Wednesday, April 15, 2009

Money, money money.

Was stopped late last night at a checkpoint in Colombo. I was returning from a short trip out of Colombo, the policeman on duty seemed to be looking for inebriated new year revelers, at least judging buy the way he was trying to sniff my breath. He asked me my name, where I was from and what I did for a living.

Then he dropped a hint, asking if I had anything to offer them for the new year. I said no, wondering where this was leading. I was bit flummoxed when he then asked me "the bonna support ekak thenda puluwan tha?" meaning, could you give me some money to have a cup of tea. I gave him a hundred rupees and he asked me if I was giving it freely and I replied that I was and he smiled and waved me on.

I have been joking to friends saying that the number of checks for dunk driving seem to be inversely related to the state of the economy. The worse it gets, the more check are conducted, with the implication that the policemen need a few more bribes to tide them over the high cost of living.

The fellows at the checkpoint must have had a poor haul that night to have to descend to begging.

I was chatting to a friend a couple of days before. This guy lectures to O level students at a tutory on a part-time basis. This is a really cheap place that charges students a thousand rupees a month and hold large group classes. The school used to have an roll of 6000 students, it is now down to 4000. I asked him why enrollment was down, he said it was a combination of economics and the security situation.

Some parents, it seems, can no longer afford to spend a thousand rupees a month on education. Although it sounds very little to me, it must represent something quite large to some people, especially since education is highly esteemed in local society and is probably the amongst the last things to be cut from family budgets.

The school also used to have students from the outskirts of Colombo; Negombo, Wattala and surrounding areas who would come to Colombo on Friday or Saturday morning, stay with friends, relatives or in a boarding house for the weekend, attend classes and return on Sunday or Monday. Many of these students were Muslims or Tamils and with the increased number of raids on lodging houses and the need to register temporary visitors it appears to have become too much hassle to come to Colombo anymore.

These two little examples underline the importance of the value of money. The vast majority of people live on a fixed monthly salary or a fixed daily wage. Salaries are generally revised once year or if they are lucky twice a year. If the value of money drops and the basket of goods that a given amount of money can buy shrinks, the result is an increase in poverty. The decline in the value of money is called inflation. The concept seems abstract and unworldly but the impact is real and affects everybody. Failure to manage inflation amount amounts to theft by the government.

Nobody understood this better than the prophet of Bloomsbury. To quote his remarks on the subject:

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

J.M. Keynes, The Economic Consequences of the Peace (p. 235-6)

8 comments:

someone important said...

have had exactly the same experience wiht the police once, only though. Not me, my friend in the driving seat, on a normal week night. yes life is tough indeed. Wow, that's so true about inflation, what better way to make you pay taxes than to include it in what you buy! A communist government according to my reading (and extremely surface level undertsanding of the subject) seems to be the answer to third world counttries. I think. must get on wiht work. So what are you going to do about it?


I think a line of credit for neccesities, like tea, meals at least would help the poor better manage their income. A credit card that lets them purchase these things only for one person, maybe one a day. Rations almost, but which they pay for later.
this is then cut from their salary. This should be made mandatory so that people have their basic needs met, and not keep asking other for it. Which is what they prefer to do.
it's common practice among the poor in my society to buy a digital camera and then be broke. in their society to pay maybe for furniture, or even toys for their kids and then starve. invariably, someon else has to bail them out.... So this card funded by some govt bank is in order- just an idea

santhoshi said...

Oh dear.. they asked for money like that? very worrying indeed......

Jack Point said...

Someone important: a card that would allow people to buy necessities sounds a nice idea but would be a nightmare to enforce.

People are very good at getting around regulations so the introduction of such a card will promptly lead to a black market in trading the card credits for hard cash that can be wastefully and willfully spent by the foolish.

Communism attempted to impose rationality but failed because it failed to take into account ordinary human behaviour and reaction to controls.

Cricket Tragic said...

Hmmm...some food for thought for the idiot Cabraal...and he claims that the economy has grown (now he admits that the rate has decreased)...it is quite amazing how much the price of items have increased....when I came back to SL in 2003, a loaf of bread was Rs.16, now it's Rs.42...that itself is a stark reminder of how much the value of money has fallen..

Even a 1000 rupee note is worthless...with a decent amount of spending, i could finish it off in 1.5 weeks (2 if I am lucky)

Jack Point said...

Cricket Tragic - thanks for visiting.

You can stretch a 1000 for a week and a half??? Man you really have expenses under control.

A trip to a supermarket will set me back a couple of thousands.

Charm Bracelet said...

Was stopped by a cop for running a red light ( I swear I didn't see it)

He agreed to let me go if I agreed to his 'Monaa hari denna ko miss, miss la wa rasathiyadu karanna hondath neha ne'

So yeah, desperate times call for desperate measures I guess. The guy probably had 2 kids and wife to provide for back home, who knows. It's an economic jungle out there. Two medium sized bags of groceries at a supermarket is easily about 3K.

It's Oxymoron-like*... as much as they stand for justice and order in the country, what happens to the ordinary bloke he is with a family to feed and barely making ends meet? I guess both stories show that the ordinary bloke takes precendence at a crunch. Reality bites.

DeeCee said...

vid added again ;)

Cricket Tragic said...

@Jack Point

The supermarket stuff goes to my mum's account...I just earn and spend on trivial matters...but like you said, a trip to the supermarket can really eat your purse up!