This May, i returned to India for a two week holiday.
Interestingly, my responses to similar circumstances on this occasion were markedly
different than they were the last time i returned from Europe. More
specifically, my appreciation of economics had changed.
In 2011, i had to take an auto-rickshaw from the Metro
station to a friend’s apartment, where i temporarily lived. The distance might
have been about five kilometers. It was a rule for auto-rickshaw drivers not to
charge by the legally prescribed fares, but charge a large premium. Having
lived in Europe, where a five kilometer ride in a taxi would cost me €12, I
would quickly convert ₹100 to imply a mere €1,5 and promptly agree to pay,
thinking of myself as being only fair in giving liberally to those in need.
Both driver and i were happy.
Despite being parched due to the immense heat, this
year i found myself refusing to pay ₹50 (~€0,70) for a 1 liter of
bottled water while waiting for a friend at the airport, while it bore a
sticker price of ₹18 (~€0,25). This, i found puzzling, because in Europe, i
would not think twice before spending €1 for a 0,50 liter water bottle, if
parched.
Why was i being so inconsistent in my behaviour, not only
in the space of a year, but just seven days? Did i have my reasons, or was i
being irrational?
Let me use a hypothetical illustration to explain. Ganesh
enjoys eating three-quarters of a loaf of bread for breakfast. His parents are
affluent and have ₹10 of daily disposable income for his breakfast. On
the other hand, Harpreet, Iqbal, and Rita’s parents are poor,
and have only ₹1 of daily disposable income for each child’s breakfast,
and these children are used to breaking fast with only 1/12th of a loaf. On
finding that the optimal bread consumption for children in the age group of
Ganesh, Harpreet, Iqbal and Rita, is a quarter of a loaf, the price of a loaf
of bread is fixed at ₹4, so that all four children could be afforded
optimal nutrition. Is it now just for Ganesh’s parents to offer to
the bakery a 100% premium to acquire his desired three-quarters of the loaf
for ₹6?
It may be considered a corrupt practice to pay more money
– tantamount to bribery if you will – to have access to additional resources in
this hypothetical illustration. However, would it be just for Ganesh’s parents
to purchase his desired quantity of bread at the sticker price of ₹1 per
quarter of a loaf?
Basic resources like dignified human transportation and
potable water in countries like India are scarcer than the loaf of bread in the
hypothetical illustration above. Must the wealthy few steal away the
opportunity to lead a dignified life from the less fortunate multitudes, just
because they can afford opulence? Trickle-down theorists like to argue that the
poor earn greater incomes on account of greater spending by the affluent.
However, it is evident that while nominal incomes (cash/bank balances) of the
poor may increase, their real incomes (what income can afford) continue to
dwindle, given the great scarcity of resources, and the ever increasing demands
of opulence by the affluent.
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