The Hindu Business Line : The economics of a scam

Even while escorted by cops, up and down the courtrooms and in and out of prison cells, they seem to retain their calm, very much like the soothsayer whose look says: `I knew this would happen'.

Second, they talk only of big money. You and I ma search our pockets for tens and fives, fumbling for the required notes when somebody embarrasses us with a `Can you give me change for hundred' request.

But the scammies deal in crores. Not just one or two, but hundreds.

Again, that's how economists too operate. They talk about macro stuff easily. Micro is your headache. They can churn out theories about how the nation's income could be enhanced but won't entertain such queries as `Boss, how do I increase my bank balance?'

Third, the scamsters are intelligent, though not wise. They are smart, living off the toil of others. They know where money sits idle and, as the saying goes, a fool and his money part ways even before you can say `Humpty Dumpty'.

Most economists, however, seem to be wise, though not smart; intelligent but not too enterprising; and idle while others toil.

While all scammies could be economists, the converse may not always be true.Fourth, scams are complicated. Everybody believes that Sanjay and Ketan are the new villains, and it's not too difficult to guess why.

For many, gilts are guilts where `you' don't figure, deliveries happen in labour rooms, and co-ops are where milk and kirana are sold. Economists are no different, cooking up theories that few relate to, formulae that look like a lot of snakes and few ladders, and models that could make you shut your eyes.

Fifth, people believe them. This happens because of all the points mentioned above. If you say something complicated, and on a large scale, it is not too difficult to draw an audience.

While it would be tough to get a bank manager lend you a few thousand bucks, even when armed with all necessary papers, the daredevils go for drive-in service when picking up liquidity.

Similarly, while a wife may find it next to impossible to convince her husband how it would be cost-beneficial to switch over from a dumb washing machine to fully automatic one, there is every chance that at work he would be hinging his capital expenditure decisions to tables and charts prepared by the economist.

Ever wondered why country ratings and downgradings attract so much attention? That is because they sound believable.

Sixth, it is tough to prove they are wrong. The normal cop, with his usual 123 or 456 tag, is not assigned these jobs. Decent-looking sleuths take over and they first ask: "Yaar, how did you do what you did?"

People from the `Economic Offences Wing' burn the midnight oil to understand what the new financial products are because, at times, the scams have an incredible level of intricacy.

No different with economics. It is not for the weak-hearted. And it is tough to prove them wrong.

Seventh, in the long run, they are out and free. Scam kids know that all travails are short-term.

Economists, too, agree that what look like major happenings, screaming through 72-point headlines, are but small shivers on a trend graph, like MiGs that are blips on Pak radars.

And that, in the long term, we all go to St Peter's Gate together.

hindubusinessline@hotmail.com

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The economics of a scam