http://economictimes.indiatimes.com/opinion/interviews/demonetisation-in-a-booming-economy-is-like-shooting-at-the-tyres-of-a-racing-car-jean-drze/articleshow/55547554.cms?from=mdr
Demonetisation in a booming economy is like shooting at the tyres of a racing car: Jean Drèze By Vasudha Venugopal, ET Bureau | Nov 22, 2016, 11.18 AM IST The debate on monetization is vitiated by delusional hopes of the impact it might have on the black economy, says Drèze. "Demonetisation in a booming economy is like shooting at the tyres of a racing car," says development economist Jean Drèze . A leading advocate of welfare policies, Drèze who was a member of the National Advisory Council during the UPA regime, tells ET that the sudden move to demonetize high-value currency notes has created a scary situation for people who live on the margin of subsistence, and that opposition parties may well be the real targets of the move. Edited excerpts: How do you view this sudden demonetisation measure? The debate on monetisation is vitiated by delusional hopes of the impact it might have on the black economy. Tall claims are being made about the ability of demonetisation to “flush out black money”, “crush the shadow economy”, or achieve “an all-out assault on the parallel economy”, to quote just a few expressions used by the government and its admirers. These claims are based on what might be called the hoard theory of black money. In this view, black money is a gigantic hoard of illegal income that keeps growing and needs to be flushed out. This is wrong. Crooks know better than to keep their illegal income in suitcases of cash. Instead, they spend, invest, launder or convert it in one way or another. They use it to buy property, fund lavish weddings, shop in Dubai or oblige politicians. Of course, at any point of time some black money is likely to be lying in jars or pillow-cases. But going after that residual liquidity is like mopping the floor under the shower. Thinking of it as a decisive strike on the black economy is a severe delusion. This point has already been made by many eminent economists, but the government seems to prefer its own echo chamber. Snipped -- Peace Is Doable -- You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send an email to [email protected]. Visit this group at https://groups.google.com/group/greenyouth. For more options, visit https://groups.google.com/d/optout.
