Sunday, August 21, 2016

Does Foreigners' Fixation with Efficiency Weaken Legal Institutions in Developing Countries?

The author's friend sent him a package across the world that happened to arrive at the Iringa post office today.  The post office staff was kind enough to send the author a text message to notify him of the arrival.  But when the author showed up to the post office this morning to pick up the parcel, he was shown the box (which appears to have arrived in one piece and without much external visual damage) but was told that he cannot take the box home just yet.  "Please come back maybe sometime between next Monday and Friday.  We need to send the package over to the Revenue Authority for examination first," the postal staff said.

Never mind the possibility that "examination" of parcel contents at the Revenue Authority is very much subject for stealing of potentially valuable contents, or the fact that "sometime between next Monday and Friday" is a ridiculously long and imprecise period of waiting time, the author is rather ashamed of himself, rather than anything the post office staff did or said.  In response to being told that the box cannot go home with him, the author nonchalantly said, "how much do you want me to pay to take my package?"  The idea of paying some money so he does not have to wait another five days sounded instinctively rational.

And in all honestly, bribing the post office staff probably would not have costed all that much. given how little the staff must be paid for their regular work.  As such, it was all the more impressive when the staff refused the offer for money and responded that he needed to follow procedures for parcel examinations.  For once, this foreigner's shameless desire to go above written legal procedures by greasing someone's palms was met with refusal from someone who is rather righteous.  Given just how often the author resorts to bribing to get past uniformed bureaucrats of all kinds, the post office staff's behavior was a pleasant surprise.

The pleasantness of the surprise is all the much stronger considering the urge to bypass complex procedures with bribes is a universal phenomenon.  Especially in developing countries with weak sense of legal accountability, money is often preferred over enforcement of rules.  Entire companies are started in the developing world are started based on the premise that lower legal standards lead to significant reduction in costs related to labor, environmental protection, and government regulation.  Some in these destinations even actively seek bribes and assist foreigners with breaking beneficial rules.

The reason that foreigners have the urge to bribe is not so much that they want to show off how large sums of cash they have allows them to do anything they want (although many secretly harbor such egotistical beliefs), but it is just that the rules are so cumbersome in completely inhumane ways.  The rules as normally applied is so slow that it is almost as if the enforcers of those rules are inadvertently (or consciously, by justifying inefficiency with "I am just following the rules") asking for bribes to be paid so that the rules can be disregarded.  The parcel at the post office very much may have been one of those situations.

Foreigners, used to everyday convenience at home, justifiably expect the same anywhere they go.  More often than not, as investors and donors propping up local economies, they expect preferential treatment when it comes to bureaucratic procedures.  When they do not get what they expect, they quick resort to bribes.  As a more diverse set of investors with more money shows up and more of them expect healthy returns on their investments, there are even more opportunities for bureaucrats to be offered more money to speed things up.  It gives even more incentive for locals in uniform to overlook rules for quick profits.

Given increased opportunities for corruption, it is unlikely that providing greater benefits for bureaucrats will sufficiently deter them from ignoring rules for money.  Indeed, if an optimistic view of economic development is taken, salaries of bureaucrats will not be able to catch up with continuing rush of foreigners investing in the developing world.  The governments will simply not have that much revenue to keep paying higher and higher wages, against competing foreign business interests who will resort to greater and greater financial enticement to have the bureaucrats on their side and simultaneously work against their competitors.

The solution instead is making the bureaucracy and laws as lean and streamlined as possible.  Fewer procedures to complete one task means fewer bureaucrats who can succumb to the urges of corruption.  It also means less waiting time for the moneyed foreigners seeking the service in the first place.  If they are satisfied with the process as it is, they will have no reason to bribe.  The post office case is illustrative: if the author did not get a text message until the package has already been inspected, he would not have sought to bribe.  Better yet, if the "examination" is done at the border already, the parcel need not sit in the local post office for an extra week, subject to further damages.

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