Sunday, September 11, 2011
Corruption and the middle classes
The Indian Political corruption is taking tiny paces to make the image of the country compatible with its development.
Twelve years ago, a group of IIM professors got together and started publishing the criminal cases against each person standing for election.
This year, Anna Hazare's Jan Lok Pal Bill demands have been accepted: even the prime minister is not above investigation.
Corruption obviously impacts the middle classes because it is a double tax that they bear. How?
First, the reason for corruption is that in poor countries like India and many others is that the government cannot pay their employees a nice salary and so these poor government officials take to bribery. The taxes are inadequate to have enough people and certainly not enough to police the police. The only way out would be high taxes on those with sufficient income: the rich businesses. But these businesses prefer to not disclose their full income in order to lower their taxes. So, in fact the salaried middle classes (the poor are often exempt) pay high direct taxes.
Second, the rich will pay bribes from their black money or just factor it in the price of goods sold and it’s the customer who pays. But the middle classed salaried person has no black money and has no way of passing on the bribes he must pay for registering land or building a house and getting a certificate of completion.
In developed countries, there is more transparency on the practices of those who do get caught. But what percentage of ministers do get caught? What we need is a register of private fortunes of our parliamentary members before taking office and on leaving office. If this is more than their total parliamentary earnings (assuming they don't spend much), then quite a bit of Sarah Palin's accusation is right: they are making money from their positions.
This excess earning should be made available to the public before the person can seek another public office.
Would be a bit tough to monitor, but why not?