Thoughts on economics and liberty

Chanakya: Pay your Ministers very heavily. But then hold them to account.

Instead of running about like headless chicken, Anna Hazare and Arvind Kejriwal would do well to read Chanakya. In Chanakya they will find THE main solutions to the problems facing India.

Without a corruption-free system, the Mauryan empire – which was the largest in Indian history and the largest (in relative terms) the world has ever seen, could never have arisen. You can't build a MEGA EMPIRE if your ministers, officials, police, and army is corrupt. TOTAL integrity is the minimum requirement. And high quality governance.

Lord Cornwallis merely rediscovered what Chankya had long ago said, when he raised salaries of ICS officers. If you recall, East India company officials were SUPER CORRUPT – more corrupt than even the most corrupt officials found in India today. Cornwallis's reforms fixed that problem.

– Till, of course, Nehru came in and DESTROYED integrity in public life in India through his socialist policies.

The difference in salary between highest and lowest in Chanakya's time was 800 times! Not five times. Not 10 times. But 800 times.

  • "the highest salary paid in cash, excluding perquisites, was 48,000 panas a year and the lowest 60 panas a year. The ratio of the highest salary to the lowest, was eight hundred to one."
  • "The highest salary, 48,000 panas a year, (‘enough to prevent them from succumbing to the temptations of the enemy or rising up in revolt’)" (Rangarajan's translation, p.179)

Of course, only the extremely deserving would get highest salary. I'll not go into details, here. But Chanakya is not giving away money on idle grounds. You deserve it. You get it. It is not charity or reward for the irrelevant fact that your grandfather was Jawaharlal Nehru.

I was speaking with one of the erstwhile members of Team Anna over the phone this Monday. He told me that Arvind Kejriwal wants only those people to step forward as candidates for his new party who will be happy with a salary of Rs.25,000 per month. (That rules me out ENTIRELY!!!!)

Arvind is deeply ignorant about BASICS of human nature. He is merely a godchild of Nehru: one more man who is intent on destroying India through his "good" intentions.

To such mega-ignoramuses I suggest BFN.

If BFN seems hard to read (for jealousy of one's peers is often a problem), then why not read Chanakya?

Or does Arvind Kejriwal think himself to be a greater economist/ policy maker than Chanakya?

Please try to understand that corruption can be fixed PRIMARILY through the right POSITIVE incentives ("efficiency wage", "incentive compatible constraint").

Once the right (positive) incentives have been established we need a sharp, vicious deterrence. Lokpal is wishy washy. What we need at that point is a super-stringent punishment system. I've outlined in BFN an example: Dismissal without recourse to natural justice. Contractual appointments of all senior officials.

But I'm comfortable with even more stringent punishments at that stage. Death penalty doesn't sound implausible to me.

"In the case of a miserly official, who hoards the King’s property and uses it for his own benefit (by storing it in his own house, by depositing it with others or by trading with it with foreigners), the facts shall be ascertained by a secret agent. The agent shall find out the details of the receipt and despatch of the goods as well as who are the official’s advisers, friends, dependents, kinsmen and supporters. In the case of trading with foreigners, the agent shall penetrate the [establishments of] foreign buyers in order to ascertain concealed information. When all facts have been ascertained, the errant official shall be [falsely] accused [of being in the pay of the enemy] using, as a pretext, a [forged] letter; he shall then be killed. {2.9.2027}

Chanakya's remedy is a bit extreme, but he's got the combination of incentives right. 800 times salary difference. Then DEATH. He would get his spies to investigate Bofors and other scams. Once convinced, he would KILL. Without recourse.

Regardless of whether a death penalty should be imposed for corruption, it is clear that the combination of positive incentives and stringent accountability can bring corruption to a grinding halt. IN ONE DAY.

Poor IAC has been running around without the slightest clue for years. Now they want to run a political party where only FOOLS or SCAMSTERS will join (for a Rs.25,000 salary!)

Doing the punishment bit (weak Lokpal) without the right incentives is a sign of TOTAL FOLLY.

I expect continued mindless folly from Indian socialists and demagogues. I don't think these people – who refuse to read BFN – will read Chanakya either.

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Sanjeev Sabhlok

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11 thoughts on “Chanakya: Pay your Ministers very heavily. But then hold them to account.
  1. Munish Raizada

    On a different note, the salaries of CEOs- often running into millions of dollars per annum- are probably offered with a caveat “Perform or perish”! However, there is generally a public outcry that CEOs are being paid just too much!

  2. vijay

    Iam surprised(not in a good way) that someone of Kejriwal’s education(IIT?) and background can be so naive to the point of being regressive in assuming people would dump their careers or lives and come join him for Rs.25,000.Yeah, right. Does he hold strong intellectual debates on his policies with his team members? Having interacted with his team members, do you have any inputs on his methodology? Atleast someone in his team should have debated against him on this.

    Arvind is everywhere these days. Suddenly he makes a statement against nuclear power in Kudankulam. He might be losing focus.
    Someone needs to drill some sense into that guy.
    He has a nice opportunity to make a dent in 2014, I hope he doesnt piss it all away

  3. Sanjeev Sabhlok

    Arvind doesn’t seem interested in India or its future but in imposing his half-baked ideas. I’m getting strong feedback that his erstwhile supporters are deserting him in a big way. He doesn’t have the capacity to listen. Also Prashant Bhushan is still excessively influential.

    Hopefully this will change.

  4. allwyn

    How the hell did this man clear IIT?! I think this also proves education malfunction or something. Anyway, could you mention who was the person you were talking to and what are his views on this and whether he agrees and if he has tried to convince arvind or get him to meet you or someone else? ANYTHING?

  5. Sudha Rani

    To be fair, one has to give credit to IAC/Team Anna for raising the debate on corruption and other pertinent issues. The awareness thry have created is commendable. The question arises why is the media reporting his every word.
    If he is being given prominence by ‘paid media’ to weaken the opposition, then the ruling party has a vested interest in promoting him and his party.I think his and many of his team members hearts are in the right place.
    Despite the media’s best attempts, the country still remembers and respects Lal Bahadhur Sashtri more than the first PM.
    The problem with paying certain people 800 times the average salary is that , once that knowledge is in the public domain, someone has to justify that salary. There are too many people, not just in India but worldwide who want to be paid that 800 times salary, probably including you and me. The key question is how does one create and sustain dedication to a cause and principle, on a minimum or modest wage? How does one maintain momentum when the sacrifice may not pay off? The psychologists will have only some of the answers.
    AJ seems to be doing exactly what is in your quoted piece… except for killing the person, which he would not do.

  6. Sanjeev Sabhlok


    Arthashastra is a superb economics text. The latest economics theories are coming close to it. The western public administration models run well on such a model.

    Pl. read BFN for details.


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