PRICE DISCRIMINATION

Legalise corruption to end it

The middle road in this war has failed us. And when all else fails, we should try the inconceivable.

In Summary

• Like companies do, to legalise corruption, the state should employ price discrimination. Allow it but make it very expensive.

• Those that wish to charge an inflated price for the cost of their supplies, should be lawfully allowed to do so in exchange for premium goods and services. 

Winning the war on corruption.
FIXING INSIDE OUT: Winning the war on corruption.
Image: FILE

“You need a tall relative to get anything in Kafira."

This excerpt is from Francis Imbuga’s play, Betrayal in the City, which illustrates how poor governance wrecks a country.

In this scene, a father is standing over his son’s grave. He is indignant that corruption is so ingrained in his nation called Kafira, where even the dead are bribed as an appeasement policy.

Kafira is depicted as a post-independence African country, plagued by the ills that are enabled by poor governance and acquiescing citizens, such as corruption, nepotism, tribalism and insolent violation of human rights.

 
 

In recent weeks, the nation has witnessed several ‘tall relatives’ who have allegedly profiteered from the Kenya Medical Supplies Agency’s procurement of Covid-19 supplies and consumables

. So dire is the situation, that donors such as USAid and the Global Fund have threatened to withdraw their Sh400 billion funding, citing concerns over Kemsa’s procurement and management of the grants.

Sadly, corruption has been a recurring decadence in this country. And the appetite keeps growing, while the fraud becomes more brazen.

In just one week, in addition to Kemsa, two other alleged heists by Migori Governor Okoth Obado and that of  Maasai Mara University vice chancellor Mary Walingo resurfaced following their arrest orders by the Director of Public Prosecutions.

If you were an alien visiting this country, you would be forgiven to think that there are not enough laws to curb corruption or chastise its perpetrators; or whether the constitutional institutions mandated to protect public resources have the teeth to bite; or whether there is any genuine political will to annihilate this vice. It seems that no matter how loud the hue and cry, this vice simply refuses to die.

Begs the question, is the cure more laws? More task forces? More parliamentary committee grillings? More audits? Or more social media tweefs?

Albert Einstein told us that insanity is doing the same thing over and over again and expecting a different result.

In past corruption scandals, ‘suspects’ have been asked to step aside; investigations carried out; and prosecutions undertaken.

However, very few tall relatives and their friends have ever been convicted and sentenced. This time around, are we going to allow the same charade to serenade us? If we do, does this qualify us as insane? Or is it time we changed tact?

I submit that to slay this dragon, we should do the hitherto unthinkable. We should legalise the illegal. We should without apologies, decriminalise corruption.

 

In free market economies, there is a concept called willingness-to-pay. This is the maximum amount a consumer is willing to pay for a certain good or service.

An example is when a football fan is willing to pay Sh1,000 to watch the match from the VIP dais, rather than Sh200 to watch from the bleachers. In economic-speak, this is called consumer surplus.

This is why companies employ a strategy called price discrimination to generate the most revenue possible on a product or service.

The seller classifies clients in groups based on certain attributes, and charges each group a different price for an identical product or service.

A good example is the aviation industry. Airlines allow travellers to self-select from a set package of goods and services.

Despite the fact that they will all fly on the same aircraft to the same destination, some travellers will have extra legroom, a fully reclining seat, receive more pampering and not queue at all.

For a comfortable flight experience, these travellers are willing to pay more; and to capture this consumer surplus, airlines offer these additional options to them. Other sectors that offer price discrimination are express laundry services where you pay more for same day service.

Likewise, to legalise corruption, the state should employ price discrimination. Those that wish to charge an inflated price for the cost of their supplies, should be lawfully allowed to do so in exchange for premium goods and services.

For example, they should supply silk not cotton towels; flannel fleece not woollen blankets; or veal not beef.

In addition, they should also pay higher taxes, licensing, registration and tender fees to generate the most revenue possible from this surplus.

At the point of bids submission, they should also deposit a sum that is thrice the amount of their quote, which would be fully refunded upon confirmation of receipt or completion of the oods and services.

For those in a hurry to be served, they should pay a premium price to receive an express service, for example, paying five times more for same-day passport issuance. They should also pay higher income tax returns, based on all the express services they received in that year.

The SRC should also price discriminate on salaries to allow state officers to self-select from different ranges.

For example, officers who wish to benefit from procurement transactions should opt for a tenth of their job group’s salary, zero benefits and perks, a higher tax bracket and fewer years of State service.

As things currently stand, the politicos and their tall relatives and friends, have monopolised corruption. However, being a free market economy, anyone should be free to transact as long as there is willingness to pay.

Allowing free legal entry and exit into this corruption sector, will not only reduce corruption, but it will also increase revenue from consumer surplus and most importantly, it will give Wanjiku the variability in value that they receive over the price they are willing to pay for goods and services.

If legalising corruption is not a viable option, then we should slay this vice the Sicario (2018) film dinner scene way. Because, the middle road in this spectrum has failed us. And when all else fails, we should try the inconceivable.

In this scene, the principled FBI agent enlisted to destroy the brutal Mexican drug cartel stealthily walks into adrug lord’s house while he is having dinner with his family.

The FBI agent, with gun drawn, icily reminds the drug lord that each night he orders other families to be killed, while he lavishly dines with his wife and children. The drug lord pleads with the FBI agent not to kill his family. Without hesitation, the FBI agent shoots them, then kills him last.

The moral is that the drug lord’s family should not continue enjoying the proceeds of crime, while other children and widows suffer from the crimes he has committed.

Likewise, if one is found guilty of corruption in Kenya, shouldn’t their family be deemed culpable too? For why should they continue enjoying the proceeds of crime, while the rest of us suffer? You be the judge.

Finally, my unsolicited advice to Wanjiku is: when elephants fight or make love, the grass suffers. Likewise, when politicos agree or disagree on matters corruption, you continue suffering. Are you tired enough?

Why join the navy when you can be a pirate? – Steve Jobs


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