Black Money of the Indian & Other National Origins

Black money [1] , its origins and its role in the financial history are legendary and known to humanity from the very beginnings of commerce. Here are some interesting facts.

It is estimated to run in to a trillion or more American dollars in equivalent value.

It is used by princes and paupers alike. It is created and used to fund clandestine operations.
Having become aware of its presence, and more importantly, of its corrupt influence on the various aspects of humanity, it has become necessary now to deal with this question in a way that will provide answers to all that have a stake in its resolution.

Since, illegality is the origin of this practice; the answers cannot and should not reward the guilty. So, at the very outset, let us all be very clear about this fact. No guilty will or should go unpunished. The second aspect of this money is that it is not unique to our times, one country or to any one group or another. The solution to this issue is very simple, like all the elegant solutions are. Essentially, a black money is stolen money. By virtue of its stealth, it claims its value to be equal to that of the real money, which is chutzpah of some magnitude. A stolen property, if brought to the market will need fake certificates of authenticity to make it sale able. In the same way, black money to buy anything with it needs appearances of authenticity. Usually, it is in the high and the mighty places that such authenticity is presumed to exist. So it is that with the connivance of the powerful and the mighty that the black money exists.

So it is that, with only an equally powerful and mighty institution can, a duel in this contest between the illegality and the legality take place. Such a duel, when conducted needs to be transparent, continuous, and ethical; and above all- needs to be beyond any reproach.

The so called, free markets have gained some reputation among the economists and among the general public. So, what better way is there than turning loose this free market approach to this black money issue? It is not that different than what a brand name product such a Rolex watch that has several fake/imitation Rolex es being sold on the sidewalks of any large city. Doesn’t the sidewalk hawker know the consequences of his/her action? Isn’t there well-oiled machinery behind its origins and presence? Isn’t the brand name affected by its obvious blatant abuse? What timidity? Shouldn’t someone be held responsible? Doesn’t the buyer of the product feel shame? It is the vanity, someone would say, that is behind this fake products market. It is in the nature of the humans to be vain.

Black money suffers from all of these baggage and more. And yet, it is created, marketed and sustained by the vain and the ignorant. It is to the human nature that we can ascribe this grand larceny and theft. So, should we not do anything? Is ignoring the problem make it go away? Well, law makers all over the world have done that over many a centuries and then some. The fake products market has seen lax and strict enforcements over many a regime. But those who deal in them know when to go underground and when to surface all with the connivance of both the high and the mighty as also the very ordinary vain.

So, what is this very elegant and simple solution that I mentioned before?

The very elegant and simple solution I propose for the American President Obama and the rest of the world leaders is that let us create and sustain a scientific and open market for the vain and cater to the vanity, just as we cater to the virtuous, the fallen and the sinners.

Let the black money compete with the legal tender to see if it can survive. Let the currency traders open a window for black money, under the foreign currency act of their central banks/currency boards and find out how much of a supply is there and how much is the demand? Are there benefits to avoiding taxes and creating black money? Is the value destroyed (legality lost) made up in any other benefit/fashion? Can the black money match the returns of its legal tender? It is to bridge this major gap, which the black money parades/flaunts, by glamorizing; it’s so called “influence” pedaling capacity. Once, if someone is in bed with you, then, you can blackmail them to your advantage ‘” at least so the argument goes to favor the creation of that black money. Once, the central bankers/currency boards, open up the counters and start making a market for those fallen and trapped, then, the black-mail component of the black money value will steadily drop to zero. There will be a way out, with of course, a very hefty cost for having had to learn a lesson; but, definitely better than being in an uncomfortable bed forever.

If the central bankers/currency boards and their sovereign states buy this argument, then, of course we can discuss all other aspects of this elegant and simple solution, which could restore the justice, mercy and create the restitution regime to win the legal duel without any bloodshed but with appropriate penalty for having battled and lost.

In India, there a movement to get rid of corruption and black money by starting a satyagraha (fast until death or agreement to take action). Will such a movement succeed [2] ?

[2]Bharat Swabhiman : is an organization to amass the political will necessary to get rid of corruption and black money.

[1] See the PBS program