Eekonomics

(July 2008)

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I once read somewhere that in ancient Athens, members of the Senate (or whatever the governing council was called) who proposed new laws, would do so with a rope round their necks. If the law failed to pass, they were hanged.

I don’t know the truth of this, but I certainly think it should apply to all of today’s politicians, with the proviso that the rope should be attached to a hook attached to their intestines. But for a change I’m not talking about politicians here, except unless the roles intersect.

No, I’m talking about those all-knowing, all-pervasive, incomprehensible, experts and masters of life and death, the economists.

Show me a guy who thinks he knows everything that matters, and I’ll show you an economist.

Show me a guy who thinks people don’t matter, only figures do, and I’ll show you an economist.

Show me a guy who thinks abstract and incomprehensible theories are more important than simple common sense, and I’ll show you an economist.

Show me a guy who lives at such disconnect from the facts that he might as well be on another planet, and I’ll show you an economist.

If an economist thinks that a particular economic policy will result in the poor becoming richer, for instance, he will insist that it is happening – even if right in front of him the people are getting poorer and poorer.

I think economists should be forced to stand up in public and explain their fancy theories in words of not more than two syllables. And then I think they should be forced to provide proof, right there in public, that the theories are working. If they don’t, they should be compulsorily made to ceremoniously and literally eat their words in the form of newsprint, CDs, and any other medium in which they have appeared, before being banished to work at digging ditches for a century.

What triggered this particular rant? I have always been contemptuous of economists, as those of you who remember my comments on Swaminathan S Anklesaria Aiyar will recall, and generally I give the illiterate (in the facts of life) morons a wide berth, but today I began reading an article by one of the tribe on how to tackle rising prices. Since I’m not of the income bracket which can afford to ignore prices rising to the skies, I read the article, with my jaw hanging wider and wider open till it threatened to hit the floor.

This guy starts off with a standard enough idea: if the amount of available money in an economy increases, and the supplies of goods and services don’t keep up with the increase in available money, then larger and larger amounts of money will chase the finite supply of goods and services, so, basically, said goods/services will go to the highest bidder and all prices will shoot up. I don’t have to have ever touched an economics textbook to agree with that one.

Not that I have a great dispute with his follow-on idea either: that money that is neither regulated nor taxed, illegal money in all forms, is more easily acquired and hence more easily expended than regulated or legal money. This being one of the most corrupt countries in the world, there is an ocean of slush money out there. Fine.

So what does our economist suggest? Does he claim that the obvious solution is to try and crack down on corruption so as to cut the source of illegal money off at the roots? No. He’s much too brilliant for that.

No, what our genius suggests is worth the Nobel Prize in his discipline: he says the government should at once ban the circulation of the three highest denomination notes in circulation; the Rs 1000, Rs 500 and Rs 100 notes. According to him, this would force everyone to deposit their money in banks, where it could be taxed, or to buy tax free bonds from the government. Either way, the amount of money could be regulated.

Let’s see now. I go to the shops, let’s say, to buy a whole passel of stuff – like so many other people. Instead of carrying a few thousand and five hundred rupee notes with me I have to drag along a sack of fifty rupee notes, because the average Indian shop will – quite right too, in my none too humble opinion – refuse to accept cheques. I guess this character envisages a lot of applications for credit cards – and he may well be a vice president in some financial institution offering credit cards. But, unfortunately, the average Indian shop also doesn’t accept credit cards. And even the Great Indian Muddle Class, let alone the rural poor, neither understands nor uses credit cards. To say nothing of the recurring expenditure on them.

Brilliant, as I said.

All right now, let me help the whole thing by taking it to its logical conclusion. Since the eminent economist here wants the supply of money to be regulated, let’s regulate all, but all, money. Let’s demonetise fifty-rupee, twenty-rupee and ten-rupee notes as well, along with the coins and notes of five, two and one rupee value. Thenlet’s issue currency of denominations such as three rupees, seven rupees, nine rupees, and seventeen rupees. And see the prices drop like an express lift – as the eminent economist says should happen.

And when he wins the Nobel Prize, will he be so kind as to mention me in his acceptance speech at least?