Thursday, February 28, 2008

Whoever said a picture is worth a thousand words definitely knew what they were talking about.... this one is from Time Magazine....

Friday, February 8, 2008

Bargaining away our growth.

I have a confession to make. I cannot bargain. When I do bargain I get it down by a ridiculously low sum and then don’t know whether to feel elated at managing to get the price a couple of notches down or irritated that I could have gotten it for less. Not a good feeling… quite ruins the whole therapeutic effect of shopping. So to escape the necessity of bargaining I tend to frequent the larger fixed price stores and end up paying more.
The whole bargaining thing just freaks me out. I mean you can go through the entire shopping experience convinced that each and every seller is out to cheat you and bargain every where you go…. To me getting a kilo of grapes down from Rs. 40 a kilo to Rs. 35 a kilo or 30 a kilo is just not worth the effort… I mean it’s 10 bucks…. Less than the price of a coconut. Seriously…. Is it worth the trouble? You may disagree with me but I don’t think its worth the trouble. If I get it down the shop keeper is upset, if I don’t then I am upset. What’s the point? Is 10 bucks going to make that much of a difference to my life’s savings? Not really. The 13 hours a day that I spend commuting and working are stressful enough without me adding to it by bargaining with every shopkeeper I meet. However bargaining when ur with someone who knows how to go about it is quite a lot of fun. U get all the benefits of a much cheaper price and someone else takes all the stress…. Win win situation all around, especially if the person doing the bargaining actually enjoys doing that.
I am a believer in the beneficial aspects of competition and economic cycles. Prices always find their own levels. Bargaining is bringing the price to an artificial level. First you bargain, then the seller knows that you will bargain, so his starting price instead of a 20% margin gets a 50% margin so that even after you bring it down he still makes his money. This in turn makes it necessary for everyone to bargain else prices juse keep rising and inflation goes out of control. Mr. Reddy won't be happy about that and we won't be happy with the increasin interest rates that he will punish us with for having unwittingly pushed up prices. Eliminating bargaining would stop all that (in a somewhat perfect non-cartelized competitive market).
Moreover, my money (that 20% margin that I didn’t bargain down) will go into the shopkeepers pocket, thus adding to his spending capability which he would in turn spend on goods and services that would in turn generate more demand and more supply and thus ultimately help the economy grow as the incomes at the lower levels is boosted.
Pretty neat huh? So next time you bargain remember that you could possibly be slowing down the economy and increasing inflation! In fact you may jsut be the reason why we have such high interest rates! So instead of shooting yourself (and the rest of us) in the foot, why don’t you just let the guy take a reasonable margin and buy into the equity markets… you know his money is going to go back into the system.