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Old 18th December 2016, 16:32   #1741
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Samurai View Post
One can easily run out of items to barter, that's the trouble with non-cash bribery. Hence not scalable.
Everyone wants something, everyone has a price and no, it's not a small-scale phenomenon. There's virtually an unlimited supply of people willing to do one thing in return for another. That's the magic of having a billion-plus population and a burgeoning bureaucracy with several levels of redundancy.

I'd actually hazard claiming non-cash bribery is actually a far bigger phenomenon than its cash-based sibling, and restricting cash won't put a permanent dent in it, if at all. Don't have the numbers to prove it so disregard it as a product of my imagination, if you will.


I understand you're reasonably well-versed with economic theory, but you make far too many assumptions when it comes to human ingenuity. Humans created economic theory, not the other way round. Bribery has existed since before formal currency has. Money has made it easier, but money is not indispensable to it.

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Old 18th December 2016, 16:39   #1742
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Re: Government scraps Rs 500 and Rs 1000 notes!

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I'd actually hazard claiming non-cash bribery is actually a far bigger phenomenon than its cash-based sibling, and restricting cash won't put a dent in it.
That is not true at all. Cash is king. And it makes one so. And his/her family too. Why depend on someone's largesse when you have the cash to get it done and feel good about it too?
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Old 18th December 2016, 16:45   #1743
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Re: Government scraps Rs 500 and Rs 1000 notes!

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That is not true at all. Cash is king. And it makes one so. And his/her family too. Why depend on someone's largesse when you have the cash to get it done and feel good about it too?
One, I edited my comment you quoted, so you may want to reconsider your response.

Two, I actually agree with you, with a small caveat. 'Money' is king, actual 'cash' is but a sidekick. There's a reason the wealth of the world isn't all in currency notes.

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Old 18th December 2016, 18:13   #1744
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Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by Chetan_Rao View Post
I'd actually hazard claiming non-cash bribery is actually a far bigger phenomenon than its cash-based sibling, and restricting cash won't put a permanent dent in it, if at all.

I think you're correct in claiming that. Monetary corruption is only one form of corruption, and cash-based corruption is only one form of monetary corruption.

The phrase "crony capitalism" itself suggests that there is an endless ocean of corruption beyond the horizon of cash-based bribes that is visible from the shore.

I can give at least three examples of big ticket (real big!) corruption in India that did not involve a single paisa exchanging hands in the form of cash. They're political cases, of course (and these cases are currently sub-judice as well), but they're far, far bigger than the relatively "small" but innumerable cases of cash-based corruption.

Just because the common man/woman only comes face-to-face with cash-based corruption 90 ~ 95 % of the time, it doesn't mean cash-based corruption constitutes the vast majority of corruption.

Cash-based corruption is the sea in which the small fish swim. Non-cash corruption is the vast ocean that's home to the big fish and the sharks!

Last edited by RSR : 18th December 2016 at 18:27.
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Old 18th December 2016, 18:29   #1745
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Everyone wants something, everyone has a price and no, it's not a small-scale phenomenon. There's virtually an unlimited supply of people willing to do one thing in return for another.
While that is true, you are completely ignoring the search theory of economics. If you have item X and will exchange it for item Y, unless you find a person who can give you item Y for item X, you are stuck.

Applying the same concept, if the briber and bribee don't have complementary service/item to barter, they are stuck too.

If your assumptions were true, the whole need for currency will cease to exist. I explained this concept in 2011 in another thread.
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Old 18th December 2016, 19:28   #1746
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Re: Government scraps Rs 500 and Rs 1000 notes!

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While that is true, you are completely ignoring the search theory of economics. If you have item X and will exchange it for item Y, unless you find a person who can give you item Y for item X, you are stuck....
You're also ignoring a critical bit: X and Y in reality are usually variables, not fixed entities. That may vary from what search theory says but bear with it a minute.

Consider this scenario: If I'm in a position of influence looking for both a monetary and intangible benefit, I can find one person who'll deal with me in exchange for cash, and another for the intangible benefit, separately.

In the example I quoted, the bureaucrat could approve inflated bills for cash, but also needed an expensive college seat for his kid. If the contractor didn't have influence with the college seat, the bureaucrat would've taken the money and paid for the seat himself with it. The contractor's situation just made the bureacrat's life easier by combining both transactions, and eliminating a significant chunk of the trail traceable directly back to him.

It's a particularly valid use case in our country by virtue of both our vast population and huge income disparities. The pools of X and Y are huge, and in case one can't get a particular X to fit a particular Y, another can usually be found, difficult sometimes but never really impossible.

As for rendering currency redundant, it's not entirely impossible. Currency makes a lot of things easier, but its absence doesn't render anything impossible. The barter system is the oldest trading system known to man, isn't it? Money just became a universally recognised item on the barter scale because of widespread acceptance, essentially turning X & Y into variables instead of fixed items, no? Instead of taking the X I don't want, money enables me to take money in exchange of Y, then go find someone who has the X I want in exchange of my money.

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Old 19th December 2016, 13:48   #1747
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Re: Government scraps Rs 500 and Rs 1000 notes!

Another industry crippled by demonetization.

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“A 10-12 year old girl costs Rs 5 lakh, while girls between the groups of 13 and 15 cost Rs 4 lakh. These transactions are all done in cash, in black money. The brothel owners are now caught in a bind because they can’t convert this cash at the banks. Because the new currency is not readily available, clients have stopped going to brothels and the brothel owners have no money to pay the traffickers,” Nobel Peace Prize winner Kailash Satyarthi said.
Source
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Old 19th December 2016, 15:10   #1748
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Re: Government scraps Rs 500 and Rs 1000 notes!

@Samurai; I will reply in one word. Excellent if the 'trade' is put out of business, for whatever reason. Bravo for that.
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Old 19th December 2016, 16:25   #1749
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Re: Government scraps Rs 500 and Rs 1000 notes!

@Samurai
I am not meaning anyone or forum in particular, but following the threads in a couple of fora on this subject, when one compares the situation till Nov 20th or so, to the situation at present; i find that 'resistors' have increased or are voicing their objections vociferously, the 'for' have become bystanders or are not voicing/defending aggressively, and the bystanders have increased.

People losing faith or what?
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Old 19th December 2016, 16:36   #1750
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Re: Government scraps Rs 500 and Rs 1000 notes!

Geez, I wonder why people are resisting when everything is obviously hunky dory. This ATM used to be deserted, but now people actually sleep outside of it, waiting for refills.
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Old 19th December 2016, 16:50   #1751
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by earthian View Post
@Samurai
I am not meaning anyone or forum in particular, but following the threads in a couple of fora on this subject, when one compares the situation till Nov 20th or so, to the situation at present; i find that 'resistors' have increased or are voicing their objections vociferously, the 'for' have become bystanders or are not voicing/defending aggressively, and the bystanders have increased.

People losing faith or what?
People are not losing faith. They are getting tired of the rumor mongering and propaganda unleashed in MSM. On the other side Govt is not helping the cause by poor communication. The confusion on political donations is a good example. ATM queues and shortage of change are a reality. Only one thing can help the situation. Saturate the market with 500 notes ASAP..!
I could not stop smiling with content after reading this..
http://zeenews.india.com/uttar-prade...y_1959814.html

Last edited by poloman : 19th December 2016 at 16:54.
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Old 19th December 2016, 16:58   #1752
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Originally Posted by earthian View Post
...when one compares the situation till Nov 20th or so, to the situation at present; i find that 'resistors' have increased or are voicing their objections vociferously, the 'for' have become bystanders or are not voicing/defending aggressively, and the bystanders have increased.

People losing faith or what?
People have moved on. There is a limit to for how many days one can talk about the same thing. Only time would tell if the whole exercise was worth the inconvenience caused to millions of people. The Budget in February would share some concrete numbers around this. Would inflation come down? Would real-estate prices be more rational? Let's wait and watch

Last edited by SDP : 19th December 2016 at 16:59.
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Old 19th December 2016, 17:15   #1753
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Re: Government scraps Rs 500 and Rs 1000 notes!

https://www.valueresearchonline.com/....asp?str=32613

The best (or the most lethal, depending on your perspective) thing about demonetisation is that practically all the cash in the country will have to be cycled through a bank account by December 30.

By that date, every single one of the 15 odd lakh crore value of large notes will have a trail in what is effectively a single web of interlinked computer systems. This is 'Big Data' with a vengeance and those who understand the implications know that this is the real brahmastra in the war against the black economy.

The second huge impact will be from the forced shift of retail and trade activities to cashless transactions. This shift is a one way street, for the same reason. It leaves a data trail. Talk to any businessman who is being forced to go cashless. He has understood very well that once he has generated a data trail of a certain sales volume from November to January, he will never be able to shift back to cash like the old times
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Old 19th December 2016, 17:36   #1754
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Talk to any businessman who is being forced to go cashless. He has understood very well that once he has generated a data trail of a certain sales volume from November to January, he will never be able to shift back to cash like the old times
Very true! So, obviously the year end IT filing has to be done according to the newer reported figures.
Once cannot report 10% of what is recorded as sales during this period (Nov - Jan) after the cash availability becomes better. That makes him an easy target for IT dept.
Next is the fact that, the customers who got used to doing business the cashless way would prefer continuing that way (unless they are already dealing with black money).
So, this 2 months period period will have a cyclic effect: The black cash in someones hands becomes either useless or brought into the system, which needs to be withdrawn as white money after IT to give it to someone else.
No big benefit again due to the lack of black cash.
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Old 19th December 2016, 18:28   #1755
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Re: Government scraps Rs 500 and Rs 1000 notes!

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Only one thing can help the situation. Saturate the market with 500 notes ASAP..!
The govt. keeps announcing that the presses are running at full capacity printing 500 notes but they just seem to be elusive.
I still havent seen any in the ATMs. Funnily, even the 100s have disappeared from the ATMs. They are only filled with 2000s.

I personally feel the condition has gone from bad to worse. The ATMs that used to be refilled every 2-3 days earlier, are now empty for the last couple of weeks.
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