Tuesday, January 18, 2011

Of Pumpkins and Chicken

I was once waiting outside a doctor's chamber in a small town. The doctor sat in a really small room, about six feet by eight in size. The room was next to a pharmacy, as is the case in many small Indian towns. In fact, there was a connecting door, so that the pharmacist could ask questions on the prescriptions as the need arose. And, there was a long bench in front of the office, almost extending to the road, where the patients sat and waited.

The man being examined by the doctor was a farmer, and he didn't look like a person with a lot of money. At the end of the examination, as the doctor was scribbling on his pad, the man ran out to his bicycle, grabbed something from a basket tied to the carrier in the back and ran back to the chamber. All this was very quick, and all I got to see was a brilliant flash of orange as the man walked by. Then, I heard the doctor say, "From next time onwards, the pumpkins are not going to cut it, you need to get me a chicken or two."

Then, it came to me. Like a brilliant flash of lightning. I was witnessing one of the oldest systems of financial transactions known to mankind. One, that almost became extinct and is making a slow comeback. Barter. The doctor had rendered his services to the farmer, and in return, the farmer gave him a pumpkin. The doctor wanted more. So, he asked for a chicken the next time.

Have you ever had the good fortune of bartering anything? Try it. Believe me, you will make a direct connection to the eighty thousand year old soul of humanity. On some days I dream strange dreams. In one of them, a neanderthal walks up to another and says, "Hey drooping-shoulders, here is a mammoth tusk. Can I get your wolfskin in exchange?". "Sure flowing-beard, we have a deal!" 

The modern financial system drives me crazy. Some people call it the fiat currency system, in which, the government prints up large volumes of currency, backed by nothing. In the old days, you would get paid in gold or silver if you were lucky. Copper or bronze, if you were not so lucky. And, chicken and pumpkin, if you lived close to the farms. But, the point was that you got paid in something tangible. Not a piece of paper. Modern money is not even worth the paper it is printed on. And every time the government wants to spend more money, it prints more currency, devaluing the money we already hold. That is when the price of everything goes up, and we complain about money not being worth anything. Inflation of currency, is nothing but an indirect tax by the government, when they run out of the money they collected from us as direct taxes. How that money is spent, is a completely different story. Perhaps, you have better answers than I do.

But one thing that the modern monetary system encourages, is corruption. Let us say that you stole thirty thousand cows and buffaloes, a thousand acres of land, and perhaps, twenty thousand sacks of rice. Where would you hide it? It is a little tough to hide so much ill gotten wealth, isn't it? But, with the help of the modern monetary system, you could convert all that into a high valued currency, say the American dollar, and make a secret account in some country that has liberal banking laws and stash all your cows and bags of rice inside a computer. As a string of numbers. Cool, isn't it? If we still had the barter system, we wouldn't be able to do all that. Of course, I would not be able to go online and order my favorite books on Applied Thermodynamics using a credit card. But not having so much corruption around me, would definitely be a payoff I would be happy with.

And, stealing large amounts of money would be one heck of a problem. And so, corruption would be at a much smaller scale. You could, for example, bribe your local babu with a bag of carrots. And, he would issue you a permit to export the rest of it, that you grew on your farm, to Scotland and Belgium.

And they, in return, would reward you, with their finest whiskey. And their best chocolates. And some people in the customs department would get  a little drunk. But, it would all be small time corruption. On a small scale.

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