Simply Explained: Why corruption works in India (and what Jan Lokpal Bill should ideally do)

Everyone's talking about the JLB. Given below is my attempt to demystify what JLB aims to set right.

A simplification of ALL the complexities. Yep, Economics+Supply+Demand can explain ANY thing.  B-)

The red colour depicts the current level (quantity) of demand (A) in our country for government services, susceptible to corruption such as driving licenses, cooking gas connections etc. At such a high level, the price that people on consensus expect and consider optimum is quit low. This is also the price that our government, consequently, sets as the norm.


What happens however is that for such a high demand, our infrastructure and government officials will require a price of X, to deliver the goods and services appropriately. This is where the concept of bribes and corruption arise - those in the public capable of paying the extra price (X-B) that can sufficiently motivate our public servants and their resources to deliver, shall succumb to the easy way out of this situation. The number of people shall by Y.


Usually, more people become willing to pay this premium after a while and in the economic sense of the word, the demand for efficient goods/services thus increases. Slowly thus, the demand and supply will adjust themselves to meet at an equilibrium (E). This is the point that I assume our country is at. The government has set a price a price (B) but we end up paying the price plus the bribe (J-B) to achieve our efficient ends. While efficient, this is still an unfair resolution because a huge section of our public (A-K) who can't afford to pay the incentivizing amount, ie bribes, aren't being served.


What has to be done, is to reduce the price of efficiency. It is a structural/operational/grassroot change to be implemented that can bring our supply curve and demand curve to meet at the point that our demand (quantity) demands - the perfect point for our functions to intersect. Here, our public are happy and public servants, happily efficient. 


And thus, I dream.


A few (more) pointers, in case the above isn't clear.

-> Corruption is a creation of a(n illegal) market, where one doesn't exist, pushing us to an efficient equilibrium in accordance to our supply (which depends on bureaucratic processes, incentives for governmental officials, technical support etc)  and demand (population, income levels, urbanization etc) functions

-> As the demand for efficient (ie corrupt) goods increase, the officials are able to decrease their prices a bit in accordance to their supply function such that it doesn't eat into their life and push them into loss. That's how equilibrium comes about (at E).

-> To get to the green, what JLB or anything else ought ideally throw up is a mechanism to reduce the price of efficiency, not punish the officer who asks for it.