Corruption & the Downfall of India & the United States
Any person who has spent even a single day in India comes to understand a hard and sinister truth about the country: it remains an ass-backward place because of, above all else, corruption. On one of my trips, it took not even a day in India but less than an hour to learn this. While trying to go through Bombay airport immigration at age 13 with my cousin of the same age, within minutes after landing from the United States, a uniformed and armed customs official detained us in a corner of the airport in order to shake us down for all our pocket money. We were let go only once we had paid him the absurdly high “tax” of US $100 which we two frightened foreign youths gave up hastily. This disgusting act of intimidation and theft 22 years ago produced a bad taste that never left my mouth and venomous thoughts about what I’d do to that man if I saw him again as an adult.
Corruption contributes to all manner of travesty throughout the country affecting so many parts of daily life: gang-rapes with impunity, dysfunctional infrastructure, poverty, pollution, medical fraud, police brutality, etc. No Indian, rich or poor, or of any religious or ethnic background would dispute this, so basic is the acceptance of corruption at every level.
Americans would be stupid to gloat, or think that they are immune from the disease. The United States is not spared from corruption by any means. Throughout the history of man corruption has helped bring down empires, and I have come to believe it is causing the decline of the United States right in front of our very eyes. Knowing a place like India where corruption has become a high art form, in America I acutely see the warning signs sprouting up even as we speak. There is a saying among Indian-Americans. Corruption occurs pervasively and openly at every level of Indian bureaucracy: low, medium, and high. And in America, it is there but more hidden, nearly all of.it occurring at high levels of corporate and government life. But it seems to be getting worse Stateside, even as there are small signs of improvement in India.
Today, we delve into the sweltering morass of corruption in both countries, and what trends to watch for in the future.
The Force Dragging India Back from Progress The word “corruption” comes up in just about every single conversation about Indian politics with anyone, anywhere. It affects nearly everything and everybody. It begins at the lowest possible levels. Need a driver’s license, a marriage license, a construction approval, or a business permit? Wait in line for a very long time, and then pay a bribe. Need to get your son out of jail, settle a court case, or buy property? Pay a bribe. Need working power lines, sewer lines, and running water at your office building? Pay three separate bribes. Want the truck deliveries to your business to arrive safely, or a health inspector to overlook a regulatory violation? Pay up. Want a good news story to be written about you on TV and in print? You know what to do.
Money talks. Rich people and corporations in India cannot sidestep the babus, or quasi-government officials who make a significant portion of, if not most of their income from bribes and extortion. They are more businesspeople than government officials as their office is used to conduct deals for personal enrichment. In fact, certain posts in big-city police precincts are so lucrative that officers are required to pay hefty sums just in order to be given one of them. That being said, those who have money have huge advantages not afforded to the common person. It helps keep the rich getting richer, and the poor staying downtrodden.
All of this occurs more or less openly and seems to be accepted at the local, state, and national level. It is actually an amazing system to behold for its ruthless efficiency and for how well it can work, as a parallel or “black” marketplace. A thriving industry of brokers and middlemen exists to handle the transactions and keep them quiet.
However, as economists know, such parallel systems are inherently inefficient because the costs of doing business become much more opaque and difficult to plan for. I can give out briefcases full of cash to get my factory built more quickly, but this will certainly take away from my profit margins, and most likely, affect quality of product. It’s an uncertain and fluctuating tax that one has to pay.
The larger cost to Indian society is incalculable. As an adult I have come to understand that India is in fact an incredibly wealthy country, with plenty of money. The problem is that much of this money is hidden. It is hoarded by rich people through corruption, including income tax avoidance, and not infused through the economy where it could in theory circulate to the lower rungs of society. It is hoarded by a small number of Uncle Scrooges who will never spend it for fear of drawing attention from the wrong authorities.
Corruption in America. I have no doubt that corruption has always existed since the original colonies overthrew the British. But I am also quite sure that the problem has gotten worse now than it ever was as the power of money has reached obscene proportions. America was made into a historically great and powerful nation through very simple concepts such as the drive to build the best possible products, provide the highest-quality services, and continue working through the challenges to provide nimbler and fairer governance.
Fortunately, the problem is nowhere approaching India’s. You may have a long wait at the DMV to get your driver’s license, but you won’t have to bribe the bored lady behind the desk. The TSA may detain you at the airport for silly reasons, but it’s not to shake you down for money. There may be a police violence problem in some departments, but they are generally not about enriching the cops. At entry level positions of government, corruption is usually rare, and in cases where it’s caught it’s likely that heads would roll. Low level corruption exists, but nothing common like what you’ll see in India.
The same is true at corporations. If you go to a fast food restaurant, it’s very unlikely that the cashier is stealing money or food. If caught, these individuals can be fired on the spot and might even get arrested. Most entry-level staff such as cashiers, clerks, drivers, and laborers at thousands of companies across the country earn their honest paycheck.
As you go up the ladder rungs of government or corporate bureaucracies in America, however, the rules begin to change drastically.
Congress, the highest legislative body in the United States and by extension, the most powerful in the world, is a cesspool of corruption. Winning elections has become the utmost priority for almost all members of Congress, and arguably the most important piece of that is fundraising. The media and public snooze through the details every election cycle of who funds these campaigns, the drastic effects these have on campaigns, and the resulting legislation, often relating to eroding regulation or government contracting of the very entities who donated money. Meanwhile, the executive branch is filled with members of industry, hired to pretend to regulate their friends or grease contracts in banking, agriculture, or at defense contractors. This system is inherently corrupt, and the public knows it. Unfortunately, the US government has not demonstrated the political will to do anything to reverse the situation.
US companies as a whole are also increasingly corrupt. Again, what made America great was that the private sector had a single, laser-like focus on providing the best possible products and services. Now, the focus is on making a quick buck, at the expense of long-term quality. This applies to so many things: utilities, cell phone companies, airlines, insurance companies, and most dramatically, the banking sector. Financial products are leading the demise of the United States one corrupt scheme at a time. Meanwhile, insurance companies have become so notoriously fraudulent and unethical that the 2008 global financial collapse all started with one insurance company, called AIG.
To understand how high-level corruption works in America, at the nexus of government and the corporation, one need go no further than the sordid tale of the F-35 military jet, an albatross that will end up costing US taxpayers 1.5 TRILLION dollars for an inferior set of aircraft that jeopardizes America’s defense and pilot safety. It’s all here: a corporation that has gotten away from making the best possible product. An industry that is basically a controlled oligopoly where colluding companies do not provide one another true competition. A Congress more concerned with the largess the project will provide in their districts than the effectiveness of the military. Pentagon officials indicted for corruption- and there are others who will of course never get indicted.
The Future Unfortunately, the problem of corruption is almost certainly going to continue getting worse in the United States, while it is unclear whether India can ever emerge from the far deeper hole of corruption it’s currently in.
Anna Hazare, the Aam Aadmi Party, and Narendra Modi have all gained attention and captured the imagination of the public in the last few years. Narendra Modi as Prime Minister has instituted reforms, in some cases leveraging technology. For example, his administration has created a website to track the attendance of government bureaucrats, available to the public. This addresses the rampant problem of official absenteeism. However, corruption is so pervasive and in so many different spheres outside of the federal government that entire lifetimes may not be enough to right the ship.
Stateside, both political parties are completely compromised on the subject of campaign finance. If undisclosed individuals can freely contribute any amount to any Republican or Democrat campaign, within the rules, the scale of the problem is certifiably insurmountable.
The 2000 election represented a sad day for me as an idealistic college student living and studying in Washington, DC. It was to some degree a death of innocence. When the Supreme Court decided a US presidential election strictly along partisan lines in the 5-4 decision of Bush v Gore, the judiciary lost its claim to being an independent check on the other two branches, in the eyes of many in America and around the world. The Citizens United decision opened the floodgates to even more corruption and further eroded any respect that the institution commands.
American institutions in the public and private sector are compromised at the highest level- which is the most important level. When the leaders are the ones hatching illegal plots- whether from the office of Vice President Cheney, or the boardrooms of Lehman and Enron- the entire organization is compromised from top to bottom.
I have of course been shaped by experiences of corruption in India. Unfortunately, this also makes it very easy for me to spot the warning signs elsewhere, and in the United States we are currently surrounded by them in overwhelming fashion. If left uncorrected, the decline of the United States is imminent as the economy will tank, the military will weaken, and other nations will be left to fill the void. These things never happen overnight. It could be a slow process, but a very painful one especially for those who like to tout the concept of American exceptionalism, whatever that means.
In both India and the United States, there is a single thing that must change in order for corruption to be tackled. That is the culture of both countries, where gaining a buck in the short term nefariously trumps long-term sustainability. Under this culture, which is ascendant, there is no hope.
Mahanth S. Joishy is Editor of usindiamonitor