Snapchat Outrage: Why So Serious?

SnapI never knew that my not downloading or using Snapchat would be so wonderfully and so convincingly explained by none other than the CEO of the application himself, assuming that he indeed said¬†what one of his employees attributed to him though some kind of denial is very likely very soon. But as things stand for now, it turns out that I have always been so completely convinced of my¬†status as a poor man in a poor country (hope it’s not yet anti-national to say that) that I never even thought of downloading an application that has been¬†so popular in India.

But what’s this outrage about? Why are people so angry at what the CEO fellow said? What’s wrong in being poor? It just means that one has less money than most other people. So? How is it a disparaging remark? It’s just a judgment on one’s economic standing even if it is¬†not founded on any concrete facts, in which case it’s more of a perception based on some flimsy impression.

But then, even if it was true and was based on sound facts and reasoning, how does it lower one’s worth in the world unless money or wealth is the only or the most important measure of excellence or superiority, which would make everybody who was not rich worthless from Socrates, Plato, Immanuel Kant, Nietzsche, Marx¬†to Mozart, Ghalib, Mir, Vinci, and the endless list¬†goes on and on. Throughout¬†human history there has been no dearth of poor but otherwise perfectly worthy individuals.

Of course, there is nothing wrong in being wealthy or being interested in earning money or having the talent to garner wealth, but there is nothing wrong is being poor either. So, why the outrage?

If you are rich and evil, or poor and manipulative, that might be open to some judgment of some sort, but being rich or poor per se is like being tall or short, dark or light, blonde or brunette, or Superman fan or Batman aficionado. One can be legitimately judged for what one does, and not for the state one eventually finds oneself for one reason or the other unless one has brought about the state on oneself, but even in that case one would be judged for what one did and not for the state itself.

Then again, who said it? A young, opinionated CEO of a media company, which owes its success largely to a good product idea, which they managed to execute well enough to catch the imagination of the people. The CEO is entitled to his opinion regarding who his product is for, especially when he expresses it privately. Why attach so much importance to the words of a 26-year-old man, who is young enough to be entitled to a certain degree of rashness and haste in drawing sweeping conclusions, particularly in a relaxed setting? So, Mr. Spiegel, you are rich, we are poor. Okay. Done. Sleep well.

Personally, Snapchat has always been a non-starter for me. Now I know why. And I am perfectly comfortable being poor.

Demonetization and Black Money

Black Money has been central to public discussions for quite some time¬†now, and the sledgehammer of demonetization is being viewed by a large number of people as the definitive cure. But a sure-fire¬†solution always strikes at the root of the problem whereas demonetization is more like shearing the leaves. Black money stems from the disinclination of the people to pay taxes. So, the natural question is why? Are the people inherently dishonest? Are they so selfish as to not see the obvious benefits of financially enabling the government to govern better? Don’t people in general want the government to function smoothly without having to face shortage of resources? And the most important, don’t they want to be at peace with their money with the fear of the taxman’s knock at the door put to rest? Isn’t peace of mind a valuable thing?

Black money is mostly with the businessmen. Not the top industrialists of the country, but the countless businessmen who run their large and small businesses battling all odds because anybody who has any experience in selling even a needle in India knows it’s not easy to do business in this country largely owing to government’s long-standing anti-business policies. Even¬†golgappa vendors in Connaught Place can tell you what it is like to run such a small business and how many government-made¬†problems they have¬†to brave to sell their things. Permits, licenses, permissions, taxes on goods and sales, this number and that number and then the bribing the government officials so that they do not force in additional hurdles. Running a commercial establishment would require one to have a commercial electricity meter installed with much higher charges payable for the electricity simply because one is trying to do business. In other words, the government does practically everything to discourage businesses through its utterly needless and hugely cumbersome processes that have earned the badge of¬†‘red-tapism’. When, after having gone through all of it, a businessman manages to make a respectable amount, he finds the government at his throat¬†demanding a substantial¬†share of his hard earned money. What for? For having tried their level best to not let him earn?¬†Any successful business who wants to discharge his tax liabilities has to give¬†over 30% of his taxable earnings to the government.

The frustration of doing business meets the considerable weight of the tax burden to produce the seething resentment against income tax, particularly in the upwardly mobile middle class because they feel that the same body that did everything to make it difficult for them to do business comes after¬†a large chunk of their income when they finally manage to earn a bit despite government-created hurdles¬†in addition to the regular¬†business hassles. So, it’s hard earned and hard fought for money, which¬†turns dark when the businessmen deprive the government of its share under the law. However, retaining¬†black money is not a comfortable enterprise for anyone, and at least some of the less adventurous hoarders of black money would very much like to relieve themselves of the headache provided they do not have to let go of a substantial portion of their earning, for if they have to part with a large amount of their money, it becomes tax evasion becomes worth the accompanying risk and headache.

Let’s not forget that the government has not really been kind on big¬†spending. Taxes on dining out and outdoor entertainment of all kinds, including cinema tickets, has been constantly on the rise¬†as though the government wanted to make it prohibitively expensive for people to relax and have fun outside their houses. Heavy taxation¬†takes a major toll on the volume of the businesses in the hospitality industry, and associated businesses that generally benefit when people go out to have a good time with family and friends. What’s the purpose of raising taxes on dining out and entertainment? Is eating out or watching a film or a play injurious to health, like cigarettes, necessitating¬†discouragement? Why can’t the tax be kept reasonable so that more people have more fun and spend more thereby allowing the commercial establishments to do brisk business making the government get more money by way of taxes? What’s wrong with that kind of arrangement? On the contrary, however, the government currently works on the principle that those who have more to spend on luxuries must pay more in taxes, like there was some inherent sinfulness involved in earning more and having more disposable income.

It seems that the government is working on the premise that a large number of people with taxable incomes would somehow evade tax, and to make up for the lost money, the government needs to tax those who cannot escape tax liability more heavily. quite obviously, if less number of people pay taxes, they have to pay more to compensate for those who do not pay. The other way round is also true. If the taxes are more reasonable, a much larger number of people would be willing to pay the taxes, which, in turn, would enable the government to function just as efficiently as before without having to tax anybody too heavily and also without having to spend huge amounts of money in prosecuting people for tax evasion. Furthermore, it would bring down the size of the black economy without many drastic measures, at least not frequently.

The basic idea is to inspire people to pay their taxes by making the tax environment conducive to that end instead of using coercive measures to chase money out even if it means destroying it. Measures like demonetization are desperate, and are generally not very effective at remedying the problem of black money because the generation of black money is a systemic problem, and needs to be addressed at the root level.

Funny Claims

Sweta Singh of Aaj Tak got even more famous than she already was as a news anchor with a video clip that showed her speak on the supposedly nano-chip armed, GPS enabled notes to be brought into circulation after the much talked about demonetization in¬†November 2016. The confidence with which Ms. Singh waxed eloquent on the technologically advanced new notes made people laugh. But that was just a part of the complete video and somebody had, just for the fun of it, circulated only the most entertaining part of it. For the purpose of reference, let’s call this video ‘Video A’, and have a look at it.

It was incredibly naive for a journalist to talk like that. But then, one can’t really argue with a video. Apparently, in an attempt to clarify that she was¬†not being quite as naive as she¬†sounded, Ms. Singh and her journalist friends shot another video and posted it online. Before we get to that video, we might note that in the video clip circulated (Video A), nobody is actually laughing at Ms. Singh’s ‘joke’ and one of her colleagues remarks¬†that such a chip would take care of the¬†criticism that the new higher denomination notes would actually breed and encourage corruption rather than reducing it.¬†So, Ms. Singh’s nano-chip statement was received in all seriousness. But let’s have a look at the video they posted to clarify the position, and call it ‘Video B’.

They pretend in this video (Video B) that Video B is just another video being shot for no particular reason, and certainly not for the purpose of clarification of any sort,  while they casually discussed the popularity of the previous video (Video A), which went viral for rather unenviable reasons.

Let’s now have a look at the full version of the video (Video C) from which the ‘popular’ clip (Video A) was clipped¬†out, like our journalists friends from Aaj Tak want us to do before passing judgment on them. Very well. Here it is:

In Video B, Ms. Singh insists that we must pay good attention to her statement¬†in Video C that the ‘RBI Guidelines’ are awaited and the things she is going to say is what the WhatsApp messages are telling her, which, she quotes not as a matter of joke but as a matter of fact, and which is¬†why her colleagues take it seriously and one of them even comments in all seriousness as to how the chip is a good idea, like I pointed out earlier. Wait, RBI Guidelines? Really? If the notes did carry nano-chips, would official RBI Guidelines or RBI notifications with respect to the circulation of such new notes make a mention of it? Wouldn’t that be more of a forewarning to the hoarders? And how would the government go ahead with implanting nano-chips in currency notes without addressing the issue of Right to Privacy?

So, even if we pay attention to that disclaimer regarding the RBI Guidelines, it doesn’t really help Ms. Singh’s defense though she did not really need to defend herself because the videos (Video A and Video B) show nothing more than a private conversation among individuals. She was not on air with those claims or rumours, and was not acting as a journalist. In her defense, she was just being a little too hopeful, like many of us might have been back then. And it is alright to be wrong¬†and even naive, and even if you are a journalist. But why post another video that makes things look far worse? That’s even more naive, if not outright juvenile. Relax, Ms. Singh.¬†People have made far fancier claims on video. For instance, Sh. Vishwa Bandhu Gupta, who is a former IRS (Indian Revenue Services) officer.¬†Check it out:

Demonetization: Politically Sound

Of late I have written quite a bit about the recent demonetization, and am still writing a few more pieces about the same, but it is fair to say that it is not yet time to pass a judgment on the efficacy of the measure in terms of what it set out to do. However, it is not too early any longer to say that the measure would have a fair share of unforeseen consequences, and many — if not the most — of these consequences might not be happy. No matter how well thought out the measure might have actually been, it seems — at least for now — a gamble in terms of its effectiveness¬†in achieving its stated objectives, but a calculated risk so far as the politics of it goes.

To put it differently, regardless of the outcome of the measure, the ruling party would not be in a politically disadvantageous position because the credit for having taken on a demon that no other political party could gather the political will to engage is by itself a major political advantage even if the steps taken are a mere eyewash that do little more than put a great number of people through a lot of suffering. Fighting is better than not doing anything for the fear of failure, or, worse, for some dark, carefully concealed reasons. So, even if nothing even remotely close to a lasting victory over black money, terrorism or fake currency is achieved, the credit for having waged a war against the dark forces goes to the government anyway.

The ones suffering would readily pardon the¬†hardship in the name of the country and for the sake of the war against the ‘dirty’ rich.¬†In fact, a large portion¬†of Indian populace¬†doesn’t quite¬†see¬†the ‘dirty rich’ category anyway. To them there are no ‘clean rich’. And I am unsure¬†if there is anyone in India who has even used or read the expression ‘clean rich’ or its equivalents anywhere. So, a fight against this evil, formidable¬†colossus is unlikely to go underappreciated by a hero-worshipping people. Besides, in a country where queues are an everyday¬†affair, the present hardship will hardly be remembered as anything more than a minor inconvenience.

True, if things¬†do not improve anytime soon, the situation might change, but the party in power is not going to suffer politically even then because they would have the Income Tax notices they have been serving on the small fish to fall back on. Therefore, the move might be useless otherwise, it’s politically quite sound, or so it seems at the moment.

Demonetization: The Give and Take of It

Forced into long queues, a woeful-hopeful India is supporting the demonetization¬†kicked into the works like the proverbial spanner by the government purportedly to make the black economy bleed and to bring it to a grinding halt by practically vaporizing hard cash — supposedly the lifeblood of black economy¬†— through demonetization. We are given to understand¬†that the move would hurt the black economy so severely as to put it on the deathbed. The common man believes that this is the death knell for the ‘dirty money’, which has been the cause of all financial ills, including massive income disparities, that India has been reeling under since independence. The poor and the lower middle class have always blamed the rich for their miseries, and the demonetization move plays the psyche quite¬†deftly. Fueled and buoyed by his¬†own elaborate fancies, the common man paints the¬†mental picture of¬†an alternative reality in which he and the richest¬†man he knows are eating together in the same eatery.¬†It’s not the five star in which the poor man imagines the richest man eats, but the cheap dhaba¬†where the poor man¬†takes his meals. The poor man is still happy to see the rich man suffer like he does everyday. ¬†

banksSome other poor man may dream differently, and in the alternative version of the imagined alternative reality of the post-demonetization golden era as imagined by the poor, the roads are paved with gold and there is no poverty because there are no rich and poor any longer; only happy people with more than enough for everything and everybody because all black money is flowing on the roads like rainwater. If you think it’s overly fantastic a vision for even the simplest of the hoi polloi to entertain, you might have ignored that these are some of the same people who not only believed that a different government could not only bring back¬†the offshore black money but could and would also —¬†as promised — have it¬†deposited in the bank accounts of the common people and everyone would be richer by a few lac overnight simply for being the citizen of the country with a bank account. To them our Prime Minister is nothing short of a miracle worker, which, in some rather unflattering ways, he indeed is.

crying-manThe poor and a large number of have-nots are willingly suffering for what they believe to be a noble¬†cause, and while the merits of the move are debatable, it remains the first major¬†assault on black money so far. It’s only the swing and sweep of it that might turn out to be unwise. And that’s what the government must be prepared for. People have suffered a lot for no fault of theirs in the hope that the nation would gain, and some kind of socio-economic justice will be delivered. The government must have something concrete in terms of results to show for all the suffering it has put the people through. Coming up with a list — no matter how long or heavy from¬†the heavyweights on it — of the people prosecuted simply would not do unless the government manages to recover substantial amounts in taxes and fines, and the sum should not be lower than 20,000 crore because that is the minimum the nation will have most likely lost directly or indirectly in implementing demonetization by the end of the first 20 days.

The government is free to experiment all it wants, but at the end of the day we’ll hold it to account.

Demonetization: The Rough Side of the Happy Shine

Most of the black-monied would prefer to burn, drown¬†or bury the paper currency gone bad instead of declaring it because of the fear of prosecution combined with the fear of being on the government’s radar for the foreseeable future. So, a great deal of black money is just dead. Not spent, not taxed, just plain dead. The filthy rich are no longer filthy and no longer rich. So what? And now what?

They¬†would get back to work and start earning and flourishing again in some time. Would they start paying their taxes for the fear of demonetization then? Unlikely, for the thieves don’t abandon stealing; they just find better ways. Black Money would start piling again and might return¬†with a vengeance, immune to demonetization.

Those who call it a ‘bold decision’ do not understand — or are in denial — that demonetization is always a desperate measure and not some¬†cool-headed, matter-of-course policy decision, much less a ‘masterstroke’ that it is being touted as, the flamboyance of the announcement notwithstanding. It’s not such a happy thing to admit that your currency notes are not good enough because of black market and counterfeiting, for it’s, in part, an admission of failure. It’s more like wiping the chessboard clean and starting afresh when you realize that you can’t win the ongoing game.

moneySo, what would this extremely inconvenient move do for us? Nothing significant really. Counterfeit currency will go out for a while and return because the notes are out, not the printing presses. If they can print this, they can print that. You say “let’s redesign” to your press; they say the same to theirs.

Black money will come back soon enough for the obvious reason that those who really have an awful lot of it would simply dump it and start over.

What it has actually done is this:

  1. You have no black money, but you are standing in front of the bank for hours to get your notes exchanged. You withdrew a large amount, say Rs 2 lac from the same bank branch yesterday for your daughter’s marriage, and now¬†you are back here and the marriage has to be postponed because you can’t get sufficient amount of currency in time.
  2. The poor and the very poor are also standing with you. Black money? What black money? They make less than Rs 70,000 a year and now whatever little savings they had in cash has to be brought to the bank for exchange.
  3. The banks and their employees are under enormous pressure and the system is creaking under the weight. They are badly overworked, and exchanging currency is not exactly what they are trained for.
  4. Long queues in front of the banks across the country means that a large number of people are standing uncomfortably for hours for no fault of theirs. It can make them angry and there can be clashes and instances of violence.
  5. The markets have nearly shut for the past two days across the country, which has already caused a loss of many hundred, if not several thousand, crores in business, and loss of business is also loss of taxes. So, the government has already lost hundreds of crores in taxes, if not more, and the loss would continue to accumulate.
  6. The estimated cost of replacing all the demonetized currency with the new currency is around Rupees 12000 crore.
  7. Almost every person in the country is inconvenienced to some degree, and a¬†great number of work hours have been lost causing loss of productivity across the nation. That’s also a loss¬†though harder to quantify. This loss, however, is also in hundreds of crore, given that we are a country of 125 million people.

So, in this adventure we have spent or lost, one way or the other, somewhere close to Rs 18,000 crore already. One might estimate the total cost to the Indian exchequer, including the loss of taxes from the temporary slump in the market, at a minimum of Rs 15,000 crore by conservative assessment.

Demonetization is an economic move primarily. So the losses and gains from the exercise are not completely incalculable in monetary terms, even if the immense hardship to the common people across the country is ignored for the purposes of cold calculations.

The government should ideally gain at least Rs 15,000 crore in taxes from this move. Else, this would be an exercise in vain because demonetization cannot really affect future black money a great deal. Also, it can take the fake currency out of the system temporarily, but cannot affect its¬†future inflow either. So, like in chess, your cleaning the board and starting afresh does not really¬†improve your chances of winning the next game; it only prevents a complete defeat in the previous one. But this also means you gave in for the fear of losing, having already conceded defeat in your own mind. Masterstroke? We’ll see.

Black Money Euphoria: The Laugh of the Jealous?

Indian currency of different denominations are seen in this picture illustration taken in MumbaiSurgical strike on Black Money, eh? Is it dead yet? Or has it changed colour and turned white, pale, cream or some other colour of your preference?¬†Good move, may be, but what’s in it for any¬†of those who are going bonkers over it? For the most of us, it’s yet¬†another inconvenience in our already inconvenient lives.

To re-explain the basics, just so we are on the same page, Black Money is the same colour as any other money, and gathers its melanic properties from being undeclared, which is not necessarily the same thing as ‘unearned’ or ‘undeserved’ or ‘looted’ or ‘begotten by unlawful means’; it simply means that the applicable taxes on this money have not been paid, which apparently dims its complexion. People don’t pay taxes because the fact is that nobody wants to hand over his or her hard earned money to the government in taxes, but most of us can do little about it because we¬†get our salaries TDS deducted. Then there are businessmen, who manage their own taxes and have a good deal of control over it. So, they do what most of us cannot — evade tax. Bad thing, yes. But they earn more, evade taxes¬†and get to splurge freely making us turn to coal¬†with jealousy. Disgusted, we call the tax-unpaid money ‘black’. But¬†that’s — for all practical purposes — money saved; you might also call it ‘money stolen from the government’. Yes, bad, very bad, evil, dishonest, loathsome and all that, yes, but it’s still extra money and a lot of it, which makes a good deal of it readily disposable.

Spurred by greed, they send¬†the black money to work and make more money. It changes hands and remains in circulation outside the books. It’s human to be generous when you have lots of disposable wealth¬†at hand. So,¬†the ones with black money are¬†willing to spend a lot more freely than, say, someone who has worked hard to earn his grub and has paid the government its dues, after which he is left with barely enough for his family. So, the black-money-rich¬†spend with a free hand, and the working class and small businesses earn more without having to break their backs for it. If there is any trickle-down effect, it is through such uncareful spending.

And then there is this guilty conscience of the nouveau-riche, who, having been brought up in the traditional middle class values, feel guilty about having so much when so many of their fellow human beings are struggling to eat. The Jagraatas,¬†the langars,¬†the bhandaras¬†and the Maa Ki Chaukis¬†are roped in to assuage the shrill little voice of the conscience. That’s more like bribing the gods to look the other way, but, intent regardless, the rickshaw-pullers, the beggars and the poor get to eat better food; the aspiring singers and musicians get to show their talent and make money to live and train, and the workers of the tent house also get employment¬†because the tent house gets work apart from marriages. So, the rich feel good and the poor get fed. And the government gets the indirect taxes on the material used for cooking the food and other things.

Black money is also the money that is freely¬†lent for high-risk, low security or no security, businesses on high interest rates to those people who can’t obtain loan from conventional financial institutions. The amount thus loaned out becomes seed capital for many small businesses, which aid the mainstream economy in their own small ways.

What happens when the people with large amounts of disposable wealth suddenly have no money? They would still have enough money to live¬†well. They would still have maids and servants; fewer, may be. Where they had four drivers for three cars with one driver in spare, they would now have two drivers for three cars, which is still good enough, but not quite as extravagant as four for three. Who loses? The drivers. You can talk of the maids and the servants and the gardeners and so on the same way. The rich would still live with much the same luxury. But they would have less to spend freely for some time.¬†There was a good reason why the ‘bold decisions’ of demonetization are not taken every other day.

While the government’s decision might be good, I don’t understand what’s it that the poor, the lower middle class and middle middle class are celebrating so gaily? Hidden money is not getting out in the open; it is getting burnt. And a lot of money that was about to be spent in your shop, Mishra ji, and your restaurant, Saxena Sahab, and your food joint, Arora ji, and your salon, Kallan Miyan, is not coming to you anymore; it’s going down the drains, quite literally.

The Black Money some people promised to bring back was the one that’s stacked away overseas. It could be enriching for us, as it is our money lying elsewhere well beyond our reach. As of now, we are just burning old paper at home. The government might gain in taxes, but your small businesses and your services are going to be spent less lavishly upon. Making the rich poor does not necessarily make the poor rich.

I am not an economist, and am still awaiting the pronouncement from the experts on this, but the euphoria around baffles me nevertheless. What exactly are the people so, so happy about? That the rich would¬†no longer be quite as rich as before? So, is it the sadistic laugh of the jealous? For the common people¬†it’s nothing but long hours in queues in front of the banks without any black money happiness in the past, present or future.

And soon enough you might hear chants about the government having delivered on its Black Money promise. But¬†that’s not the same Black Money, buddy. Sorry.