A decade ago, Kaushik Basu, a Cornell University economist, caused a furor in India when he proposed that for a certain class of bribes, the act of giving a bribe should be considered legal. Basu, who at the time was the chief economic adviser to Prime Minister Manmohan Singh, described the reaction in his 2016 book, “An Economist in the Real World: The Art of Policymaking in India”:
What I did not anticipate was the level of anger (and misreporting) that my note would generate. It began with small mentions of my paper in the newspapers, followed by lacerating editorials and op-eds. Some of them stemmed from the mistaken view that I was somehow condoning corruption and saying that bribery should be made legal.
Two members of Parliament wrote to Singh in protest. “Then the television channels picked this up and there were some screaming matches debating the idea,” Basu wrote.
I’m writing about this dust-up at a 10-year remove for two reasons. One is that Basu’s idea is genuinely interesting, although as I’ll show, not perfect. The other is that it says a lot about how hard it is to change policy when, rightly or wrongly, the change offends people’s sense of common sense or justice.
A bit of background. Countries differ on whether bribery is punished symmetrically (same for givers and takers) or asymmetrically. According to a 2014 article in the Journal of Public Economics, the United States, Britain, France and Germany are like India in equally punishing givers and takers of harassment bribes. In contrast, China, Japan and Russia have “comparatively mild” punishments for bribegivers, the article says. I don’t know of any major changes since that article appeared. This compilation by the law firm Baker McKenzie is a good resource.
In his 2011 proposal, Basu was referring to what he calls harassment bribes, also known as “speed money,” which are bribes demanded for the performance of legal activities, such as getting a license. (Collusion bribes, where the giver is trying to get special treatment illegally, are a different matter.)