Friday, August 9, 2013

Owning a business in Russia can be tricky, it seems

This story cited by Tyler Cowen really shows the problem of private or corruptible police:

Most of the imprisoned are not there for any political reason. Their incarceration has to do with the nature of Russian corruption, said Elena Panfilova, the director of the Russian branch of Transparency International, a nonprofit group that studies corruption around the globe. Run-of-the-mill bribery schemes, practiced from China to Mexico, usually involve the police, fire inspectors or other regulators asking for payments on the side to allow a business to operate. In these instances, the interests of the business owners and corrupt officials are aligned — both ultimately want the enterprise to succeed.

But in Russia, the police benefit from arrests. They profit by soliciting a bribe from a rival to remove competition, by taking money from the family for release, or by selling seized goods. Promotion depends on an informal quota of arrests. Police officers who seize businesses became common enough to have earned the nickname “werewolves in epaulets.”
This type of problem really points out why you need a state that is strong and well functioning.  Because there is a bad equilibrium for a police force to shift into (see above), it is critical that there be an external check on the shift into these equilibrium.  It also tells us just how valuable a tradition of "good government" is and how deeply we should prize it. 

1 comment:

  1. You should read this article

    "Under civil forfeiture, Americans who haven’t been charged with wrongdoing can be stripped of their cash, cars, and even homes. Is that all we’re losing?"

    I think the American police are way ahead of the Russian police.