Bribery or labour efficiency?

As I was leaving “Ker Club” in Barcelona on 15th November, my pocket was very skilfully picked. I had lost some money but more importantly, I had lost my NIE (Spanish residence permit) and my Indian driving license.Now, anyone familiar with Indian bureaucracy or spanish lethargy will empathise with poor me. The fact that I didn’t have any spanish “friends” yet only made matters slightly worse because google is not your most trust worthy translator. Last thing you want to do is rub people off the wrong way with inappropriate translation. Despite having a copy of my original residence permit, it took me 20 billion visits to 100 different offices, tons of money (for an Indian student in Spain, mind you) and broken spanish trying to put together all necessary documents to make sure I could both get out of and come back into Spain peacefully as I was going home for Christmas break.

All of this would have been relatively simpler (and a lot more expensive, of course) if I could have bribed someone. Now, I used to believe that bribing is the easy way out for people and that’s why people would rather bribe someone than do the work themselves. But I have updated my opinion because of two things – I have learnt that you must posses tremendous amount of skill to bribe and also, to bribe or not is merely a decision of what you’re optimising for. In order to successfully bribe, one needs to know who to bribe and how to bribe in the same The latter  can be illustrated with an analogy from “Friends” ().

From one of my earlier posts, it is evident that bribery does exist in Barcelona but it takes either time or talent to spot the opportunity. Talent I didn’t have because I’m not a fluent spanish speaker or in the network of well connected Catalans. But, I had time and I spent hours trying to talk to people in these offices (mostly because I had to think for 5 minutes before saying a line in spanish) but in vain. At no point did any of these people suggest “alternate” methods. There are hundreds of people like me lingering around these offices every single day. This hasn’t been incentive enough for spaniards to fill this apparent gap with agencies who facilitate faster transactions. No wonder the unemployment is still 26%.

On the other hand, the day after I reached Bangalore, I was at the RTO to get a picture taken for a duplicate driving license and everything was done in less than 2 minutes. I would get my license in 3 days. All it took was a call home where my mother spoke to someone who knows one of these “agents” who can get this done for you with marginally higher cost and exponentially lesser pain. Here I didn’t have time but I possessed talent (knowing the right people, thanks to my mum, of course). I noticed that there are tons of these “agents” hanging around the RTO proactively facilitating transactions for people like me. In fact, the guys in the offices suggest that you take help from one of these agents so they can earn some commission.

Technically speaking, when you hire an agent, you are not bribing him. You are outsourcing the running around. The agent on the other hand is bridging the demand supply gap by improving supply efficiency. If in the process, he chooses to bribe some officers, that’s just his business model. One could go off on a moral tangent at this point, but that would make it another blog post. my hypothesis is that bribery makes the labour market more efficient by creating such jobs for “agents” who in the name of facilitating faster transactions bridge the demand supply gap just a little bit more.

At the face of it, in emerging economies, where government taxes are higher (in terms of percentage of the amount spent on paying agents) to sustain development, creation of such mediator markets is relatively easier as compared to more mature economies where government taxes are too minuscule for such agents to tap. Since people from developed nations tend to optimise for time rather than money, the value of such services is way higher than in developing economies. So, there is greater potential to bridge the demand supply gap in developed nations than that is perceived. Implied meaning – Bribery should not just be a third world problem. In fact, it’s a tool to improve labour efficiency.

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