Bureaucrats must learn humility to unlock foreign investment
Let us not get involved with politics too much here and concentrate instead on economics. A politician (see, we can do this without party labels) has said,”To attract investments, we must be more open and move toward deregulation,” and this is both true and useful. Also welcome, for not all political statements are both true and useful, of course. But it’s not complete, as this story tells us:
The senior NBR official then contacted the commissioner and said that it was sorted out, and the importer should visit the commissioner again, who will clear the goods.
But after going, the commissioner expressed anger for having consulted with a higher authority.”
No, leave aside the background (which was about which classification should have been used on an import declaration, truly unimportant stuff to begin with). If I were writing this for an American audience, I would refer to South Park and the character Cartman, who insists that people must “Respect my authoritah!” If this were for an English one, I would reference the Licence Raj, which we inflicted upon India all those years ago. A blind obedience to the detailed regulations overseen by the “babudom”.
Here it is, one of those Babus — self-important bureaucrats — upset that his authority has been questioned. Has not been respected as Cartman demands. So, the initial perfectly sensible request — well, if we’ve used the wrong customs code, we’ll correct it and let us get on with things — is sent on a months-long round robin through varied offices.
The delay is imposed simply because it can be — that’ll teach people not to respect my office, won’t it?
Well, yes, it probably will. Except that sort of behaviour will entirely kill any inward investment. In fact, it will substantially reduce any local investment.
Deregulation is important, yes it is. For where there is regulation there will be delay, the speed of economic growth is the speed at which new things happen. Regulation therefore delays growth by slowing the speed at which things happen.
But what will kill that investment is uncertainty about regulation. The not knowing is worse than even the most tortured set of regulations. So, if some fat Babu (I do not know that he’s fat, but I sure suspect) can delay matters by months just to polish his ego, we’re not just going to have things slowed down; we’re going to miss out on some investments entirely.
Now, the two are linked in a way. If there are fewer regulations then there are fewer ways in which egos can be bolstered by delaying things. But a determined bureaucracy can still delay beyond the limit that any foreigners will put up with — further than most domestic capitalists will too. So deregulation does limit, to an extent, the damage these people can do but only limit, not eliminate.
What is actually needed here is a cultural change. To where bureaucracy — and bureaucrats — are not centres of their own power and thus to be respected. Rather, they are what we call them in English — civil servants. That is, servants of the people. Society has a certain amount of basic labour that needs to be done, which English slang calls “scut work”.
Bureaucrats are those people we, collectively, hire to do that boring must-be-done stuff for us. All individuals, all work done, are worthy of respect, of course, but those who administer the customs code for us are doing nothing more worthy of that respect than those who take out the rubbish for us. It’s society’s scut work being done, we’re paying them to do it, and that’s that.
That is, we want a society in which some customs commissioner grasps that his job is to make things easy for us out here, the people paying his salary. Rather than his position meaning that we owe him obeisance, that we must respect his social position. You’re our servant, Laddie.
So, get on with making things easy for the people who pay you, not hard, so that we all have to marvel at your power and ego.
Foreigners won’t invest where Babus rule — as India has shown just across the border. So, yes, deregulate, of course — but also degrade that claimed social position of the bureaucrats.
Tim Worstall is a senior fellow at the Adam Smith institute in London.
