For many years, we blamed the
government and the government organizations for being inefficient, complex and
corrupt. We adored Max Weber for appropriately applying the word bureaucracy and
spoiled the reputation of this nomenclature by attributing to anyone and
anything that are adamant, stoic, apathetic and irresponsive. Inevitable
regulatory system imprisoned the government officials inside an iron cage giving
them peanuts. But the smarties lavishly feasted encashing on the nuances and
nuisances of the laws and ever expanding procedures, thanks to the voluntary
and involuntary paperweights (read as hot cash) kept on the hopeless files by
both hapless and dishonest citizens. Scholars, politicians, senior bureaucrats,
media and the civil society angels loudly professed: No hope, no salvation, and
no atonement – for and from the corrupt bureaucratic system.
But the neocolonial policy
experts, public intellectuals and multinational policy advising entities researched
hand-in-hand and invented a prescription: Privatize, de-regulate, merge,
acquire, and spread out.
What is the result?
Let me start with the brighter
side:
It paved way for many players who
were waiting for an opportunity to get the large business share hitherto
monopolized by the government. Competition resulted in ensuring quality,
cheaper rates, and accountability. The ambitious, greedy and aspiring middle
class in third world countries got what they craved for: to live the life of a
first world citizen while unfortunately destined to be born in a wretched third
world.
And what is the darker side?
To know this, one need not look
at any empirical studies. (In fact, there is hardly anyone who would like to
research on this now!) Just look at our experiences rather than giving a
complex theoretical discourse delivered by policy experts or intimidating
statistics frequently displayed by economists.
Photo: Businessresearchguide.com
One simple ‘everyday life’ example from the bottom
You are a subscriber to the most
essential service of the day: a phone or internet connection. You have a
grievance to be settled. You approach the large, mighty, sophisticated,
automated, cosy, pretty, and articulate service provider. You find that the
polite voice on the other end cannot understand your pulse. The replies are
disseminated from a stock of frequently needed answers. Each time you remind
about the unsettled grievance, you are with a different person. You do not know
where to go next. You are not allowed to explain your problem in plain and
simple human language. No access to the huge structures guarded by private
security guards. No awareness about the hierarchical structure. Even when you
are fortunate to get a soul to interact, the response would be, ‘I don’t have
the mandate’ or ‘this is the Standard Operating Procedure’, or ‘I am sorry, I
can’t help’, or ‘register your complaint at Interactive Voice Response System
once again’. You encountered with the new face-less private bureaucracy.
You were happy when you were told
that many services hitherto provided by the mighty government have been
contracted to be done by private players who have quoted the lowest rates in
the tenders. Only the large entities could afford to quote lower rates. Cartelisation,
predatory pricing and anti-competitive mergers and acquisition destroyed the
fairness in allocating the resources and work of the public sector to the
private players. They outsourced these contracts to smaller players who did not
have the capacity and resources to execute the work. You found the same old
‘bureaucratic’ delays coupled with data thefts, corruption, and lack of
accountability among those private providers. Some examples of criminal
opportunities: the promoters can exploit
the resources with scant regard to sustainability, people can get multiple PAN
numbers, criminals can get cell phone connections without any documents or by
giving fake documents, vendors can circumvent standard postal procedures and
can transport contraband, thieves can get into secure offices with the
connivance of private security guards. These are just a few generic examples.
Why all these happen in a large
private environment? a) Profit motive is predominant than service motive, b)
The tendency to sub-contract the work to make more profit, c) Lack of
monitoring of quality of the sub-contractor, d) Frequent attrition among the
employees and lack of long-term loyalty, e) Lower risks for the mischief makers
as they can vanish from the company before being caught and punished, f) When
the company practices are perceived to be unethical, the employees also tend to
be dishonest and selfish, e) Inadequate
government regulations to monitor the affairs in a liberalized
environment, etc.
Apart from the above inefficiency
in large private sector companies, most of these entities are marred by
internal corruption. Managers at each level engage in deals that satisfy their
personal interests. However only a few cases are reported to the police as
there are no clear rules to punish the corrupt executives for financial crime
committed within a private company. To safeguard the reputation, corporate
managements let off these criminals with just an expulsion from the company. Businessmen
and traders have many stories to tell about how they had to please the managers
at various levels in a large firm to get into a business with the company.
Governments were quick to
understand the corporate inefficiency and corruption and consequently
established ombudsmen, sector regulators, and enacted various corporate
governance legislation. However none of these initiatives have curbed the
problems mentioned above.
The real reason: The problem of ‘Large’
Policy experts and technocrats
dumped E F Schumacher’s concept of ‘Small is Beautiful’ many years back. But
all the problems we face in the name of ‘bureaucratic inefficiency’ are the
contribution of the ‘Large’. It is proved from the bitter experiences we have
from the large private sectors that inefficiency, red-tapism and corruption are
not the exclusive attributes of Government, but necessary fallout of any large,
complex and non-transparent system.
What is the solution?
The solution lies only in creating small,
independent, and responsible units within the existing large structures,
whether it is in government or in private sector. Each unit should be given
delegated powers based on the unique attributes and should be accountable for
its operational decisions. There should be human interface in these units so
that services are provided and grievances are redressed based on the needs and
requirements rather than universal procedures. Technological interface should
not undermine the genuine need for human interaction to find a satisfying
solution to a problem.
Privatization and deregulation are irreversible. These processes need to continue. However governments cannot abdicate their responsibilities to ensure fairness, transparency and public welfare. Similarly, large firms cannot continue in an outsourcing and delegating process without ensuring quality and efficiency.It is imperative to have a
stringent law to curb corruption in private sector and to make it mandatory for
the private sector management to report the criminal incidents of internal
unlawful acts to law enforcers. Regulators and ombudsmen need to establish
their field arms to monitor compliance to regulations rather than be armchair
watchdogs. Both statutory auditors, internal auditors and the Audit committees
need to be proactive and should be made accountable for their laxities in
reporting irregularities not only in financial affairs but also in security
issues and consumer affairs. Strict
penalties may be imposed on all acts of corporate corruption, ethical failures,
and procedures that are against public interest.
In short, we need to go back the
concept of ‘Small is Beautiful’ to get rid of the ghost of Max Weber and his
iron caged bureaucracy that has reincarnated as corporate bureaucracy.
© Sibichen K Mathew
Views are personal. Comments are welcome
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