tag:blogger.com,1999:blog-5043138489010794057.post4908109694044735848..comments2024-03-27T15:57:09.192+05:30Comments on Urbanomics: The descent into a Banana Republic?Urbanomicshttp://www.blogger.com/profile/16956198290294771298noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5043138489010794057.post-3807345563102886742012-02-07T11:13:09.645+05:302012-02-07T11:13:09.645+05:30Dear Gulzar,
No disagreement at all with what you...Dear Gulzar,<br /><br />No disagreement at all with what you suggest may be the slippery slope of judicial 'populism' - only that the judiciary in this case is exerting its authority appropriately over a system that has nearly veered off the rails. <br /><br />I used the "tracks are covered" argument to suggest that the cost of uncovering complex collusion and gaming of the system is so deleterious - that if by design a politician were to judiciously use selective transactions to exploit -we will be so tied down by such an exercise in uncoverng corruption, as to swamp the capacity of any institution. Which I suspect is the case.<br /><br />This broad based generic ruling - is a step in the rght direction - a shock that creates a judicial precedent where, when large scale corruption is strongly inferenced -a sweeping action can be forced by the judiciary on the executive.<br /><br />Some responses to specific comments :<br /><br />1. "But my point is that the same effect could be achieved with the existing rules, if properly enforced. you write about "corruption whose tracks are well covered"."<br /><br />'if properly enforced' is really the loaded question.<br /><br />If the price finding / searching mechanism of such resources is the question (and the perversion in the use of FCFS as a fig leaf is the problem) - the judiciary could have issued general guidelines - and maybe that is what the ruling is - illustrated for full effect.<br /><br />2. "'Regular and impartial administrative enquiry' would be enough to bring them out."<br /><br />This is the crux of the issue over which the various rulings cover obfuscation and foot dragging at the highest level (PMO) - and a ministerial clean chit through the theory of 'zero-loss' - 'regular and impartial enquiry' - a reasonable expectation ?<br /><br />3. "we have not yet fully grapsed the longer-term consequences of this on market competition" <br /><br />- No, but, we can expect subsequent rulings and immediate correctives will at least be transparently conducted - for example in the case of some of the affected parties going to court to seek remedy. <br /><br />The question of whether bidding alone will stifle competition by creating large barriers to entry for new players - and if new licenses can be given at a floor price to stimulate competition - all reasonable policy questions.<br /><br />All these can be answered clearly through transparent policy making/ execution, without the kind of shameful subversion of intent to aid windfall private profit.<br /><br />4. "Such judicial populism has several dangers. For one, does it not set a precedent to over-turn sovereign decisions? Two, let nobody be under any illusion that this wing of our governance system is any less corrupt than the bureaucracy and politicians."<br /><br />- Completely agree, the slippery slope is always near - not by the act of overturning sovereign decisions per se, but that under close scrutiny the judiciary's recent past has been just as murky and needs to be closely monitored -at all levels.<br /><br />What prompts me to write this justification is - there is a stronger case to feel we are a 'banana republic' on the basis of how our policy making is subverted by rent seeking and serving private interests - and lesser reason to derive such a conclusion from the verdict that seeks to correct the situation.<br /><br />regards, KP.KPhttps://www.blogger.com/profile/06553866275918658507noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-24943275637431968012012-02-06T22:55:51.051+05:302012-02-06T22:55:51.051+05:30and KP, we have not yet fully grapsed the longer-t...and KP, we have not yet fully grapsed the longer-term consequences of this on market competition. how will the exit of the smaller players who may have played some role in keeping the big players honest, affect cellphone tariffs?Urbanomicshttps://www.blogger.com/profile/16956198290294771298noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-54385481080935173992012-02-06T22:35:09.145+05:302012-02-06T22:35:09.145+05:30Thanks so much KP for that. I appreciate the viewp...Thanks so much KP for that. I appreciate the viewpoint and agree with you. the deterrent effect due to the enormity of the potential losses by indulging in corrupt practices can be a powerful disciplining force for corporate India. <br /><br />But my point is that the same effect could be achieved with the existing rules, if properly enforced. you write about "corruption whose tracks are well covered". From what I read, it does not appear to be so. It is just that, as you write, the entire establishment was so badly compromised that such blatant irregularities easily passed through. <br /><br />Regular and impartial administrative enquiry would be enough to bring them out. Exemplary punishments on public servants and criminal punishments coupled with large enough financial penalties on the corporate offenders would serve enough deterrent.<br /><br />Such judicial populism has several dangers. For one, does it not set a precedent to over-turn sovereign decisions? Two, let nobody be under any illusion that this wing of our governance system is any less corrupt than the bureaucracy and politicians.<br /><br />I am just wondering that given the availability of stringent enough rules, why the need for this extreme step. If it wanted, the judiciary could have conducted the administrative enquiry under its own watch and completed the punishment process in a few months.Urbanomicshttps://www.blogger.com/profile/16956198290294771298noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-13170812948177313872012-02-06T10:37:50.021+05:302012-02-06T10:37:50.021+05:30Dear Gulzar,
Reading with keen interest your view...Dear Gulzar,<br /><br />Reading with keen interest your views on discretionary public policy and this one on the banana republic.<br /><br />Surprisingly The Economist has viewed the judgement, with a pragmatism that veers towards the primacy of the law rather than veering towards protecting private interests. (below, Can You prepone my 2G spot)<br /><br />http://www.economist.com/blogs/schumpeter/2012/02/india%E2%80%99s-telecoms-scandal#comments<br /><br /><br />And this is a quick response.<br /><br />I think there is a clear distinction between use of discretion and the application of this leeway for private profit by politicians /public servants.<br /><br />Observing the obvious use of discretion for private windfall profit - I think the use of judicial discretion to throw out the entire clutch of transactions may seem like over-reach, but may be the only reasonable way to ensure that we are not discriminating between corruption whose tracks are well covered and those that are not.<br /><br />This is about the collusion right at the top - between an entire ministry and bureaucrats - and an entire system that is playing along - it has taken external intervention for this scandal to be uncovered, following which the court have taken these steps.<br /><br />This scam is in a microcosm the modus operandi for all large scams that have extensive networks of vested interests that play along.<br /><br />Too often under the cover of property rights and the cost of ensuing disruption we have refused to clawback obvious corruption - because of our fear of upsetting status - quo. <br /><br />Corruption is almost always entirely discreet and inferenced rather than obvious - and the judiciary in this case, in my opinion, has made a reasonable extrapolation of the situation.<br /><br />Since the law as applied, intuitively takes into account the transaction cost of its implementation - the ruling in effect is a reflection of the degree to which the system has been swamped by corruption that it is impossible to differentiate what is clean and what is not - and it is reasonable and effective to make a broader judgement.<br /><br />If the argument is that in India it is impossible to transact with the government because of the very obvious need to make significant payoffs - and if it is then the responsibility of the courts to make sufficient 'leeway' for the 'pragmatic' nature of these transactions - the result will be 'banana' justice.<br /><br />The price finding mechanism between a nascent market and a well defined market is very different - and the obvious use of arbitrary discretion, using the FCFS principle as a fig-leaf has also been well documented.<br /><br />It may be a sweeping judgement, but to cleanse an entire ministry enveloped by corruption, under the overarching influence of vested interests - there is little option but to resort to the use of drastic measures.<br /><br />There is nitty-gritty in the ruling that may come in for some quibbling - but we should appreciate that this rulng did not upset some perfect state of being -it is the drastic response to correct a wholly and visibly compromised state (of affairs). <br /><br />Justice is a deliberative mechanism - in some cases it must uphold the philosophical ideal, but, it can also be a pragmatic means to an end.<br /><br />regards,KP.KPhttps://www.blogger.com/profile/06553866275918658507noreply@blogger.com