Cash, Corruption and Economic Development

Vikram Vashisht

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351663441
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Have you ever asked yourself what gives comfort to someone who demands and accepts a bribe, sells drugs or commits professional crimes for money? The majority of these people are not wealthy, and they accept small amounts of money every day from their victims.

Cash, Corruption and Economic Development examines the causes of corruption and crime and highlightswhat bringscomfort to all those who accept bribes and kickbacks, arguing that it is paper currency becauseit does not leave a signature of its movement from one entity to another. The author proposes that today, with the technology available, we can make the transition to a paper currency-free economy, which will helpreduce corruption and crime and give a boost to economic development. The book analyses the causes of corruption and presents areplacement forthe current model, to be implemented bya central bank and followed by banks operating within its jurisdiction.

This book will be of interest to economists, students of economics and finance, and all those who have suffered as a result of corruption and professional crime and wantthese practicesto end.

1 We the people

We are at the best time in the history of humankind. Look at our history so far – from being barbaric and uncivilised just a few centuries or perhaps a few decades ago, we have transformed ourselves into a more civilised society. Not totally civilised as yet, but the progress made so far compels us to hope that more can be achieved for everyone who lives on this planet. Compare ‘us’ at the present day to ‘us’ a century back; the overall situation has changed for the good. More of us have enough to eat and most of us have more legal protection than we had 100 years ago. Things were even worse 200 years back. Laws have improved, the global economy has improved and more of us today are contributing to the global economy as producers and consumers than ever before. Our understanding of the phenomena around us has improved, which has led to the development of technology. Many parts of the world are developed, many are developing and many will start to develop in the near future. But the longer the delay in the development of those underdeveloped parts, the more will be the suffering that people who live in those underdeveloped parts have to go through.

We are at a junction where we can make our civilisation the best in our history. If we keep on developing in a sustainable way and avoid any major wars and conflicts, there is a real chance that some day all of us living in all parts of the world will be able to live a life of prosperity and peace. A very simple example of the peaceful coexistence of different nationalities was the formation of the European Union (EU). If peace and prosperity can be achieved in one part of the world, there is no reason why it cannot be done in any other part of the world. Some extra effort may be needed but there is nothing stopping any country from achieving 100 per cent literacy or creating conditions for businesses to flourish. During the Second World War, many countries in Europe fought against each other. At the end of the war who would have dared to envision an EU as it exists today? The EU today is a reality. What allowed the original member states of the EU to come together was their similar level of economic development, among other factors. Any number of other uniting or common factors may not have helped the formation of the EU had the level of economic development been grossly uneven. A union was formed that allowed people to move and work freely, but that also let the member countries retain their basic character and shape. Just like the EU, a global union is possible for the whole world; it is possible that you could live and work in any part of the world regardless of where you were born, but it is not possible at the moment because the conditions are not right.

As long as slogans of regionalism and narrowness such as ‘Antarctica for Antarcticans’ are alive and believed, the chances of another war cannot be ruled out. We must know each other very well otherwise we are selfish, myopic and corrupt enough to provoke ourselves to kill and get killed. When you have the ability to go across to the other side of a border and meet the people there, the chances of a war are substantially reduced. This is because it is easier to fight against someone you have never met and harder to fight against someone you know. The formation of the EU was a step towards a world where the impact of political boundaries on travel and work opportunities may become minimal. This leaves us with the question as to why do we need a world where the impact of political boundaries will be minimal? We need it for the betterment of our own civilisation and out of sheer need. Until we are free to travel and see what happens on the other side of the border, there is a chance that the hatred inside the human mind may not go away. There is a chance that you may let someone else feed you his or her thoughts without being able to see the truth. The existence of conditions that will not restrict people from travelling is needed. For peace to be here on this planet, people on all sides of all the fences need to understand the value of peace and a peaceful and prosperous life. But for anyone to value a peaceful life they must have a peaceful life; we cannot understand the value of something we do not have. Peace for a hungry stomach is food; as long as someone is hungry, he or she cannot be at peace.

Underdevelopment of many parts of the world poses a threat to our own civilisation. Prosperity and education need to hit every part of the world for every one of us to live in peace. Development of the whole world is the requirement for peace to exist here, forever. It is imperative that people living in each and every country start enjoying economic prosperity and a peaceful life. People who cannot make ends meet resort to fighting. So long as your neighbour is hungry and uneducated, you are not secure inside your house. And in this age of fast travel, ‘neighbourhood’ will have to be defined very liberally. Just being fed is not enough – being educated is equally important as education teaches us everything, including the value of peace and freedom. Until that is achieved, our civilisation is not great. Peace is, wherever it has been and wherever it will be, a product of economic prosperity and education.

If the people from underdeveloped parts of the world who would be willing to migrate to developed parts of the world were allowed to move, the economies of the developed countries would collapse, being unable to bear the additional load of migrants. The economic development of the whole world is needed, especially of the underdeveloped parts of it, to reduce the chances of war and to increase the chances of peace. Imagine you had the ability to settle down in any part of the world and enjoy the same conditions that you enjoy today. Imagine this for any other human being who is living in any other part of the world. Many countries that are at peace with each other were not so some time back. What has changed and why are they not fighting? It is because they are prosperous and they appreciate the importance of peace. Will you fight against a country or let your government wage a war against a country where you could go and live a free, prosperous and peaceful life? Until every citizen of the world is prosperous and at peace, the threat of terrorism and war will loom over our heads. But political boundaries are very much needed. They will always be needed as much as they are needed today. Without political boundaries and governments responsible for governance within their political boundaries, the world would be chaotic. Of course, we do not want chaos. Political boundaries are needed just the way they are; it is their impact on us that should be minimal and which will bring immense hope for each of us. The free movement of people across the borders and reduced impact of political boundaries will be the result of economic prosperity for the whole human race.

If all the people living within the EU can travel and work within the EU, why can the people living in other parts of the world not travel to any other part of the world and work there? Who stops them, and why? At least at present it is not possible because of the wide income disparities that exist between different countries. Only the economic development of all countries can minimise the impact of political boundaries. The economic conditions in many parts of the world will need to be improved. The prevalence of uneven economic conditions is not letting people travel across the borders. For example, Australia and New Zealand are two different countries with two distinct governments and systems. But it is not that difficult for an Australian to work and settle down in New Zealand, and the same is true in reverse. This is possible because the level of economic development in both the countries is the same. Certainly, both countries share many other values, but without the same level of economic development, this level of freedom of movement for the residents of these two countries would not have been possible.

So, what is stopping the underdeveloped countries from developing? What is the major factor that is preventing billions from getting above the poverty line? What is not letting hundreds of millions receive an education? What is not letting this happen fast? Why do some countries develop fast and some not? A simple one-word answer is ‘corruption’, the corruption that exists in many countries. How can corruption be the root cause of all evil? Just a simple example: when money that is allocated by the government of a country to developmental projects ends up in the pockets of unintended corrupt recipients, development is set back. This money, if spent on its intended purpose, would have helped develop that part of the world. This money, if spent as planned, would have created conditions and jobs for people to earn a living. Corruption in countries where it is rampant is not just a one-off occurrence; it happens on a daily basis. So, every time corruption happens, development gets a setback. Moreover, the low and slow rate of development brings pain to billions and keeps the chances of war and terrorism alive. The sufferers in any war or an incident of terrorism are never the countries. The sufferers are the people. It is the people who feel the pain.

Sustainable economic development of the whole world, touching each and every human being, is the solution for global peace – for all men and women to stay with their families in happiness and not be sent to war. Look at any war, either recent or not so recent – did it create better economic conditions for the masses? Human lives are lost in every war; the side that loses least claims victory. Would you really call it a victory? The world will become a much safer place when we realise that this entire planet of ours, and not just the land marked by a political boundary, is our motherland. How could only the area under the control of a particular government be my motherland and not the rest? Either the whole planet is my motherland or no part of it.

The special attachment that we have towards our race, country or religion, and which makes some of us act irrationally at times, is not going to go away until all of us know all of us very well and until all of us become prosperous and educated. This is possible only through economic development, and for economic development it is mandatory that there is no corruption, and that the money is spent on its intended purpose and does not end up in the pockets of the corrupt. And to see whether money has been spent on its intended purpose, it is imperative that the flow of money from one entity to another is visible.

A developed world is in the interest of everyone. It is possible to think of it today and it can be a reality. Perhaps the idea of a prosperous and educated world would have been unimaginable a few centuries ago, but so would the technology and development of today. Today our efforts could make development happen in all parts of the world. The sooner it happens the better it is for us. We are the people who become part of governments, be it a democratic government or non-democratic one. And as responsible citizens we must understand that expansion of the empire is not going to do any good to our people but consolidation will. The days when governments of countries used to expand their empires are over. You can feel proud that your country has a very big and strong military but as an enlightened citizen you must ask yourself what that big and strong military is getting you. Feeling good and proud of the military strength of your country is one thing but what in real terms is this military strength getting you? This is a question that we should ask ourselves: is a powerful army ensuring social security, creating better living conditions, reducing the level of crime in the community, ensuring that medical care is available when it is needed, or schooling your children to help them live better lives? The more strongly you ask these questions, the higher is the chance of more economic development. As an enlightened citizen, you must ask your government if the money is spent on national defence or on the ability to project power. The same money that is spent on the projection of military power could have been spent on health care, education or infrastructure development, adding value to the lives of the citizens of your country. The same money spent on health care would have saved lives.

Coming back to the first point, if people who become part of a government are enlightened, they can frame government policies that are good for the masses. Countries that are experiencing strong economic growth and emerging as economic powers must not try to expand their empires. They must rather try to consolidate this opportunity to strengthen their countries. Regardless of anything it is the truth that wins in the end. They should not let go easily of this opportunity, which they have received after hundreds of years. A simple look at recent and not so recent history shows us that countries and empires that could have made the lives of their citizens better did not do so and instead were more eager to establish their hegemony over others. That strategy has never worked in human history and it will not work in the future. It is more the responsibility of the people who form policies to see this. It is for the leaders of countries to see that making their citizens educated and prosperous will make their countries immensely strong internally, forever, whereas spending money on military power at the cost of internal development may just make them strong on the outside and hollow inside. Uplifting their citizens by educating them and removing any obstacles in the path of their economic development will make their countries truly strong. If that is achieved, even with decent military strength, your country will be much stronger than having a huge military and hollowness inside. It is imperative that we think of what wins in the long run. An educated and economically strong civilisation that knows how to stay economically strong and understands the value of education will always be strong and prosperous. The sooner we abandon the myopic vision the better it is for us. What threat is there that was not there before and must be given deep thought before more money is spent on military build-up? If there is no new threat and more money is poured into the military, then it is towards power projection and not defence.

If a country has historically been a more significant military power than you and has never attacked you, why will it attack you now when you are economically much stronger? Strengthening your countries on the inside by making your populace educated and economically prosperous will make them able to withstand anything. Think about making your country immortal and not just a short-lived actor in human history. That can be achieved only if the citizens of your country are educated and economically prosperous. What is important is that we do not let this opportunity slip by. We should not let ourselves fall back to the Stone Age. It was a ‘Stone Age’ on this planet when during the Second World War we showed no respect for human lives in any part of the world. Just imagine a soldier on any side – did he have any power to change anything? Probably not; well, let’s remove any doubts here, definitely not. So, who has the responsibility to change the course of things and contribute, to make a change to the path that our own civilisation takes for betterment? It is the men and women who are enlightened and are in a position of authority and leadership. It is the men and women who are enlightened and who can influence those who are in a position of authority and leadership.

Now to the money side of the house. An argument can be that the money spent by a government within an economy helps the economy flourish and lets the economic cycle move. Let’s take this example: a government has 100 dollars and it spends those 100 dollars on its military. It could have spent this money on many other activities as discussed above but it did not. By spending 100 dollars on its military, it immediately lost 100 dollars that it could have spent on educating its citizens or on providing medical care and saving the lives of its citizens or on hundreds of other developmental activities. The options are simple: a government can either make a bomb or it can build infrastructure and spend money on development. Once a resource is spent, it is spent. Explaining further, those 100 dollars spent on non-military activities internally would have generated at least the same economic activity as those spent on military activity, but the government would have had 100 dollars more for developmental activities such as education, medical care, infrastructure development etc. Secondly, when a road, hospital, school or train network is developed, the community gets the benefit for many years to come compared to money spent on the acquisition of military hardware, although the equivalent money is spent on both of them.

Corruption is a major cause of development being slower than what its actual speed can be. In countries where corruption exists, and the list is very long, many people embezzle public funds allocated for development. A very small number of pockets absorb a substantial percentage of the money allocated for development, leading to setbacks in development. Let’s say that funds were allocated to build an electricity generation plant but the plant was never built because corrupt officials embezzled all the funds. Had the plant been built, the power generated would have run factories, which would have provided employment to people living in that region, which would have created economic prosperity, which would have created peace in that region, which would have created additional tax revenue for the government to spend on developmental activities. A casual look around will make anyone aware as to the level of corruption that exists in this world. The level of corruption that some people get involved in defies all principles of mathematics or logic. They are causing a lot of pain and grief to billions.

Working for a reward is in our very nature as human beings. Any system that creates conditions for people who want to work hard to excel is bound to prosper. A system that does not reward hard-working people will not flourish as much. It is imperative that conditions are created which allow people who work hard to reap the benefits of their hard work. This will allow any society to progress further and become prosperous. Compare this to a system where everyone gets paid the same wage. Will anyone put in any extra effort? Why should they? There is no incentive for them. Conditions certainly need to be created that allow people to realise their full potential. If the conditions are not right, enterprise in any society is not possible. The incentives for hard work have to be there. The primary condition is preferably no crime rate or a very low crime rate. Again, to achieve a low crime rate, people living within a community should have employment and education. A full stomach enjoys peace but may not understand the value of peace. It is a full stomach and an educated mind that fully understand the value of peace. So, people living within a society need employment and education for the right conditions to exist for enterprise. When tax revenue is spent on education, job creation and other social welfare activities, the impact of that on the whole society is that conditions are created for the enhancement of enterprise.

We invented money; we probably would not have needed to, had we not developed our civilisation or chosen to live the way we used to. But now we are here in a society where money buys us what we need. The more we have of it, the more likely it is that we will live satisfactorily. This power of money makes all of us want more of it. More money equals more satisfaction which equals more happiness. This equation will pass most tests. This is what we have seen since the time we were born and if we believe in it, it is very natural. Human effort determines everything and is the sole factor behind economic development – otherwise resources will just be sitting idle. Without human effort, economic development is not possible. Human effort and actions generate wealth or money or any other name you might want to give it. Resources might be present on this beautiful Earth but to create wealth you need to put in the effort. Look at this example: there is a tree loaded with apples. Anyone...