The other day while having
discussions with some friends and colleagues, opinion emerged that, at least in
present circumstances, a corrupt official is more beneficial for the ‘system’
as compared to an honest official. ‘After
all, a corrupt official has some incentive, however perverse, to take decisions
and to act, while an honest official has none.’
This premise throws open some
questions worth pondering. The usefulness of rogue and ‘amoral’ elements for
the system is a time tested fact. The use of disguised (or at times, known) pirates
by the monarchies of Portugal and Spain to search new oceanic trade routes and
the deployment of white-collared fraudsters to expand the British Empire in
East India are but a few examples where the elements with highly questionable
personal integrity have been used to further the cause of the ‘system’; and
time has proved that these engagements were immensely beneficial for both the
parties – the employer as well as the employed. But the more disturbing aspect
of the above mentioned premise is the unwillingness of ‘honest’ officials to
take decisions and to act.
Going by the broader definition
of honesty (which implies trustworthiness, loyalty, fairness, and sincerity) –
any person failing to perform his assigned duties to the best of his abilities
is not honest. Thus, indecision and inaction by any official render him unfit of
being called ‘honest’ in the true sense of the word. However, in a narrow and
better-understood sense, any person who does not ‘mis’-use his official
position for personal gains or gratifications is honest; and our current
premise is about the rapidly eroding desire among this class of ‘honest’ officials
to take the decisions as are expected from them.
I feel that this situation is a
variant of the well-known and discussed principle of economic theory – Moral
Hazard. In economic theory moral hazard is a situation where a party will
have a tendency to take risks because the costs that could incur will not be
felt by the party taking the risk. In other words, it is a tendency to be
more willing to take a risk, knowing that the potential costs or burdens of
taking such risk will be borne, in whole or in part, by others.
But in the scenario being discussed, the situation is
reversed. In the prevailing system in government/quasi-government
organizations, the cost of erring is too high for any official (if blamed/caught/detected),
while there are neither any costs of indecision/inaction nor any
personal/professional gains (recognition, praise, career progression, etc) for
successful or beneficial decisions and actions. This gives rise to a peculiar situation,
which we may call ‘Reverse Moral Hazard’ – which arises because an individual or institution desists from taking decisions/actions,
and behaves extra cautiously, for the fear of disproportionately large (personal)
negative consequences of those decisions/actions.
The conventional wisdom dictates that errors ought to
be divided in two categories – (1) genuine mistakes, which could happen due to
misunderstandings of facts or rules/procedures, incomplete knowledge, oversights,
or simple bad luck; and (2) deliberate acts of omissions or commissions with
mala fide intentions. It is important to distinguish the two, and to take
follow-up corrective/punitive action only according to the nature of, and
intention behind, the mistake. Unfortunately, the present bureaucratic system
treats all errors, including genuine mistakes, as deliberate mala fide acts. In
these circumstances, it is explicable that officials behave extra cautiously –
which has led to the current atrophy in the decision making process.
The onus to correct the situation lies squarely with
the top (policy-making) levels of bureaucracy. If the policies are ambiguous
with multiple possible interpretations, any decision taken by the lower rungs
of bureaucracy on the basis of those policies will be open to questions. The
inevitable aspect of every official decision is that there are always some
winners and some losers. If the very basis of a decision is ambiguous – questions
are raised; decisions are analyzed, scrutinized, and re-interpreted; and
motives are searched for. And if, god forbid, the interpretation of policy as made
by the scrutinizing agency is different than the one made by the
decision-making official, he (the official) is proclaimed guilty of mala fide
intentions. Now it becomes a case of ‘guilty till proven innocent’ – and the
burden to prove his innocence lies with the official himself.
Unfortunately, the ultimate loser in this situation is
the common man, for whose benefit and welfare the ‘system’ ostensibly exists.
