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Friday, 28 May 2010

Satonomics, 3rd Edition

Another burst of unscripted reflections from the Leader of the Opposition, Mr Michael Sata this time focusing on the problem of corruption :

"There is corruption today because people have uncertainty of who they are and what they are and what they are doing. When there is no uncertainty there would be no corruption because people will protect their jobs. Today, there is corruption because people are not sure whether they would be there tomorrow"
The first thing to note here that the corruption he has in mind is largely bribery coupled with stealing. Its not other forms discussed here (e.g. nepotism, political corruption). Its always good to precisely define the nature
of corruption in question because it affects the usefulness of the analysis. With that in mind, I would say the basic thrust of his argument appears to be that job insecurity breeds corruption. There are two ways this might be true. First insecurity may lead to less employee "ownership" of the organisation's vision and therefore lower psychic value of their job. If one is less attached to their work, it does not take much to incentivise them to abuse the resources at their disposal. This is also partly because the possibility of being sacked any time may lead employees to become shortermist. The other aspect is that job insecurity is associated with arbitrary recruitment processes. The President or Minister always appoints the people  - and therefore are always serving at their pleasure. If the appointing authority is corrupt you bet the appointee would also be corrupt. How else would he stay on the job and feed his family?

But Mr Sata's argument is incomplete. It relates only to the demand side of corruption i.e why people may demand bribes or start to steal national assets. It does not recognise the "supply" of corruption. That is to say the extent to which corruption is shaped by availability of corruption opportunities. Like most crimes, corruption is opportunistic, if you eliminate the chance to steal you are half way there. That is where developing effective monitoring and detection arrangements come into play. This distinction between the supply and demand side is not trivial because it really does affect which approach may prove ultimately beneficial and over what horizon. Needless to say, I favour focusing on the demand side, though I recognise ultimately the extent to which one approach is more effective than the other is largely empirical or down to appropriate cost benefit analysis.

Previous posts in this series :

Satonomics, 1st Edition
Satonomics, 2nd Edition

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