Recently FICCI kindly suggested how to tackle black money (reported by The Hindu, Chennai: The Hindu : Business / Economy : FICCI suggests amnesty scheme to bring back black money). I must admit that I was so incensed by this that I wrote this piece: HOW TO CATCH A FELON - PART I.
I do believe that I may have been a little long on emotions and a little short on suggestions. I shall now proceed to make some suggestions now. But I must warn the readers not to expect any suggestions anywhere near comparable to the ones made by FICCI in its sweep, breadth, simplicity, elegance, audacity or implementability.
Let me start by complementing the FICCIon two things: Firstly for coming up with a simple solution which makes the crime itself disappear - no crime, hence no criminal, and we can all go back to normal life. Secondly for co-opting the abettor in the original crime - shortly to be non-crime and hence non-abetment on the part of the former abettor - to co-author the proposal for tackling it. Perhaps a veiled threat to the powers that be that should they make so bold as to go after the stashers of black money, the Bank could be easily persuaded to release their names as well. What a master-stroke, FICCI. Do accept my unreserved compliments on this simple yet brilliantly audacious scheme.
Now let me address myself to what the government can and indeed should do.
We have had many amnesties and yet black money has only grown despite the amnesties. I dare say actually very little was disclosed. The incentives were all wrong. What incentive do black money stashers have to disclose their unaccounted wealth when they know yet another amnesty is just round the corner? Zero, zilch, zip, nada, kuch nahin. For an amnesty to be effective there are four simple conditions that must be met:
1. Cost of non-compliance should be very high
2. Cost of compliance should be minimal and "acceptable"
3. The enforcement will be certain, swift and without exception and
4. There shall be no further amnesty in the foreseeable future.
Where our previous amnesty schemes failed is on condition 4 above. Since governments do not generally deliver on their promises, prohibiting future amnesties must be through an act or even enshrined in the constitution . The prohibition should cover a foreseeably long future, say at least 100 years.
The enforcement must be not only guaranteed by law but required by law with most severe punishments for the foot dragging officials and politicians in charge. Fast track courts must be set up so that the poor aggrieved black money holders cannot tie the government agencies up in court cases. The punishment (cost of non-compliance) must be confiscatory and not merely penal. Confiscate not only the black money assets but also ALL ASSETS of the felons. Only the fear of losing not only their illegitimate assets but also their legitimate ones will make them disclose their black money.
During the time the government has been posturing over the last year or so, much of the black money has been moved. Mostly to India. Everyone but the government seems to know where it has gone. Any half decent forensic accountant (even amateur ones like me) can trace the money backwards and identify their black origins.
We know what to do and we also know how to do it. Are we going to do it then? The answer is a resounding NO. We all know why. It is in no ones interest to do so. Which is why Lok Pal is attracting so much opposition.
Is there no hope? If I said yes there is no hope then I will have to kill myself for there is no point in living without hope. I live in the hope that the earth will continue to spin, that it will not get lethally impacted by a large asteroid, that a tsunami will not wipe out my home, that the Government of India including the babus and mantrijis will work together to eliminate the scourge of black money.
Until that last named event actually happens, FICCI rules !
I do believe that I may have been a little long on emotions and a little short on suggestions. I shall now proceed to make some suggestions now. But I must warn the readers not to expect any suggestions anywhere near comparable to the ones made by FICCI in its sweep, breadth, simplicity, elegance, audacity or implementability.
Let me start by complementing the FICCIon two things: Firstly for coming up with a simple solution which makes the crime itself disappear - no crime, hence no criminal, and we can all go back to normal life. Secondly for co-opting the abettor in the original crime - shortly to be non-crime and hence non-abetment on the part of the former abettor - to co-author the proposal for tackling it. Perhaps a veiled threat to the powers that be that should they make so bold as to go after the stashers of black money, the Bank could be easily persuaded to release their names as well. What a master-stroke, FICCI. Do accept my unreserved compliments on this simple yet brilliantly audacious scheme.
Now let me address myself to what the government can and indeed should do.
We have had many amnesties and yet black money has only grown despite the amnesties. I dare say actually very little was disclosed. The incentives were all wrong. What incentive do black money stashers have to disclose their unaccounted wealth when they know yet another amnesty is just round the corner? Zero, zilch, zip, nada, kuch nahin. For an amnesty to be effective there are four simple conditions that must be met:
1. Cost of non-compliance should be very high
2. Cost of compliance should be minimal and "acceptable"
3. The enforcement will be certain, swift and without exception and
4. There shall be no further amnesty in the foreseeable future.
Where our previous amnesty schemes failed is on condition 4 above. Since governments do not generally deliver on their promises, prohibiting future amnesties must be through an act or even enshrined in the constitution . The prohibition should cover a foreseeably long future, say at least 100 years.
The enforcement must be not only guaranteed by law but required by law with most severe punishments for the foot dragging officials and politicians in charge. Fast track courts must be set up so that the poor aggrieved black money holders cannot tie the government agencies up in court cases. The punishment (cost of non-compliance) must be confiscatory and not merely penal. Confiscate not only the black money assets but also ALL ASSETS of the felons. Only the fear of losing not only their illegitimate assets but also their legitimate ones will make them disclose their black money.
During the time the government has been posturing over the last year or so, much of the black money has been moved. Mostly to India. Everyone but the government seems to know where it has gone. Any half decent forensic accountant (even amateur ones like me) can trace the money backwards and identify their black origins.
We know what to do and we also know how to do it. Are we going to do it then? The answer is a resounding NO. We all know why. It is in no ones interest to do so. Which is why Lok Pal is attracting so much opposition.
Is there no hope? If I said yes there is no hope then I will have to kill myself for there is no point in living without hope. I live in the hope that the earth will continue to spin, that it will not get lethally impacted by a large asteroid, that a tsunami will not wipe out my home, that the Government of India including the babus and mantrijis will work together to eliminate the scourge of black money.
Until that last named event actually happens, FICCI rules !
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