[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Some more research needed

On electoral reform:

On Fri, 31 Jul 1998, Charudatt wrote:

> 	>Regarding contribution to parties at no time can a party have
> more
> 	>than half 1/2 of its total contributions from corporations.
> 	>What do you say Charu, do you agree?
> My short answer is:
> I think this is an excellent compromise and would go along with it.

Two concerns:

a) My question: I go by principles. What principle was used to determine
this ad-hoc number? Any derivation from micro-foundations or philosophical
principles?  According to me there can be no limits imposed unless there
are very strong and very powerful reasons for that. This reeks of the
ad-hoc interventionism in everything that is the favorite hobby in India.
Prove to me that the Kush forumla is theoretically and empirically sound.

b) How about the feasibility (the process)? The process is the key. How
will you determine and impose such limits? What mechanism can you devise
to not drive contributions underground again. No ad-hoc limits have so far
worked in the history of mankind. Which system design supports this limit? 

I was asking for transparency. You also wanted it. This limit, in my view,
will drive transparency out once again, and very quickly. Do not empower a
petty bureaucrat somewhere to set and "impose" limits (ie. to get his

Since the topic is so confoundingly difficult, I would propose a breather: 
Let us fully and in detail examine the system of funding in USA. A web
site which gives detailed campaign finance accounts for the Republic of
California is available at: 


I would like to read a few books/ papers on this topic (if I get the
time), as well as request others to do so, and to examine the full
accounts of American campaigns (freely downloadable from the web site
above) and come back in a couple of weeks. The system design in USA seems
to work fairly well. Let us take a close look at it.

Corporations as centrally planned 'economies':

> I do dislike the principle of corporations having the ability to
> influence elections because by virtue of their huge wealth and limited
> liability, they have so much indirect political influence anyway and
> though I abhor the notion of a huge centralized government that is
> unresponsive to the electorate, I see one role of government as the
> counterbalancing of the power corporations on behalf of, and in the
> interest of, the people who constitute the electorate.
> For those of you who see large corporations as beneficent, or at worst
> neutral social entities, I'd point out that they are large hierarchical
> power structures. Upper management has near totalitarian powers.
> Operations are centrally planned, and the majority of employees and
> small shareholders have very little power to effect change- their
> options are pretty much limited to leaving or selling out. Meanwhile
> upper management has the ability to vote itself huge pay raises and
> bonuses, and diluting equity of shareholders while employees and small
> shareholders pay for this largesse. This is beginning to sound a lot
> like the big bad power-centralized, centrally planned government Sanjeev
> rails against.

Charu: I cannot unfortunately repeat this discussion again. In my 'book' I
do hope to spend considerable time on this topic since the confusion that
exists about corporations and corporate power is just too enormous. Until
then (and maybe till after then), let us agree to disagree on this
perception about corporations/ firms. 

One parting shot: I will throw you a homework exercise until then. Design
a contractual arrangement which will - optimally - be able to research,
design, build (produce), and sell, a massive jumbo jet. If you can design
anythign better than a corporate structure, you will be GUARANTEED to get
a Nobel Prize. I promise you. No one has yet done better than a corporate
design. You would be the first and only one to come up with another
structure to take the human race forward. 

Corporations are contracts - which are essentially designed to solve the
SAME problems as in the case of a tiny village artisan's relationship with
his two employees, and in Boeing or IBM. Period. Contracts (explicit and
implicit) - in the social world - are like atoms in the physical world. 
These are the building blocks of human interaction. The issue is the
design of optimal contracts.



This is a posting to India_Policy Discussion list: india_policy@cine.net
Rules, Procedures, Archives:     http://www.indiaconsult.com/indiapolicy/