Joel Waldfogel covers an interesting new study of corruption in the motor vehicle department in India. Some eight hundred Indians were randomly assigned to one of three groups: the first group got a cash bonus for getting a license, the second group was given driving lessons, the third group was a control.
If government worked well we would expect the second group to be the most likely to get a license in the shortest period of time. Instead, the first group bribed their way to a license. In addition to taking the shortest period of time, most of the first group never even had to take a test!
Waldfogel has more details. He misses, however, what I think is the most important finding of the study. The delay in the Indian DMV is "endogeneous," i.e. it’s not due to torpor or constraint but instead is a result of corruption.
How can the Indian bureaucrats make the most of their control over licenses? First, make the line long. But that can increase the bribe-price only so much – especially given how cheap it is to hire someone in India to wait in line for you. The real value is in the license itself so the Indian examiners randomly fail many applicants, even those with good driving skills. Paying the bribe, therefore, is really the only route to a license. The net result is long lines and unsafe drivers.
Corruption like this is endemic throughout the world. Libertarians should take note, however, the problem in this case is not so much that there is too much government but that government is too weak.