The Economics of Morality

Government official A will always find an issue with your business and hit you with a major fine.  You can invest in your processes or strive to meet the highest international standards (despite the fact that few local companies even meet basic standards) – but you can’t win.  The purpose isn’t to regulate and drive higher industry standards – it is to extort a bribe.

So you have three options:

1)  Keep investing in standards and trying to outwit the government official.  Fight any “issues and penalties” and try to reduce them, all the while running the risk that you’ll anger the official and receive even higher fines (their time dealing with you means less time to extort others).  Despite the fact that you’re years ahead of most companies and driving positive growth in industry standards, the government is putting you at a severe competitive disadvantage.

2)  Pay the bribes at the face value and deal with it quickly.  You can even invest less in your processes since they won’t really check it.

3)  Give the official “gifts” at appointed holidays throughout the year as a sort of service fee.  In other words, you preempt extortion attempts through service fees for the officials to “help you maintain good standards.”

I don’t like any of those options – why even play the game?

~ by responsiblenomad on April 8, 2011.

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