Tuesday, November 20, 2018

Arguments for Mexico do not apply to India.

When an action born of good intentions has harmful effects it is a mistake and a costly way to learn," wrote Prof R Hausmann. "A case in point is the decision by Mexican President-elect Andres Manuel Lopez Obrador (AMLO) to lower the salaries of the higher echelons of the civil service, including himself, capping them at $5,707 per month. It showed that AMLO was committed to fiscal austerity and income inequality." Why is it a mistake? Because government services are more "skill-intensive" and so "government employees have significantly higher levels of schooling -- four more years, on average, in Mexico". Since private firms pay very high salaries to CEOs so the government has to compete to attract top talent. Not in India. Here salaries of civil servants are much higher not only compared to the private sector but also compared to the armed forces who risk their lives daily to protect us. So great is the demand that MBAs, engineers and lawyers applied for jobs as drivers at the Gujarat High Court and 50,000 graduates, 28,000 post grads and 3,700 with PhD degrees applied for jobs as peons in Uttar Pradesh. Why? Not only are civil servants very highly paid with healthcare and pensions for life but they have huge opportunities to augment their incomes through corrupt means with complete immunity. Anyone bribing a government official faces 7 years in prison but no government official can even be investigated without permission of the government. This privilege has been extended to retired employees by the present anti-corruption government. No wonder India regularly wins the prize for being the most corrupt country in Asia. At the top of the administration is the Indian Administrative Service, or the IAS, perhaps the most pampered civil service in the world, with powers of a feudal lord. Not only very high salaries but the list of perks would make any CEO of a private company jealous. Since civil servants are in post for years, while politicians may come and go, civil servants teach politicians how to game the system and make money through corruption. To improve the quality of administration the government proposed recruiting experts directly in top levels of government, called 'lateral entry'. To which a retired IAS officer wrote that the service is a "powerful magnet for competent, capable and proficient graduates" who are attracted "in spite of increased job opportunities of the corporate world". It needs brains to get away with corruption and punishment in the private sector is quick and severe. High salaries for good people works in Mexico but not in India. They are still corrupt.

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