Recently, I visited Kenya. As soon as I landed and stood in the immigration queue, one of my fellow passengers advised me to take out all the dollars from my purse and keep them in a separate pocket. I asked him about the rationale behind this suggestion. He explained that corruption and rent-seeking are common problems in Kenya, similar to other parts of the world. Sometimes, people at the airport may seek extra dollars from passengers. This did not come as a surprise to me. Being born and brought up in India and having seen the workings of the government from both sides of the table, I can confidently claim to understand the psychology of rent-seeking behavior in the underdeveloped world. In this article, I attempt to provide insights into this phenomenon.
Bureaucrats and politicians are often considered the most corrupt class across the world. However, this is not entirely true. Corruption in the private sector far exceeds the scale and volume of corruption in the public sector and government. People in operations, HR, purchase, and accounts sections of private enterprises are often the kingpins of significant financial scams. The reality is that government servants are merely cogs in the wheel, small pawns in a value chain that often originates in the private sector. If some idealists choose to resist these pressures, they face challenges such as transfers and unnecessary troubles from their own class. A case in point is IAS officer Ashok Khemka, who has been transferred 55 times due to his non-accommodative nature.
Corruption is a structural issue in the underdeveloped world. By design, bureaucracy consists of some of the most ambitious and smart individuals in the country. People in senior or mid-level positions either come through rigorous examination processes, leaving behind lucrative careers in the private sector, or are nominated through a nepotistic setup. In cases where officers are selected through fair means, they may display idealism in the initial years of service. However, as the idealism of their 20s and 30s fades and the realism of monetary needs hits, even the honest ones find themselves tempted by financial offers from the private sector. For instance, a government servant may find it difficult to afford the health and educational expenses of family members or to purchase a decent retirement house for their family on a government servant’s salary. Can a government servant purchase a piece of land without paying a cash component? Nowadays, even a Group A officer may find it difficult to save any significant amount of money due to inflationary pressures and social expectations regarding their standard of living. On the other hand, those selected through nepotistic setups focus primarily on repaying debts or settling quid-pro-quo arrangements, often ignoring rules and regulations.
The economic history of countries reveals that entrepreneurial human resources are crucial for national development. However, the most ambitious and entrepreneurial individuals often get absorbed into the bureaucracy. While in government service, this class of individuals gains exposure to global developments, best practices, and material comforts during government-sponsored tours. However, the country misses out on their entrepreneurial zeal and risk-taking abilities to bring these global developments and practices to their backyard. This is where bureaucrats act as semi-entrepreneurs. It is in the national interest for this entrepreneurial class to work overtime and don both hats: that of an entrepreneur and a bureaucrat.
Even on a psychological level, when bureaucrats see less competent individuals or private enterprises making significant profits by exploiting loopholes in the system, they are bound to experience conflict. The needs of their families, rising social expectations, and the association of money with power amplify feelings of inferiority within the bureaucracy, forcing them to play second fiddle. Consequently, they are often tempted to adopt the role of entrepreneurs. The top leadership tends to ignore the interests of the bureaucracy for two reasons: first, bureaucrats do not form a homogeneous, united voting class; second, leadership presumes that corruption is an unsolvable problem and assumes that every employee is seeking rent in some form or another. This perception removes any moral pressure from the officers.
Numerous other socio-economic factors drive rent-seeking behavior, including ethnic kinship, class attitudes, in-group/out-group behavior, and power distribution in underdeveloped societies. However, history reveals that a corruption-free society is a luxury of the developed world, where individuals enjoy social security, jobs, and some form of survival guarantee. As long as there is a fight for survival, some entrepreneurs or enterprises will be ready to pay rent, and some insecure officers will always be there to accept it. Thus, the focus should be more on maximizing guarantees and social securities rather than on anti-corruption crusades.
To complete my story: no one in Kenya sought rent from me, and I thoroughly enjoyed the trip. The details of the trip are covered in another blog.
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