I tried starting a manufacturing unit in India (2020)(superr.in)
superr.in
I tried starting a manufacturing unit in India (2020)
https://superr.in/economy/i-tried-starting-a-manufacturing-unit-in-india/
455 comments
Back when GST was introduced, they asked all exporters of software services to pay the 18% GST and then claim a refund because exports are exempted. This was before they introduced a process to apply for a "NOC" (which must be renewed periodically I think). So, I duly paid GST for the first couple of months.
5 years later, I'm yet to receive the refunds. First, they said that they were authorized to only sanction refunds for exporters of physical goods and then they said that this is handled by the State government, who said that it was handled by the Central. Finally Central accepted that they are in-charge of the refund, but by then COVID happened and I could not follow up for 2 years. In May, when I tried to claim the refund again, they said that this refund pertains to 2016 and it's difficult to "reopen" the accounts for that year and that's handled by yet another department. So, they have written to them to ask for the process. No replies after two emails. Story continues...
5 years later, I'm yet to receive the refunds. First, they said that they were authorized to only sanction refunds for exporters of physical goods and then they said that this is handled by the State government, who said that it was handled by the Central. Finally Central accepted that they are in-charge of the refund, but by then COVID happened and I could not follow up for 2 years. In May, when I tried to claim the refund again, they said that this refund pertains to 2016 and it's difficult to "reopen" the accounts for that year and that's handled by yet another department. So, they have written to them to ask for the process. No replies after two emails. Story continues...
My family’s liquor shop was forced to close because our accountants could not keep up with the constant GST changes. They quit and we could not find another on short notice. The worst part was that the shop was on the hook for the unpaid taxes of upstream suppliers - money that is yet to be fully refunded after years.
India’s legal systems and the enforcement of laws are one of the biggest drags on a country with immense potential.
India’s legal systems and the enforcement of laws are one of the biggest drags on a country with immense potential.
That sounds awful. Curious to hear if you were able to avoid GST payments in later years as should be the case for exports.
Yes, you can get a waiver if you apply for something called the "Letter of Undertaking" which allows you to not pay anything for exports. This was not available at the start.
This is exactly what happened to me.
This is awful.
I had to apply for Foreign Export of Services Certificate as well which turned out to be the PAN number.
They also made it impossible for services exporters to claim GST back on business expenses.
I had to apply for Foreign Export of Services Certificate as well which turned out to be the PAN number.
They also made it impossible for services exporters to claim GST back on business expenses.
I came to the comments to warn exactly this, perhaps more emphatically.
Do not set up a legal entity in India. It will become a never-ending void where money and time go to die. The bureaucracy is hilariously inept and bloated, and if you are not willing to pay the bribes or for some entity to navigate the systemic corruption on your behalf, you will end up in OP's situation.
Source: hired many Indian developers in recent years for a SV startup
Do not set up a legal entity in India. It will become a never-ending void where money and time go to die. The bureaucracy is hilariously inept and bloated, and if you are not willing to pay the bribes or for some entity to navigate the systemic corruption on your behalf, you will end up in OP's situation.
Source: hired many Indian developers in recent years for a SV startup
When I visited a Cisco office in India, I noticed there was a prominent notice of business application and listed the Indian owner of the company. I thought that was interesting and went digging into India law about ownership. When I came out of that rabbit hole I immediately had zero interest in starting up in India. Simply because of the bureaucracy and would be way more wink-wink-$$$-nudge-nudge than what I'm even used to today with my dealings in the West Indies. Then I read the article and by the time I got to the Irrigation NOC I was nodding my head 'yup, exactly what i expected'.
It's very easy to read these requirements and agree that there are natural resources that (a) you don't want exploited and (b) want preserved, so all of these hurdles are necessary. But the timeline involved and the MULTIPLE bribes really drives home the fact that reforms are needed.
It's very easy to read these requirements and agree that there are natural resources that (a) you don't want exploited and (b) want preserved, so all of these hurdles are necessary. But the timeline involved and the MULTIPLE bribes really drives home the fact that reforms are needed.
Well, I expected this article to be about bribes, because I assume it happens a lot. However, there were no bribes. Does anyone have actual experience with bribes in India (not traffic police)?
Edit: sorry, one person openly asked for a bribe, the Panchayat. I would like to understand more about this. Do they just ask for an amount?
Edit: sorry, one person openly asked for a bribe, the Panchayat. I would like to understand more about this. Do they just ask for an amount?
House/plot registration is a common place where most folks encounter bribe. The person/company selling you the house/plot will ask you to bring INR 15-20K in cash to the registrar office. It'll be paid to an agent who is a conduit.
Driving license is another. You'll see tens of touts in and around the govt office; you pay about INR 2-3K and get your drivers' license. Again, a tout/agent will handle it for you end to end.
Both are very well oiled machine; money goes all the way up to politicians. Getting a posting in those offices in turn requires millions of rupees of bribe, besides influence, caste angle etc.,
Speaking from personal experience.
Driving license is another. You'll see tens of touts in and around the govt office; you pay about INR 2-3K and get your drivers' license. Again, a tout/agent will handle it for you end to end.
Both are very well oiled machine; money goes all the way up to politicians. Getting a posting in those offices in turn requires millions of rupees of bribe, besides influence, caste angle etc.,
Speaking from personal experience.
Not the OP but typically bureaucrats will talk about fees and fines, which continue without documentation of their purpose (at which point they are explicitly bribes).
Baksheesh, whereby people expect a tip ahead of time if you want decent service, is quite common in India and is essentially another form of corruption, especially when practiced by police, bureaucrats, etc.
Baksheesh, whereby people expect a tip ahead of time if you want decent service, is quite common in India and is essentially another form of corruption, especially when practiced by police, bureaucrats, etc.
IME the bribes are often not asked directly but instead the people in the office throw up insurmountable obstacles so that you initiate the conversation of bribes. I don't know why they do this, maybe because it puts them in a better negotiating position?
Soliciting a bribe is probably illegal.
But accepting a gift to do your actual job, how could that be illegal, hmmmm?
But accepting a gift to do your actual job, how could that be illegal, hmmmm?
If you go first you are offering a bribe. If the police are investigating offering a bribe is entrapment and your lawyer will run with that in court.
In short it is a way to avoid getting caught.
In short it is a way to avoid getting caught.
I worked as a Unix guy for Morgan Stanley UK & US in the 90s. As part of a SunOS to Solaris rollout, we built & pre-configured all the AFS servers for the Bombay (as it was known at the time) office before they were wrapped & palleted up to be shipped over to India to be racked & powered on over there. There was a courier (I'm not sure if he was an actual MS employee) who apparently would travel along with all the pallets and grease the wheels at certain points with cash payments. It was well known among our project team that cash bribes were an absolutely essential part of getting the servers in one piece and at the same time to our office there in Bombay. I never did find out how much the "bribe fund" was for that project but I suppose a couple of grand would have covered it. BTW The servers did get there in one piece, and they pretty much all came up as they should have.
I read the article a bit differently... Whenever there is a "no bribes" note, all went well - elsewhere there were obstacles which could probably be solved with bribes.
Bribes are required for each of the following for any store/shop/market:
* Trade license (renewable each year)
* Shops and establishment license Weights and measures calibration (needs to be done each year)
* To get electrical connection or to get additional capacity (Rs.100,000/KW in Bengaluru)
* Export / Import - at the ports to various officials no matter how clear your papers are
* Police clearance (for restaurants)
* Health inspector (from time to time)
* Food and Safety license (needs to be renewed periodically) Labour inspector etc
* Periodic visits from panchayat/municpality/police etc where they will demand money or take stuff for free or at huge discounts
India is a cesspit of corruption
* Trade license (renewable each year)
* Shops and establishment license Weights and measures calibration (needs to be done each year)
* To get electrical connection or to get additional capacity (Rs.100,000/KW in Bengaluru)
* Export / Import - at the ports to various officials no matter how clear your papers are
* Police clearance (for restaurants)
* Health inspector (from time to time)
* Food and Safety license (needs to be renewed periodically) Labour inspector etc
* Periodic visits from panchayat/municpality/police etc where they will demand money or take stuff for free or at huge discounts
India is a cesspit of corruption
I had a traffic parking violation recently. When I showed up at my car, I found that there was a traffic police's wheel lock on my car's front right wheel, which I assumed is because I parked in a no-parking area (a no parking sign was about 20 meters away from where I was parked). My car was one among many cars parked in that lane and mine was the only one they fined (I guess because they had only one wheel lock to deploy).
The phone number of the constable who deployed the lock was written on the lock itself. So I called it. The constable and a sub-inspector promptly showed up within 15 minutes. They spoke very politely when I asked why I was the only one being fined. They were even apologetic as they were promptly issuing me a ticket for Rs.500. I had looked up the fine before they arrived and Rs.500 was correct. I paid the fine, they removed the lock and I drove away. They were deploying that lock on another vehicle on the same lane. No bribe whatsoever. Overall, I was surprised/delighted/dazed by the whole experience.
The phone number of the constable who deployed the lock was written on the lock itself. So I called it. The constable and a sub-inspector promptly showed up within 15 minutes. They spoke very politely when I asked why I was the only one being fined. They were even apologetic as they were promptly issuing me a ticket for Rs.500. I had looked up the fine before they arrived and Rs.500 was correct. I paid the fine, they removed the lock and I drove away. They were deploying that lock on another vehicle on the same lane. No bribe whatsoever. Overall, I was surprised/delighted/dazed by the whole experience.
India is huge. Could there be a district with enough integrity that it can become the place to establish a company in India?
I highly doubt it. Bribery is baked into the culture. Everyone takes bribes, and the act of solicitation does not have the negative connotations or legal ramifications that it would have elsewhere. Most Indian people who pay regular bribes are on friendly terms with the people they pay bribes to.
Also, political parties are mostly funded by bribery, and rely on literally buying the votes of villagers to maintain power. Any political entity with the power to actually tackle corruption would have little incentive to do so.
Also, political parties are mostly funded by bribery, and rely on literally buying the votes of villagers to maintain power. Any political entity with the power to actually tackle corruption would have little incentive to do so.
Can you please not claim it is part of 'Indian' culture ? The Indian state is anything but Indian.
How is the Indian state not Indian lol
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I think the state of Bihar is trying to do that (just armchair analysis from reading the news)
Bihar is run by elected thugs and is the last place in India that an honest business would want to go.
Seriously, Is this a joke. Bihar would be right at the bottom of states if I ever setup shop.
If some of the 'liberal-intellectual' types in India have their way, the only thing Bihar will (again) be known for is the industry of kidnapping.
Yes because Bihar is run by liberals and intellectuals ?
also at every level, where you are expected to file forms or deal with any officials, you will be asked to pay some bribe, and there will be 'agents' who offer to do it for you using whatever illegal means they can, for a 'fee', and in many cases they are the only feasible way of getting it done. This happens in every corrupt economy/country but in India its an art form and taken to its logical extreme.
> Do not set up a legal entity in India.
I am curious to know how the Stripe Atlas-like services from razorpay.com and clear.in have worked out for folks here in dealing with govt-facing work?
I am curious to know how the Stripe Atlas-like services from razorpay.com and clear.in have worked out for folks here in dealing with govt-facing work?
Being an Indian who ran a sole proprietorship company which is suppose to be relatively easier with bureaucracy I strongly relate to this comment.
Not only the ease of doing business is non-existent but also the entire running the company's operations is exhaustive and riddled with inconsistencies regulations. Plus, the amount of reporting required to stay compliant is never ending.
Every month you will have to file for multiple GST reports, then file quarterly GST reports again to reconcile. On the other hand, file for quarterly advance tax, then finally file for annual income tax. To top it of, GST rules changes so frequently that the entire book keeping process becomes complex & convoluted.
You will end up spending more time in keeping all the things in check with the regulation instead of spending time on growing the business itself.
Not only the ease of doing business is non-existent but also the entire running the company's operations is exhaustive and riddled with inconsistencies regulations. Plus, the amount of reporting required to stay compliant is never ending.
Every month you will have to file for multiple GST reports, then file quarterly GST reports again to reconcile. On the other hand, file for quarterly advance tax, then finally file for annual income tax. To top it of, GST rules changes so frequently that the entire book keeping process becomes complex & convoluted.
You will end up spending more time in keeping all the things in check with the regulation instead of spending time on growing the business itself.
In the meantime companies like remote.com and similar have sprung up, providing "employer of record" services. Basically they let you outsource the act of having a company in a given country and employing people through it, much like how Stripe lets you outsource the whole merchant account thing for payments.
It seems that whenever there's red tape, there's a business opportunity in paving over it and providing a sane interface on top of it instead.
It seems that whenever there's red tape, there's a business opportunity in paving over it and providing a sane interface on top of it instead.
I would like to second this recommendation. We’ve been using remote.com and hiring internationally suddenly became very possible and we can’t be any more happy.
Before this hiring internationally was a pure nightmare to the point that we simply didn’t accept international remote developers.
Thanks Remote!
Before this hiring internationally was a pure nightmare to the point that we simply didn’t accept international remote developers.
Thanks Remote!
And how has that shell set-up been for your international team members?
In my experience, it added just enough of a layer of obscuration to perpetuate a caste system, similar to how full time temps and vendors are currently treated in tech. US FTE employees had full HR support while Indian subcontractors had really poor HR/payroll/benefits resources from Remote. YMMV
In my experience, it added just enough of a layer of obscuration to perpetuate a caste system, similar to how full time temps and vendors are currently treated in tech. US FTE employees had full HR support while Indian subcontractors had really poor HR/payroll/benefits resources from Remote. YMMV
As someone currently working on the employee side of a remote.com setup, it’s been great.
They have a much better understanding of my local laws, tax systems etc than the US-based HR and Payroll departments at companies I’ve worked for in the past.
They have a much better understanding of my local laws, tax systems etc than the US-based HR and Payroll departments at companies I’ve worked for in the past.
Hi , how do you get hired via Remote ? All I can see is services to hire for employers.
Remote isn't a hiring platform, it's a service companies can use to manage HR compliance. You get hired by the company, and your employment goes through Remote for compliance with local laws.
Blame the employer, not remote.com. The employer decides what benefits they will pay remote.com to give to employees
Maybe you can compensate with higher pay?
This is similar to what Smart does in Germany (and Belgium I think).
They're hiring freelancers as employees, and take care of all the invoicing and tax stuff for them. The freelancers can focus on their craft as if they were employees, with no loss in autonomy.
They're hiring freelancers as employees, and take care of all the invoicing and tax stuff for them. The freelancers can focus on their craft as if they were employees, with no loss in autonomy.
My intuition is that bribes would tend to scale with the square root of the size of the enterprise, so working with a large company would reduce your overhead versus talking to the government yourself.
That is the business model of TriNet, paving over the hassles of operating in different US states.
I am a US Citizen (Indian Origin) who has a US company and a subsidiary in India as well. It is certainly very difficult and cumbersome to set up entity in India but it is possible as long as you have a few things sorted out:
- Have a local point of contact. If you are not Indian yourself or at least of Indian Origin, you will need to have a good local contact ideally your lead tech. who can be part of the entity
- Find a good Chartered Accountant/CA (equivalent to CPA in US) who can help you set it up. DO NOT DO IT by yourself
- For a US based company, I had to do something called "Appostille" which is equivalent of a Notary but for Foreign stuff.
I can recommend the company we used that we still use. We pay them about 20,000 INR per month (about $250/Month) for a team of roughly 15 developers and they do all the setup, taxes, payroll, filings etc etc. PM me if anyone is interested.
- Have a local point of contact. If you are not Indian yourself or at least of Indian Origin, you will need to have a good local contact ideally your lead tech. who can be part of the entity
- Find a good Chartered Accountant/CA (equivalent to CPA in US) who can help you set it up. DO NOT DO IT by yourself
- For a US based company, I had to do something called "Appostille" which is equivalent of a Notary but for Foreign stuff.
I can recommend the company we used that we still use. We pay them about 20,000 INR per month (about $250/Month) for a team of roughly 15 developers and they do all the setup, taxes, payroll, filings etc etc. PM me if anyone is interested.
Perhaps they were looking for some under-the-table deal, commonplace in the government offices of the subcontinent, that you failed to realise. Here, you need to may money to get your money back.
No, this was just incompetence/ignorance on the govts part. My local (Indian) company director had full authority to do whatever he thought was needed.
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It's a signal you need to pay a bribe, sorry. That's the only way to get something done.
Two anecdotes from me (based in USA).
1) India's IRS still owes me tax-refund from 1998, 1999, 2000, 2001. I gave up trying to recoup long ago.
2) I inherited an inheritance in India from someone passing away (who died without a will). A family member managed to have everything put in their name.
Mindboggling.
1) India's IRS still owes me tax-refund from 1998, 1999, 2000, 2001. I gave up trying to recoup long ago.
2) I inherited an inheritance in India from someone passing away (who died without a will). A family member managed to have everything put in their name.
Mindboggling.
You should watch the Japanese movie ikiru - that’s how I felt when I tried to navigate the kafkaesque GST system. I received a letter, and just to find out who I received from, I was shuffled around between 7 offices in just my cities with a total travel of 60 kilometers (my city is itself only 15km across lol).
> We have sent experts to the relevant tax offices etc, but the ONLY guy who can handle it is never there, refuses to deal with it, then says we need to go somewhere else - where we are sent back etc etc. Sent around in circles, basically - with everybody recognizing the money is in fact owed...
That sounds exactly like they're needing a bribe, but you're too rooted in western ways of doing things that you don't realize it.
That sounds exactly like they're needing a bribe, but you're too rooted in western ways of doing things that you don't realize it.
US citizens bribing foreign officials can be convicted of a felony under (I think it is) The Foreign Corrupt Practices act. Whether DOJ chases down three-developer scale stuff, or has only the staff for multi-zillion class bribes, I don't know.
If you are paying them to do something they're supposed to do but refuse to do in a timely manner, that may be legal. It's called a facilitating payment or grease payment, and is an exception to the Foreign Corrupt Practices Act.
Ask a real lawyer, obviously.
Ask a real lawyer, obviously.
Yeah, I remember this from my compliance training because it was so ridiculous. It is just a type of bribe, but since it has a special name and a carve out it is potentially not a problem!
I think it's a distinction that matters, morally. A regular bribe is paying an official to do something the law says the official shouldn't do. Whereas grease money is essentially paying the official to follow the law and do their job properly. The latter rewards the official for their show of tactical incompetence, but at least it isn't paying them to break the law on your behalf. More like it's paying them to stop breaking the law.
As far as I can make out facilitation payments are a legal exception in US law, but they are illegal in Indian law. This is definitely in the ask a lawyer before you go making this kind of payment territory.
There have been many smaller companies charged with FPCA violations and even in cases where no charges were brought, the investigation cost the company enough to basically put it out of business.[0]
[0]: https://fcpablog.com/2017/05/24/hyperdynamics-another-fcpa-i...
[0]: https://fcpablog.com/2017/05/24/hyperdynamics-another-fcpa-i...
not just the us. most of europe has similar laws.
Paying an official to do something they were going to do (eventually) anyway does not qualify as a bribe.
Jesus. Please no one take that as legal advice. Paying a bribe to get preferential treatment (even if that treatment is just to get the person to do their actual job) is a bribe none the less.
Paying an official to perform their job (perform a "routine governmental action") is a facilitating payment and is an exemption from the prohibitions of the Foreign Corrupt Practices Act.
https://www.law.cornell.edu/uscode/text/15/78dd-1
The point with a facilitating payment is that you've done everything that's actually required by law to e.g. get a business license and the official is still giving you the run-around, you are allowed to pay them. It doesn't apply in cases that relate to paying decision makers for contracts, for example.
If you're thinking about doing this, you should absolutely consult a lawyer, but the post above is wrong on the general construction of the law.
https://www.law.cornell.edu/uscode/text/15/78dd-1
The point with a facilitating payment is that you've done everything that's actually required by law to e.g. get a business license and the official is still giving you the run-around, you are allowed to pay them. It doesn't apply in cases that relate to paying decision makers for contracts, for example.
If you're thinking about doing this, you should absolutely consult a lawyer, but the post above is wrong on the general construction of the law.
Yeah, dude doesn't deserve getting downvoted as hard as he is. Neither the "You'll get killed by FCPA" nor the "FCPA lets you do this" comments are legal advice. But what you're saying is, in fact, true. It allows US companies to continue to be competitive in places where this stuff is expected.
It's an obvious exemption in FCPA that would be surprising to the majority of people, hence why I posted the gist of it. That earns you a "Jesus" by clueless people on HN these days.
That's interesting. In the UK these would also be considered bribes. From a quick search the US and Australia are the the only countries with this principle.
The problem is, as a foreigner, you may have been misled to think what you're asking for is legal, when in actuality it is not.
Maybe. From the multitude of FCPA training I’ve had to endure, you can pay to have processing expedited if there is an official policy for it. You cannot pay $1K to the head of the office because he hints that it will speed things up.
Technically, you’re not even protected if you hire a local agent to do all of this for you.
Technically, you’re not even protected if you hire a local agent to do all of this for you.
it does sound a lot like a bribe to me.
citation please :-)
To me...if I have to pay someone to do their assigned job it seems like a bribe to me https://www.merriam-webster.com/dictionary/bribe (using money to affect the conduct of a person)
To me...if I have to pay someone to do their assigned job it seems like a bribe to me https://www.merriam-webster.com/dictionary/bribe (using money to affect the conduct of a person)
>citation please :-)
15 U.S. Code § 78dd–1(b)
15 U.S. Code § 78dd–1(b)
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I probably would have been, if it had been myself. However, this was my local Indian director, who is very well versed in navigating Indian bureaucracy. They were just ignorant, completely disinterested in helding and wildly incompetent.
I’ve heard some countries don’t have the same level of rule of law (and corruption instead) as anticipated.
Well, certainly someone got your money.
This is precisely why upwork exists.
India's obsession with paperwork is unceasing and baffling. Everything requires an application, even when everything can be done digitally. You need letters and stamps to get anything done.
Case in point: the "company stamps" that are required for everything you do with your business. From getting a debit card to changing the maturity instructions for a corporate deposit, you need to sign your name AND stamp it with your company stamp.
The company stamp can be made by anyone for $1-2. It has no bearing on security at all. Yet, you need to carry it with you if you want to get anything done.
It's utterly baffling. I can access my corporate bank account online and make any number of transactions, yet if I want to apply for a debit card, I need my company stamp and signatures from all directors.
Why? I have no idea!
Case in point: the "company stamps" that are required for everything you do with your business. From getting a debit card to changing the maturity instructions for a corporate deposit, you need to sign your name AND stamp it with your company stamp.
The company stamp can be made by anyone for $1-2. It has no bearing on security at all. Yet, you need to carry it with you if you want to get anything done.
It's utterly baffling. I can access my corporate bank account online and make any number of transactions, yet if I want to apply for a debit card, I need my company stamp and signatures from all directors.
Why? I have no idea!
Countries with high paperwork and bureaucratic burden are famous for also being highly corrupt. This is probably not a coincidence. Likely all the excess paperwork makes it easier to hide what's really going on, easy to provide roadblocks for those who don't pay, and easier to generally hide bad activity in a sea of noise.
The paperwork is an attempt(usually misguided) to stop the corruption. The idea is that if you have to account and document all actions you will have act in the proscribed manner and not in a way that benefits you.
This usually fails for the reason you posted. I am not really sure how you are supposed to stop corruption once it gets rooted in your society. It is a vile and subversive menace that turns every one into a criminal, preying on their fellow man. A very unpleasant environment to live in.
The best article on corruption I have seen.(if you have time for an hour long power point presentation )
https://www.youtube.com/watch?v=i9i47sgi-V4
This usually fails for the reason you posted. I am not really sure how you are supposed to stop corruption once it gets rooted in your society. It is a vile and subversive menace that turns every one into a criminal, preying on their fellow man. A very unpleasant environment to live in.
The best article on corruption I have seen.(if you have time for an hour long power point presentation )
https://www.youtube.com/watch?v=i9i47sgi-V4
The video talk about Russian military handing out Million dollar contracts to companies registered weeks before the tender.
Well, guess what, the exact same thing happened in UK for PPE contracts:
"Within weeks of the company’s incorporation on 12 May 2020, PPE Medpro was awarded contracts worth £203m to supply millions of masks and gowns."
https://www.theguardian.com/politics/2022/jan/07/michelle-mo...
Well, guess what, the exact same thing happened in UK for PPE contracts:
"Within weeks of the company’s incorporation on 12 May 2020, PPE Medpro was awarded contracts worth £203m to supply millions of masks and gowns."
https://www.theguardian.com/politics/2022/jan/07/michelle-mo...
It's actually kind of disturbing how there are basically only a handful of countries on the planet without systematic corruption. Maybe there are none. Perhaps it's a human trait.
Some types corruption are worse than others.
With the typical Western "overpay for a modern tank/gun/piece of equipment by a factor of 2" style you still get a modern tank/gun/piece of equipment in the end.
From what I heard, for example, in Russia you do that but then the quartermaster goes and sells half of your equipment off on the black market and the grunts sell off the other half and replace it with something much inferior.
The first kind of corruption is bad and should be rooted out, but the second type is much more destructive as can be seen in Ukraine right now. Secrecy at all levels and for minor details, as well as "encouragement" from the highest levels of politics for this kind of theft are core ingredients.
With the typical Western "overpay for a modern tank/gun/piece of equipment by a factor of 2" style you still get a modern tank/gun/piece of equipment in the end.
From what I heard, for example, in Russia you do that but then the quartermaster goes and sells half of your equipment off on the black market and the grunts sell off the other half and replace it with something much inferior.
The first kind of corruption is bad and should be rooted out, but the second type is much more destructive as can be seen in Ukraine right now. Secrecy at all levels and for minor details, as well as "encouragement" from the highest levels of politics for this kind of theft are core ingredients.
> With the typical Western "overpay for a modern tank/gun/piece of equipment by a factor of 2" style you still get a modern tank/gun/piece of equipment in the end.
Many studies have been done and this isn't really a thing. The government isn't paying 2x (or 100-1000x as is often the rumor) for a given thing. What they're paying is the price of certification and guarantees. If the law requires that a procured item be guaranteed to NOT catch fire in an oxygen-rich environment (because it could be used in space) then the price of that product--no matter how seemingly mundane--is going to be more expensive than if you "just bought it from the store". Because someone had to setup a complicated bureaucracy and certification testing process to cover that product and actually carry out the testing.
There's also product availability guarantees that add to the price of government-procured things: A lot of stuff the government buys must continue to be manufactured for the effective life of the product in the government. This means that companies supplying stuff need to stock and maintain replacement parts for lifespans that would normally be vastly longer that a typical product cycle. They may even need to keep people trained at making and repairing these goods. That costs a lot of money!
If you're looking for corruption in Western governments it's in the form of paying political campaigns (or entire parties) to get specific laws passed or not passed. That's the big one that causes basically all the major problems in Western politics.
To a lesser extent there's also corruption involving decision-making bureaucrats getting hired by the industries they regulated after their time in office is over (this should be illegal) and politicians with insider information trading stocks. Taking direct bribes also does happen but it's rare because it's too easy to get caught and the consequences are high (high risk, low reward most of the time).
Many studies have been done and this isn't really a thing. The government isn't paying 2x (or 100-1000x as is often the rumor) for a given thing. What they're paying is the price of certification and guarantees. If the law requires that a procured item be guaranteed to NOT catch fire in an oxygen-rich environment (because it could be used in space) then the price of that product--no matter how seemingly mundane--is going to be more expensive than if you "just bought it from the store". Because someone had to setup a complicated bureaucracy and certification testing process to cover that product and actually carry out the testing.
There's also product availability guarantees that add to the price of government-procured things: A lot of stuff the government buys must continue to be manufactured for the effective life of the product in the government. This means that companies supplying stuff need to stock and maintain replacement parts for lifespans that would normally be vastly longer that a typical product cycle. They may even need to keep people trained at making and repairing these goods. That costs a lot of money!
If you're looking for corruption in Western governments it's in the form of paying political campaigns (or entire parties) to get specific laws passed or not passed. That's the big one that causes basically all the major problems in Western politics.
To a lesser extent there's also corruption involving decision-making bureaucrats getting hired by the industries they regulated after their time in office is over (this should be illegal) and politicians with insider information trading stocks. Taking direct bribes also does happen but it's rare because it's too easy to get caught and the consequences are high (high risk, low reward most of the time).
If you look at the required operating range (temperature and humidity) for most mudane item sold to the US military... it is INSANE. Plus, the amount of "QA" done on the final product ensures very low failure rates. All of this costs a LOT of money. I see the same issue with nuclear power plants built in highly industrialised countries with strong environmental protection laws.
100%, I’m originally from a really corrupt country. They steal the money, and then still refuse to do the work. Result: no money, nothing works.
Here in the West, there is much less corruption to begin with, but the work gets done for the most part. Result: things work
Here in the West, there is much less corruption to begin with, but the work gets done for the most part. Result: things work
I would go as far as to say that a little bit of corruption is healthy. It adds flexibility.
For example: you don't want to register your neighbor's daughter for taxes just so that she can babysit your child once or twice. That is crazytalk. And yes, a lot of countries make sure that small payments don't require registration or taxes. This was just a quick example to make the point, sometimes the general law is just not applicable to a local event and it is better that everyone ignores it.
But this is like cholesterol. The right amount in your body makes everything better. Too much and you are in deep trouble.
For example: you don't want to register your neighbor's daughter for taxes just so that she can babysit your child once or twice. That is crazytalk. And yes, a lot of countries make sure that small payments don't require registration or taxes. This was just a quick example to make the point, sometimes the general law is just not applicable to a local event and it is better that everyone ignores it.
But this is like cholesterol. The right amount in your body makes everything better. Too much and you are in deep trouble.
> I would go as far as to say...
In the UK, it wasn't corruption. These people were paid money for products, they delivered those products, the price paid wasn't excessive.
The UK has an independent auditor that found no evidence of corruption, and that (where product was delivered incorrectly) it was due to problems with contract specs.
Afaik, there is only one case where a person was directly involved in politics and was related to a vendor, they went to great lengths to hide their connection to a vendor, repeatedly lied to civil servants who questioned them, and is now being charged criminally (for some reason, the person who made the original comment about the UK chose not to mention it, it was PPE Medpro).
The issue was that at the start of Covid, the govt called up all their suppliers asked for PPE, and they said they didn't have any. So the govt started using suppliers who often had other businesses that imported product from China (and had to set up new companies). The level of profit on the contract was normal, the price was higher but that was related to the pandemic (how quickly forgotten, in the UK there was literally no PPE for most of 2020, you couldn't buy masks at any price).
So the flexibility already exists...the UK is not corrupt, things happen naturally. Corruption is only necessary where there are supply-side bottlenecks due to politics (i.e. Qatar, Russia, India).
In the UK, it wasn't corruption. These people were paid money for products, they delivered those products, the price paid wasn't excessive.
The UK has an independent auditor that found no evidence of corruption, and that (where product was delivered incorrectly) it was due to problems with contract specs.
Afaik, there is only one case where a person was directly involved in politics and was related to a vendor, they went to great lengths to hide their connection to a vendor, repeatedly lied to civil servants who questioned them, and is now being charged criminally (for some reason, the person who made the original comment about the UK chose not to mention it, it was PPE Medpro).
The issue was that at the start of Covid, the govt called up all their suppliers asked for PPE, and they said they didn't have any. So the govt started using suppliers who often had other businesses that imported product from China (and had to set up new companies). The level of profit on the contract was normal, the price was higher but that was related to the pandemic (how quickly forgotten, in the UK there was literally no PPE for most of 2020, you couldn't buy masks at any price).
So the flexibility already exists...the UK is not corrupt, things happen naturally. Corruption is only necessary where there are supply-side bottlenecks due to politics (i.e. Qatar, Russia, India).
Private Eye has covered this. The level of profit was not normal. Some of the companies were making 50%. And the government had two lists of companies when they were awarding contracts. The priority list was for the acquaintances of ministers and MPs.
It smells very bad.
It smells very bad.
50% what? And Private Eye has also covered the NAO report, which found no evidence of this, and the GLP court case which attempted to prove the price paid was excessive and failed to do so.
No, the priority list wasn't. To approve a vendor through the normal process would have taken years, the fast track process was created to get PPE quicker than normal. I believe all but one person was unrelated to the Tories, the only person who wasn't (as I have said) repeatedly lied about their connection to the vendor, and is now facing criminal charges.
No, the priority list wasn't. To approve a vendor through the normal process would have taken years, the fast track process was created to get PPE quicker than normal. I believe all but one person was unrelated to the Tories, the only person who wasn't (as I have said) repeatedly lied about their connection to the vendor, and is now facing criminal charges.
Seriously? The high court found that the operation of the priority list was unlawful [1]. You can reasonably argue that they needed to move quickly, but that doesn't explain why some companies were getting special treatment.
And the 50% is profit. Obviously.
[1]: https://www.bbc.co.uk/news/uk-59968037
And the 50% is profit. Obviously.
[1]: https://www.bbc.co.uk/news/uk-59968037
Obviously...profit margin, return on equity, return on capital, return on assets,
return on investment, operating margin, gross margin, net margin...to be so ignorant that it is obvious.
The reason they got special treatment was because of the speed. That was what the priority list was for - "establishes that presence on the high priority lane did not confer any advantage at the decision-making stage of the process", what you have linked me is exactly what I was just told you. The award wasn't unlawful, the govt did not report on the detail of the contracts within the time period required...that was unlawful, but a function of the process (again, the contracts were awarded outside the usual process so all the information wasn't gathered...the NAO conducted a full audit of the contracts, iirc, before the contract details were reported in the public database).
The reason they got special treatment was because of the speed. That was what the priority list was for - "establishes that presence on the high priority lane did not confer any advantage at the decision-making stage of the process", what you have linked me is exactly what I was just told you. The award wasn't unlawful, the govt did not report on the detail of the contracts within the time period required...that was unlawful, but a function of the process (again, the contracts were awarded outside the usual process so all the information wasn't gathered...the NAO conducted a full audit of the contracts, iirc, before the contract details were reported in the public database).
Why are you so hard at work trying to come up with excuses for obvious sleazy dealing?
There are companies that made no upfront investment, ordering equipment from China without any understanding of what they are ordering, any relevant experience, and huge quantities fo PPE had to be destroyed because it was not fit for purpose and did not meet regulatory requirements. Most of the companies contracted had no experiece of dealing with medical equipment ever before. I personally know people who have experience in the industry and government passed them up for contracts in favour of the shitsters that were chosen.
There are companies that made no upfront investment, ordering equipment from China without any understanding of what they are ordering, any relevant experience, and huge quantities fo PPE had to be destroyed because it was not fit for purpose and did not meet regulatory requirements. Most of the companies contracted had no experiece of dealing with medical equipment ever before. I personally know people who have experience in the industry and government passed them up for contracts in favour of the shitsters that were chosen.
What equity? What capital? What assets? What investment? These mostly weren't PPE manufacturers or even PPE suppliers. Often they were little more than drop shippers with a 50% profit margin. It is that simple.
And the fact that companies were treated the same when they were assessed doesn't alter the fact that being assessed sooner rather than later is a massive advantage.
And the fact that companies were treated the same when they were assessed doesn't alter the fact that being assessed sooner rather than later is a massive advantage.
I think your argument boils down to don't assign to corruption what could more easily be assigned to incompetence.
Which I think is a fair point but does raise some questions about the competency of the civil servants and politicians we trust with a fairly large chunk of our income.
Which I think is a fair point but does raise some questions about the competency of the civil servants and politicians we trust with a fairly large chunk of our income.
Yes, I think we should do that (there are massive issues with both the civil service and civil service procurement, Scotland has significant issues here...these are probably bigger than with politicians) but we have a system with robust checks and balances (for example, ministers don't make procurement decisions...if a firm was fast-tracked, they delivered something...that doesn't mean there were no issues, but ministers aren't writing cheques to people).
How does this rule work when people are both currupt and incompetent, life is the case with the Russian military? On the rare occasion anyone competent is involved, incompetence can be feigned.
I realise that you are making an off the cuff example, and I agree with your basic point. However, in the places I have lived, the babysitter would be an independent contractor and thus responsible for her own taxes. Moreover, it is unlikely that she would be making enough money to exceed the personal exemption, and therefore, it is unlikely that she would owe taxes anyway. An argument could be made that she should collect and remit sales tax or VAT where applicable, but again, there are usually thresholds below which there is no obligation.
My point is that well run, non-corrupt, systems tend to have exemptions to make everything sane and reasonable. If these exemptions don't exist, you can believe that it is because the system is corrupt and not because they are trying to stop corruption.
My point is that well run, non-corrupt, systems tend to have exemptions to make everything sane and reasonable. If these exemptions don't exist, you can believe that it is because the system is corrupt and not because they are trying to stop corruption.
Well for small payments we need a simple tax box, no country is doing that, all countries require a ton of paperwork for each new “employee”.
Why not just have one payment system to rule them all run by the government that is required by law for all payment of employee-driven services? Businesses could save a TON of money on payroll systems and HR.
A government-run system--presumably--would take care of withholding the correct amount of taxes and also making sure the business/person paying a salary never has to worry about running afoul of the law (having the IRS or equivalent) come after them.
A government-run system--presumably--would take care of withholding the correct amount of taxes and also making sure the business/person paying a salary never has to worry about running afoul of the law (having the IRS or equivalent) come after them.
In France there are more than a hundred mandatory numbers on the paysheet. Each class of worker has its own retirement/health/subhealth/old-age-health/unemployment/family benefits. Each has a different rate.
The problem is that the revenue leakage for babysitters and other under the table services is lower than the scaled grifts that an “easy box” would generate.
I agree. Look at the map on this page. Plenty of orange and red!
https://en.wikipedia.org/wiki/Corruption_Perceptions_Index
https://en.wikipedia.org/wiki/Corruption_Perceptions_Index
It is not a human trait. It is a property of money. Interest is a bribe to keep money in circulation. There is an incentive to pass this bribe onto someone else. Why is it a property of money? Because money has a liquidity premium versus any other asset and no holding costs. It is rational to ask to be compensated for giving up this liquidity for the face value of money. Money is a payment network that introduces costs for businesses that accept it. Businesses must be close to consumers and open whenever consumers want to spend their money. They must also have a variety of uniform products and if it has to store them it will have to pay for storage costs. Think about it like being an on call employee. You must be ready to respond at any moment and this flexibility is worth a certain amount of money.
Now, you could call the national money system to be a public service provided by the government (and indirectly by private businesses).
If you were to issue your own money what would it's liquidity premium be? It would be very low to be sure because barely anyone accepts it.
So, the holders of money effectively own a free subscription to this public service. If they lend out money, they will obviously charge a fee in proportion to the liquidity premium. This fee is included in the interest rate.
The borrower is now paying for the liquidity premium, the cost has been fully internalized and the problem is gone right?
The problem is that the liquidity premium that is part of the interest rate is erroneously calculated as the cost of capital. It is not, it is the cost of liquidity.
Now, things will get very strange. When the borrower spends his money, he will be obligated to pay the subscription fee, the cost of liquidity, even though he no longer has the money and he is no longer benefiting from the liquidity services. What this means is that the money system constantly screws over people who use money as a medium of exchange and rewards those who sabotage it. It will look as if those who "save" money will be rewarded for their frugality and "moral" behaviour and those who are in debt are being rightly punished for their unsustainable and and "sinful" behaviour.
Now imagine if private households all follow this strategy of selling more than they buy and saving and lending the rest. There must be another sector that earns less than they spend and accumulates debt though borrowing. The government is forced to avoid austerity at all costs. It must become the "immoral sinner" that spends in excess to shield the private sector.
If you want to solve the problem you would have to make buying and lending symmetric. Lending passes the cost of liquidity onto someone else which is in theory ok but only if buying also passes the cost of liquidity onto the seller so that no liquidity premium accrues to the lender. He will pay a liquidity premium and earn liquidity premium which then zeroes. The only one who then collects the liquidity premium is the central bank that issues the money.
The problem with this is that the interest rate on cash would be negative and paper technology isn't advanced enough to calculate and display a dynamically changing face value. It isn't some conspiracy by a cabal, it is actually an engineering problem that originates from our historical and cultural attachment to cash. Humans aren't evil bribe collecting monsters, they are just in a rationality trap that is difficult to escape.
Now, you could call the national money system to be a public service provided by the government (and indirectly by private businesses).
If you were to issue your own money what would it's liquidity premium be? It would be very low to be sure because barely anyone accepts it.
So, the holders of money effectively own a free subscription to this public service. If they lend out money, they will obviously charge a fee in proportion to the liquidity premium. This fee is included in the interest rate.
The borrower is now paying for the liquidity premium, the cost has been fully internalized and the problem is gone right?
The problem is that the liquidity premium that is part of the interest rate is erroneously calculated as the cost of capital. It is not, it is the cost of liquidity.
Now, things will get very strange. When the borrower spends his money, he will be obligated to pay the subscription fee, the cost of liquidity, even though he no longer has the money and he is no longer benefiting from the liquidity services. What this means is that the money system constantly screws over people who use money as a medium of exchange and rewards those who sabotage it. It will look as if those who "save" money will be rewarded for their frugality and "moral" behaviour and those who are in debt are being rightly punished for their unsustainable and and "sinful" behaviour.
Now imagine if private households all follow this strategy of selling more than they buy and saving and lending the rest. There must be another sector that earns less than they spend and accumulates debt though borrowing. The government is forced to avoid austerity at all costs. It must become the "immoral sinner" that spends in excess to shield the private sector.
If you want to solve the problem you would have to make buying and lending symmetric. Lending passes the cost of liquidity onto someone else which is in theory ok but only if buying also passes the cost of liquidity onto the seller so that no liquidity premium accrues to the lender. He will pay a liquidity premium and earn liquidity premium which then zeroes. The only one who then collects the liquidity premium is the central bank that issues the money.
The problem with this is that the interest rate on cash would be negative and paper technology isn't advanced enough to calculate and display a dynamically changing face value. It isn't some conspiracy by a cabal, it is actually an engineering problem that originates from our historical and cultural attachment to cash. Humans aren't evil bribe collecting monsters, they are just in a rationality trap that is difficult to escape.
> It's actually kind of disturbing how there are basically only a handful of countries on the planet without systematic corruption. Maybe there are none. Perhaps it's a human trait.
More disturbing (to me) is how easy it is to eliminate corruption in any given area - without any brutality or anything else extraordinary. Just setup the process correctly, incentivize workforce - and the same people who were building roadblocks to milk money will switch to earning money by helping you get your task done.
There was a “widely known in narrow circles” libertarian setup in Troitsk, Russia - of all places. The setup was related to the topic of the original post - registration of businesses. The post-Soviet business registration law was rather liberal. The amount of documents needed was not zero, but doable. But there was a catch - businesses should have been registered locally, and each locality was allowed to add their own requirements on top of federal ones.
You can imagine what followed. Our own city, the I was a counsel member was: just prove to us (“us” in reality means -a clerk) that your business will be useful to the city - and we will register you. But there was a small city named Troitsk, home to some physics scientific institutions, which elected a libertarian mayor, Gennady Lebedev. The city council decided not to ask for any additional documents and just register any business that complied with federal guidelines.
But - any clerk has any good intention in his own hands, right? Mayor said: register everyone? but I am too busy, come tomorrow, and by the way go to… uhm police station, do a background check on yourself for me, I feel a sudden need to be extra cautious in your case. Why not? Seen it everywhere, like you’ve said.
Here comes handy a proper construction of checks and balances:
1. Salary for registration office clerks was paid from a percentage of the (federally fixed) registration fee, nothing else, no safety cushion. If you delay an application- your salary will be delayed too. In the starving Russia that percentage created a - potentially - extremely well paying job.
2. The clerk will be fired if he asked - not just for any unnecessary documents, but just for asking any legally unnecessary question.
3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
So clerks have the incentive to work fast, help people correct their documents to comply with the federal law and the opportunity for any additional “milking” was too risky and simply not worth it. In short time - small Troitsk had more businesses registered than any other small city in Russia, and comparable to Moscow. Imagine a tax base they’ve got?
First-hand account by Gennadi himself here (in Russian): http://www.sapov.ru/g_v_lebedev/texts/gvl1992_12_troitsk01.h...
More disturbing (to me) is how easy it is to eliminate corruption in any given area - without any brutality or anything else extraordinary. Just setup the process correctly, incentivize workforce - and the same people who were building roadblocks to milk money will switch to earning money by helping you get your task done.
There was a “widely known in narrow circles” libertarian setup in Troitsk, Russia - of all places. The setup was related to the topic of the original post - registration of businesses. The post-Soviet business registration law was rather liberal. The amount of documents needed was not zero, but doable. But there was a catch - businesses should have been registered locally, and each locality was allowed to add their own requirements on top of federal ones.
You can imagine what followed. Our own city, the I was a counsel member was: just prove to us (“us” in reality means -a clerk) that your business will be useful to the city - and we will register you. But there was a small city named Troitsk, home to some physics scientific institutions, which elected a libertarian mayor, Gennady Lebedev. The city council decided not to ask for any additional documents and just register any business that complied with federal guidelines.
But - any clerk has any good intention in his own hands, right? Mayor said: register everyone? but I am too busy, come tomorrow, and by the way go to… uhm police station, do a background check on yourself for me, I feel a sudden need to be extra cautious in your case. Why not? Seen it everywhere, like you’ve said.
Here comes handy a proper construction of checks and balances:
1. Salary for registration office clerks was paid from a percentage of the (federally fixed) registration fee, nothing else, no safety cushion. If you delay an application- your salary will be delayed too. In the starving Russia that percentage created a - potentially - extremely well paying job.
2. The clerk will be fired if he asked - not just for any unnecessary documents, but just for asking any legally unnecessary question.
3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
So clerks have the incentive to work fast, help people correct their documents to comply with the federal law and the opportunity for any additional “milking” was too risky and simply not worth it. In short time - small Troitsk had more businesses registered than any other small city in Russia, and comparable to Moscow. Imagine a tax base they’ve got?
First-hand account by Gennadi himself here (in Russian): http://www.sapov.ru/g_v_lebedev/texts/gvl1992_12_troitsk01.h...
>2. The clerk will be fired if he asked - not just for any unnecessary documents, but just for asking any legally unnecessary question.
>3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
Fired by whom? Who is in charge of checking this? How do you ensure that the clerk isn't just accepting false businesses and giving a percentage to whoever's above? On its face this system doesn't seem to cure a culture of corruption to me
>3. The clerk will be also fired if he accepts a registration that does not confirm to federal guidelines.
Fired by whom? Who is in charge of checking this? How do you ensure that the clerk isn't just accepting false businesses and giving a percentage to whoever's above? On its face this system doesn't seem to cure a culture of corruption to me
> How do you ensure that the clerk isn't just accepting false businesses and giving a percentage to whoever's above?
What do you mean by a “false business”? Here in the US the state of Nevada have not asked me anything except Articles of Incorporation (the state of California later found my file and… also has not asked me anything except $800 a year - which exactly what I was hoping to avoid by filing in Nevada, lol). Number of federally required papers was 0 (zero).
Federal regulations in Russia required much more paperwork. But the libertarian city council in Troitsk just deliberately didn’t care to add anything to the pile. Bad documents - it was actually a problem for the business being registered. If federal regulators caught a discrepancy- the business will be in a huge trouble. So checking the documents- it was nothing more than a service provided by a city council to the company being registered. If the documents were inconsistent - the business will complain.
This setup really worked, as I said in the original post. It’s not a theoretical suggestion.
What do you mean by a “false business”? Here in the US the state of Nevada have not asked me anything except Articles of Incorporation (the state of California later found my file and… also has not asked me anything except $800 a year - which exactly what I was hoping to avoid by filing in Nevada, lol). Number of federally required papers was 0 (zero).
Federal regulations in Russia required much more paperwork. But the libertarian city council in Troitsk just deliberately didn’t care to add anything to the pile. Bad documents - it was actually a problem for the business being registered. If federal regulators caught a discrepancy- the business will be in a huge trouble. So checking the documents- it was nothing more than a service provided by a city council to the company being registered. If the documents were inconsistent - the business will complain.
This setup really worked, as I said in the original post. It’s not a theoretical suggestion.
you can audit a small number and know. sure the clerk can risk one, but statistically they are caught with enough.
By "you" you mean a regular Russian citizen? Who is in charge of the clerks under this system, and what ensures that they aren't as corrupt as before?
I mean the mayor. You can also hire independent auditors. As a person just keep electing mayors unrelated to the last and hope they expose each other.
The podcast "The Rest Is Politics" did an interesting interview with the Prime Minister of Albania recently, where he made the argument that the best way to deal with corruption is to get rid of the paperwork altogether, and basically make government services so easy to access that corruption and bribery wasn't necessary in the first place. So he'd been putting a lot of work into digitising as much as possible, making corruption effectively much more difficult, but also much less necessary in the first place.
This sort of thinking also prevents some kinds of scams. For instance there are web sites that masquerade as British government sites for paying road tax/vehicle tax and charge fees that the official site does not. Similar sites scam people out of money for making ESTA visa applications to visit the US
In Norway this road fund fee is collected automatically by the insurance company. This is obviously easier for the user (zero paperwork), less work for the state, and prevents scam artists from duping people.
And back on the subject of registering a company: in Norway this is done online and takes minutes.
In Norway this road fund fee is collected automatically by the insurance company. This is obviously easier for the user (zero paperwork), less work for the state, and prevents scam artists from duping people.
And back on the subject of registering a company: in Norway this is done online and takes minutes.
> I am not really sure how you are supposed to stop corruption once it gets rooted in your society.
Well, assuming that all people are roughly the same as each other, the answer would be to adopt traditions and systems from countries that aren't corrupt. Attempt the sisyphean task of convincing people that giving power to the middle class is going to lead to a better future.
As your comment reveals, the instinct when confronted with corruption is ... centralise power and try to force it to be used for good. That doesn't work, so try to convince people to decentralise power. Political and bureaucratic elites are regularly revealed to be corrupt, so stop making them the bottleneck for handing out the "allowed to run a business!" stamp. Centralising power just gives corrupt people a target to aim for and increases the blast radius when they worm their way in to a position.
How you convince people to do the sensible thing and decentralise power is beyond me though. The instinct to push power to a single leader is remarkably strong in humans.
Well, assuming that all people are roughly the same as each other, the answer would be to adopt traditions and systems from countries that aren't corrupt. Attempt the sisyphean task of convincing people that giving power to the middle class is going to lead to a better future.
As your comment reveals, the instinct when confronted with corruption is ... centralise power and try to force it to be used for good. That doesn't work, so try to convince people to decentralise power. Political and bureaucratic elites are regularly revealed to be corrupt, so stop making them the bottleneck for handing out the "allowed to run a business!" stamp. Centralising power just gives corrupt people a target to aim for and increases the blast radius when they worm their way in to a position.
How you convince people to do the sensible thing and decentralise power is beyond me though. The instinct to push power to a single leader is remarkably strong in humans.
I am a fan of the Singapore anti-corruption method of paying bureaucrats a lot of money. That way they don't have to have corruption side hustles and you can attract good talent to these positions. Somehow this is more unpopular than widespread political corruption.
I'd be sceptical given just how greedy corrupt bureaucrats can be.
There's not much to stop a crook being both officially well paid and totally corrupt.
There's not much to stop a crook being both officially well paid and totally corrupt.
According to transparency international, Singapore is one of the least corrupt countries on earth. If a politician could make several million dollars a year just from his job, you could attract major corporation CEO caliber people. Otherwise, why would a highly talented person want to deal with untangling that mess?
Yes, but the position will be taken by a honest guy already.
Ah, you have a good heart to give them the benefit of the doubt but remember these aphorisms:
A fish rots from the head down.
and
Power corrupts and absolute power corrupts absolutely.
and
Nothing disinfects better than sun light.
IMHO they all apply when dealing with public servants in unchecked positions of power.
A fish rots from the head down.
and
Power corrupts and absolute power corrupts absolutely.
and
Nothing disinfects better than sun light.
IMHO they all apply when dealing with public servants in unchecked positions of power.
Why?
This is the very famous in economics theory of Becker and Stigler. The high pay isn't so that they don't need side hustles, it is to make the (small) chance of being discovered and losing their job painful. You pay much above market wages, people will not risk losing their job.
Is it true? Well, maybe. From Van Rijckeghem and Weder (2001):
> ... we find evidence of a statistically and economically significant relationship between relative wages and corruption.... While economically significant, the relationship, nevertheless, implies that a large increase in wages is required to eradicate corruption solely by raising wages... The relationship between wages and corruption is not found in regressions with country-fixed effects which points to ineffectual wage policy in the short run...
I haven't found much better evidence than that, though there is Di Tella & Schargrodsky (2004) with a detailed study on a hospital.
Is it true? Well, maybe. From Van Rijckeghem and Weder (2001):
> ... we find evidence of a statistically and economically significant relationship between relative wages and corruption.... While economically significant, the relationship, nevertheless, implies that a large increase in wages is required to eradicate corruption solely by raising wages... The relationship between wages and corruption is not found in regressions with country-fixed effects which points to ineffectual wage policy in the short run...
I haven't found much better evidence than that, though there is Di Tella & Schargrodsky (2004) with a detailed study on a hospital.
incredibly naive answer from someone who probably haven't lived in a corrupt country and deal with the process on a daily basis.
But the parent comment is right.
The knee jerk reaction against corruption is to centralize power: "X institutions are corrupt, we will give more power to this candidate who demonstrated to be a good person, so he will vanish those institutions and saves us fron corruption".
That's what Bolsonaro did in Brazil. In his campaign, he demonstrated to be a good christian and a person of faith. In Brazil, people strongly associate that with being a good person.
Guess what happened after.
The knee jerk reaction against corruption is to centralize power: "X institutions are corrupt, we will give more power to this candidate who demonstrated to be a good person, so he will vanish those institutions and saves us fron corruption".
That's what Bolsonaro did in Brazil. In his campaign, he demonstrated to be a good christian and a person of faith. In Brazil, people strongly associate that with being a good person.
Guess what happened after.
> That's what Bolsonaro did in Brazil. In his campaign, he demonstrated to be a good christian and a person of faith. In Brazil, people strongly associate that with being a good person.
Wasn't Bolsonaro elected because the previous president and his main opponent (Lula?) was so corrupt that he even landed in jail, which is a rare event for a prominent politician?
> Guess what happened after.
Care to explain to non Brazilians?
Wasn't Bolsonaro elected because the previous president and his main opponent (Lula?) was so corrupt that he even landed in jail, which is a rare event for a prominent politician?
> Guess what happened after.
Care to explain to non Brazilians?
I don't know if Lula committed corruption, but he apparently wasn't more corrupt than the judge who tried him, who became Bolsonaro's Minister of Justice. All the charges were dismissed eventually because of court bias.
https://en.wikipedia.org/wiki/Luiz_Inácio_Lula_da_Silva
Lula was condemned in 3 different courts. Not unanimously because the higher court judges disagreed about increasing his sentence by a small amount or a lrge amount.
Al the cases were dismissed because a new law was passed that created a new court and said every case like Lula's should be judged only on that new court.
Al the cases were dismissed because a new law was passed that created a new court and said every case like Lula's should be judged only on that new court.
Thanks for the info. I don't follow Brazilian politics, but somehow the picture of a corrupt ex-president going to jail persisted in my head, since that was the news we were getting here back in the time.
I couldn't understand why our news in Germany was pretending that a guy convinced of corruption would be a saviour of Brazil against the evil Bolsonaro.
That highlights one of the main problems in our societies. We just accept information served to us by our governments without much checking. Either because we don't care about every topic, or because we don't have a means to actually check.
I couldn't understand why our news in Germany was pretending that a guy convinced of corruption would be a saviour of Brazil against the evil Bolsonaro.
That highlights one of the main problems in our societies. We just accept information served to us by our governments without much checking. Either because we don't care about every topic, or because we don't have a means to actually check.
When the baseline of corruption is high enough and those who judge you are equally or more corrupt, convictions for "corruption" are a weapon from those who do not want a specific someone on the government rather than real intention of reducing corruption.
Simplifying, it's like this: If the road to presidency is corrupt, you either become also corrupt (on a varying degree) or stay as one of those parties with no more than 1% of the votes. But then, there's a pact of silence between cronies. And those who are accused of corruption are the ones that either went too far or went against powerful people in the government.
I take all those trials with a grain of salt.
Simplifying, it's like this: If the road to presidency is corrupt, you either become also corrupt (on a varying degree) or stay as one of those parties with no more than 1% of the votes. But then, there's a pact of silence between cronies. And those who are accused of corruption are the ones that either went too far or went against powerful people in the government.
I take all those trials with a grain of salt.
This reminds me of why I hate when government agencies excuse an overly broad rule by saying they "won't prioritize enforcement" against favored/minor actors. Eg [1].
[1] https://www.axios.com/2022/09/13/us-treasury-department-torn...
[1] https://www.axios.com/2022/09/13/us-treasury-department-torn...
It is funny because it is the exact opposite of what you should do if you want to stop corruption.
Deregulation is the best cure for corruption, because it makes the gatekeepers obsolete. There would be no reason to bribe them because you don't need their approval in the first place.
Deregulation is the best cure for corruption, because it makes the gatekeepers obsolete. There would be no reason to bribe them because you don't need their approval in the first place.
Perun has been making some of the best videos on Youtube since the start of the Ukraine invasion. Mostly on how military procurement works. It sounds like a dull topic, but when you start to understand the intricacies and the stakes involves it becomes fascinating. Absolutely recommend this channel.
@loudmax wasn't totally clear, but I understood what he was pointing to: Perun made a video about how corruption can destroy military procurement. And, possibly, why the Russians are doing so poorly in Ukraine.
It was a terrific powerpoint slide video.
It feels similar to the sometimes unintended consequence of having more legislation only serving to entrench the incumbents by making it hard for new players to enter. In a couple of African countries I am familiar with it is the same story. An endless series of papers and stamps and signatures that are supposed to stop corruption but really just serve as an opportunity to be corrupt. I am so paranoid now of not having the right paper I tend to store all papers issued by a government official.
This is a popular misconception. Paperwork is basically created as part of job being done by the government employee. This employee is hired due to connections and the paperwork created to justify the job. The pointlessness makes people exert the tiniest amount of power they have, like reddit mods. The monetary corruption is more related to salary which is related to well being of economy.
For example, during British Raj almost any British who could, got a job to move these papers in India. India inherited that machinery and hasn't moved to economical right yet. The current government is trying but you can read how it is a bad government in western media since it came to power. The corruption in government allows foreign interference so of course.
- unhappy Indian
For example, during British Raj almost any British who could, got a job to move these papers in India. India inherited that machinery and hasn't moved to economical right yet. The current government is trying but you can read how it is a bad government in western media since it came to power. The corruption in government allows foreign interference so of course.
- unhappy Indian
Raj era ICS was much smaller, Congress and Nehru created a lot of the bureaucracy
You are, I am sorry to say, mistaken. The Raj era was huge. There is very old article (https://www.theatlantic.com/magazine/archive/1908/10/the-new...).
<blockquote>But the government is as complete a bureaucracy as that of Russia.</blockquote>
The British Raj kept creating more and more bureaucracy paid for taxes exacted by causing famines, increasing in frequency and intensity. This system was inherited by Nehru and Congress. They were socialists so they increased bureaucracy but they didn't increase corruption - independent India has not seen a famine caused by taxes even in the direst of times.
<blockquote>But the government is as complete a bureaucracy as that of Russia.</blockquote>
The British Raj kept creating more and more bureaucracy paid for taxes exacted by causing famines, increasing in frequency and intensity. This system was inherited by Nehru and Congress. They were socialists so they increased bureaucracy but they didn't increase corruption - independent India has not seen a famine caused by taxes even in the direst of times.
Do you have any stuff I could read up on this?
Prescribed, not proscribed
I would replace “countries” with “systems”. You can see this in the US with government contracting or health billing. Tons of paperwork but totally opaque and prone to corruption.
This has nothing to do with physical paperwork (See Japan which runs on paper forms even today; most hospitals in US are paperless but they're far from efficient), but the underlying policies that dictate the requirements and how the approval process must be conducted, number of parties/agencies/teams involved and the incentives put in place to make sure it gets done within a certain timeframe (QA controls). Some governments are better than others.
Paperwork really isn't to blame here because even if everything was digital, the people behind the operation and the policies that govern their behavior is still the same. The problem isn't the interface between citizens and the government, it is the backend source code of the government.
You are all barking at the wrong tree.
Paperwork really isn't to blame here because even if everything was digital, the people behind the operation and the policies that govern their behavior is still the same. The problem isn't the interface between citizens and the government, it is the backend source code of the government.
You are all barking at the wrong tree.
During the pandemic I paid for a concierge care doctor and man it was the most convenient experience I’ve ever had with a medical provider. Cut out the insurance, he had a nurse and one office assistant and virtually no paperwork. Guy actually had brain power leftover to know who I was and what my situation was. I feel really bad for anyone wanting to become a doctor in this day and age, it seems absolutely grueling. I don’t know why anyone would go through all that trouble.
Wow, please share more details. What city and what was the total cost compared to other options? I have heard this exists in very rich places in New York City, but it costs a pretty penny!
Paperwork and bureaucracy conducted face-to-face is completely different in its capacity for bribery, cronyism, and discriminatory behaviour outside of the official system.
Automated systems can be quite awful (original research: Spain) but neither paper or digital systems would officially state the human factors involved in turning them over. There's simply less opportunity for these human factors in more automated digital systems.
Automated systems can be quite awful (original research: Spain) but neither paper or digital systems would officially state the human factors involved in turning them over. There's simply less opportunity for these human factors in more automated digital systems.
Particularly if you consider the on-ramp to corruption: being a little more lenient and helpful to those who are more polite than others blends into being a little more lenient and helpful to those who you consider "on your team" blends into blends into being a little more lenient and helpful to those who give favors in return blends into being a little more lenient and helpful to those who offer cash. Only then the artificial roadblocks begin. Fully developed corruption would likely find ways to continue after digitalization, but the ramp to get there would be so much less inviting.
Every new piece of paperwork that requires an additional face-to-face hand off or brings in a new entity provides another avenue for corruption to occur and a place for money to disappear.
I've had employees (in Brazil) who don't ever claim reimbursement on personal expenses because if their paycheck varies too much their bank freezes their funds (in the name of preventing money laundering) and then the employee has to go to the bank and bribe someone to get the funds unfrozen. Just showing the cause for the variation in payroll doesn't cut it. As the employee puts it, every requirement to show up in front of an official for anything requires a bribe.
I've had employees (in Brazil) who don't ever claim reimbursement on personal expenses because if their paycheck varies too much their bank freezes their funds (in the name of preventing money laundering) and then the employee has to go to the bank and bribe someone to get the funds unfrozen. Just showing the cause for the variation in payroll doesn't cut it. As the employee puts it, every requirement to show up in front of an official for anything requires a bribe.
I wouldn't consider Germany and Switzerland that corrupt.
Ahem. We're talking about a country where a chancellor that pushed for building a gas pipeline from a foreign country went straight to the board of the foreign company running that pipeline after ending his term as chancellor.
Corruption is everywhere, it's just on different levels. Usually in more "developed" (I don't like that word) countries you see corruption on the highest levels, and people actually get away with it.
Corruption is everywhere, it's just on different levels. Usually in more "developed" (I don't like that word) countries you see corruption on the highest levels, and people actually get away with it.
The way you word it makes it sound like "the corruption in developing countries is low-level, whereas in developed countries it's high-level". In reality, the corruption in developing countries is on all levels, whereas it's mostly only happening at a higher level in developing countries.
I wouldn't say so. To get the appropriate doctor to check my brother's broken arm and shoulder sooner than in more than a month (he needed surgery within 3 weeks max to avoid permanent damage) we had to employ personal contacts and gifts. I live in EU and this happened this summer.
in The US recently a commissioner at The FDA got offered a high exec position at Pfizer. Nobody says anything about that...
There's literally an entire political party dedicated to ridiculing Democratic nonsense during the pandemic.
It is another league, not like back home in Portugal, where everyone does everyone little "favours", you cannot even get into some hospitals without a little help.
That's just run-of-the-mill corruption like you would find anywhere else. Every country has this. Politicians will be politicians.
It hardly supports the thesis above. Germany is not rotten to the core by corruption. It's not a constant hindrance to someone trying to get things done.
It hardly supports the thesis above. Germany is not rotten to the core by corruption. It's not a constant hindrance to someone trying to get things done.
> We're talking about a country where a chancellor that pushed for building a gas pipeline from a foreign country went straight to the board of the foreign company running that pipeline after ending his term as chancellor.
Yeah, and long after that they decided to build a second pipeline (Nord Stream 2).
And before that, they've been received the same gas from the same foreign company over the ex-SU Ukrainian pipelines.
And five years later we will likely see Turkish pipelines (still bearing Russian gas) prolonged to Hungary, from where it will reach Germany once again.
And that foreign company isn't even running those Nord Stream pipelines - they were largely German, due to legislations requiring separation of the pipeline operator and the supplier.
Don't underestimate how much Germany had profited from all the cheap gas and infrastructure investments from the said foreign country, up until they managed to loose it all just for the sake of political appearance and no real substantial win.
I wonder if we would some day see Scholz in some American LNG company for which the nation now has to pay order of magnitude more, than it ever paid to Russia.
Yeah, and long after that they decided to build a second pipeline (Nord Stream 2).
And before that, they've been received the same gas from the same foreign company over the ex-SU Ukrainian pipelines.
And five years later we will likely see Turkish pipelines (still bearing Russian gas) prolonged to Hungary, from where it will reach Germany once again.
And that foreign company isn't even running those Nord Stream pipelines - they were largely German, due to legislations requiring separation of the pipeline operator and the supplier.
Don't underestimate how much Germany had profited from all the cheap gas and infrastructure investments from the said foreign country, up until they managed to loose it all just for the sake of political appearance and no real substantial win.
I wonder if we would some day see Scholz in some American LNG company for which the nation now has to pay order of magnitude more, than it ever paid to Russia.
At least for Germany... we're not overtly corrupt: you don't need to bribe policemen to get out of fake charges or traffic stops, you don't need to bribe city officials for building permits.
But at the large scale, we are absolutely a corrupt nation: our former Chancellor Schröder sold us out to Russia, there have been dozens of millions euros worth of (shockingly ruled legal) corruption during the pandemic, the large companies ("Deutschland AG") have an extremely cozy relationship with almost all parties in Germany, not to mention corporate donations and sponsorship of party gatherings (except far-right AfD whom no one serious wants to donate money to and far-left Linke who refuse to take corporate donations out of principle).
But at the large scale, we are absolutely a corrupt nation: our former Chancellor Schröder sold us out to Russia, there have been dozens of millions euros worth of (shockingly ruled legal) corruption during the pandemic, the large companies ("Deutschland AG") have an extremely cozy relationship with almost all parties in Germany, not to mention corporate donations and sponsorship of party gatherings (except far-right AfD whom no one serious wants to donate money to and far-left Linke who refuse to take corporate donations out of principle).
True, for building permits, either fast or out of the usual and other edge cases, you don't need to bribe people, you need to know the people in charge very well.
EDIT: Nobody wants to donate overtly to the AfD, that's why they had already multiple investigations into their finances and donations. A large part of which came from Switzerland. They do have those donation scandals in common with the CDU and CSU, those received anonymous donations in cash in briefcases. And Schäuble, who ended up as Finance Minister in the federal government later, got away with, I kid you not, "I do not remember that briefcase containing 100,000 bucks" (emphasize from me). So, it seems all parties in Germany are corrupt, some more than others, with the exact degree of corruption directly proportional to the time in actual power.
EDIT: Nobody wants to donate overtly to the AfD, that's why they had already multiple investigations into their finances and donations. A large part of which came from Switzerland. They do have those donation scandals in common with the CDU and CSU, those received anonymous donations in cash in briefcases. And Schäuble, who ended up as Finance Minister in the federal government later, got away with, I kid you not, "I do not remember that briefcase containing 100,000 bucks" (emphasize from me). So, it seems all parties in Germany are corrupt, some more than others, with the exact degree of corruption directly proportional to the time in actual power.
Another classic is regulatory capture.
Oh that new building code or electrical code just so happens to only be fulfilled by using the latest (patented) product by company X?
Well it's the state of the art, we can't build below that standard anymore.
Oh that new building code or electrical code just so happens to only be fulfilled by using the latest (patented) product by company X?
Well it's the state of the art, we can't build below that standard anymore.
Or union labor. I needed some electrical work on a new house, but there's no electricians available for months. Hanging out with a contractor friend, I mentioned that the state law says "the homeowner OR a licensed electrician", and he reacted like doing it myself meant wiring the house with dead orphans or something. I've done electrical work, I just make more money in software so I'm not licensed, but that is somehow even worse because I'm depriving the union electricians of work. So now its a secret I take to my grave apparently.
The rule does make sense from a public safety point, because untrained people can do a lot of mistakes in electrical wiring. If you as the homeowner fuck it up and cause a fire, well that's on your own fault. If a licensed electrician fucks it up, their insurance pays for damages. If Joe Random fucks up their neighbor's electrical wiring, chances are high he has no insurance and now the homeowner is stuck with a burnt-down house.
You wrote: <<the large companies ... have an extremely cozy relationship with almost all parties in Germany>>
This is true in most highly industrialised countries. Can you name any where this is not true? I don't know any.
Another way to think about it: What is the polar opposite? "the large companies ... extremely unhealthy / combative relationship with almost all [political] parties". That sounds like the bad old days in 1980s India. Most economies would be a wreck if that were true.
This is true in most highly industrialised countries. Can you name any where this is not true? I don't know any.
Another way to think about it: What is the polar opposite? "the large companies ... extremely unhealthy / combative relationship with almost all [political] parties". That sounds like the bad old days in 1980s India. Most economies would be a wreck if that were true.
I have dealt with bureaucracy in Italy and in Switzerland and if you think Switzerland has bad bureaucracy, you have no idea what you're talking about.
Same with Germany. It's slow and analog, but it produces the desired outcome fairly reliably.
If you follow the law to the letter, and you don't get what you want, the mere threat of hiring a lawyer will get it sorted.
The only issue is the speed. I see people lose their job offer before they even start, because the immigration office is too slow.
If you follow the law to the letter, and you don't get what you want, the mere threat of hiring a lawyer will get it sorted.
The only issue is the speed. I see people lose their job offer before they even start, because the immigration office is too slow.
Just google Franz Josef Strauss for some history on German corruption. Followed by a quick search on how exactly the government sourced face masks during COVID (same political part basically).
For Switzerland, well, a quick search for money laundering gives you all the information you need.
EDIT: Both the FIFA and the IOCI, probably the most corrupt organizations on earth, are having their seats in Switzerland.
For Switzerland, well, a quick search for money laundering gives you all the information you need.
EDIT: Both the FIFA and the IOCI, probably the most corrupt organizations on earth, are having their seats in Switzerland.
Your two orgs are not part of the Swiss gov't. Nor is the United Nations. On the whole Swiss society, business, and its gov't has very low corruption.
I checked his Wiki page: https://en.wikipedia.org/wiki/Franz_Josef_Strauss
I cannot find the word "corruption" anywhere. What am I missing?
I cannot find the word "corruption" anywhere. What am I missing?
Weapons deals with saudi arabia, the Starfighter, the Spiegel affaire (more an abuse of power than corruption), none of this is mentioned?
Edit: Both, the Spiegel affaire and the Lockheed bribery scandal are mentioned.
Edit: Both, the Spiegel affaire and the Lockheed bribery scandal are mentioned.
Yeah but that isn't like back home in Portugal, where everyone does everyone little "favours", you cannot even get into some hospitals without a little help.
Oh, corruption still exist, but most people are too poor to play in that league. Compare that to "developing country corruption", where you can often ... ahem ... prematurely show your gratitude towards an official for as little as 20 bucks.
Sure, but it is another league, not like back home in Portugal, where everyone does everyone little "favours", you cannot even get into some hospitals without a little help.
How many times are you going to copy-pasta this exact same comment? Quick search shows three times. Keep it up. Great work.
I care for the lazy readers that don't bother to read all comments, as means to find out why I made the top comment.
Congratulations you aren't one of them.
Congratulations you aren't one of them.
They aren't, but there's definitely some present at the top. With enough money on the table, how could it be otherwise? Others have mentioned gas, but there's also BaFin/Wirecard: https://newrepublic.com/article/162084/weird-extremely-germa...
Almost forgot about that one... I wonder how they are going to contain the fallout from this to some low level BaFin employees and Wirecard's leadership. because it will be contained, nobody went to jail for things like the 2006 FIFA World Cup for example, or the various defense contracts in the last decade, or...
In the finance industry, BaFin is widely regarded as slow moving, out-of-date, and incompetant. Note that I did not use the term corrupt. Do you really think some BaFin staffers got bribes from Wirecard not to investigate? I doubt it.
Switzerland is far less bureaucratic than Germany.
Absolutely. Also, in paperwork superpowers, oftentimes the only ways to get things done are by resorting to what global consensus evaluative norms view as corruption, and a significant form proportion of what goes on frankly is corruption of corruption of the parasitical criminal kind... but there's also a great deal of routing around dysfunctional nodes in the system with legitimate intent on all sides.
Interpersonal networks and middlemen routers evolve over time into parallel tracks of shared understanding about how to achieve mundane process flows and solve problems when the official channels are broken.
Interpersonal networks and middlemen routers evolve over time into parallel tracks of shared understanding about how to achieve mundane process flows and solve problems when the official channels are broken.
How do explain doing business in Japan and Korea? They are famous for stamps, applications, and exceedingly complex rules and regulations. Yet, there are relatively low corruption. I heard Germany and Austria are also very heavy on paperwork and bureaucracy. They essentially have zero obvious corruption.
Corruption is a weird thing. Why do some countries have more of it than others -- holding GDP per capita constant? I cannot explain it. Look at the United States -- "googols" of money spent to influence lawmakers. It cannot be healthy and looks like legalised bribery in comparison to other highly developed democracies.
Corruption is a weird thing. Why do some countries have more of it than others -- holding GDP per capita constant? I cannot explain it. Look at the United States -- "googols" of money spent to influence lawmakers. It cannot be healthy and looks like legalised bribery in comparison to other highly developed democracies.
If you have lots of paperwork, it means you are dealing with lots of different departments so lots more chances of encountering corruption.
In the article, the author needs to chase dozens of different bits of paperwork. Quite a few there were no problem. But quite a few incompetent, corrupt, or both. Now, how about a system where you submit one application in one place, and if other departments need to know or collect fees or approve it is the responsibility of the submission point to pay or collect approvals? One desk is held responsible.
In the article, the author needs to chase dozens of different bits of paperwork. Quite a few there were no problem. But quite a few incompetent, corrupt, or both. Now, how about a system where you submit one application in one place, and if other departments need to know or collect fees or approve it is the responsibility of the submission point to pay or collect approvals? One desk is held responsible.
the corruption business is very similar to racket. the threat being making you lose indefinite amount of time (instead of violence).
as a business you have deadlines and not meeting them would make you lose money. sometimes losing money can be deadly to the company, that's why people unwillingly participate in corruption.
the business model of corruption is : 1- slow the process as much as you can 2- some people will have deadlines and will be willing to pay to meet them 3- profit
the slowness is there on purpose, to be able to provide quick process as a paid service
the business model of corruption is : 1- slow the process as much as you can 2- some people will have deadlines and will be willing to pay to meet them 3- profit
the slowness is there on purpose, to be able to provide quick process as a paid service
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Is Japan the exception?
From my experience with both countries, surprisingly, Japan is more paperwork oriented than India. For some reason, they really want things in hard-copy, too.
The difference, and it's a major one, is that paperwork does not slow the pace of work in Japan. Once papers are there, progress is usually instantaneous.
The difference, and it's a major one, is that paperwork does not slow the pace of work in Japan. Once papers are there, progress is usually instantaneous.
Not really - Germany is equally infamous for its obsession with paperwork and bureaucracy (unlike India, Germany still used fax)
To my knowledge, Japan's Yakuza used to be highly involved with the government. That's basically just a rumor though. I don't have any details. The rumor also says that this is no longer really the case anymore.
I cannot answer about the original rumor, but I can say in the last ten years there has been a dramatic (economic) fall for the Yakuza. Slowly, the Japan gov't has passed tighter and tighter domestic money laundering laws -- taxes, building / business permits, banking, etc. Many times I have been asked to sign a form stating no connection with "anti-social forces". The Japan gov't is putting the economic equivalent of the "sleeper hold" on Yakuza. You hardly see them now (in visibly obvious forms) except the dodgiest places. I never see anyone with a missing half their pinky finger. (Yes, it is real / weird / scary.)
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Corruption at the government level is rampant in Japan
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I remember dropping my bag at a luggage store at the big train station in Mumbai. Bags needed to be scanned before being stored, not uncommon. Except the scanner was on the other side of the station.
So I was sent off and queued up to get my bag scanned and more importantly get my receipt stamped to say it'd been scanned walked back through the crowds where I could have done anything with the bag - to the luggage drop where the attendant checked that I had the correct stamps to say it had been checked! No seals on the bag, nothing to stop me giving them a different bag, just the essential stamp on a bit of paper!
So I was sent off and queued up to get my bag scanned and more importantly get my receipt stamped to say it'd been scanned walked back through the crowds where I could have done anything with the bag - to the luggage drop where the attendant checked that I had the correct stamps to say it had been checked! No seals on the bag, nothing to stop me giving them a different bag, just the essential stamp on a bit of paper!
Ah yes, it's the "yessir" bureaucracy, the "magical piece of paper" bureaucracy. Designed to keep privileges and maybe as a job program
Malls are the worst when it comes to security theater. Most will check your car's boot for illicit materials when you park. But they won't check the car's interios - you could have anything inside!
You'll usually be frisked at the mall entrance. Women will only get frisked by a female security guard. If the female security guard is absent (pretty common), any female visitor can just walk through without getting frisked.
You'll usually be frisked at the mall entrance. Women will only get frisked by a female security guard. If the female security guard is absent (pretty common), any female visitor can just walk through without getting frisked.
Bangkok, at least pre-COVID, metal detectors at all underground station entrances and all department stores. All with security guards. All waving people straight through while the things beeped alarmingly. Worst was when a tourist paid attention to the signs and attempted to show the security guard the contents of their bag. Eyes rolling everywhere as the crowd backs up, waiting for the guard to get them out of the way as fast as possible. But despite all that, they still insisted everyone actually had to walk through the detectors and you would be blocked if you dared try to enter through the exit door (without a metal detector).
Wait, everyone gets frisked at Indian malls?
Was certainly not my experience 20 years ago.
Was certainly not my experience 20 years ago.
At least happens here in Delhi. I can't remember if it happened before the 26th November 2008 Mumbai terror attacks, but that might have been the instigating factor.
You're right it wasn't true back then. I don't live in India anymore, but I believe a lot of security measures (and security theater) were implemented after the 2008 terrorist attacks in Mumbai: https://en.wikipedia.org/wiki/2008_Mumbai_attacks.
Not in South India, in any of the cities I've been to. There was a brief period (possibly after the 2008 attacks that the others mention) when that was the case, but that didn't last long.
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> the "company stamps" that are required for everything you do with your business
We had that craze in Poland, but somehow managed to slowly crawl out of it over the last 20 years. It was a slow and painful process: even when the laws were changed not to require stamps, many places would ask for them and you would have to explain that your company stamp doesn't exist, so you can't place one on the form.
It's one of those bureaucratic viruses of the mind. We're lucky to have gotten rid of it, but there are others! Examples are "fill your forms with a BLUE pen" (supposedly because it looks less "photocopied"?), "sign legibly" (I never know if I'm supposed to use my signature or sign my name), "your national ID card number" (it's idiotic to ask for one, as it changes if you lose your ID and get a new one). There was also a period where every company would photocopy your ID (for example when signing up for a cellular plan), until the government stepped in and declared it illegal.
Bureaucracy is like barnacles on a ship: you have to constantly fight the growth.
We had that craze in Poland, but somehow managed to slowly crawl out of it over the last 20 years. It was a slow and painful process: even when the laws were changed not to require stamps, many places would ask for them and you would have to explain that your company stamp doesn't exist, so you can't place one on the form.
It's one of those bureaucratic viruses of the mind. We're lucky to have gotten rid of it, but there are others! Examples are "fill your forms with a BLUE pen" (supposedly because it looks less "photocopied"?), "sign legibly" (I never know if I'm supposed to use my signature or sign my name), "your national ID card number" (it's idiotic to ask for one, as it changes if you lose your ID and get a new one). There was also a period where every company would photocopy your ID (for example when signing up for a cellular plan), until the government stepped in and declared it illegal.
Bureaucracy is like barnacles on a ship: you have to constantly fight the growth.
> "sign legibly" (I never know if I'm supposed to use my signature or sign my name)
I suppose they mean to say "don't make a squiggly line (parafka) and call it a signature".
I suppose they mean to say "don't make a squiggly line (parafka) and call it a signature".
We had waived off the requirements for stamps and signs when filing annual compliance documents during the pandemic. Everything worked just as well.
Now they've brought them back again.
Now they've brought them back again.
In India they optimize for maximum employment.
It's the only place I've seen 7 people needed to refill a soda vending machine.
Once I ordered some drinks brought up to my hotel room around 10 in the evening. It took forever - turned out the guy who made the drinks was sent home for the day. So the hotel called him back and had him return just so he could come and make the drinks and bring them to my room. Because that was his job - nobody elses.
This was at a five star hotel in Amritsar.
Our driver slept in the car outside the hotel and was on call 24/7 for our entire stay.
Quite different from western countries for sure.
Once I ordered some drinks brought up to my hotel room around 10 in the evening. It took forever - turned out the guy who made the drinks was sent home for the day. So the hotel called him back and had him return just so he could come and make the drinks and bring them to my room. Because that was his job - nobody elses.
This was at a five star hotel in Amritsar.
Our driver slept in the car outside the hotel and was on call 24/7 for our entire stay.
Quite different from western countries for sure.
I'm not sure that is maximizing employment as much as it is taking advantage of labor that is too cheap to meter.
Weird question: Did you feel embarassed when you learned driver was sleeping in the car? I would be. You: Sleeping in a 5 star. Them: In an uncomfortable car seat. When I traveled to Seam Reap, Cambodia, I was constantly embarassed when my driver did not come to eat with me. It was a weird, unpleasant peasant-ruler divide that I did not enjoy.
I was attending a wedding and everything was arranged for me so i just 'arrived' as a white westerener.
Yes it was strange, and it exposed me to something I had never before experienced or imagined. Wherever I went they would yell 'gora' meaning white man. Some even wanted to take my picture.
However, Amritsar is famous for the golden temple which is the the holiest of all Sikh shrines. They said it was most beautiful to view at night. So we went there late at night parking closeby , walking there there we passed by the rickshaw drivers sleeping in their rickshaws as far as i could gather they had no other place to sleep. So they had it even worse.
Not to mention the child beggars of New delhi or the makeshift camps you saw driving along the highway.
All of this was approx 10 years ago.
It for sure opened my eye to the destitute and poverty.
However, Amritsar is famous for the golden temple which is the the holiest of all Sikh shrines. They said it was most beautiful to view at night. So we went there late at night parking closeby , walking there there we passed by the rickshaw drivers sleeping in their rickshaws as far as i could gather they had no other place to sleep. So they had it even worse.
Not to mention the child beggars of New delhi or the makeshift camps you saw driving along the highway.
All of this was approx 10 years ago.
It for sure opened my eye to the destitute and poverty.
Honestly this kind of stuff is why I don’t travel to such places. Im sure they’re beautiful and whatever but I’d rather go spend time in an advanced country like Japan. The constant guilt tripping is not fun.
Unfortunately, in rich countries, the peasant-ruler divide is just abstracted away and out of sight, often internationally.
I remember buying a train ticket in Goa. This involved showing the passport and filling out multiple forms. It was pretty crazy.
That reminds of a story about an Indian couple travelling Europe. SO, obviously, within the Schengen countries you do not need additional visas, something foreign to said couple. So, they crossed Eu border by train and ended up in another country. Confused over what to do next, they talked to the next police officer they found, because the couple was sure they couldn't just continue their journey without any further control. Explanations didn't work, so the easy solution was to use an official looking, but totally irrelevant, stamp to put on the back of their train tickets (in order to not cause confusion with the tickets or official passports). Source: I know the police officer in question.
How things have changed. Maybe 30 years ago I got stuck in Gibraltar for a few days having returned by ferry from Morocco, because the airport was closed due to weather. No problem for most, as they just bus passengers to the bigger airport in Spain. But a problem for us, because we had run out of entries on our Schengen States visa. It also used to catch a lot of people out on the trains, with people not realizing their passports would be checked mid journey when crossing the borders.
Real question: What year? I notice there are lot of stories online about "20 years this crazy thing happened to me in India", but now no more. Example: You can do eVisa for India travel. Super easy online. Most train tickets you can buy online or via "concierge" (minor fee). Hotel booking? Yeah, that too, even smaller places via Internet "aggregator" websites. Travel in India is not so backwards as people think!
I think the funniest and most embarassing story I have about travel in India: The first day in downtown Mumbai, I go to the train stain to buy a ticket for a Churchgate station a few stops away. Honestly, I have no idea what the price will be, but I assume 20-30 rupees. I only have 100 rupee notes. I go to the ticket window: Lady tells me: "5 rupees". I gasped, and looked at my 100 rupee note. She rejects my 100 rupee note! (She was not disrespectful; said: you will take all my change! Wait here; after next person, I can sell it to you.) Next person pays with enough change, then me. All good. We both laughed. To put that in perspective, that is about 2-3 Euro CENTS to ride the train!
I think the funniest and most embarassing story I have about travel in India: The first day in downtown Mumbai, I go to the train stain to buy a ticket for a Churchgate station a few stops away. Honestly, I have no idea what the price will be, but I assume 20-30 rupees. I only have 100 rupee notes. I go to the ticket window: Lady tells me: "5 rupees". I gasped, and looked at my 100 rupee note. She rejects my 100 rupee note! (She was not disrespectful; said: you will take all my change! Wait here; after next person, I can sell it to you.) Next person pays with enough change, then me. All good. We both laughed. To put that in perspective, that is about 2-3 Euro CENTS to ride the train!
Isn’t train ticketing online now? I know my 75 yr old dad just does it at home on his laptop.
Edit- echoing a comment further down. I got an Indian visa. It was done online and was emailed to me in 24hrs.
Edit- echoing a comment further down. I got an Indian visa. It was done online and was emailed to me in 24hrs.
[deleted]
> India's obsession with paperwork is unceasing and baffling. Everything requires an application, even when everything can be done digitally. You need letters and stamps to get anything done.
I remember once my wife and I wanted to travel by train to a tourist town. After buying the tickets, we realized we had made a mistake (actually, _they_ had made a mistake). So we decided to cancel our tickets and just buy new ones.
We had to fill in an application, attach photos of ourselves, as well as our copies of our passports ... all to cancel a ticket! Boggles the mind.
It feels like a Kabuki theater, set up to keep the people busy and employed.
I remember once my wife and I wanted to travel by train to a tourist town. After buying the tickets, we realized we had made a mistake (actually, _they_ had made a mistake). So we decided to cancel our tickets and just buy new ones.
We had to fill in an application, attach photos of ourselves, as well as our copies of our passports ... all to cancel a ticket! Boggles the mind.
It feels like a Kabuki theater, set up to keep the people busy and employed.
>Why? I have no idea!
Legacy of British civil service and bureaucracy ?
Legacy of British civil service and bureaucracy ?
"No, you don't understand, we have to operate like this seventy plus years after the end of British rule - not because we are incapable or we aren't agents - no no but because the British set up this system, and who are we to change it?"
See also, "no you don't understand, we had to start a war with the Muslims in the West because the British didn't tell them to be our second class citizens fast enough"
See also, "no you don't understand, we had to start a war with the Muslims in the West because the British didn't tell them to be our second class citizens fast enough"
A bureaucratic system selects for people who are good at that kind of process. Unsurprisingly, they aren't too eager to change the environment they thrive in.
Indian civil service do have stronger gravitas compared to other civil service. Looking from Indian Civil Services Examination, it really attracts huge amount of talents and required preparations.
...and an effectively unlimited labour supply
A company stamp isn't a security device any more than a signature. It's an abstraction similar to a "power of attorney" type thing. They are going away but has been used in Japan and China, including Hong Kong, as well.
Reminds me of a surreal example[1] of Indian bureaucracy from Jim Rogers’ Adventure Capitalist:
Rogers and his wife had left India's State of Manipur and were safely across the border in Myanmar. But wait, here comes an Indian official running after them, who says that they can't leave, because, they didn't have permission to be in Manipur. "He was telling us — I am not making this up — that we had to return to Manipur, because we were not allowed to be in Manipur, and thus we could not leave it," Rogers relates. The debate lasted for two hours before, "someone made a phone call and took the subinspector off the hook, and we were free to proceed."
India is the only place I ever travelled to, that controlled visas upon leaving the country. Like what, you are at the airport, behind security, with a ticket back to Germany in hand, with a German passport, and now they have doubts about the visas you got from the Indian consulate? What are they going to do, hold you up and send you back on a flight paid for by the Indian government or what? Really crazy.
Overall, kind of logic so, because how can you leave a place you didn't enter in the first place because you had no permit to enter it? Mind blowing!
Overall, kind of logic so, because how can you leave a place you didn't enter in the first place because you had no permit to enter it? Mind blowing!
This is not that unusual. It happens to me every time I forget to hand over my Dutch residence permit with my (non-EU) passport when leaving the Schengen zone from Schiphol. The border guards are absolutely meticulous about flipping through the passport looking at the entry and exit dates in the hopes of catching a potential overstayer. They're almost always super disappointed when I realize what's happening and hand over the card.
The threat isn't "we're going to keep you here because you weren't allowed to be here," it's "we see you have overstayed your visa and now we're going to make sure you catch your flight out and ban you from ever coming back."
The threat isn't "we're going to keep you here because you weren't allowed to be here," it's "we see you have overstayed your visa and now we're going to make sure you catch your flight out and ban you from ever coming back."
Thailand checks on exit for overstay requiring you to pay overstay fines on the spot in cash. Ostensibly to stop illegal workers, because the best way to stop that is apparently done by the immigration department, by making work visas hard to qualify for and a bureaucratic nightmare to actually get, and checking tourist visas on exit after the illegal work has been done and enough money to cover the fines earned. Because the Labor department has no enforcement force.
With so many people pointless busywork is a good way to keep people busy and 'employed'.
We had company stamps and sole proprietor's stamps in Russia too but they became optional 7 years ago. It was Soviet legacy and it's surprising that India still hasn't got rid of it.
India got rid of it in 2015.
Singapore still has company stamps.
I guess it is a legacy of (inherited?) Chinese bureaucracy. Hong Kong has it too.
> Everything requires an application, even when everything can be done digitally.
Please also provide two self attested photocopies.
(It’s interesting to think about why attestation is required.)
Please also provide two self attested photocopies.
(It’s interesting to think about why attestation is required.)
Now they ask for "official Aadhar". Even though its a digital document and Aadhar website explicitly states that every copy of Aadhar is an "official" copy.
If you get a color print and get it laminated, your unofficial Aadhar suddenly becomes "official".
I've had so many arguments with officials about this its unreal.
If you get a color print and get it laminated, your unofficial Aadhar suddenly becomes "official".
I've had so many arguments with officials about this its unreal.
Huh, is that a thing people ask for? I've had to explain the
> its a digital document and Aadhar website explicitly states that every copy of Aadhar is an "official" copy
part multiple times to people in my family, but had assumed this would be basic knowledge to government officials.
> its a digital document and Aadhar website explicitly states that every copy of Aadhar is an "official" copy
part multiple times to people in my family, but had assumed this would be basic knowledge to government officials.
I was in Tunisia at the airport in Tunis for a departing flight. Having already checked online, I tried going through security with my electronic boarding pass. The security told me I needed my boarding pass. I pointed again to the electronic copy as politely as I could. The security said “this is Tunisia, you need the paper copy.” XD
This happened to me in Mumbai several years ago. I had thankfully been forewarned, but there were military police checking boarding passes for entering passengers outside the airport, and no one without a paper boarding pass + appropriate government ID was allowed into the terminal. This was right up there with the "requirement" that business travelers in India provide a physical business card to the hotel when checking in. I haven't been a in few years, so hopefully that's at least no longer the case.
What year? I cannot believe this was in the last 20 years. The "physical business card" thing never happened to me.
Is smoking still allowed there indoors (in the airport)?
Not sure, I didn't notice. A lot of airports have a designated smoking room, but I think you're asking about smoking in general.
It's probably banned then since. A few years ago people were lighting up cigarettes in the lobby, which was very odd to me.
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dude. unless you are doing some space age shit or something, you don't need to set up a company in india to do business. sure the whole "limited liability" and that but in reality that is just a smokescreen.
just use your personal pan card to open a bank account, get a GST registration, do income tax audit and you will be done. No compliance, no nothing.
i do taxes and books for businesses with 250+ Crore turnover and they are all sole proprietorships. Why? the simple answer is why bother? you can have all the employees,all the corporate hierarchy and still be a proprietorship...
One part of the problem is all the professionals milking companies for "compliance management fees" but in the end of the day, my suggestion to businesses is unless you REALLY REALLY need a company, please don't bother
just use your personal pan card to open a bank account, get a GST registration, do income tax audit and you will be done. No compliance, no nothing.
i do taxes and books for businesses with 250+ Crore turnover and they are all sole proprietorships. Why? the simple answer is why bother? you can have all the employees,all the corporate hierarchy and still be a proprietorship...
One part of the problem is all the professionals milking companies for "compliance management fees" but in the end of the day, my suggestion to businesses is unless you REALLY REALLY need a company, please don't bother
> you don't need to set up a company in india to do business
You do if you want outside investment. Or if you want professional management. Or if you want to seriously engage in international business.
What you say is true: most businesses are sole proprietorships. But that's a significant and manufactured barrier to growth.
You do if you want outside investment. Or if you want professional management. Or if you want to seriously engage in international business.
What you say is true: most businesses are sole proprietorships. But that's a significant and manufactured barrier to growth.
Unfortunately you need to incorporate if you want to raise venture funding. You'll also struggle to get taken seriously by good tech talent if you try to hire them as a proprietorship.
Depends. The comment you replied to has a point. I have a family business. From personal experience this is how it works in practice for most entrepreneurs.
As for funding and business strategy, it will get bit tricky because you will now have to think of different ways of financing instead of VCs. But it is nothing different than VC financing (and you get to keep 100% of your company).
As for funding and business strategy, it will get bit tricky because you will now have to think of different ways of financing instead of VCs. But it is nothing different than VC financing (and you get to keep 100% of your company).
You need limited liability at larger scale and an official entity to get low interest loans, support and above the counter investor funding. These systems need new company centred reform and redesign to remove friction causing elements like OP describes to enable Indian entrepreneurship to realise its untapped potential in India as well as overseas. The amount of bureaucracy left behind by the British and the layer upon layer of mindless inefficiency added since is stifling innovation, adaptation and growth like nothing else.
What makes me pessimistic is the place bureaucrats still occupy in the social hierarchy. Even today, getting a government job carries tremendous prestige, especially outside urban areas. Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual.
Bureaucracy will remain obdurate as long as members of the bureaucracy are feted by society. Ideally, bureaucrats should be invisible. But in India, IAS/IPS officers make headlines regularly.
I won't get even started about the sheer amount of man hours wasted in preparing for administrative exams. Statistically, less than 0.1% of the people preparing for IAS exams will actually be selected. The remaining 99.9% waste YEARS of their lives in this futile endeavor instead of actually building and learning.
I remain bearish on India as long as the bureaucracy remains paramount.
Bureaucracy will remain obdurate as long as members of the bureaucracy are feted by society. Ideally, bureaucrats should be invisible. But in India, IAS/IPS officers make headlines regularly.
I won't get even started about the sheer amount of man hours wasted in preparing for administrative exams. Statistically, less than 0.1% of the people preparing for IAS exams will actually be selected. The remaining 99.9% waste YEARS of their lives in this futile endeavor instead of actually building and learning.
I remain bearish on India as long as the bureaucracy remains paramount.
> Becoming an IAS/IPS officer is the most prestigious thing you can do as an individual.
If you are in UP and Bihar. That's not true for the rest of the country.
If you are in UP and Bihar. That's not true for the rest of the country.
True in Rajasthan and Madhya Pradesh as well (have lived there for years).
Between these four states alone, we're talking about 40% of the country's population.
If more than half of your country believes something, it can be said to be the majority opinion.
Between these four states alone, we're talking about 40% of the country's population.
If more than half of your country believes something, it can be said to be the majority opinion.
You wrote: <<Between these four states alone, we're talking about 40% of the country's population.>>
Google Sensei tells me:
Google Sensei tells me:
UP: 204.2M
Bihar: 99.02M
Rajasthan: 68.89M
Madhya Pradesh: 73.34M
Those numbers are way too old. Even by the 2011 census, UP was nearly 200M with a decadal growth rate of 20% in the previous decade. Bihar was 104M with a 25% growth rate.
Even with more muted growth, current population would be 230M+ for UP and 125M+ for Bihar.
Even with more muted growth, current population would be 230M+ for UP and 125M+ for Bihar.
Not really.
IAS folk make on the order of a $1M/pa with all their kickbacks. They often even get to send their kids to study in the West for "free" through "scholarships" (as a quid-pro-quo for compromising national interest). The demand is quite high (see marriage portals).
IPS is one tier lower. Though, anyone who has studied the hallowed history of the former commission of Mumbai knows this is also not something to sneeze at.
IAS folk make on the order of a $1M/pa with all their kickbacks. They often even get to send their kids to study in the West for "free" through "scholarships" (as a quid-pro-quo for compromising national interest). The demand is quite high (see marriage portals).
IPS is one tier lower. Though, anyone who has studied the hallowed history of the former commission of Mumbai knows this is also not something to sneeze at.
isn't the tax burden for sole proprietorship higher than for say limited company? 30 vs 25 iirc?
you can claim as many expenses as you like, in companies there are restrictions, there are deferred tax assets and liabilities because of companies act and income tax act depreciation difference.
There is MAT applicable sooner than sole proprietorship i think.
lets just say it is easier to "appropriate" the books as a sole proprietorship.
you have to pay mca fees for your authorized capital, one off but if you are doing serious business, it costs.
i know, 5% "might" sound a lot in taxes but by fudging some numbers, by not paying complaince fees, by not being on the hook for a "lot of compliance" and the penalties that come up, it does not sound worth the risk....
Look, if you are doing big business, want to raise money from the public, sure go ahead but not otherwise.
lets just say it is easier to "appropriate" the books as a sole proprietorship.
you have to pay mca fees for your authorized capital, one off but if you are doing serious business, it costs.
i know, 5% "might" sound a lot in taxes but by fudging some numbers, by not paying complaince fees, by not being on the hook for a "lot of compliance" and the penalties that come up, it does not sound worth the risk....
Look, if you are doing big business, want to raise money from the public, sure go ahead but not otherwise.
> but by fudging some numbers
And this is the corruption mentality right there.
And this is the corruption mentality right there.
The results of British and east India company influences?
Worth noting that a vast majority of these rules were created by the British and have been carried over as it is post independence and till this day. Quite a lot of them have become irrelevant but no one’s bothered to purge them.
Previously on HN: https://news.ycombinator.com/item?id=24106545 (with a few comments from the author as well).
The author had added a correction to the post (12th August 2020) stating that this was a mistake, and that the actual procedure was much less cumbersome:
https://web.archive.org/web/20200812093618/https://superr.in...
> It has been bought to my attention that there was a mistake by an entry level employee.
> So the Revenue Department itself was supposed to get all the NOCs required by going to all those offices, but an entry level employee forgot to add my file to the list of NA’s to be done.
> [...] But PLEASE UNDERSTAND that “it was a mistake” in filing by an Entry Level Employee and normally this procedure takes less than 2 months and all the heavy lifting is done by the Revenue Department, Collector Office.
Tweet from the author about the correction: https://twitter.com/mrohanshah/status/1293170591441104902
But the correction was removed after a while, so maybe a bit of clarification will help.
The author had added a correction to the post (12th August 2020) stating that this was a mistake, and that the actual procedure was much less cumbersome:
https://web.archive.org/web/20200812093618/https://superr.in...
> It has been bought to my attention that there was a mistake by an entry level employee.
> So the Revenue Department itself was supposed to get all the NOCs required by going to all those offices, but an entry level employee forgot to add my file to the list of NA’s to be done.
> [...] But PLEASE UNDERSTAND that “it was a mistake” in filing by an Entry Level Employee and normally this procedure takes less than 2 months and all the heavy lifting is done by the Revenue Department, Collector Office.
Tweet from the author about the correction: https://twitter.com/mrohanshah/status/1293170591441104902
But the correction was removed after a while, so maybe a bit of clarification will help.
Hey! I'm the author and here's the clarification:
That was the official response I got from the district administration so had to post it. Also was being pressured by the government (indirectly) to take it down. So that was all bs. Next update I'll give is when I will have solved the problem.
That was the official response I got from the district administration so had to post it. Also was being pressured by the government (indirectly) to take it down. So that was all bs. Next update I'll give is when I will have solved the problem.
> Also was being pressured by the government (indirectly) to take it down
Why am I not surprised.
Why am I not surprised.
> Also was being pressured by the government (indirectly) to take it down
Do you mind sharing how?
Do you mind sharing how?
So, it's still pending ?
Here is Narayana Murthy, founder of Infosys, explaining the early days of Infosys :)
https://www.youtube.com/watch?v=4IuqHUA2mQY
https://www.youtube.com/watch?v=4IuqHUA2mQY
Here's the 2022 edition: https://twitter.com/mrohanshah/status/1579829414916784128
> Yes, you need to obtain “permission” before you build any manufacturing structure on your own land with your own money. This permission is called the NA or Non-Agricultural Certificate.
Well, I though it was this way everywhere in the world. In Europe, at least, you cannot build anything on agricultural land unless it is a n agricultural structure or you get the classification changed, which is not easy.
Well, I though it was this way everywhere in the world. In Europe, at least, you cannot build anything on agricultural land unless it is a n agricultural structure or you get the classification changed, which is not easy.
I have a funny story from Spain:
My father's has an orange field, so at some point he wanted to dig a well to get some water.
He went to the City Hall, got all the tricky paperwork and applied for permission to build it. Months passed by without hearing anything, and at some point he just forgot about it, assuming he'd be denied silently. There's some people in the city hall don't like him too much BTW.
Few years later an official from the government came, "I'm here to check on the well you built", to which my father was of course confused "what well? You never gave me permission to dig it!". Apparently and according to this official, the normal thing to do is that you apply for permission, then build the project and finally then you'll receive the permission eventually, so he'd assumed my father had the well built already. Since as mentioned some people were against him, he was also not gonna officially break the law and build it before getting permission.
My father's has an orange field, so at some point he wanted to dig a well to get some water.
He went to the City Hall, got all the tricky paperwork and applied for permission to build it. Months passed by without hearing anything, and at some point he just forgot about it, assuming he'd be denied silently. There's some people in the city hall don't like him too much BTW.
Few years later an official from the government came, "I'm here to check on the well you built", to which my father was of course confused "what well? You never gave me permission to dig it!". Apparently and according to this official, the normal thing to do is that you apply for permission, then build the project and finally then you'll receive the permission eventually, so he'd assumed my father had the well built already. Since as mentioned some people were against him, he was also not gonna officially break the law and build it before getting permission.
A friend of mine in Spain bought a masia, but was not allowed to tear down the old building to build a new house (protected heritage or something, even though it was junk). So the way around it was to do it in steps. Replace it whole building part by part. So now he has a new house (but it looks like the old one in shape), but there's nothing left of the original.
Not limited to Spain: here in Somerville MA I see people doing this pretty often. They leave just enough of the building standing (two walls?) that it counts as a remodel and they can keep all the zoning exemptions from the old structure. If they tore it down entirely they wouldn't be able to build anything nearly as large.
Completely legal, but a good illustration of how even our new (and honestly much improved) zoning is too restrictive.
Completely legal, but a good illustration of how even our new (and honestly much improved) zoning is too restrictive.
Seen this a lot in Philadelphia lately. Part of one outer wall remains standing, everything else is totally destroyed and built new around it. Creates some interesting looking collage-buildings.
This is the main way people under the California Coastal Commission's authority did projects up until I moved as well.
[deleted]
don't ask permission, ask forgiveness
That sometimes backfires. My dad built a fence while the application was pending. The city approved the application but made him tear down the fence anyway and rebuild it since he didn't have permission when it was first built.
The idea itself is sound and reasonable. If you let people built wherever you'll find yourself out of arable land in an instant.
What seems overly complex and inefficient is the amount of permissions and the subpermissions.
Even to my German bueorcracy adjusted ears this sounds like a great way to extract bribes and fees. At least the process here is quite clear (but not always fast)
What seems overly complex and inefficient is the amount of permissions and the subpermissions.
Even to my German bueorcracy adjusted ears this sounds like a great way to extract bribes and fees. At least the process here is quite clear (but not always fast)
This does not seem sound and reasonable. Yes, India has been civilized for 5000 years, with the result that it's very densely populated; but "very densely populated" is only 418 people per square kilometer, less than twice Germany's 232.
53% of India's land area is arable land: 790 people per square kilometer of arable land, or 1270 square meters of arable land per person. I feel like 100 square meters of factory area per person is more than adequate, which would decrease the arable land by some 8% if you built it all on previously cultivated fields, rather than mountains or forests or deserts (or polders!); but that assumes you're employing the entire population in the factories.
Some factories do have lower density than that; for example, https://en.wikipedia.org/wiki/NUMMI was 370 acres (150 hectares in modern units) and employed 5500 people at its closure in 02006. This works out to 270 square meters per worker. But now https://en.wikipedia.org/wiki/Tesla_Fremont_Factory occupies that space and some additional (175 hectares total) and employs 22000 people, 80 square meters per person, despite extensive automation.
If some of those factories are producing fertilizers, tractors, irrigation equipment, and food products, converting some fields into factories might actually increase your agricultural production rather than decreasing it. Germany harvests 7 tonnes of cereals per hectare that's planted in cereals; India, despite being tropical, harvests only 3.3: https://tradingeconomics.com/india/cereal-yield-kg-per-hecta...
Allocating scarce resources like land by means of capitalism is maybe not ideal unless you can make more of them (polders!), but it does seem to work better than allocating them by bureaucracy and laws.
53% of India's land area is arable land: 790 people per square kilometer of arable land, or 1270 square meters of arable land per person. I feel like 100 square meters of factory area per person is more than adequate, which would decrease the arable land by some 8% if you built it all on previously cultivated fields, rather than mountains or forests or deserts (or polders!); but that assumes you're employing the entire population in the factories.
Some factories do have lower density than that; for example, https://en.wikipedia.org/wiki/NUMMI was 370 acres (150 hectares in modern units) and employed 5500 people at its closure in 02006. This works out to 270 square meters per worker. But now https://en.wikipedia.org/wiki/Tesla_Fremont_Factory occupies that space and some additional (175 hectares total) and employs 22000 people, 80 square meters per person, despite extensive automation.
If some of those factories are producing fertilizers, tractors, irrigation equipment, and food products, converting some fields into factories might actually increase your agricultural production rather than decreasing it. Germany harvests 7 tonnes of cereals per hectare that's planted in cereals; India, despite being tropical, harvests only 3.3: https://tradingeconomics.com/india/cereal-yield-kg-per-hecta...
Allocating scarce resources like land by means of capitalism is maybe not ideal unless you can make more of them (polders!), but it does seem to work better than allocating them by bureaucracy and laws.
Population density of Nederlands: >500 people/sq.km.
See, with industrialization you can support higher population densities than India can.
Everything is right in theory. This article is about how difficult it is for a small entrepreneur, you essentially need big pockets and right connections to start something even very small.
All this does is creates a set of entrenched local businesses which run hand-in-hand very transparently with local political interests. This is the whole reason Western folks never understand why China succeeded so fast, it is because they made the trade-offs necessary for growth. For rapid growth you cannot make everyone happy right away.
The good thing about India is that e-Governance initiatives have at least provided some transparency and understanding for the average person which did not exist before.
All this does is creates a set of entrenched local businesses which run hand-in-hand very transparently with local political interests. This is the whole reason Western folks never understand why China succeeded so fast, it is because they made the trade-offs necessary for growth. For rapid growth you cannot make everyone happy right away.
The good thing about India is that e-Governance initiatives have at least provided some transparency and understanding for the average person which did not exist before.
Had this article been the difficulties to build a manufacturing plan on an area reserved for industrial use, I would agree. But I don't believe that changing the destination of agricultural land has to be a fast and easy process.
It should be fast and easy, but not necessarily guaranteed. You should be able to get a decision quickly regardless of whether it's 'yes' or 'no'.
This! In Germany it's simply not possible to declare a parcel of your own choosing as "Non-Agricultural". Land is of course taken out of agricultural use and reclassified for industrial or residential use, but only in predefined areas. Of course there's lobbying and speculation involved, because reclassification multiplies the value of the parcels, but it takes much longer than a year from the first proposal until you can actually build something, and certain conditions have to be met, e.g. good accessibility by road, other infrastructure (power supply, sewage etc.)...
Same thing in Russia. All land is classified according to its use and changing intended use is a lot of paperwork.
Very similar in most parts of the US
In Poland atm you can't even buy farmland unless you are a registered farmer in the local county already. Its a new rule and hopefully they remove it cause its insane.
And then of course you can't just build on it. You may attempt to reclassify it into building land but from TFA it seems the process is just as tedious as in India and definietely not guaranteed to succeed.
Theres a big chance, once you get to the building, you will have to monitor the builders constantly otherwise they rob you blind. From my friend in India I was told they have the same problem.
And then of course you can't just build on it. You may attempt to reclassify it into building land but from TFA it seems the process is just as tedious as in India and definietely not guaranteed to succeed.
Theres a big chance, once you get to the building, you will have to monitor the builders constantly otherwise they rob you blind. From my friend in India I was told they have the same problem.
First you have to ask yourself why would such a rule exist? Sometimes it is done in the interest of national security. Or you run into issues such as a desert kingdom purchasing rights to use massive quantities of farmland where water is already scarce. See Saudi Alfalfa in California. Or why Bill Gates is the biggest private farm land owner in the United States at around 242,000 acres and climbing. You need to look past the knee jerk assumption that the government is schizophrenic. There may be greater forces at play this intends to put the brakes on without overtly prohibiting those activities.
The policy doesn't make sense. Farming benefits massively from economies of scale, and farmland in most of Eastern Europe is already very fragmented due to "agricultural reforms" in 45. If you're not familiar with that situation it is you who need to ask themselves some questions. Look at how messed up Haiti is, much of that results from the way they delt with land ownership. Every family owing their own little scrap of land sounds nice, but makes zero economic sense.
I didn't say the goverment is schizofrenic, but their message certainly plays on xenophobic fears. Its clearly a part of a populist agenda, because we need people with capital buying up land, but its super easy to frame this as a malevolent action to less educated people, and that is what is being done for purely political reasons. And this policy is exactly what I would call "overly prohibiting": I can't sell my farmland even to local farmers who live a few miles away cause they happen to be in a different couty. Cmon thats just stupid.
I didn't say the goverment is schizofrenic, but their message certainly plays on xenophobic fears. Its clearly a part of a populist agenda, because we need people with capital buying up land, but its super easy to frame this as a malevolent action to less educated people, and that is what is being done for purely political reasons. And this policy is exactly what I would call "overly prohibiting": I can't sell my farmland even to local farmers who live a few miles away cause they happen to be in a different couty. Cmon thats just stupid.
This reply is the perfect "Chesterson's Fence"!
In the US you typically have to make sure the land is in the right "zoning" for manufacturing, but that's typically not too hard to find. How easy it is to get preexisting land changed varies widely. If it's agricultural land, that often won't need rezoned in places with cumulative zoning: https://matthewminer.name/law/outlines/1L/2nd+Semester/LAW+5...
Then you probably need a building permit, but they usually just need the plans for the building to be built for that.
Then you probably need a building permit, but they usually just need the plans for the building to be built for that.
Yeah, that statement is a bit of a hyperbole.
I think in the US this is called Zoning and you need Zoning permissions or something similar.
I think in the US this is called Zoning and you need Zoning permissions or something similar.
You are doing it wrong. What they really wanted from you was a bribe, not a stack of papers.
Nobody will ever openly admit they want a bribe. They will just drown you in bureaucracy until you get the idea.
Nobody will ever openly admit they want a bribe. They will just drown you in bureaucracy until you get the idea.
My read is that the OP understands this but is ideologically opposed to paying bribes. Ex: "Obviously, they are playing 'hard to get' to get me to pay some bribe and initiate the process" and "So the Gram Panchayat NOC is stuck because of non payment of bribe".
You have a choice. Try to do business in India and pay bribes or move your business elsewhere.
There are countries of which India is one of them where you can't do any serious business without paying bribes. Serious business is anything where a government official even suspects you may have money to pay the bribe. So maybe not a hairdresser, but if you have money to buy a piece of land you are expected to have money to pay bribes.
There is a lot of examples of large companies that came to the same conclusion. For example, Ikea tried to do business in Russia without paying bribes and gave up. They also decided they will not be supporting corruption but they failed, faced the choice to pay bribes or get out and decided to get out.
India is corrupt to the bone. Corruption is way of life. It is a reason for people to get government jobs which otherwise do not pay enough.
If government jobs do not pay enough and people self select themselves to get these jobs anyway only because they plan on getting bribes to supplement their salary, how prevalent corruption would be?
This actually is the reason why fighting corruption is so hard. Because people self select themselves and displace those who do not accept corruption from those jobs. Then these officials advance and take up high level jobs and pretty soon you have entire structure corrupt to the bone at every level.
There are countries of which India is one of them where you can't do any serious business without paying bribes. Serious business is anything where a government official even suspects you may have money to pay the bribe. So maybe not a hairdresser, but if you have money to buy a piece of land you are expected to have money to pay bribes.
There is a lot of examples of large companies that came to the same conclusion. For example, Ikea tried to do business in Russia without paying bribes and gave up. They also decided they will not be supporting corruption but they failed, faced the choice to pay bribes or get out and decided to get out.
India is corrupt to the bone. Corruption is way of life. It is a reason for people to get government jobs which otherwise do not pay enough.
If government jobs do not pay enough and people self select themselves to get these jobs anyway only because they plan on getting bribes to supplement their salary, how prevalent corruption would be?
This actually is the reason why fighting corruption is so hard. Because people self select themselves and displace those who do not accept corruption from those jobs. Then these officials advance and take up high level jobs and pretty soon you have entire structure corrupt to the bone at every level.
> You have a choice. Try to do business in India and pay bribes or move your business elsewhere.
This post and the OP's decisions seem to me to be part of an attempt to decrease corruption in India.
This post and the OP's decisions seem to me to be part of an attempt to decrease corruption in India.
IMO it is just wasted effort. I applaud the person for trying to do right but unfortunately it will not achieve anything. For corruption to decrease you need government that is actively working to this end. Except Indian government is corrupt, too.
It isn't even going to prove any point or make the problem any more public. Because Indians are extremely well aware of the problem and they all know a lot of these stories from their own life.
Regular people will never get rid of corruption exactly because of the effect I mentioned -- because people self select themselves into government jobs. A government position is way more lucrative to a person that plans on being corrupt than to a person that plans to only live from the official salary.
It is like trying to explain to extremists (say Republican extremists, or nazi, or communist, etc.) why what they are doing is bad. You can reach individuals and even convince them to your point but then those individuals leave their extremist circles leaving those circles exactly as extremist as they were before.
It isn't even going to prove any point or make the problem any more public. Because Indians are extremely well aware of the problem and they all know a lot of these stories from their own life.
Regular people will never get rid of corruption exactly because of the effect I mentioned -- because people self select themselves into government jobs. A government position is way more lucrative to a person that plans on being corrupt than to a person that plans to only live from the official salary.
It is like trying to explain to extremists (say Republican extremists, or nazi, or communist, etc.) why what they are doing is bad. You can reach individuals and even convince them to your point but then those individuals leave their extremist circles leaving those circles exactly as extremist as they were before.
Maybe, but many people in India's government do want it to be a place people come to do business, and publicly embarrassing them with how hard it is to make progress without bribes seems plausibly helpful.
afaik there are quite heavy laws against paying bribes - in foreign jurisdictions. See https://en.wikipedia.org/wiki/Foreign_Corrupt_Practices_Act - other countries also have quite similar laws to this respect.
"Oh, that's nice then" ... nope.
I liked this article… but… it’s agricultural land. You can’t buy agricultural land unless you are a farmer and you can’t build non-ag buildings on ag land. This is a national food security issue. This is common in many countries.
This is not an honest take on ‘ease of doing business in india’. What the author is trying to do is re-purpose his agricultural land for non agricultural use. For various socio-political reasons this is big no-no in many states in India and is known to be a very long winding and drawn out process because the govt does not want agricultural land to be re-purposed. I expected something along the lines of ‘I tried to setup a unit on land that I already have which allows this’. Note that agricultural land goes for a pittance compared to non na one. Author probably tried to pull a fast one onthe govt.
> Author probably tried to pull a fast one onthe govt.
In what sense is the author trying to pull a fast one? They own agricultural land. It is legal to convert agricultural-use land to non-agricultural-use land. There is a legal procedure for doing so. The author is trying to follow the procedure. The procedure turns out to be very difficult, and they publicize this fact. Where is the 'fast one' being pulled and who is it being pulled on?
In what sense is the author trying to pull a fast one? They own agricultural land. It is legal to convert agricultural-use land to non-agricultural-use land. There is a legal procedure for doing so. The author is trying to follow the procedure. The procedure turns out to be very difficult, and they publicize this fact. Where is the 'fast one' being pulled and who is it being pulled on?
Why dont you try building a residential property or factory on a land zoned for public parks and tell me how that goes in your country?
...the author owns the land he is trying to build on, which is very different than trying to build something in the middle of a public park.
Most US cities as they exist today would not exist if you could not convert agricultural land to other uses. Where does suburbia come from? Former farms.
Fair point.. but most (almost all) US cities do not exist only because their owners wanted to go from farm-land —> city. They could not have existed with a local body of authority/government wanting that to happen and planning for it. The point I am trying to make is, yes the author owns the land and no one is taking away his ownership. However, owner is not the only party who gets a say in what happens with his land which is earmarked for agriculture. I know there are cities in the west where you cant even repaint your own houses without getting the permission from cities.There are local laws and zoning regulations as well you have to abide by which author seems to have conveniently left out.
Thanks for the context. I remember this when this blog made the rounds originally. Didn't realize it's the same one that made HN front page again. Interesting that this is being floated around when India is trying hard to make a good foray into manufacturing.
On a related note, a former central bank (RBI) governor is trying to sabotage India's manufacturing aspirations. Inimical forces that aspirational Indians will face while they dig out of the current mess is unimaginably powerful.
That caught my eye as well. If I wanted to buy some agricultural land in my state and convert it to industrial manufacturing, I would be mired in red tape for years.
It seems like the problem is that the author has a moral objection to paying bribes in an area where bribery is customary:
> Obviously, they are playing “hard to get” to get me to pay some bribe and initiate the process. But after going through all this, I am not going to pay any bribe to anyone.
And:
> And they openly demanded bribes after waiting for four months.
> So the Gram Panchayat NOC is stuck because of non payment of bribe.
> Obviously, they are playing “hard to get” to get me to pay some bribe and initiate the process. But after going through all this, I am not going to pay any bribe to anyone.
And:
> And they openly demanded bribes after waiting for four months.
> So the Gram Panchayat NOC is stuck because of non payment of bribe.
We should use different terms for what is currently covered by "bribes":
Money paid illegally to gain an unfair advantage, that will result in local prosecution if discovered and is not the usual practise is a "bribe". No one should pay those.
Money paid illegally to gain normal access/approvals/licenses etc, where it is entirely normal to pay and unlikely to lead to local prosecution is "extortion".
Op isn't really paying a bride, he's being extorted.
Money paid illegally to gain an unfair advantage, that will result in local prosecution if discovered and is not the usual practise is a "bribe". No one should pay those.
Money paid illegally to gain normal access/approvals/licenses etc, where it is entirely normal to pay and unlikely to lead to local prosecution is "extortion".
Op isn't really paying a bride, he's being extorted.
> It seems like the problem is that the author has a moral objection to paying bribes
Duh?
Duh?
Exactly. This is what the rest of the world usually says on the first encounter with "tips culture" in the US.
As I see it, cultures are different and one thing that is considered an absolute taboo in one culture might be customary in another. Tips in the US are customary yet at the same time they are offensive in Japan. Bribes are killing the economy in my country yet it makes economy moving in India.
PS: I personally hate corruption more than anything.
As I see it, cultures are different and one thing that is considered an absolute taboo in one culture might be customary in another. Tips in the US are customary yet at the same time they are offensive in Japan. Bribes are killing the economy in my country yet it makes economy moving in India.
PS: I personally hate corruption more than anything.
> Exactly. This is what the rest of the world usually says on the first encounter with "tips culture" in the US.
I think my shock was greater when I discovered that lobbying in the US means "literal legal bribery". In a lot of the western world that word it means things "having meetings" and perhaps "organizing PR campaigns". Straight up giving money to politicians is against the law.
I think my shock was greater when I discovered that lobbying in the US means "literal legal bribery". In a lot of the western world that word it means things "having meetings" and perhaps "organizing PR campaigns". Straight up giving money to politicians is against the law.
This may sound like a distinction without a difference, but it is explicitly illegal to give money directly to politicians in the United States. Lobbying is giving money to their campaign committees, which get them elected or re-elected. It is also explicitly very illegal for campaign committees to use their funds to do anything for the candidate -- there are a huge[0] number[1] of politicians[2] who have been severely[3] penalized for flouting campaign finance laws. Further, there are severe restrictions on what the campaign committee can use their money for, which is largely restricted to travel for the campaign, advertising, and paying campaign staff.
These are just some recent examples of federal politicians who have run afoul of these laws, but they apply at all levels of government, as well as to staff (both campaign staff and the official staff of elected officials).
[0]: https://en.wikipedia.org/wiki/Duke_Cunningham
[1]: https://en.wikipedia.org/wiki/Duncan_D._Hunter
[2]: https://en.wikipedia.org/wiki/Jesse_Jackson_Jr.
[3]: https://en.wikipedia.org/wiki/Michael_Grimm_(politician)
These are just some recent examples of federal politicians who have run afoul of these laws, but they apply at all levels of government, as well as to staff (both campaign staff and the official staff of elected officials).
[0]: https://en.wikipedia.org/wiki/Duke_Cunningham
[1]: https://en.wikipedia.org/wiki/Duncan_D._Hunter
[2]: https://en.wikipedia.org/wiki/Jesse_Jackson_Jr.
[3]: https://en.wikipedia.org/wiki/Michael_Grimm_(politician)
Yes it is totally a meaningless distinction to me. On the level of “this is not gambling, because we use a virtual currency (that can be purchased with dollars)” that is prevalent on mobile video games these days. It is gambling, just with extra steps. And it is bribery, just with extra steps.
>I think my shock was greater when I discovered that lobbying in the US means "literal legal bribery".
This is what the internet thinking lobbying means because they just want to be angry at a thing without bothering to learn about it because that would expose their own political apathy. Lobbying in the US means the exact same things that it means in the rest of the world. Companies will donate a few thousand dollars, so that a legislature will hear them out, but the legislature doesn't have to listen to them. There is some sketchy stuff going on with campaign finance for sure, but it's no where near as bad as "legalized bribery."
This is what the internet thinking lobbying means because they just want to be angry at a thing without bothering to learn about it because that would expose their own political apathy. Lobbying in the US means the exact same things that it means in the rest of the world. Companies will donate a few thousand dollars, so that a legislature will hear them out, but the legislature doesn't have to listen to them. There is some sketchy stuff going on with campaign finance for sure, but it's no where near as bad as "legalized bribery."
Using your own resource:
https://www.opensecrets.org/federal-lobbying/top-spenders
I believe that’s at least 4 orders of magnitude higher than “thousands of dollars”. I rest my case
https://www.opensecrets.org/federal-lobbying/top-spenders
I believe that’s at least 4 orders of magnitude higher than “thousands of dollars”. I rest my case
...as I mentioned, the vast majority of this money goes towards things like paying people to read legislation, prepare presentations, and speak with politicians. It's not "literal legalized bribery."
> a few thousand dollars
You might want to revise that assumption.
You might want to revise that assumption.
You might want to revise your assumptions. These are the top lobbying recipients: https://www.opensecrets.org/federal-lobbying/top-recipients. All things considered it's not a lot of money. The vast majority of lobbying spending goes towards mundane expenses like payroll at lobbying firms. The reason lobbying is so powerful is that regular people don't pay attention to actual legislation, so politicians spend too much of their time campaigning and end up outsourcing the hard work of writing legislation to the lobbyists. Regardless, it's definitely not "literal legalized bribery."
First time I am hearing about this. Could you elaborate on the Tips culture in US?
Do you have any first hand or second hand experience with it?
Do you have any first hand or second hand experience with it?
US waitstaff aren't covered by minimum wage laws - effectively a very large component of their income is "variable compensation" through tips. This is "expected" to be 10-20%. The culture doesn't quite come out and say "you need to put down 10% more than the number stated on your bill in order for the person serving you to make rent", but if you don't it will be interpreted as an insult.
For waitstaff at a restaurant, baristas at a coffee shop, bartenders, or people giving personalized service (for example a tattoo artist) it's customary to give a tip of ~20% extra on top of the bill. The expectation is that extra money goes directly to the staff giving you the service, and you are expected to pay it; many of these services jobs are actually legally allowed to pay less than minimum wage with the expectation that the tips will cover the difference. You are allowed to give less if you feel the service wasn't satisfactory, or if it's an especially large bill, but to give no tip at all means you are a terrible person.
From my experience most people working these jobs prefer the tips system the way it is because a lot of times it's in cash so they can fudge their tax numbers if they want (might not be true nowadays as less people use cash), and also because often they make more money through tips than minimum wage, and they think if tips were removed the restaurants would only pay them minimum wage.
From my experience most people working these jobs prefer the tips system the way it is because a lot of times it's in cash so they can fudge their tax numbers if they want (might not be true nowadays as less people use cash), and also because often they make more money through tips than minimum wage, and they think if tips were removed the restaurants would only pay them minimum wage.
There’s a distinction to be made between a small customary bribe to an seriously underpaid state employee, and a larcenous bribe to a high official.
> a distinction to be made between a small customary bribe to an seriously underpaid state employee, and a larcenous bribe to a high official
Not really. If normalized, it's part of their expected compensation package. Practically speaking, I think I'd suck it up and pay the bribe in the author's position. But I'd know I was doing wrong.
Not really. If normalized, it's part of their expected compensation package. Practically speaking, I think I'd suck it up and pay the bribe in the author's position. But I'd know I was doing wrong.
> If normalized, it's part of their expected compensation package.
But it already is normalised. I think this is morally difficult because it is customary, expected and if you refuse you will not get anything done but also won't change anything. So what have you gained?
I don't think you can fight corruption this way, you just can't do it alone.
But it already is normalised. I think this is morally difficult because it is customary, expected and if you refuse you will not get anything done but also won't change anything. So what have you gained?
I don't think you can fight corruption this way, you just can't do it alone.
[deleted]
Not according to the Foreign Corrupt Practices Act (FCPA).
The FCPA basically says that as a representative of a US corporation (in my case, anyone at a Staff Engineer level or above), it's illegal to bribe an official of a foreign government.
It does try to make a distinction (sort of) between the kinds of bribe you're talking about but in my FCPA training, that "distinction" boils down to "go ask your lawyer." The lawyer will just tell you how to do it in a way that doesn't look like a bribe, even though it still is.
The FCPA basically says that as a representative of a US corporation (in my case, anyone at a Staff Engineer level or above), it's illegal to bribe an official of a foreign government.
It does try to make a distinction (sort of) between the kinds of bribe you're talking about but in my FCPA training, that "distinction" boils down to "go ask your lawyer." The lawyer will just tell you how to do it in a way that doesn't look like a bribe, even though it still is.
FCPA is such a stupid law. The universal way to bribe someone as an American is to pay them a absurd day rate for consulting. These people then have to be given fake roles when all they do is hand over money to corrupt officials.
It just adds yet another layer.
Just as an FYI it’s very hard to be convicted of under FCPA if you’re just operating in a personal capacity. So don’t worry about bribing policemen in foreign counties.
It just adds yet another layer.
Just as an FYI it’s very hard to be convicted of under FCPA if you’re just operating in a personal capacity. So don’t worry about bribing policemen in foreign counties.
Bribes scale up. How much is the underpaid state employee "tipping out" to his boss? Or had to pay to get the job in the first place?
They are both immoral
So it is a "tip" for quality of service.
In a region where bribery is customary, trying to get stuff done without bribes is a case of tilting at windmills. I applaud the author's willingness to stand up for his convictions, but realistically his options are to either pay the bribes or set up his business in a less corrupt region. An entrenched local bureaucracy can easily outlast a typical small business when it comes to a fight like this.
>> It seems like the problem is that the author has a moral objection to paying bribes
> Duh?
It's only "Duh" because you snipped the qualifier out. It's not "Duh" if you read until the end of the sentence like you normally do:
> in an area where bribery is customary
See?
> Duh?
It's only "Duh" because you snipped the qualifier out. It's not "Duh" if you read until the end of the sentence like you normally do:
> in an area where bribery is customary
See?
The fact that a lot of people do it customarily doesn't preclude for it to me morally reprehensible.
To bring it to the extremes: If I found myself visiting Germany during World War 2, I would still strongly object to killing jews, even if it was "customary" there.
And since know this is a reductio-at-hitlerum, I will try again: I would not seek or consent or engage to having pedophilic sexual intercourse if I found myself in certain neighborhoods of Thailand, where apparently it is commonplace.
Perhaps a bit less extreme: I would not expect someone who is a convinced vegetarian to start consuming meat when they arrive to my country just because meat is consumed in almost every meal here.
To bring it to the extremes: If I found myself visiting Germany during World War 2, I would still strongly object to killing jews, even if it was "customary" there.
And since know this is a reductio-at-hitlerum, I will try again: I would not seek or consent or engage to having pedophilic sexual intercourse if I found myself in certain neighborhoods of Thailand, where apparently it is commonplace.
Perhaps a bit less extreme: I would not expect someone who is a convinced vegetarian to start consuming meat when they arrive to my country just because meat is consumed in almost every meal here.
It doesn't matter whether it is customary. I live about 200km away from where the author is, I have never paid a bribe in my life, and I never will. They make you sweat it out for 4-5 months and then eventually it gets done.
I mean, isn't it extraordinarily clear that he doesn't want to pay bribes and that bribes are customary. Hence... duh?
I wouldn't consider the author to be the problem.
[deleted]
India Penal code, 171E.
Up to 1 year in prison.
Up to 1 year in prison.
This seems like nothing to do with 'starting a business', but simply obtaining planning permission for changing land use.
This is a notoriously difficult process in any developed nation, and is often even impossible, because the state has decided that a particular area should be dedicated to agriculture (the nation has to feed itself, etc).
This is a notoriously difficult process in any developed nation, and is often even impossible, because the state has decided that a particular area should be dedicated to agriculture (the nation has to feed itself, etc).
Here's some interesting things that I believe are universally true in India:
1) People succeed here inspite of the government, not cause of it.*
2) Indians can be successful anywhere except India.
*Unless you are rich enough to bend the laws to your needs.
1) People succeed here inspite of the government, not cause of it.*
2) Indians can be successful anywhere except India.
*Unless you are rich enough to bend the laws to your needs.
and still it seems a lot of india fetishes socialism/commando economy USSR style. why?
It's easier to move the masses with promises of freebies and subsidies than with better economics that are difficult to explain.
Is there any reason to believe it would be less corrupt with a different economic system? At least now there's plenty of subsidies for the poor.
[deleted]
As someone who lives in Maharashtra and I am close with people in manufacturing I can confirm that the corruption and mafia here is on a different level. You can’t get anything done unless you know people and are willing to bribe at every step.
Just like in my country, Ukraine.
However during the last years Ukraine is getting rid of corruption at an escape velocity and hopefully at that speed we will be able to be done with it within ten years or so.
However during the last years Ukraine is getting rid of corruption at an escape velocity and hopefully at that speed we will be able to be done with it within ten years or so.
I like your optimism... I am writing from a country which joined EU few decades ago and hoped to rid the corruption as well. Now here we are: I have applied for permission to connect a house to a water line in a small town - that was in early June: and it still drags on. Despite all fancy online application and project tracking tools the government has built, the number of involved institutions is insane. And its a bloody water pipe some 50m long at most... Cannot imagine something larger...
Ukraine was really on a roll pre-war, regarding corruption, at least low-level.
I had a friend who worked at Kyiv since 2014, first as a nightclub owner, then as a security contractor salesman/manager, and he told me that low-level corruption there was divided by two overnight (during Covid).
I don't know what happened, but i guess it is easier to pass harsher or society-changing laws during a pandemic.
I had a friend who worked at Kyiv since 2014, first as a nightclub owner, then as a security contractor salesman/manager, and he told me that low-level corruption there was divided by two overnight (during Covid).
I don't know what happened, but i guess it is easier to pass harsher or society-changing laws during a pandemic.
There's an image in Ukraine (and the EU) that Russians are corrupted. Saying no to corruption is a form of saying "I'm different from Russians"
I guess he meant the shift from government office offline visits to full digitalization. At the moment a lot of common operations and documents (e.g. register the company) in Ukraine can be done exclusively using the Internet, and if you try to visit a government office they will send you back to fill the forms via the website.
This could happen in Marin county too. Can't build a house next to these other houses because there is no water or sewer hookup, and catch22, can't hook up water and sewer because some nesting owls in the area, which are apparently wholly unaffected by all the existing development but would surely be wiped out should you build another 40'x40' building in the area.
Well, we had two successful revolutions in the 21st century, so no government here would want to fuck with people. Reforms continue.
I'm pretty sure corruption in societies is a cultural thing. It'll take at least a generation, maybe more, to truly go away. Ten years is wildly optimistic.
I know, right?
This is why the speed of reforms in Ukraine is mind-boggling. Absolutely nothing short of amazing.
This is why the speed of reforms in Ukraine is mind-boggling. Absolutely nothing short of amazing.
I do not understand the authors issue with paying bribes. You want your factory, you are willing to pay lots of money for it, and the system works with bribes.
Fine, so be it. Pay the bribes and get to work.
I once lived in such a country*. The unfairness is built in, but if you have the money, you can get whatever you need relatively quickly.
If you are trying to save money, fine. But you are willing to go to court, which is even more expensive. And all that time wasted you could have been earning revenue. So instead, pay the bribes, start the company, get workers and build clout, and have the power to make change!
* Said country has made huge strides to combat this and become legit in the past 30 years, and that has made everyone more wealthy - even those employees that can no longer collect bribes.
Fine, so be it. Pay the bribes and get to work.
I once lived in such a country*. The unfairness is built in, but if you have the money, you can get whatever you need relatively quickly.
If you are trying to save money, fine. But you are willing to go to court, which is even more expensive. And all that time wasted you could have been earning revenue. So instead, pay the bribes, start the company, get workers and build clout, and have the power to make change!
* Said country has made huge strides to combat this and become legit in the past 30 years, and that has made everyone more wealthy - even those employees that can no longer collect bribes.
Paying bride is a criminal offense. Paying bride abroad is also a domestic criminal offense. I do not think encouraging criminal behavior is a great idea, especially when it is also unequivocally morally wrong.
> Paying bride is a criminal offense.
Cringe.
Cringe.
> Fine, so be it. Pay the bribes and get to work
Since most people think like that, things don't change and everybody is miserable. Cudos to the author for not accepting this rampant corruption.
> If you are trying to save money, fine
If that's really what you think the authors motivation is then you may have missed the point of the article.
Since most people think like that, things don't change and everybody is miserable. Cudos to the author for not accepting this rampant corruption.
> If you are trying to save money, fine
If that's really what you think the authors motivation is then you may have missed the point of the article.
The author doesn't get his permit stamped and obviously currently has no influence. He'll probably give up, and now the jobs he would have created and imports that would have become local production won't happen. It's not an obvious good vs bad situation here, a corrupt system that allows bribes is gross, but pretending you can just act like you are in a western country with rule of law is ignoring reality.
You got it upside down. Exactly because too many people think like that, this whole corrupt system works. Imagine the whole country refusing to pay bribes. They would disappear tomorrow.
This whole "but this single action won't change anything " attitude may feel rational, and even be (selfishly) rational, but the effect comes through the aggregate. Lots of people in society behaving like that, and you get emergent properties caused by the aggregate of those individual choices. A dangerous (and pretty selfish) path to go in societies.
This whole "but this single action won't change anything " attitude may feel rational, and even be (selfishly) rational, but the effect comes through the aggregate. Lots of people in society behaving like that, and you get emergent properties caused by the aggregate of those individual choices. A dangerous (and pretty selfish) path to go in societies.
If everyone who has a problem with the corrupt system opts out, the system will chug along fine. Most people don't care, obviously. The people who make a moral stand will just be poorer and less able to thrive. You are basically suggesting something a lot like being Amish, they refuse to participate and as result they are a cute little subculture that is slowly disappearing.
Ah right. And women still can't vote and Jim Crow laws are still in full swing. Because if somebody would take a stand it would be meaningless, right?
What is a strawman? Do you know?
So you're saying during Jim Crow people should have refused to build factories? I don't follow your point, laws which attack black people are very different from bureaucracies that require bribery to give you permits for your business. I mean both are bad, but they are very different, and Jim Crow is a thousand times worse, both because of it's basic nature and because it was the law of the land and enforced with the full power of the government (vs corruption, which is people sneaking around in violation of the law).
This is what you are doing: "So you think it's ok to just pay it when the police to give you a speeding ticket when you weren't speeding!? That means you are fine with the holocaust!"
So you're saying during Jim Crow people should have refused to build factories? I don't follow your point, laws which attack black people are very different from bureaucracies that require bribery to give you permits for your business. I mean both are bad, but they are very different, and Jim Crow is a thousand times worse, both because of it's basic nature and because it was the law of the land and enforced with the full power of the government (vs corruption, which is people sneaking around in violation of the law).
This is what you are doing: "So you think it's ok to just pay it when the police to give you a speeding ticket when you weren't speeding!? That means you are fine with the holocaust!"
At the end of the day you are only playing a game that someone else has made. It can be corrupt, terrible, whatever, but the fact is you can do nothing to stop it, so if you want to get anything done you need to play the game. Your little petty protest does not stop the game from being played, the people who made the game as it is just don't care about your opinions at all.
>"I do not understand the authors issue with paying bribes."
Because... Its extremely unethical and facilitates corruption?
OK, accepted.
Like everything in life, there is always a trade off.
We have a see-saw. One side has indignation, encouraging corruption at the level of one bribe, cost. The other side has time, factory, jobs, and possibly more influence to change the system.
And from my experience, the people getting the bribe don't see it as unethical - it may even be their "salary". (Eg. Counselors don't get paid in many summer camps, they just get tips. Parents views the tips as extortion. Is it unethical to tip? No, but the whole system is corrupt and should be changed. /rant)
Assuming that system is built this way (so the risk of paying the bribe is nominal), and you have the resources to pay it, it is the cost of doing business. It is unfortunate, but I do not understand why the cost is not worth it.
Like everything in life, there is always a trade off.
We have a see-saw. One side has indignation, encouraging corruption at the level of one bribe, cost. The other side has time, factory, jobs, and possibly more influence to change the system.
And from my experience, the people getting the bribe don't see it as unethical - it may even be their "salary". (Eg. Counselors don't get paid in many summer camps, they just get tips. Parents views the tips as extortion. Is it unethical to tip? No, but the whole system is corrupt and should be changed. /rant)
Assuming that system is built this way (so the risk of paying the bribe is nominal), and you have the resources to pay it, it is the cost of doing business. It is unfortunate, but I do not understand why the cost is not worth it.
This is an unfounded dichotomy. The implication that you cannot have an industrious society without a level of corruption is not supported by your argument (nor any I have heard of).
Equitable working conditions make working more appealing to a worker - and this is extended to the "fairness" of your workplace. Tips are not "the cost of doing business", they are similarly an expectation passed down from authority to the workers to extract their wages opportunistically. People being accustomed to it does not mean that the issue is resolved, because it still leaves the financial risk in the hands of the worker should the business' profitability shift. And so bribes are similarly unethical.
Moving on from the issue of bribes to the bribe receiver, they are also very obviously an imposition to the giver. Not further, they make the "true cost" of a transaction less clear to varying degrees, allowing a services cost to vary very highly compared to what the public might think it is.
There is no good argument for a bribe.
Equitable working conditions make working more appealing to a worker - and this is extended to the "fairness" of your workplace. Tips are not "the cost of doing business", they are similarly an expectation passed down from authority to the workers to extract their wages opportunistically. People being accustomed to it does not mean that the issue is resolved, because it still leaves the financial risk in the hands of the worker should the business' profitability shift. And so bribes are similarly unethical.
Moving on from the issue of bribes to the bribe receiver, they are also very obviously an imposition to the giver. Not further, they make the "true cost" of a transaction less clear to varying degrees, allowing a services cost to vary very highly compared to what the public might think it is.
There is no good argument for a bribe.
> The implication that you cannot have an industrious society without a level of corruption is not supported by your argument (nor any I have heard of).
I’m not exactly sure what you’re saying here, but corruption does exist everywhere. It’s just a question of how pervasive it is, how much it’s actually enshrined in law, etc. (E.g. campaign finance laws in the US essentially legalize corruption, which could perhaps be argued to be like decriminalizing drugs in order to better control them, although whether that’s the actual intent is debatable.)
The Corruption Perception Index and the Global Corruption Index might help get a sense of this. As is typical with such lists, the top performers (last corrupt) tend to be countries with smaller populations. With bigger populations, the risk and incidence of corruption increases.
https://www.transparency.org/en/cpi/2021 https://risk-indexes.com/global-corruption-index/
I’m not exactly sure what you’re saying here, but corruption does exist everywhere. It’s just a question of how pervasive it is, how much it’s actually enshrined in law, etc. (E.g. campaign finance laws in the US essentially legalize corruption, which could perhaps be argued to be like decriminalizing drugs in order to better control them, although whether that’s the actual intent is debatable.)
The Corruption Perception Index and the Global Corruption Index might help get a sense of this. As is typical with such lists, the top performers (last corrupt) tend to be countries with smaller populations. With bigger populations, the risk and incidence of corruption increases.
https://www.transparency.org/en/cpi/2021 https://risk-indexes.com/global-corruption-index/
India Penal code, Section 171E.
Up to 1 year in prison. Do you wish to be exposed to this?
Up to 1 year in prison. Do you wish to be exposed to this?
Sometimes people just stand up for what is right and expect officials to do their job?
Regarding the country you formerly lived in, what efforts would you say were most effective?
A minister of finance that took upon himself to break all the (huge) monopolies [the country had one phone company, one bus company, one electric provider, etc. These were broken apart one at a time.], to reform the corruption, etc.
He made plenty of enemies along the way, but somehow managed to keep on punching. And it truly is much better for everyone.
He made plenty of enemies along the way, but somehow managed to keep on punching. And it truly is much better for everyone.
This is almost identical to the process of setting up a manufacturing facility here in the bay area. Difference is that you never do all this yourself. You use permit sherpas and general contractors to handle most of the paperwork. Source: done it three times
Do you have any contacts you recommend for this process?
Formula 1 was racing there but pulled out due to tax issues that could not be resolved.
https://edtimes.in/why-was-formula-1-racing-forced-out-of-in...
https://edtimes.in/why-was-formula-1-racing-forced-out-of-in...
While this post is specifically about a manufacturing unit and usually will involve land, acquisition (if not already), NOCs (as shown in the post). This is standard and can / should / would be done digitally in near future, once all the units and officials have the awareness.
To offer an alternative, starting business in India is extremely easy (at least Software Business), People have been running a business, filing GST, owning trademarks without leaving their apartment - Thanks to online services which ease these things. But yes, things are still difficult for manufacturing and land related things (and I assume it would be similar in other parts of the world, granted not so difficult).
To offer an alternative, starting business in India is extremely easy (at least Software Business), People have been running a business, filing GST, owning trademarks without leaving their apartment - Thanks to online services which ease these things. But yes, things are still difficult for manufacturing and land related things (and I assume it would be similar in other parts of the world, granted not so difficult).
One of the tricks that the income tax department uses is to "outsource" their work to regular tax payers. Companies are forced to check and see if their vendors are paying their taxes on time!
https://cleartax.in/s/gst-vendor-compliance-report
This is an absolutely ridiculous demand to make. This is because of the very complicated way the GST structure works in India.
The systems in India are designed to complicate life for the ordinary person
This is an absolutely ridiculous demand to make. This is because of the very complicated way the GST structure works in India.
The systems in India are designed to complicate life for the ordinary person
This person forgot to pay the right people.
This kind of ridiculousness is why governments serious about attracting enterprise have "one stop shops" for sorting out the paperwork. Here's the one for Thailand, which is hardly a paragon of governmental efficiency, but is a lot friendlier to small businesses than India.
https://osos.boi.go.th/One-Stop/home/
https://osos.boi.go.th/One-Stop/home/
So India has a process for turning agricultural land to manufacturing land. Compare that to Europe, where such endeavours are often impossible completely (if you are a landowner), and quite easy (if you are a local government). We've had this guy [1] protest on TV lately. Sums it up well.
[1] https://www.youtube.com/watch?v=3mnB5Q5Hay4 ... translated subtitles are decent. Money shot: "It's like that: We can't all sit with a MacBook in Berlin in a cafe, sipping on a chai latte and programming the tenth dating app. Sometimes, someone has to work with their hands."
[1] https://www.youtube.com/watch?v=3mnB5Q5Hay4 ... translated subtitles are decent. Money shot: "It's like that: We can't all sit with a MacBook in Berlin in a cafe, sipping on a chai latte and programming the tenth dating app. Sometimes, someone has to work with their hands."
About a decade ago I did set up an entity in India which employed people. However I did it as a JV with a subgroup of one of the big dynastic families. They had to own 50%+1 share, I am a PIO so owned the rest.
They had all the connections so setting things up was quick. Then we needed a factory so I visited a bunch of factories owned by the conglomerate. We picked one and they set aside some space to build our stuff. We didn't get soaked in that deal; I think that was because the factory wasn't really making much money and they figured the JV would throw off more cash.
We also worked with some other suppliers; I visited them directly, negotiated terms, and only then brought in the big guns from our partner. I figured that would mean we'd get the best deal: either the special deal for a new customer or the special deal for one of the big guys, whichever was cheaper. The latter was always cheaper, but I always wondered: would that have been true had we not already negotiated a ceiling on the price?
And in the end...the person assigned to be the CEO of the JV by the partner, a nice guy who seemed to work hard...embezzled most of the capital!
But my big lessons were: 1 - work with a partner who already knows whose hand to shake and 2 - don't try to do anything new; modify an existing structure. In that, the latter case is similar to what apparently is the standard way to open a restaurant in America: don't rent an empty space and fit it out as a restaurant; instead take over the lease and permits from someone who went bankrupt doing that, and run your restaurant on their kitchen setup and permits.
They had all the connections so setting things up was quick. Then we needed a factory so I visited a bunch of factories owned by the conglomerate. We picked one and they set aside some space to build our stuff. We didn't get soaked in that deal; I think that was because the factory wasn't really making much money and they figured the JV would throw off more cash.
We also worked with some other suppliers; I visited them directly, negotiated terms, and only then brought in the big guns from our partner. I figured that would mean we'd get the best deal: either the special deal for a new customer or the special deal for one of the big guys, whichever was cheaper. The latter was always cheaper, but I always wondered: would that have been true had we not already negotiated a ceiling on the price?
And in the end...the person assigned to be the CEO of the JV by the partner, a nice guy who seemed to work hard...embezzled most of the capital!
But my big lessons were: 1 - work with a partner who already knows whose hand to shake and 2 - don't try to do anything new; modify an existing structure. In that, the latter case is similar to what apparently is the standard way to open a restaurant in America: don't rent an empty space and fit it out as a restaurant; instead take over the lease and permits from someone who went bankrupt doing that, and run your restaurant on their kitchen setup and permits.
> Yes, you need to obtain “permission” before you build any manufacturing structure on your own land with your own money.
> I understand the reasoning behind the need for a PWD NOC. What if they’re planning to build a road through the land on which we intend to do our construction. It’s certainly worth notifying the public works department before we do any construction activity.
Seems strange to me that it is on you to check that the government isn't planning on building on the land you own.
> I understand the reasoning behind the need for a PWD NOC. What if they’re planning to build a road through the land on which we intend to do our construction. It’s certainly worth notifying the public works department before we do any construction activity.
Seems strange to me that it is on you to check that the government isn't planning on building on the land you own.
India's claims to remove red tape since this government took over can best be summarised as "three red tapes in a trenchcoat"
The time spend is the request for a bribe.. waiting 8h at a checkpoint or the local police station is the punishment for not paying up.
Reading this, it doesn't seem like starting a manufacturing unit in India is difficult. But starting a manufacturing unit in an AGRICULTURE land meant for farming is difficult.
The difficulty is not the manufacturing plant. It is the conversion of agriculture land to non agriculture land.
I find the title and the conclusion by the author very misleading.
The difficulty is not the manufacturing plant. It is the conversion of agriculture land to non agriculture land.
I find the title and the conclusion by the author very misleading.
this reads like the main quest from a RPG
There are two big problems with bureaucracy (apart from never knowing how to spell it). The first is that bureaucratic processes always seem to get bigger/longer/more complex and secondly, by its nature, it is hard to improve because the same bureaucracy you want to remove requires just as much effort to change as the effort you are trying to save.
It would make more sense to time-limit some of these things and make the various departments reapply every 2 years if they think the process serves a purpose still. Perhaps they pay $1M as well. As soon as the cost is more than the benefit, all of a sudden we realise that we don't really need 100 differnt people to sign off on everything.
Another easy win in this example would just be to make more of it electronic e.g. you apply in one place and they send out the relevant permissions to the various departments, some of whom could fill them in immediately/automatically and wire them back.
It would make more sense to time-limit some of these things and make the various departments reapply every 2 years if they think the process serves a purpose still. Perhaps they pay $1M as well. As soon as the cost is more than the benefit, all of a sudden we realise that we don't really need 100 differnt people to sign off on everything.
Another easy win in this example would just be to make more of it electronic e.g. you apply in one place and they send out the relevant permissions to the various departments, some of whom could fill them in immediately/automatically and wire them back.
> Yes, you need to obtain “permission” before you build any manufacturing structure on your own land with your own money.
I don't understand why this is phrased as incredulous. Are there countries where this isn't the case? Just because you own the land -which you don't, you merely have a title that grants you the exclusive, but limited, usage rights of that land- does not mean you are free to just build whatever you want?
That said, Indian paperwork is famous for being Futurama levels of bureaucracy with Balkan levels of bribery. It's why giant corporations just don't bother with India, and why small store owners just don't even bother: just run your business until they crack down, which they won't as long as you keep a low profile.
I don't understand why this is phrased as incredulous. Are there countries where this isn't the case? Just because you own the land -which you don't, you merely have a title that grants you the exclusive, but limited, usage rights of that land- does not mean you are free to just build whatever you want?
That said, Indian paperwork is famous for being Futurama levels of bureaucracy with Balkan levels of bribery. It's why giant corporations just don't bother with India, and why small store owners just don't even bother: just run your business until they crack down, which they won't as long as you keep a low profile.
> Balkan levels of bribery.
Yeah think again.
Yeah think again.
think again because "there's no bribes in the balkan" (rural cops in the balkan will pull you over for literally nothing just to make you pay them to go away again) or "it's so much worse than the balkan" (I won't argue that one, it really is)
The latter. It may be bad in the balkans, which it is, but nowhere near as bad as in other places. Either way both regions will improve. If anything, i’d invest now even if i wouldnt be able to exploit that investment. Nationalism aside i think india has a bright future. The balkans will end up in the eu as well if the eu doesnt break up. Worth investing there too.
Investing and "opening a business" are two very different things though. I'd definitely invest in India (BRIC is about to loose China, but the rest are still improving year over year at a rate that looks sustainable), but I'm not mad enough to try to actually open a physical business there. It's kind of a well-known bureaucratic black hole in economics circles. The best you can hope for is to buy an existing company (whether that's outright buying, or "buying" through some contractual subsidiary/merger/etc. arrangement)
Do you even need to open business? I’d just buy land near promising areas, say near where motorways are likely to be built, or regions with tourist potential (ie tall mountains, as snow will be at a premium in the future, thermal water reserves, agricultural potential, etc). That in itself can be good business. Buy it and leave it there for a while. Unlike china, india will indeed take a different trajectory - if it doesnt go down the route of petty nationalism. Similarly, i’d invest in real estate in the balkan region or moldavia should it join the eu. I know in some countries once they joined the eu they 10x’d.
That's kind of what this whole article was about, so in this specific case, yes?
Missing was the grease to turn the wheels of bureaucracy
> Yes, you need to obtain “permission” before you build any manufacturing structure on your own land with your own money.
Are there any countries where this isn't true? Where you can just build whatever you want on your own land with your own money?
Are there any countries where this isn't true? Where you can just build whatever you want on your own land with your own money?
Amazing you can apparently start a scam call centre with less administrative effort …
Japan's colonialism in Manchukuo turned it into one of the largest industrialized economies in the world (and in many ways, more industrialized than Japan).
British colonialism & its continued degeneration under Nehru's acolytes made sure that India would never ever rise again. What a tragedy.
It's amusing that my countrymen consider the Indian state legitimate at all - it's only agenda seems to be the destruction of the classical Indian civilization, together with all its inheritence (language, tradition, 'religion' ...).
British colonialism & its continued degeneration under Nehru's acolytes made sure that India would never ever rise again. What a tragedy.
It's amusing that my countrymen consider the Indian state legitimate at all - it's only agenda seems to be the destruction of the classical Indian civilization, together with all its inheritence (language, tradition, 'religion' ...).
I am not sure about a manufacturing company, but I could start a "firm", in a matter of 1 week, to conduct business. Granted mine is a software development one and I created the business primarily for tax purposes.
Looks like the author wants to use land demarcated for agricultural use to build a factory.
That is a whole new story. In many cities, there are industrial development centers and you can buy land there and build a manufacturing facility easily.(The very fact that the govt. sold/leased you land in that zone means a lot of environmental and industrial clearances are de-facto fulfilled)
Looks like the author wants to use land demarcated for agricultural use to build a factory.
That is a whole new story. In many cities, there are industrial development centers and you can buy land there and build a manufacturing facility easily.(The very fact that the govt. sold/leased you land in that zone means a lot of environmental and industrial clearances are de-facto fulfilled)
Not surprised. The amount of paperwork I had to fill out just as a tourist in India already boggled my mind. I had to fill out basically the same information three times over just between the airport and the hotel.
I would highly recommend this book by Hernando DeSoto, The Mystery of Capital.
GBooks link: https://www.google.com/books/edition/The_Mystery_of_Capital/...
GBooks link: https://www.google.com/books/edition/The_Mystery_of_Capital/...
(from August 2020, FWIW)
I wonder what it would take to digitize this whole process, so that a single application can trigger all the relevant approval requests, and the overall status can be tracked -- both by the applicant, and at the systemic level to see whether certain departments become (cough) bottlenecks.
I wonder what it would take to digitize this whole process, so that a single application can trigger all the relevant approval requests, and the overall status can be tracked -- both by the applicant, and at the systemic level to see whether certain departments become (cough) bottlenecks.
The biggest bottleneck is the power sharing between Central, State and local Govts with the judiciary acting as its own entity sometimes. By design a lot of entities would not want to cede power and control. This has been happening with the implementation of Goods and Service Tax (GST) in India which was considered politically unfeasible as recently as 10 years back
The right answer to most of this corruption is to create a system of check and balances with complete blinded information exchange between each check point so no one decision body is influenced by another. This is impossible to create because of vested interests and likely never happen.
America is closest to this but is not blinded so corruption still exists.
Not sure if political parties in India provide assistance in these cases, in return for electoral funding via completely legal and annonymous electoral bonds. This would be similar to lobbying in the west.
But the question is for how much, they would be willing to help.
Unless you are willing to pay bribes and have the right contacts. Business in India is impossible.
as someone else said, it looks like rezoning and that might be hard in many other place.
For instance in France, you could be per-empted until late in the process by the SAFER, the entities managing agricultural land. They might buy it from the vendor at market price when you try to buy the land, and sell it for another price they see fit to a farmer of their choice.
Not as frustrating as what OP described. Still. Simple Administrative formality can fuck up your plan badly.
CF a fine piece of self reflection on our own adminstration. ( I love our admin, it's a fine piece of Napoleonic technology. But. yah. ) https://youtu.be/JtEkUmYecnk?t=34
Not as frustrating as what OP described. Still. Simple Administrative formality can fuck up your plan badly.
CF a fine piece of self reflection on our own adminstration. ( I love our admin, it's a fine piece of Napoleonic technology. But. yah. ) https://youtu.be/JtEkUmYecnk?t=34
What a pain man. Reminds me of setting up the visa for my spouse in Bulgaria (she's from Canada). The amount of mental pain I've experienced with administration should be illegal. This seems much worse and I wouldn't wish this on my worst enemy.
[deleted]
> Obviously, they are playing “hard to get” to get me to pay some bribe and initiate the process. But after going through all this, I am not going to pay any bribe to anyone.
Given "bribe" was mentioned 39 times in the article.. Good luck!
Given "bribe" was mentioned 39 times in the article.. Good luck!
Systems like this are set up to be almost impossible to get through because the higher the cost to go through the legitimate process the more likely you are to pay a bribe, and the higher that bribe will have to be.
I tried buying some land but it was very difficult to get some agri land without significant cash in the area i was looking for. Paperwork is never perfect, but to make it acceptable you need to feed the right people.
[deleted]
Try the signle window policy of Telangana. https://ipass.telangana.gov.in/about.aspx
There is a single window, but it's only open on the third monday of every other month, and the person manning it is illiterate - unless you pay them a small fee to activate their reading skills.
I am from Hyderabad. Can you share any success stories with this? I am very interested. Do you have any first hand knowledge or experience with this system?
Dhruvok and Jalammad at Telangana
[deleted]
As soon as I read the title, I knew the article would be pure pain.
I assume building a manufacturing on agricultural land will be hard, what about government designated "manufacturing / SEZ (special economic)" zones?
[deleted]
In Brazil we have a saying: The government makes it difficult to sell facilities.
This is so true, I started a digital business in 2014 and grew it until 2016. Then I had some personal emergency and slowed down for a bit. Then GST came, and I literally had to "beg" my existing chartered accountant "with folded hands" to take care of my GST filings - even after I would pay him anything he wanted. They were so overloaded with constant changes, bad portal, etc that my small work was "negligible".
Over a period of 5-6 years, I brushed up with so much corruption that it sickens me to the core. I tried approaching the ACB(anti-corruption-bureau), and faced even more harassment. I believe their job is to protect corrupt officers who pay dues to their higher ups. And the supreme leaders are changing rules that are empowering such corrupt officers. If we talk about it to public - we are termed anti-nationals.
I grew up with "real goons and mafia" when I was a kid, but even those guys had better ethics relative to what most govt officers exhibit today.
In India, I used to have mild panic attacks when my mobile rang. I had sleepless nights and my work suffered so much.
I left India with my business just recently and came to UAE (because it was the shortest path). The freedom from stress was so good that I slept like a baby for a few days. (And I am an Hindu for the record). The only worry I have here is higher cost of living which leaves less savings, but I make enough. I have so much invested in India that I want to sell off, but I do not want to go back even for a moment. I have extended family back there, but I don't want to see them.
There are a few things I've realised over the past 20 years, and more so in the past 8 years. I may be wrong - but this is what I think, based on my own experiences:
1. GST is a HUGE RISK to any business in India. There are some businesses that actually benefit from GST - but they deal with "arbitrary ruling risk". Then there are other bureaucratic departments. India's GST was not successful in doing "one-nation-one-tax", but it became successful in bringing multiple levels of corruption and goonism together.
2. All taxation and govt departments are departments of white-collar greedy goons. No matter what people say about part of the system being corrupt. They are all corrupt goons because they work in unison.
3. Corruption in India is not like "some bad fish in water", but it is like a "glass of highly toxic liquid that has contaminated the container". Even if you put in multiple glasses of "clean water", the system stays "toxic" - you basically need to replace the container completely. And that really requires a big breaking change - which people of India will not support.
4. Indian govt officers (even the clerks) think of private Indian citizens as "slaves" and use divide-and-counquer policies. If we think India is a democracy, think again. The supreme "elected" leaders cannot do a lot, because they need them.
Over a period of 5-6 years, I brushed up with so much corruption that it sickens me to the core. I tried approaching the ACB(anti-corruption-bureau), and faced even more harassment. I believe their job is to protect corrupt officers who pay dues to their higher ups. And the supreme leaders are changing rules that are empowering such corrupt officers. If we talk about it to public - we are termed anti-nationals.
I grew up with "real goons and mafia" when I was a kid, but even those guys had better ethics relative to what most govt officers exhibit today.
In India, I used to have mild panic attacks when my mobile rang. I had sleepless nights and my work suffered so much.
I left India with my business just recently and came to UAE (because it was the shortest path). The freedom from stress was so good that I slept like a baby for a few days. (And I am an Hindu for the record). The only worry I have here is higher cost of living which leaves less savings, but I make enough. I have so much invested in India that I want to sell off, but I do not want to go back even for a moment. I have extended family back there, but I don't want to see them.
There are a few things I've realised over the past 20 years, and more so in the past 8 years. I may be wrong - but this is what I think, based on my own experiences:
1. GST is a HUGE RISK to any business in India. There are some businesses that actually benefit from GST - but they deal with "arbitrary ruling risk". Then there are other bureaucratic departments. India's GST was not successful in doing "one-nation-one-tax", but it became successful in bringing multiple levels of corruption and goonism together.
2. All taxation and govt departments are departments of white-collar greedy goons. No matter what people say about part of the system being corrupt. They are all corrupt goons because they work in unison.
3. Corruption in India is not like "some bad fish in water", but it is like a "glass of highly toxic liquid that has contaminated the container". Even if you put in multiple glasses of "clean water", the system stays "toxic" - you basically need to replace the container completely. And that really requires a big breaking change - which people of India will not support.
4. Indian govt officers (even the clerks) think of private Indian citizens as "slaves" and use divide-and-counquer policies. If we think India is a democracy, think again. The supreme "elected" leaders cannot do a lot, because they need them.
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Do not engage in any relationships with people from the "Global South" and Slavs. Simple rule for easy life.
Chiter
If building something on agricultural land is hard, it is good: it is called agricultural for a reason. Maybe buying a parcel of industrial or commercial land would have ended up cheaper?
Author of the article here:
All the land in India is agricultural by default. Except in some desert states.
All the land in India is agricultural by default. Except in some desert states.
Fellow Pune resident here. I think there is a potential for a transparency startup here. Parts of stuff like these exist. I would buy you lunch/ beer/ whatever to learn from some of your experiences.
I'm building a startup for solving this. Let's meet. Twitter DM @ mrohanshah
Really? Lots of land parcels are identified as Non-agricultural.
Yeah. His motivations seem a bit suspicious. Is he so ignorant to claim all land in India is agricultural land.
Sure it's not 100% but more like 50.4%.
Guess which country has the most arable land in the world?
Hey author, this is OP.
Thanks for documenting your ordeal.
One of the worst business-decisions of my life. The amount of red tape, stupid rules, corruption, signatures, stamps, showing up physically in a certain office etc etc... Mindblowing.
I will not tire you with all the details, but to this day, Indian tax authorities still hold money hostage, that they agree my Indian company is owed (GST refunds). But all attempts to actually get the money back falls on deaf ears. We have sent experts to the relevant tax offices etc, but the ONLY guy who can handle it is never there, refuses to deal with it, then says we need to go somewhere else - where we are sent back etc etc. Sent around in circles, basically - with everybody recognizing the money is in fact owed...
I will never do business in India again. Happy to work with Indian developers (I still do), but they will get paid as freelancers and deal with the red tape on their end.