On adversity and ways to tame it
Saturday, 25 August 2007
Qazi Azad
One might have discovered the other day why our national poet, Kazi Nazrul Islam-- the rebel poet -- wrote in profuse praise of poverty on reading a particular article, published recently in a Dhaka daily. Its writer sought and succeeded to push through her points like shells, fired from cannons.
Perhaps a younger Bangladeshi girl, who was attending the local American School, wrote a letter long ago in the same daily on a controversial historical matter, which then surfaced for a wide range of academic discussion on. Driving her points remarkably coherently and beautifully, the young lady advised her readers, "Read, think and learn".
While the country still reels under a devastating flood and millions of our people find themselves overtaken by sudden miseries and being tormented by an angry nature for no fault of their own, the article under mention would encourage most of the pathological Bangladeshis to think that their country is gifted with many brilliant young minds. They would be also convinced that this country does indeed have a bright future.
The rebel poet, Kazi Nazrul, eulogized poverty in these words, "Oh, poverty, the noble, thou hath given me honour as is due to the Christ; the glory of a thorny crown, oh saint; the indomitable courage to express without hesitation".
In her article on the raging inflation, the particular writer recalls, "In an efficient (or somewhat efficient) market, price makes supply and demand come to an equilibrium. As prices increase, suppliers, in lure of profit, increases supply. As prices decrease, consumers end up buying more (as they can afford more). Criticizing market policing, as being done leisurely now by the joint forces to stem high profiteering, she writes, "This is a distortion of the market mechanics that defies even the basic economic sense".
The article, which is quite illuminating, explains the basic fact of supply of any product being a function of its demand and the supply being again a function of a good profitable market condition. But if one rechecks why the British have their Office of Fair Trading (OFT) to enforce their legislated rules for discouraging retail price maintenance and other anti-competitive business practices, one would find that a perfect market does not emerge and develop automatically. It requires a set of market discipling rules to create an environment for the market to operate responsibly with the due sympathy for the consumers. Those rules, which collectively form the basis of competition policy, are necessary for the players in a free economy to know the limit of their own orbit and the consumers to be assured of what would protect them from any unethical business manipulation and illogical profiteering.
Boris Yeltsin-the late Russian President, could not grasp that an efficient market did never sprout up magically and automatically with the introduction of the market economy or with a radical change of the state political system, as happened in his country with its transition from the controlled economy under communism to the free market, following the break-up of the Soviet Union. He opened the market to competition without setting the regulatory regime and having institutions to enforce it as if he preferred to go on skating without being fully equipped. He slipped and had his legs broken. The Russians, as a result, were bruised. A manipulated market, gone wild at the hands of the opportunity-seekers on a frenzy of profiteering, hurt him and his nation grievously. Boris had to bow out of office with much discredit.
Every state that has embraced the market economy, including this country, should have the necessary regulatory laws and bodies in place to create the proper environment for an efficient market to sprout up. The Americans have their antitrust laws for it. The British have their equivalent legislated rules and institutions to enforce those rules for capping exploitative abnormally high profiteering and market manipulation, as mentioned partly in the foregoing paragraph.
But it seems that Bangladesh has gone for staging the orchestra, called the free market, without caring to have enough musicians to play its different instruments for maintaining its rhythm. It is yet to have a consumer protection law and a competition policy, defining the rights of the consumers and the degree of freedom of the business people in manufacturing and trade.
Policing the market, leisurely and arbitrarily without being equipped with appropriate rules, as an alternative arrangement, can also create unjustified obstructions to interrupt or distort the market rhythm. We have to be extra careful to avoid creating the dreaded adverse consequences.
One pragmatic way of disciplining the market at this difficult time of soaring inflation could be advising the importers not to go for a margin of effective profit beyond a certain limit, which may be defined by the authorities in consultation with the relevant business people, the banks and the transporters' association. The retailers may be required to limit their apparent profit within a margin defined for them by the authorities. They may be also required to always retain the cash-memos of their purchases from the wholesalers and give similar memos to all their buyers. The wholesalers too may be brought under a similar arrangement if they are not also importers of the same goods.
The policing of the market may then become effective and non-harmful with a set of pre-defined rules. While negotiating the optimum profit margin, to be allowed to them, the business people will have the chance to convey to the authorities and the authorities to take into account what level of profit margin will not erode the motivation of the business people for continuing their businesses and will not drive them out from their socially useful and beneficial activities.
One might have discovered the other day why our national poet, Kazi Nazrul Islam-- the rebel poet -- wrote in profuse praise of poverty on reading a particular article, published recently in a Dhaka daily. Its writer sought and succeeded to push through her points like shells, fired from cannons.
Perhaps a younger Bangladeshi girl, who was attending the local American School, wrote a letter long ago in the same daily on a controversial historical matter, which then surfaced for a wide range of academic discussion on. Driving her points remarkably coherently and beautifully, the young lady advised her readers, "Read, think and learn".
While the country still reels under a devastating flood and millions of our people find themselves overtaken by sudden miseries and being tormented by an angry nature for no fault of their own, the article under mention would encourage most of the pathological Bangladeshis to think that their country is gifted with many brilliant young minds. They would be also convinced that this country does indeed have a bright future.
The rebel poet, Kazi Nazrul, eulogized poverty in these words, "Oh, poverty, the noble, thou hath given me honour as is due to the Christ; the glory of a thorny crown, oh saint; the indomitable courage to express without hesitation".
In her article on the raging inflation, the particular writer recalls, "In an efficient (or somewhat efficient) market, price makes supply and demand come to an equilibrium. As prices increase, suppliers, in lure of profit, increases supply. As prices decrease, consumers end up buying more (as they can afford more). Criticizing market policing, as being done leisurely now by the joint forces to stem high profiteering, she writes, "This is a distortion of the market mechanics that defies even the basic economic sense".
The article, which is quite illuminating, explains the basic fact of supply of any product being a function of its demand and the supply being again a function of a good profitable market condition. But if one rechecks why the British have their Office of Fair Trading (OFT) to enforce their legislated rules for discouraging retail price maintenance and other anti-competitive business practices, one would find that a perfect market does not emerge and develop automatically. It requires a set of market discipling rules to create an environment for the market to operate responsibly with the due sympathy for the consumers. Those rules, which collectively form the basis of competition policy, are necessary for the players in a free economy to know the limit of their own orbit and the consumers to be assured of what would protect them from any unethical business manipulation and illogical profiteering.
Boris Yeltsin-the late Russian President, could not grasp that an efficient market did never sprout up magically and automatically with the introduction of the market economy or with a radical change of the state political system, as happened in his country with its transition from the controlled economy under communism to the free market, following the break-up of the Soviet Union. He opened the market to competition without setting the regulatory regime and having institutions to enforce it as if he preferred to go on skating without being fully equipped. He slipped and had his legs broken. The Russians, as a result, were bruised. A manipulated market, gone wild at the hands of the opportunity-seekers on a frenzy of profiteering, hurt him and his nation grievously. Boris had to bow out of office with much discredit.
Every state that has embraced the market economy, including this country, should have the necessary regulatory laws and bodies in place to create the proper environment for an efficient market to sprout up. The Americans have their antitrust laws for it. The British have their equivalent legislated rules and institutions to enforce those rules for capping exploitative abnormally high profiteering and market manipulation, as mentioned partly in the foregoing paragraph.
But it seems that Bangladesh has gone for staging the orchestra, called the free market, without caring to have enough musicians to play its different instruments for maintaining its rhythm. It is yet to have a consumer protection law and a competition policy, defining the rights of the consumers and the degree of freedom of the business people in manufacturing and trade.
Policing the market, leisurely and arbitrarily without being equipped with appropriate rules, as an alternative arrangement, can also create unjustified obstructions to interrupt or distort the market rhythm. We have to be extra careful to avoid creating the dreaded adverse consequences.
One pragmatic way of disciplining the market at this difficult time of soaring inflation could be advising the importers not to go for a margin of effective profit beyond a certain limit, which may be defined by the authorities in consultation with the relevant business people, the banks and the transporters' association. The retailers may be required to limit their apparent profit within a margin defined for them by the authorities. They may be also required to always retain the cash-memos of their purchases from the wholesalers and give similar memos to all their buyers. The wholesalers too may be brought under a similar arrangement if they are not also importers of the same goods.
The policing of the market may then become effective and non-harmful with a set of pre-defined rules. While negotiating the optimum profit margin, to be allowed to them, the business people will have the chance to convey to the authorities and the authorities to take into account what level of profit margin will not erode the motivation of the business people for continuing their businesses and will not drive them out from their socially useful and beneficial activities.