Corruption -- Why Does it Exist?

The Indian Economy Blog has an interesting post on corruption.

Interesting reading.

It is stating the obviosu that corruption in all forms results in inefficient allocation of resources. However, the reasons it exists from time immemorial is because of some fundamental realities.

The foremost of which is the income disparity between public and private sector. Until you see a comparable income level between these two sectors, human tendency is to make up for the difference by getting income from other means. In fact, fostering an articifial inefficiency in the system (such as creating a waiting list for phones, or licenses) -- supports a self fulfilling profecy. Sure, "competition" and "privatisation" helps in removing corruption, but that strategy in a sense accepts the inability to ever achieve parity in incomes between the two sectors.