Nepali Times
Strictly Business
Compensation dilemma


One of my professors used to give this example:

Say that three adults go to a restaurant. The first person only orders the food. He will neither have to eat it nor pay for it. The second person eats the ordered food. The third is around just to pay for it. How will these three people behave? And how is their situation different from the one in which each person chooses his own food, eats it and pays for it out of his own pocket?

I remembered this lesson on learning that the government has just set aside Rs 1 million for the family of the slain journalist Birendra Sah. On the face of it, providing relief money at a time of distress is noble. After all, who but a heartless bean-counter is going to be against it?

Though giving away money does not solve the bigger mystery of disappearing journalists, it does provide immediate relief to the family, while the government appears to have done something respectable. Still, if you put emotions aside and start thinking about the implications of such a decision, complications come up quickly.

The Maoist leaders icily accepted that their cadres were involved in Sah's murder. Their acceptance alone makes it unsettling that the government did not ask for a formal explanation - let alone claim damages - from the Maoists, whose cadres draw salaries from the government.

Moreover, the government did not clarify the basis which formed the rationale for its decision. Given this sort of murky decision-making process, what if a physician is beaten up and killed tomorrow, with some group not admitting anything beyond the point that its cadres fired the bullet? How will her after-death compensation be determined? By the loudness of protests on the streets?

By dispensing the usual rhetoric about how great the need for harmony in Nepal is, the government may try to evade such questions. This evasion allows it to continue to go for easy compromises, especially when it can get away with paying for other people's crimes by using public funds. But as the custodian of public money, and even in its interim avatar, it owes us all an explanation on what its basis for spending public funds is, regardless of what the funds are used for.

Such an explanation also clarifies one more thing: where the money to be distributed is coming from. Public funds, after all, are limited. And if you want to give away Rs 1 million to some cause, no matter how noble and pressing, you have to take away that much from other public-benefit activities such as building a school or a health clinic.

But when you talk to most Nepali politicians, the disconcerting thing is that they do not seem to be worried about running out of money. Nor are they particularly concerned about ways to raise it by effectively mobilizing domestic resources. Somehow they seem assured that the donors will be there, in the name of strengthening democracy, to pay for various governance-related reforms. So, if giving away a million here and a million there in the name of making peace will make everyone happier, why quibble?

Besides, with every 11th adult Nepali male working abroad to take care of his family's private needs in Nepal, our politicians face little incentive to be prudent about how they spend public funds for public goods such as hospitals, schools and community centers.

Thus, with scrutiny on spending lessened, and with other people's money available to give away, our politicians can go on paying for the cost of one group's actions with another group's money, and continue to buy us further make-believe harmony.

(11 JAN 2013 - 17 JAN 2013)