at. The upshot is that there will be a general decline in respect for the law. Look around you. Hasn’t it already happened?&lt?br />Or take another example. Suppose an honest policeman is sent to break up a Diwali gambling party. He finds a group of people having fun. They offer him a bribe also called the “Diwali Baksheesh”. Will the bribe weigh as heavily on him as a bribe given by an alleged murderer? Nonetheless he has taken his first step towards corruption, and it is that much easier for a murderer to bribe him in the future.

It hurts the poor How? Firstly, complicated laws hurt the poor more than the rich because the rich are better placed to pay the bribes that will cut the Gordian knot of complicated laws, and to last out the long court cases that result from the complicated laws. Secondly, laws to protect the poor end up putting special restrictions on the poor. The poor are prohibited from partaking of the simple pleasures of gambling, while the rich can indulge in horse races… how do you think they like that?

It is not self-correcting The problems I’ve mentioned aren’t new and certainly not theoretical. Every country that has tried intrusive laws has failed to achieve its goals (with the only exception of Singapore) The USSR failed, the US failed when it tried to impose prohibition and the Indian legal system has collapsed under the weight of confusing laws. It is not as people claim, that Indians are a specially corrupt people and that the general disregard for the law is embedded in our genes. The evidence that more laws lead to more lawlessness is overwhelming. So why do Sandeep and many many others (I know that I am in a hopeless minority) insist on calling for more laws?
Because it seems to be an immutable law that failure of government regulation leads to calls for even more government regulation. In contrast, an individual who fails mostly corrects himself – and if he does not, he doesn’t pull down the rest of society along with himself.

I don’t know whether I’ve made my case or lulled you to sleep with the length of this piece, but there you are. If you’ve read this, hopefully you’ll also consider this the next time you hear calls for more laws, “better implementation” or yet another regulatory authority. Not all problems of private vices have a legal solution. In most cases we’ll be better off abolishing the law.

Yes, many of these problems can also arise in legitimate laws. But there will be a lot less of them. It is easier to write a clear law against murder than a clear law against gambling. Secondly, the advantage of having fewer laws is that we can afford to keep a watch over our government officials who implement the few laws that we will have.

I’d have liked to tackle the question of why Singapore seems to defy all these rules, but I have honestly no idea. The only thing I can say is that it is an exception to the rule and unless you have a good idea how to replicate that experiment, better not try it out on a large scale in India.