Sunday, December 9, 2012

Entrepreneurship, Innovation and Corruption ~ Changing Scenarios that Define the Corrupt

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          The Harvard Business Review is running a very interesting and insightful story on how money in politics is having a deleterious and increasingly eroding effect on U.S. innovation and the economic environment that fosters the same.


How Corruption Is Strangling U.S. Innovation
http://blogs.hbr.org/cs/2012/12/how_corruption_is_strangling_us_innovation.html





An excerpt from the original entry:

" If there's been one topic that has entirely dominated the post-election landscape, it's the fiscal cliff. Will taxes be raised? Which programs will be cut? Who will blink first in negotiations? For all the talk of the fiscal cliff, however, I believe the US is facing a much more serious problem, one that has simply not been talked about at all: corruption. But this isn't the overt, "bartering of government favors in return for private kickbacks" corruption. Instead, this type of corruption has actually been legalized. And it is strangling both US competitiveness, and the ability for US firms to innovate.

The corruption to which I am referring is the phenomenon of money in politics.

..Somehow, it seems that every time that [Mickey Mouse] is about to enter the public domain, Congress has passed a bill to extend the length of copyright. Congress has paid no heed to research or calls for reform; the only thing that matters to determining the appropriate length of copyright is how old Mickey is. Rather than create an incentive to innovate and develop new characters, the present system has created the perverse situation where it makes more sense for Big Content to make campaign contributions to extend protection for their old work.if you were in any doubt how deep inside the political system the system of contributions have allowed incumbents to insert their hands, take a look at what happened when the Republican Study Committee released a paper pointing out some of the problems with current copyright regime. The debate was stifled within 24 hours. And just for good measure, Rep Marsha Blackburn, whose district abuts Nashville and who received more money from the music industry than any other Republican congressional candidate, apparently had the author of the study, Derek Khanna, fired. Sure, debate around policy is important, but it's clearly not as important as raising campaign funds.

       ..Ars Technica reports that Derek Khanna is getting axed over his memo detailing the conflict between laissez-faire-oriented free market ideals and the regulatory monopoly that is copyright. 'The Republican Study Committee, a caucus of Republicans in the House of Representatives, has told staffer Derek Khanna that he will be out of a job when Congress re-convenes in January. The incoming chairman of the RSC, Steve Scalise (R-LA) was approached by several Republican members of Congress who were upset about a memo Khanna wrote advocating reform of copyright law. They asked that Khanna not be retained, and Scalise agreed to their request. "



“Greed & Power-lust is a weed that grows only in the vacant lots of an abandoned mind. ” ~Ayn Rand

           The multifaceted Intent and the efforts to control and curb corruption increases levels of trust in the ability of institutions to effectively enforce laws/rules of trade in a fair manner. With varied periods of time pervasive bureaucracy and increasing red tape also tends to create a stagnant climate where corruption can and will flourish, with officials often demanding bribes for the myriad permits needed to carry on business among several other things. Entities and groups with a political and financial upper hand often tend to dominate and predate in a market such as this. High handed corruption as a result continues to remain a major deterrent to distributed and diverse economic activity. Often a better control of corruption has been historically associated with rising levels of innovation and entrepreneurship. Absence of such a critical and defining trust, would invariably restrict the scale and scope of trade and inversely effect productivity and investment in innovation and entrepreneurship.

        Yes, the puzzling relationship between entrepreneurship, innovation, and corruption suggests corruption is inversely correlated to economic growth, entrepreneurship and innovation. That is, beyond all debates and arguments several studies across the globe conclude that as corruption goes up, economic indicators go down. The scope/effects of corruption on business is mediated and outlined by several factors, all of which are related to the ability to reliably enforce rules that promote fair trade and transparency.


“Political corruption, social greed, and Americanized quasi-socialism can ruin even the most wonderful places. California proved that.” 
~Tiffany Madison





         Entrepreneurs and innovators are motivated by the portion of the value created by the venture that they are able to capture for themselves. As corruption increases, entrepreneurs face the risk of losing some of those profits to opportunists taking advantage of the corruption on the value chain. As a result, some potential entrepreneurs become discouraged and abstain from pursuing new business opportunities. The dampening effect of corruption has often been compared with that of taxes. Under this school of thought, corruption would differ from taxation only in the lack of public revenue generated. No matter the depth or potential of their innovations, all of their efforts to solve challenging industrial/social/economic problems could be stymied and nullified by corruption and unscrupulousness that favor the connections and short-term gain of a few over the long-term benefit of the industries they serve, the economy and the populace. Corruption is one of the most restrictive and intractable issues around the world, It is comparable to a wider and deplorable socio-economic disease that pervades and plagues entire cultures and economies  It inhibits the development of a stable and prosperous economy and the flourishing of an active democracy and citizen sector. Demanding transparency and fostering a culture in the public and private sector of accountability and  rule of law is perhaps the only real feasible approach to tackling this issue in the United States.

Sincerely,

Jai Krishna Ponnappan


------------P.S-------------

Blessed is The Fruitful Hand



“Among a people generally corrupt, liberty cannot long exist.” 
~Edmund Burke

“Evil is not just a theory of paradox, but an actual entity that exists only for itself. From its ether of manifestation that is garlanded in perpetual darkness, it not only influences and seeks the ruination and destruction of everything that resides in our universe, but rushes to embrace its own oblivion as well.

To accomplish this, however, it must hide within the shroud of lies and deceit it spins to manipulate the weak-minded as well as those who choose to ally themselves with it for their own personal gain. For evil must rely on the self-serving interests of the arrogant, the lustful, the power-hungry, the hateful, and the greedy to feed and proliferate. This then becomes the condition of evil’s existence: the baneful ideologies of those who wantonly chose to ignore the needs and rights of others, inducing oppression, fear, pain, and even death throughout the cosmos. And by these means, evil seeks to supplant the balance of the universe with its perverse nature. 

And once all that was good has been extinguished by corruption or annihilation, evil will then turn upon and consume what remains: particularly its immoral servants who have assisted its purpose so well … along with itself. And within that terrible instant of unimaginable exploding quantum fury, it will burn brighter than a trillion galaxies to herald its moment of ultimate triumph. But a moment is all that it shall be. And a micro-second later when the last amber burns and flickers out to the demise of dissolving ash, evil will leave its legacy of a totally devoid universe as its everlasting monument to eternal death.”
~ by Adam Turquine. The excerpt is taken from the sequel to 'Beyond Mars Crimson Fleet'



“When one gets in bed with government, one must expect the diseases it spreads.” ~ Ron Paul




CORRUPTION PERCEPTIONS INDEX 2012


            Looking at the Corruption Perceptions Index 2012, it's clear that corruption is a major threat facing humanity.


         
           Corruption destroys lives and communities, and undermines countries and institutions. It generates popular anger that threatens to further destabilize societies and exacerbate violent conflicts.





            The Corruption Perceptions Index scores countries on a scale from 0 (highly corrupt) to 100 (very clean). While no country has a perfect score, two-thirds of countries score below 50, indicating a serious corruption problem.

           Corruption translates into human suffering, with poor families being extorted for bribes to see doctors or to get access to clean drinking water. It leads to failure in the delivery of basic services like education or healthcare. It derails the building of essential infrastructure, as corrupt leaders skim funds.

          Corruption amounts to a dirty tax, and the poor and most vulnerable are its primary victims.


So, How do we Counter the Effects of Public Sector Corruption?


              *Governments need to integrate anti-corruption actions into all aspects of decision-making. 
              *They must prioritize better rules on lobbying and political financing. 
               *They must make public spending and contracting more transparent, and make public bodies more accountable.

              After a year with a global focus on corruption, we expected more governments to take a tougher stance against the abuse of power. The Corruption Perceptions Index results demonstrate that there are still many societies and governments that need to give a much higher priority to this issue.


~ Jai Krishna Ponnappan

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