Economist Vito Tanzi once said that when rules can be used to extract bribes, more rules will be created. And when more rules appear, more bribes will be needed to bargain down the red tape, and so on.
That means countries with lots of red tape can’t fight corruption without fighting the red tape that causes it. If there are too many rules, laws against corruption won’t work. When bureaucrats have the opportunity to extract bribes, some will do it no matter what punishment they’re threatened with. (China’s mandarins, after all, face the death sentence or life in prison for graft, but that doesn’t stop them.)
So when the ruler of a country says he plans to fight corruption by slashing red tape, that’s good news.
Indonesia’s new president, Joko Widodo — known as Jokowi — has a history of zeroing in on red tape. That’s what he did as mayor of Solo and governor of Jakarta. Can he do the same for all of Indonesia, with 250 million people spread across 13,000 islands? He thinks so.
Here’s what he said in a recent interview with Foreign Affairs:
Corruption is one of the hardest problems for any government to address, but it’s a particularly big problem here. How will you succeed in fighting it?
I will continue to support the work and maintain the independence of our Corruption Eradication Commission. But first and more important, we need to introduce bureaucratic reforms and consistently monitor the problem. We must check consistently, every day, every week, every month, because this can change our bureaucratic culture.
For example, in Jakarta, we have a new system for when you want to get an ID card here. Before, it took two weeks, three weeks; now, only one day. And my objective is only one hour. Step by step. As for building permits, before it sometimes took six months, eight months, two years. Now, I gave my bureaucracy here the goal of only two weeks, using an online system. You can ask for the permit from your office, from your house. And we can copy this system in other provinces.
This year Indonesia ranked a dismal 175 out of 189 countries for “starting a business” on the World Bank’s Doing Business Index. The country is a tangle of red tape — a target-rich environment for Jokowi.
Other countries and institutions serious about promoting a level playing field should throw their support behind a war on red tape in Indonesia and any other country. Aid, trade, military support, and other forms of cooperation should be tied to programs like Jokowi’s that target unnecessary regulations.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.