Transparency International ranks Vietnam 116th out of 178 in corruption perception. In comparison, the Four Asian Tigers Singapore, South Korea, Taiwan, and Hong Kong rank 1st, 39th, 33rd, and 13th, respectively. The United States ranks 22nd. If Vietnam
wants to become the fifth tiger, they clearly have to close the huge corruption gap. How? Kaushik Basu, chief economic adviser to India’s Ministry of Finance, has the answer.
To reduce corruption, make paying bribes legal. Taking bribes would still be illegal. If caught, the person taking the bribe would have to return the money and face additional penalties, like going to prison.
It’s a brilliant game of incentives. Here’s an example of how it would work (borrowing from NPR’s article):
You want to remodel your house in Saigon, but the government clerk says you won’t get a permit unless you offer him a bribe. You pay the clerk. Normally, you are now both criminals. However, under the new law, what you’ve done is completely legal. Further more, you can go to the police, report that you paid the clerk a bribe, and the clerk would have to return the money to you (and go to prison).
See what happened there? If you were the clerk, it would be much more dangerous for you to take the bribe under the new law. With the old law, both of you are partners in crime, so both have the incentive to keep quiet. With the new law, you and the clerk have completely opposite incentives. He wants to keep quiet, while you want to tell the police and get your money back.
Of course, it’s not perfect. As NPR suggests, this could lead to an increase of false accusations and it would only apply when the party paying the bribe is legally entitled to receive what they’re paying for.
Do you think this can work in Vietnam? What are potential problems? Let us know in the comments.
Source: NPR, Why Paying Bribes Should Be Legal
Image from Creative Commons
Well, assuming it would, how does one go about lobbying the current government to adopt such a legislation?
Glad I wasn’t the only one with Vietnam in mind when reading the NPR article. We have many things to learn about corruption from our Indian friends. Another example is the website ipaidabribe.com, which could use a Vietnamese-language version hosted overseas.
But to the previous commenter’s comment, seriously, how can we make this a reality? Pressure does come from business groups (like JBAH), and could come from lender requirements like ADB rules. Try there? It’s not coming from individual businesses or people.
Great post, James. But corruption could go easily the way, too. The only solution to government corruption is transparency. Let hope VC government would adopt the gold standard. Business sector will improve henceforth.
I think you forgot one critical factor that makes bribing possible is that it leaves no evidence. Vietnamese people use cash for almost everything and keep cash in their home. Most people also don’t report their real income.
Another critical factor that makes bribing possible is connection. If you’re going to report a bribing case to a police officer, you better make sure that he has no connection with that clerk. Or you’ll end up in jail before you get your case heard.
There is bribing in the US as well, but the degree is lessen because almost everyone has a bank account and report their income to the IRS (not all, but at least it is being done better than in Vietnam).
The solution to end bribing and corruption probably lies heavily in the Human Values. As the society advances, people lose their moral values. Years ago, education starts out with teaching moral values before we could learn the science subjects. Our parents taught us values at home and constantly remind us about them as we grow up. However, nowadays, children only focus on Math and Sciences. In their free time, they are all occupied with video games and entertainment that is full of sex, drugs, and gang activities.
This has been tried in other countries (e.g., Slovakia in the 1990s) and it has backfired. The scenario in the article assumes that citizens and firms are angels and that bribery always comes from the official. But often the corruption comes from the supply side. Making it legal on the supply side can unleash of free-for-all of bribery.
Already this year we have seen the Immigration Department having a shake up. New staff, everyone given 150% pay increase, now illegal to take bribes and staff face immediate dismissal. Also, supervisors watch staff very closely. It seems to be working.