Rules and Principles

Kunal and Gaurav are right. In this post, I was talking of the trade-off between rules and principles in policy enforcement. Actually, when you think of it, rules vs. principles is not a simple dichotomy, but a spectrum of choices.

Imagine that these choices are spread from left to right. At the left end of the spectrum is automation. Rules are enforced automatically, without anyone having the responsibility of enforcing them. The best example of automation in my stories was actually the turnstile – it automated the task of checking for tickets, leaving very little scope for discretion.

Another example is the jugad “automation” that the Hyderabad police enforced. Blocking off the right turn doesn’t seem like an example of automation, but for our purposes, it is, because it enforced the rules without the police having to intervene.

To the right of automation come rules – clear and transparent rules that leave no scope of discretion to the enforcers. But then, whether to follow the rule or not is still a choice – and ensuring that officials enforce the rule depends on the existence of procedural mechanisms.

As you move further to the right, you find that the rules have more and more discretion embedded in them. For example, consider the difference between enforcing a red light and ticketing someone for rash driving. The former is easier to enforce fairly than the latter.

At the extreme right of the spectrum is the idea of “principles-based regulation”. This distinction between rule-based regulation and principles-based regulation is used most often in the financial sector, so let me use an example from Banking to illustrate.

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A Tale of Love and Heartbreak

I don’t know how many remember the story of Syed Modi, who was murdered in 1988. He was a star badminton player who had fallen in love and married Amita (Ameeta?) Kulkarni, also a badminton player. He was shot dead in Lucknow while returning from practice.

Suspicion fell on his widow and on Dr Sanjay Singh, then sports minister of UP. The allegation was that they were having an affair. The case ended up with the CBI.

As it happens Sanjay Singh is a relative of the late VP Singh, who, at that time, was leading the fight against the Rajiv Gandhi government over corruption and misgovernance. Sanjay Singh is also the “Raja” of Amethi. It was the height of the Bofors scandal – a few newspapers, notably N Ram’s Hindu and Arun Shourie’s Indian Express were courageously exposing the bribery. I had just started reading newspapers, was following the various scandals with avid interest and virtually hero-worshipping Shourie.

Arun Shourie decided that the CBI investigation into the murder was intended to persecute Sanjay Singh, and mounted a full-scale defence of Amita Modi and Singh. Looking back, it is incredible how much of it I swallowed. I don’t remember the specifics, but a few things stand out. The CBI had found Amita Modi’s diary, where she had written about the conflict she felt in choosing between “S1” and “S2”. It should have been obvious even to a stupid 14 year old what S1 and S2 were, but I bought the Indian Express version where it quoted Rani Jethmalani (Ram Jethmalani and his daughter were fighting on behalf of the defence) to say that the diary just reflected Amita’s disturbed mind and nothing else. The Indian Express also went to Amethi where they interviewed the people there. They were quoted as saying that while it was imaginable that their Raja would do a bit of womanizing, they couldn’t believe that he’d committed the murder. Garima Singh, the then wife of Sanjay, stood behind her husband.

Eventually, the case came to trial in 1990, by which time VP Singh was the prime minister. The CBI had weakened the case sufficiently that Amit and Sanjay were acquitted.

I forgot all about the case till I read a small news item tucked away somewhere, to the effect that Sanjay had married Amita. By then, VP Singh had gone from being the darling of the middle-class, the crusader against corruption, to its most hated symbol, with his Mandal agenda. Arun Shourie had gone from campaigning vehemently for VP Singh to fighting him. I don’t think he has ever mentioned the Syed Modi murder ever since VP Singh became Prime Minister. But the news of the wedding made me feel profoundly stupid. It’s difficult to believe now, but at that time, I had honestly thought that even their supposed affair was a story concocted by the CBI as part of its witch-hunt. (That is how the mind rationalizes. I suppose I could have believed that they did have an affair, but did not commit the murder. But then, how could it be a with-hunt to investigate the suspicion?)

So, quite clearly, Shourie had been perfectly willing to lead his newspaper on a campaign to subvert justice even as it was fighting the government on corruption. I am sure he did it with the highest of motives – I think he thought that getting the Rajiv Gandhi government out was then the highest national interest. But something didn’t seem right.

Of course, Sanjay Singh then had a fairly typical political career for a UP politician. He switched parties a few times. He was with the BJP for a few years before finally landing up with the Congress. Now, he and his wife are the feudatories of the current royal family.

The story faded to a dim memory for me, but I suppose the lesson has always stayed with me. It accounts for my cynicism over the Lok Pal and the concept of “Persons of unimpeachable integrity”. It accounts for my scepticism over the idea that the dynasty represents everything that is wrong with the country, or that if only the country rediscovered its Hindu soul, we would be great. It accounts for my discomfort with idolizing or demonizing (Narendra) Modi. In general, I am sceptical of any solution that relies on people’s character rather than structures and incentives.

The Moral of the Corruption Tale

Gaurav argues that the only discernible moral from my tale of corruption is that Indians are corrupt. Well, that is a good enough summary, but I need to fill out an entire blog post, so here I spell out the lessons I drew from that incident.
The most striking aspect of the tale, to me, was this: B, who was undoubtedly a well-meaning man, saw nothing wrong in misusing the CBI to achieve what he considered were morally justifiable ends. But if misusing public resources to achieve private aims is what is considered corruption, how were B’s actions any less corrupt than A’s?

There is a tendency in India to think of incorruptibility as a personal quality roughly equivalent to “lack of avarice”. We believe that corruption is caused by a hankering after material wealth, and consequently, the tendency is to hold the saintly man, preferably with no family to lead him astray, as the model from which good governance will flow. Sometime back, I read a story on how Nitish Kumar was transforming Bihar. I do not remember the source now, nor the exact words, but there was a line on how honest a man Nitish was. Apparently, industrialists who went to him with bags of money (presumably as donations to the party fund) found that Nitish did not even look at or touch the money when they tried to hand it over, but asked them to keep it in one corner. Now, without detracting from Nitish’s achievement in making Bihar governable, which is indeed a considerable one, Nitish’s own personal “cleanness” makes no difference to the fact that the wads of notes that industrialists contribute to his party funds distort policy-making, just as B’s own personal honesty made no difference to the fact that his actions ensured that a person who ought to be arrested and in jail was out of it because it served the cause of a private dispute.

This tendency to think of corruption in terms of personal characteristics is a consequence of the saintly idiom in Indian politics. Gandhiji contributed significantly in establishing this, but he was by no means responsible for originating it. This mode of thinking has had many deleterious consequences on our polity. One of them, which has thankfully reduced in severity, is an Indian inability to distinguish between a dishonest man and a person who, having made his money honestly, enjoys the good things in life. This inability was fueled by, and in turn contributed to, the antipathy towards free-market policies. Whether it is liberalization that changed this attitude or generational change, this particular attitude’s trend is downwards. Other consequences, however, remain. We tend to search for the incorruptible person to run our systems, and our fantasies of a perfect society display a disturbing willingness to hand over dictatorial powers to such a person.

The second aspect of the story to note was the reaction of the association’s members. The membership was split in its support between A and B, but there was no dispute over facts. None of A’s supporters thought him to be an honest man. Indeed, it never occurred to them that there was anything wrong with looting from the public purse. What tipped the views of his supporters in A’s favour was the fact that A did a good job at the association – and yes, they knew that he took a cut there too.
For that matter, A’s opponents weren’t particularly concerned about the public money either. It was his avarice and his behaviour at the association that they were concerned with (Of course, as we have noted, B, the supposedly honest man, wasn’t that concerned about A’s corruption)
This is an important point, and unless we address it, we are not going to get rid of corruption. For us, the government’s money is “out there”, something external to us. It exists to be looted. The job of our representatives is not to be incorruptible and govern impartially. It is to be corrupt in our favour. We are strongly opposed to corruption when indulged in by our opponents, because they are denying our side the opportunity to do the same thing.

That brings me to the Jan Lok Pal idea, which is essentially a fantasy that we can get rid of corruption without addressing the systemic problems that cause it. I will write about it in a subsequent post.

(Update: Aadisht pointed out that I mixed up A and B in the last few paragraphs. Fixed that.)

A Little Tale of Corruption

This story played itself out back when I was a teenager. The two protagonists, let’s call them A and B, were locked in a dispute. The dispute was about how the affairs of a particular association ought to be run. Now, it is somewhat important to mention that the association in question was a caste-based association, and the specific caste in question is Brahminism. However, I feel some regret having to mention this, because this fact will prejudice the minds of many of my readers. I, therefore, ask them to try and ignore the caste-based nature of the association and treat it like any other voluntary association of citizens. The import of the story and the morals to draw from it will not change significantly.

With this caveat in order, let us return to the story of A and B. Now, as it happened, both A and B were government employees. A was known to be extremely corrupt. Not a file passed through his desk without a bribe having to be paid to him. His extra-income showed up, not in his lifestyle, but in the assets that he was known to possess. He had no flashy taste in clothes and he had no unbrahminical “bad habits”. His wife, a genuinely good woman, wore much less jewellery than the ordinary middle-class woman at weddings. However, it was well-known that he had accumulated a lot of money. He had used it to buy up houses and stock up enough in his benaami bank accounts to last his descendants seven generations.

B, on the other hand, was known to be an honest man. He had never taken a bribe in his life, and his family’s lifestyle reflected this as well. For long, they lived in the same Central Government Quarters that his employer provided, and while his family did eventually achieve its ambition of buying a modest house, at the time of the story, they had been unable to achieve it. B was widely reputed to be uninterested in wealth – and rumour has it that he was also uninterested in family life, believing himself to be cut out for higher pursuits, one of which was the association that is the subject of our story.

Let us now turn our attention to the subject of the dispute between the two men. We will not get too much into detail, but suffice it to say that the rights and wrongs of the dispute were exactly what one would expect from the character sketches of the two men we have drawn above. A had monopolized the affairs of the association, and it was widely thought that he took a cut from the association’s budget. To be fair to him, however, it was also widely thought that the association was in fact being run well, and its members regularly reelected him. B was proposing a change in the association’s by-laws that would bring in more transparency and bring in some degree of fresh blood in the association’s managing committee.

The dispute between the two men got personal, as these things frequently do. Apparently A struck the first blow – the details of which I do not remember. In response, B retaliated by calling in his contacts – he had many – and getting the CBI to open an investigation of A’s affairs. (“CBI” was the term used in the conversations I listened in on. It might have been some other investigative wing.) The CBI carried out a series of raids on A’s property.

The response to the raids among the association’s members – and here I think it is relevant to point out that almost all of them were middle-class, educated Brahmins – was mixed. Some thought that A had got his comeuppance. Many others felt that B had gone too far in involving the police in an internal dispute.

In any case, these raids shook up A and made him ready to open talks with B for a possible compromise. After extensive discussions, a “compromise” was reached, which can better be described as a surrender. A agreed to the rule change that B wanted – and B used his contacts to call off the CBI raids and hush up the investigation.

I will end this story here. There are of course many lessons to draw from this, and if I start off on them, the size of this post will double, so I will leave those for a subsequent post. But I must mention that this story tells us almost everything we need to know about the Indian’s attitude towards corruption, and the Indian’s conception of honesty. Of course, we will get a Jan Lok Pal who will fix everything.

Scion Rise

There are many reasons why the dynastic system finds favour with people. A minor one among these is that every generation a new scion of the ruling family descends on the scene and makes a bid for a top post. Chances are, he will be a relatively young person among more senior contenders. Youth always attracts people – they associate it with freshness. They also instinctively associate it with a rapid rise, achievement and talent, even when they should know better. Because this person is from the ruling family, chances are that he has not had to fight his way to the top, has not had to make ugly compromises and does not have a history that gives some people a reason to hate him. His “clean past” is an empty vessel into which people can pour their hopes and aspirations, whatever they are, however unrealistic they are. So it was with the Rajiv Gandhi of 1984. With absolutely no basis in his track record, nay with no track record people had decided that he was the one who would lead the country into the 21st century. [“Barack Obama and Rajiv Gandhi”, The Examined Life, March 20, 2008]

And so it is with the Rahul Gandhi of 2009. With absolutely no basis in his track record, nay with no track record, Ramesh Ramanathan has decided that he will be the one to reorganize the Congress Party, make it a rule-based institution, and bring financial transparency to the party.

Of course Rahul Gandhi is just the man to bring about financial transparency. To start with, he could ask his mom for details on the Lotus, Tulip and Mont Blanc accounts. He was just a minor when you could read about those in every newspaper of the country, and if he is like his dad, he wouldn’t be reading newspapers.

Rerun – Popular Will and Divine Will

As you ponder over the results of the elections in the five states, it is time to rerun an old post from over a year back: Popular Will and Divine Will

Essentially, I believe that the first fundamental lacuna of India’s democratic system is that a government’s performance at governance has nothing to do with its performance in the elections. Everyone can explain an election after the results are declared, but no one can predict it in advance. I believe that in India, a statement like “If you do X, your probability of returning to power in the next elections is Y” cannot be made for any values of X or Y. This applies to all X, whether X stands for “good” policies or populist policies. Neither kind of X will have any kind of cause-and-effect relation on election results.

The problem is not just the electoral system. It is also because no value of X will translate into any result on the ground. A politician can hatch a scheme whereby he can promise free colour TV to all voters. He may think that voters will get TVs and vote for him, while he gets kickbacks from the manufacturer. But given the corruption in the administrative mechanism, it is pointless to try and put this scheme in action. There is no guarantee that the TVs will reach the voters, and therefore there is no way to ensure that his constituents vote for him.

Given this reality, if I were a politician, I would basically forget about trying to get reelected and concentrate on making money.

Very few politicians have tried to break out of this cycle, and I believe that the person with the greatest chance of succeeding is Modi.

When Free Markets Are a Bad Thing

A year back, we were visiting my wife’s relatives. The head of the family, my wife’s uncle, used to be in the police force before he drank himself to death.

As is the norm in these cases, his eldest son was given a job in the police department. Of course, he had to pay a bribe for the job. He got a discount because of his late father, but he wasn’t exempted. If the son had been a graduate, the amount would have been lower, but he would still have had to pay.

And oh – he did not get an actual policing job. That would have cost him much more. He was given a clerical job in the department, dealing with personnel matters. That cost lower.

“I don’t suppose you have any opportunities to make extra money in this section?” I asked him.

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How Corrupt is the Government? How Deep is the Ocean?

I am astonished to find that Amit Varma has a less cynical view of government than I have, at least going by this post.

See, the thing is, in a corrupt Indian government organization (pardon my redundancy) there are no half measures. It is not like only Jothikumaran was corrupt. Usually, the entire organization, right from the chaprasi level to the very top, has a stake in the corruption. It is usually an open secret as to how much one has to pay whom for what. So, it is not like the organizers of the sting operation would have any reason to doubt whether Jothikumaran was corrupt or not. It would be just a case of finding the evidence. Of course, there are many ethical issues in investigative journalism and there are more when sting operations are involved, but the possibility that the person being stung is actually honest ought not to be one of them.[1]

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