![]() | #1726 | |||
Team-BHP Support ![]() ![]() Join Date: Jul 2010 Location: Bangalore
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That problem will exist as long as humans exist, because being selfish is an instinct with all humans and anything else alive with a cognitive function, varying by degrees but never absent. I still don't understand why that needs to be a terminal road-block to good governance where everyone plays by the same rules. If your argument is the principal-agent problem will always get in the way, then what's the alternative? Live with the status quo and let things happen as they may? Then why bother with demonetisation or anything else? Principal-agent theory will make sure nothing ever really works, right? Quote:
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You're taking the brain cells comment out of context, and it wasn't directed at you specifically as an insult. If it appeared that way, I'm glad to apologise. It was only meant to highlight the 'political organisations are non-profit' scenario is so obviously false in this country in so many ways, I'm amused anyone even bothers to consider it. You of all people, who have crossed paths with our bureaucracy several times probably know that like the back of your hand now. You have a valid point and a sound legal position, but the principal-agent problem is inherent to humans. Everyone is influenced by it, knowingly or otherwise, and that's what makes getting anything done challenging. Our current laws are a road-block, and those in charge of revising them stand to lose the most by it. Understood and agreed. What next? Last edited by Chetan_Rao : 18th December 2016 at 01:44. | |||
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![]() | #1727 | |
BHPian ![]() Join Date: Jan 2016 Location: Ahmedabad
Posts: 516
Thanked: 1,622 Times
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Yes, change was urgently required. And yes, it was disruptive. True, there could have been many ways to implement it better (in hindsight). But one has to agree on the following:
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![]() | #1728 |
BHPian Join Date: Apr 2010 Location: Chennai
Posts: 420
Thanked: 193 Times
| ![]() Folks, why can't Adhaar number be made mandatory for every donation to a non - profit trust or party? I am assuming that a proposal may be made on this based on the fact that it's already come up in election meetings. |
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![]() | #1729 | |
Team-BHP Support ![]() ![]() Join Date: Jul 2010 Location: Bangalore
Posts: 3,467
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What's been done was actually the easier part, it's the next step of enforcing accountability that'll be a tall mountain to climb. A lot of the bureaucracy either supported this or stayed silent under the assumption they're out-of-bounds when the stinky stuff hits the fan. If those protections are removed, I'm not sure how many will still sing the same tune. On the contrary, if the bureaucracy continues to be protected, popular support will slowly ebb away. Interesting times ahead. Last edited by Chetan_Rao : 18th December 2016 at 10:37. | |
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![]() | #1730 | |||
Team-BHP Support ![]() ![]() | ![]() Quote:
As vishnurp99 said, making every donation linked to an aadhaar card is one possible way. This was technical not possible before, but possible now. But who can make this new law? The very politicians who benefit from the absence of this law. Therefore the resistance will be very high. So we are back to principal-agent problem. However, drastic reduction in availability of cash might reduce this problem without any law. That day may be far, and politicians might open a different channel for corruption. Quote:
Since bribe is paid always in cash, lack of large denominations will highly affect the current system of corruption. Will it reduce corruption, it is not clear yet. All the government offices are now demanding bribe in new bills. So approvals are getting delayed a lot, as people don't have enough new bills to pay them. This situation can't go on for long, unlike a Mexican standoff something will happen. Frankly, I don't know how the chips will fall. If bribery becomes very difficult, it will naturally reduce it. But there is a black economy in digital world too. Just like how drugs are sold via Darkweb, even bribery may go into Darkweb. A new breed of digital middlemen may emerge to make this possible. The only real impediment to demonetization are resistance to go cashless, and bank frauds that are making new cash available to unscrupulous people. I gave this example few days, notice that corruption is not part of it. Quote:
Last edited by Samurai : 18th December 2016 at 11:58. | |||
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![]() | #1731 |
Distinguished - BHPian ![]() ![]() Join Date: Apr 2013 Location: Beans Town
Posts: 1,757
Thanked: 7,187 Times
| ![]() I understand the limitations of discussing within the already very limited scope of superficial "reality" as far as the monetary system goes. Kindly also do note that I am apolitical, non-regionalist and totally anti-press, so I do not remotely subscribe to any views that any of the above three can come up with to garble core reality. Many debates and discussions on the same topic in chai ka thelas, hotels, office corners, blogs and over telephone calls bordering on trite, and people miss the simple, basic, point - money is a construct that began its ascent to global domination simply because the other medium of exchange > barter wasn't perfect and could never become perfect. It began most notably in Israel where "moneychangers" sat outside temples to exchange commodities of interest into pieces of gold and silver (shekels). Those gold and silver could either be held for a future transaction or donated to the Temple as a sign of devotion. That system didn't work either because the changers began to "shortchange" the people and decided each day's value differently. By then which was shortly after numerous conquests by various kings of Persia (Cyrus, Darius, Xsyarsa [Xerxes]) gold and silver began to be used as an approved means for exchange as can be evidenced by the Persian daric. There were a lot of struggles for conquest amongst Iraq, Iran, Egypt and Canaan (the then lands of Israel+Jordan+Palestine and a few pieces of Syria and Lebanon). Long story short this form of exchange so to speak evolved post the 1500's A.D into a more devious form. The holding of gold and valuable metals were no longer safe for the public as one could easily steal them and use without any proof against it ever being stolen. Thus came the earliest form of bankers, those who changed the gold into promissory notes and enabled that to become the sole form of transactions ever since. The problem is that ever since there has been a struggle to gauge how much is owed to each since the value of gold lying in reserve was stagnant or increased only by fractions in comparison to the population growth. There had to be a better way to ensure equitable holding and/or distribution and thus came to rise the policies of fractional reserve banking (began in Amsterdam). Also economists began growing like mushrooms at that point and brought about theories of demand/supply which while relevant only clouded the mystery of the origins of money. Also the banks had a newer interest in mind, profitability and increasing profitability. A few wars and very clever speculations later - most notably the one in early 1800's ensured that "banks" took over large portions of Europe and funded the creation of many other countries due to their large financial reserves. This is how the origins of World Bank, were laid, and this is why "globalism" resulted in an inter-dependence of all countries worldwide, including that of money valuation, oil valuation and inflation/deflation. I'm not saying its a bad thing, I'm not saying that here.. all I'm saying is that the true objective of money which was to act as an interest-free tool for rotation between its users as a means to bridge the gap of imperfections of barter system, was lost due to the other vagaries as population increase, inconsistency of commodity availability and others. I'm well learned in the fields of economics, mathematical analysis, statistics and business.. yet I'll be the first one to get philosophical here - money for the most part, is money. It'll always remain a tool for misuse as there is NO perfect means for exchange possible, either you control it or it controls you. The superficialities of black and white are just that, superficialities. Both can be converted into each other and can even cease to exist.. as long as those that hold it decide so. I want to look beyond all these petty games and focus on the obvious.. in the end its a means for survival and even with all its imperfections it has resulted in a world that's not half bad. Survival is still the name of the game. Last edited by dark.knight : 18th December 2016 at 11:58. |
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![]() | #1732 |
Senior - BHPian Join Date: Mar 2010 Location: Bangalore
Posts: 1,057
Thanked: 1,459 Times
| ![]() Indian political system with more than 1000 parties is the biggest employer in the country. This is a well known secret that cadre based parties have to pay upwards of 10K for their political workers. So obviously rich people or money bags only can get in to critical positions or win elections. This is a reality. A presidential system would have suited a large country like India. A single person in charge of each level of administration, be it the president, governor or the mayor. But here we have reached a state even a corporator is spending tens of crores to get elected. These people are not found doing any productive work other than looking for cuts in every work happening. If an executive system was in place at a local level, lot of corruption would have been avoided. But in a country which largely lacks innovation, politics will continue to be the biggest money spinner. |
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![]() | #1733 | |
BHPian Join Date: Apr 2009 Location: Bangalore
Posts: 443
Thanked: 37 Times
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Something has to be done about campaign finance reform, but I don't think it will happen as part of the demonetization exercise. | |
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![]() | #1734 |
Team-BHP Support ![]() ![]() | ![]() One of the main reason behind all this confusion is because media economists writing one sided articles. For example, take this article. His basic premise is MV=PT. But MV=PT doesn't say M is only cash. Transactions done via cheque/dd/card/NEFT/RTGS were unaffected by demonetization. The size of black economy or cash economy is 25% only, rest is white. How did he assume V become near zero, when 75% of V is unaffected by demonetization? When you look at rest of his article, one realises that he only focuses on black or cash economy. The black economy is severely affected, that was the very purpose of demonetization. Last edited by Samurai : 18th December 2016 at 13:15. |
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![]() | #1735 | |||
Team-BHP Support ![]() ![]() Join Date: Jul 2010 Location: Bangalore
Posts: 3,467
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Lack of cash will hit small-time corruption (probably temporarily, let's not discount human ingenuity), how long remains to be seen, but the big fish is elsewhere. | |||
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![]() | #1736 |
Team-BHP Support ![]() ![]() | ![]() I am not familiar with this technique. Can you explain how bribery is done via creative accounting, and how it passes auditing? Couple examples would help. |
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![]() | #1737 | |
Team-BHP Support ![]() ![]() Join Date: Jul 2010 Location: Bangalore
Posts: 3,467
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Contractors, in cahoots with local civic bureaucracy, inflate costs and work estimates to pad their profits. The whole transaction is on the books by the letter of the law, but the numbers don't add up to ground realities. The contractor makes a tidy sum, the bureaucrat gets a cut (non-cash considerations can vary widely) and nobody is none the wiser. A specific example I can quote from personal experience: a civic bureaucrat in my extended family approved inflated costs on a large lucrative PWD contract in exchange for his kid being admitted to a premier medical institution without 'donations' (or whatever they're called nowadays) because the contractor in question had 'contacts' in the right places. No cash changed hands, but the 'consideration' was worth a couple crores at least on the market, and the local civic body unknowingly and unwittingly picked up the tab. I'm assuming audits were arranged to ignore this because both chaps (contractor and bureaucrat) continue to be free and unencumbered. I'll add the 'anectodal evidence' rider myself because the lack of a definite, auditable trail is intentional by the participants. If you want corporate examples, the simplest one is software companies inflating customer billing to pad their margins (contractors gain, so does the company), and the infamous scandals of the early noughties. Just look up Accounting Scandals on Wikipedia. Last edited by Chetan_Rao : 18th December 2016 at 14:29. | |
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![]() | #1738 | |||
Team-BHP Support ![]() ![]() | ![]() Quote:
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Corruption without liquidity doesn't grow too much. Money exchange is what fuels most corruption. Quote:
That is how corrupt politicians and government officials escape the dragnet, cash is both untraceable and liquid. Having no audit trails is the very foundation of black economy. | |||
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![]() | #1739 | ||||
Team-BHP Support ![]() ![]() Join Date: Jul 2010 Location: Bangalore
Posts: 3,467
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| ![]() That isn't an isolated event, and non-cash bribery is alive and kicking. Scalability? Non-cash bribery isn't exactly a new-fangled idea, it's widespread in ways that boggles the mind. Just because a bundle of cash didn't physically change hands doesn't mean money wasn't part of the equation. Quote:
You're assuming the 'exchange' happens primarily by cash, and I say that may be true for relatively smaller amounts but the larger deals happen outside the cash economy. In a lot of cases (including the example I quoted), there is a trail within official records for someone willing to follow it, but nobody did/does. Someone in the whole chain paid for the seat in real money (but not necessarily in cash), not just through a barter. Quote:
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In the future, having paper currency with limited chronological validity may help alleviate longer-term hoarding that helps hide/erase trails today. Quote:
Actual cash is only practical upto a certain level. After that, it's just accountants getting creative where money moves around without any cash actually changing hands. Hypothetically, if I wanted to give you a cut of illicit gains large enough to fill a shipping container (consider a multi-billion dollar deal where you get a sizable share), would I actually send you a truck full of cash? ![]() Last edited by Chetan_Rao : 18th December 2016 at 16:08. | ||||
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![]() | #1740 | |
Team-BHP Support ![]() ![]() | ![]() Quote:
Those fall into a different category. In that kind of deals, money moves outside the country and is stored in numbered accounts in certain tax-lax countries. When corruption happens using foreign currency, it has no effect on our monetary policy. | |
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