Monday, September 26, 2011

Legalizing speed money-the global trend?

Today, we had a guest lecture by one of India's renowned intercultural consultants, Sreemathi Ramnath(http://www.linkedin.com/pub/sreemathi-ramnath/4/946/539). While mentioning the different cultural attitudes towards bribery, she made a distinction between speed money(paying to get your legal right faster) and bribery(getting what you are not entitled too). I dissect this issue further in this post.

  1. Any temple of repute has a 'special darshan' where well heeled(or well connected) devotees can avoid standing in the serpentine Qs, and instead finish their darshan in a jiffy. Initially, this used to outrage me because if devotees are not equal before God, then where else are they equal? Then it struck me that those in a hurry would devise some way to break the Q, and end up enriching the guardians/priests. Instead, this system ensures that the temple grabs that economic surplus. 
  2.  Another example is the tatkal reservation system in trains, which replaced the earlier manual manipulation of reservation charts to benefit those in a hurry. Now, tatkal transparently allocates seats to those willing to fork up that extra bit of money. 
  3.  Even for that citizenship identity(the passport), those in a hurry can pay an extra fee and legally get their application processed faster.
  4. Inventors in a hurry to publicize their patents, can pay the Patent Office an extra fee to get their patents published on a priority basis(and thereby signal their belief in its commercial utility and validity). 
  5. The Ministry of Company Affairs can now approve company formation in less than a day, provided the applicants use a professional to pre-certify the application forms. Granted that the professional runs the risk of penalties and disbarment for wrong filing, but for the most part in routine cases, this provision allows the professional to extract a 'rent' from the company-a refined version of speed money. The applicant pays the professional extra fees, so that the processing is done faster
But then, this practice is not that new fangled. Banks, Photography studios and courier agencies have a hallowed tradition of charging more for faster delivery. The modern science of activity based costing has merely justified this practice, as has another favorite consulting jargon of value based pricing. 
Takeaway:-Try spotting more such practices around you, and do not get pissed off. It is just economic logic-the system captures the rent instead of corrupt people within the system.


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