Friday, 25 September 2020

Does Alternate Economy Make People Work Hard?

Updated: October 26, 2013 12:01 pm

Most of the people are finding that the economy no longer works for them. Even after obtaining an education, gathering skills and training, hard work and paying their dues, achieving success or merely comfortable survival has become very difficult. Those who have reached a certain level of material comfort are often insecure and must work multiple jobs and manic hours to try and preserve it. Forces beyond our control have changed the economic rules while one continues to play by them in the old game. Jobs that allow one to live decently are scarce, benefits evaporate, healthcare costs skyrocket, job security is almost nonexistent. Greed, competition, individualism and selfishness have become the hallmarks of the economy.

The growing unemployment and imminent economic depression that is being felt throughout the country means that things will only get worse. People sometimes react to the inability to meet their expectations through expressions of anger, depression or substance abuse. Others turn to crime and parasitise people through overt stealing or theft by another name, such as multilevel marketing or the sale of questionable value in merchandise or services. Rising involvement of B.Tech and Post-Graduate students with the incidents like burglary, extortion, theft, and such other heinous crimes in our country is a clear indicator of economic depression and frustration among the contemporary youths.

 Why alternate economy developed?

People are turning away from this situation in disgust and are helping to develop an alternate economy as both a healthy survival mechanism and a tacit means of protest. One can participate in the alternate economy in many different ways according to their taste:

(i)            The one commonality is that it serves that needs of people and the public-good first, and profit second.

(ii)           Another advantage to it is that it engenders a safer and more pleasant environment for both individuals and families to live within.

(iii)          Third is that smaller, highly self-sufficient local economies, largely independent of the global economy are more likely to survive economic reversals?

(iv)         Finally, When one uses many of the techniques that follow, much of one’s economic activity becomes almost unseen and most importantly, unmeasured, so that it no longer helps to validate the system that has disenfranchised so many people. When one stops supporting their game and vote against what they stand for at the same time that one helps himself and assist others.

When retail sales numbers climb, as do units shipped, dollar amounts sold, corporate profits and stock prices go up, all these statistics are then parroted by the party in power and its supporters as an example of the tacit success of their policies in spite of the negative effect that they have on real people and the real productive economy.

 Make people to work hard?

Never use an ATM card, instead get to know the tellers in your local bank and if there’s no line behind you, take your time with them, hang out gossip and enjoy the transaction. This is the antithesis of the corporate efficiency model that forces them to work harder and faster. The machines that allow you to check out your books at the library, if accepted by the public, will eliminate jobs of librarians. What I mean to say that, too much craze for automation often puts a negative impact on our economy and make people lazy and sometimes reduces their efficiency.

Similarly, the new self-checkout machines in grocery stores will not lead to lower prices but only fewer adults with decent union jobs and higher CEO salaries. The economics of automated theatre ticket and “food” dispensing machines have not led to lower prices, only skeleton staffs and tiny satellite “auditoriums” with atrocious sound and visuals approaching the home theatre level. It is important to let the workers and especially the management in these situations know what you are doing and why.

When doing business on the telephone, avoid automated phone systems in favour of talking to humans. Try punching “0” for operator as soon as you are in the system. Often “00” or “000” or other multiples of this will save you from languishing in ‘voice jail’.

 Is PDS needs a revamp?

Another way of encouraging people to work hard is to revamp the public distribution system in our country which resorted to all most all political parties keeping their vote banks in mind. Instead, the government should distribute such essential commodities like wheat, rice, kerosene’s etc. only to paupers and homeless. The rest of the beneficiaries should be given work by the government for 365 days and earn their lively hood. Due to faulty distribution system in the country which is currently on, not a labourer is available anywhere in the country and those available are not willing to work. The impact of this system can be more visible if one visits to any village or slum areas where the farmers and the poor live in majority. One can notice that, young guys are spending their valuable times with playing cards round the clock. It clearly signifies that, they have at least rice to eat two meals a day as they get 35 Kgs per month under the existing PDS scheme at rupee one per kilo or so which is sufficient for them for the whole month. There are more BPL families who sold half of their surplus rice in the open market at ten-fold increased price to meet the other auxiliary expenses. This is a gross misuse of the scheme.

 How do you determine, if a business is part of the alternate economy or not?

  1. Just ask people in a business that you are investigating, “who owns this business?” “Is it owned and run by a family or by a trust or by a partnership firm?”

The people working there will either be part of the family or will know the answer if it is. It is often found that asking both these questions in a row puts people more at ease than just asking the first. If the people working there have no idea who owns it, that is a bad sign.

  1. If employees are open and cheerful and take the time, that is a good sign. Everyone gets tired sometimes but if they are sullen, hostile and you have to chase them down to get help that is bad.
  2. Reputation and longevity. If when you ask somebody about where there is a good place to eat or buy something in and they immediately tell you “Go to Girija Restaurant “or McDonald, that is a good sign. If you have to draw it out of them and they finally point you toward a shopping mall that is bad.

 Alternate economy at work?

The superficial “savings” alleged in the purchase of the often large quantities of frivolous things from the big box stores are more than negated by money going to distant corporations and investors that actively destroy as many middle class sustaining jobs as possible for the greatest profits, the loss of local control, the importation of taxpayer subsidised cheap-labour, disregard for local decision making and lack of responsiveness to the community. In the alternate economy, there is an emphasis on personal relationships. Instead of everything being monetised with a price tag and “savings” being the only criteria for choice of business one patronises, the currency of loyalty and reciprocity is used along with cash.

Some countries those who become the victims of Economic Unrest-Let we learn!

The Global Peace Index—which tracks 23 indicators from military spending to crime levels to conflict and disputes with neighbours—showed economic factors are at the heart of unrest.

Let me cite some examples. Rising food prices have helped trigger revolts in Egypt, Tunisia and elsewhere, with some leading to serious bloodshed, while austerity measures in Europe have also helped bring protesters on the streets.

“The dramatic changes we are seeing this year are caused not by war between countries but struggles between people and their governments,” said Steve Killelea, founder and cshairman of the Institute of Economics and Peace which produced the report. Going forward, Killelea—an Australian former businessman who started the index five years ago—said, “The key country to watch was China, which could experience violent unrest, if the economy slowed in the years ahead. Japan and New Zealand also performed well despite natural disasters whilst Ireland saw the smallest rise in unrest of any troubled Euro zone state,” Killelea said, almost certainly because of the way their societies are organised.

In Egypt, there are 5 sources of income. These are the Suez Canal, tourism, crude oil, agricultural products, industry and the savings of the Egyptians working abroad. Political unrest in the form of endless protests, turmoil, violence and terrorism had terribly damaged the economy of the country, and that damage has escalated since the June 30 protests. Political stability and the rule of law are corner stone’s for economic growth of any country. In 2013, tourism dropped by nearly 70 per cent and exports have dropped by nearly 50 per cent. One third of the budget of Egypt goes to subsidising goods such as gasoline, electricity and some basic food items such as bread, sugar, rice and cooking oil. While the subsidies dent government budgets, at least 80 per cent of the population depends on these subsidies to survive. Egypt’s economy grew by 2.4 per cent in the first six months (July to December) of its 2012-2013 fiscal year, slightly below World Bank estimates. In the first three months of 2013, that growth rate fell to 2.2 per cent, according to government figures, and given the current unrest in the country, the growth rate is very likely to fall even further in the final quarter of the country’s fiscal year. Another serious issue is that the country had halved its foreign reserves to about $19 billion in July, about half its total in December 2010. That makes it difficult for the country to purchase food and refined petroleum products, the country’s main imports. Egypt is the world’s largest importer of wheat. The country’s exports totalled $2.4 billion in May, while imports totalled $4.7 billion. That $2.3 billion trade deficit is growing and likely will continue as long as there is no political solution in Egypt. Egypt produced more than 700,000 barrels of oil a day in 2011 and has been a net exporter of crude. The country also has large natural gas reserves and exports about 20 per cent of its production. These levels will be difficult to maintain until the country’s political situation is settled. Oil and minerals account for almost a third of the country’s exports. Another major source of Egypt’s revenue comes from tourism, which totalled $8.08 billion in the first nine months of the 2012-2013 fiscal years. Egypt’s revenues from the Suez Canal are down 3.6 per cent in the first half of its fiscal year to $2.6 billion.

How to cure the unrest fever of Indian economy?

Indian economy is in a state of man-made fever. During last six months the inflation in India remains in two digits which is attributed to demand-supply theory. Why this fever has come? The answer to this question is simple. There is more demand, but supply is too meagre which is responsible for the present crisis. Why it is man-made? This concept is attributed to poor governance, poor leadership quality of the party in power, lack of forward planning and vision, political instability coupled with coalition culture, rampant corruptions and scams, defective policy, and deficiency in constructive role of the opposition to guide the government in economic front. This would be clearer, if one takes the example of Japan. The inflation in Japan perhaps did not increase 2 to 2 ½ per cent during last ten years. Unfortunately, the political leaders in India are not willing to admit their faults; instead they want to shift their responsibility to the economic recession of other countries. Thus, the key factors of unrest in Indian economy are quite visible from the following factors:

(i)            Instability in government coupled with coalition compulsions;

(ii)           Ineffective leadership of the party in power;

(iii)          Non-taking of principal opposition parties in to confidence by the ruling party;

(iv)         Lack of good governance; and

(v)          Forward planning and lack of vision of the party/government in power.

Among these, good governance plays a pivotal role in shaping economy of the country in its right perspective. Say for instance, 700 lakh million tons of food grains like wheat are lying under open sky in India and are allowed to be rotten including 11 tons of such grains alone in Punjab. Where does the good governance stand? Most of the elected governments seem to be running after charity for cheap popularity such as distribution of lap tops, cell phones, cycles, and so on, simply to consolidate their respective vote banks which would make the Indian economy more disastrous.

What immediate measures India needs to adopt to prevent unrest its economy?

  1. a) India need to advance its dialogue with IMF to sort out the problems as it did in 1991. For instance, Spain and Italy have gone to IMF to sort out the identical problems;
  2. b) Take measures by which the products of farmers should get the deserved market price by the whole sellers;
  3. c) The implementation of food security bill should be put on hold as it is likely to bring great fiscal crisis in the days ahead;
  4. d) The RBI should intervene to accord appreciation to Indian rupee in war footing which the new RBI Governor has rightly acted upon;
  5. e) To check the pilferages of Electricity (as currently according to an estimate, 30 per cent of the country’s electricity are being pilfer aged for which all political parties need to be united against the mafias who are protesting any action against these pilferages in the best interest of the country);
  6. f) To take steps to increase the supply (through more investment and attract the investors by making India an investment-friendly country without too much rigid clauses); and
  7. g) To increase the productivity as well as industries.

Investment is highly crucial for any country to sustain economically and India is not an exception to this dictum. It has been universally accepted that, if there are no investors: (i) there would be no growth; (ii) no employment; and (c) no increase in products. India, therefore, needs to introspect on the above issue.

Rajan effect on Indian economy?

After Mr. Raghuram Rajan took over as the new Governor of RBI, the Indian economy started to recover. Within forty eight hours after he assumed office, the value of rupee marked progress and the gold rate had come down providing relief to the government and the public. In his surprise move, the new governor, as a part of his maiden policy, on 20th of this month raised the repo rate by 0.25 per cent or 25 basis points (bps) to 7.5 per cent making the bank experts to feel that such action might make EMIs on loans costlier. This was the first time after almost two years that the RBI has raised the short term lending rates with no change in cash reserve ratio (CRR) which is kept constant at 4 per cent. This has not only threw the Indian stock markets tumbling down, but also struck the fear of paying higher amounts of loan EMIs in the hearts of the millions of public who have taken loans.

Rajan expressed his concerns over rising inflation which has dented house hold financial savings and said in mid-quarter policy review statement, “Recognising that inflationary pressures are mounting and determined to establish a nominal anchor which will allow us to preserve the internal value of the rupee, we have raised the repo rate by 25 basis points.” However, the India’s Current Account Deficit (CAD) need to be reduced, so also attention is to be paid to increase the growth rate as it is currently trailing below the potential. Rajan’s efforts are being hailed from all quarters. But many more things are yet to be done to bring the Indian economy to its right track.

India stumbles through its worst economic crisis since 1991 puts pressure on New Delhi to relieve supply-side bottlenecks in the economy, such as poor infrastructure, that keep inflation high even when demand is soft. This is a big task for a weak coalition government, which also faces a general election by May, 2014.

There is a need to shift the RBI’s main inflation gauge to consumer prices from wholesale prices, putting India in line with most big economies but pushing up near-term rate expectations. Consumer price inflation was 9.5 per cent for August, meaning the cost of living is rising faster than interest rates. The wholesale price index rose 6.1 per cent. And there is every possibility of hike, which I think he might, and then it might affect growth. A flurry of measures by Rajan’s predecessor and fresh moves on his first day in office has helped lift the rupee off its record low.

The government in power, therefore, should take stringent and balanced measures to revive economy, to control inflation, to keep the prices of essential commodities moderately low and strengthen the Indian rupee, but should not take any measure which would be detrimental to the interest of the common man nor it should jeopardise the interest of the nation and its growth. Every Indian is eagerly waiting for the result of 2014 election and its new Prime Minister and the way he would direct the nation.

By KC Panda

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