The rain teemed down in Ungobungoland as the summer monsoon dragged on. The locals claimed they hadn’t seen the like for years and with craters replacing potholes on the main thoroughfares into the capital, it was clear that the rickety infrastructure was suffering a bout of rickets. The ruling party – yet to be elected out of power in a generation – had headed off for a two-month break.
Just before the politicians made for the hills, it emerged that the pension fund that they had set up to look after future generations of Ungobungos had lost a few shekels. The Chairman of the fund for future Ungobungos also happened to be the boss of a company that benefited directly from the fund’s activities because the fund bought shars in that company. Although this may have been frowned on elsewhere, this was par for the course in Ungobungoland. The fact that the investments appeared to be made when the stock was in free-fall, after suspicions of unorthodox accounting, didn’t seem to worry anyone. Maybe that is because the populace of Ungobungoland had become so cynical that only a little over half of them decided to vote anyway.
Interpreting this apathy as a sign of complacency, the government that was rapidly running out of money slipped in a number of tax increases designed to shore up the leaky accounts before they broke up for the holliers. University fees went up by 70%; transport costs were slated to rise by 20%, electricity by 15%, health insurance by 18%, house prices by 15% with an attendant 6-9% tax. For business, insurance costs rose on average by 100%. The natives appeared to be getting restless and complained that they did’nt know where their money was going. Those who had been travelling suggested that the rest of the continent was laughing at ridiculous prices in Ungobungoland. Amazingly, all the price rises were introduced without an increase in taxes or as much as a mini-budget. Not that it seemed to matter because for the past five years the budget forecasts produced by the Ministry of Finance had been so wildly inaccurate as to be worthless.
The rate of inflation, although not doctored, does not present an accurate picture. People complain about the cost of living but are reassured that this is an anecdotal mirage and that the rate of inflation is under control. However, this jars with the survey data that reveals that Ungobungoland is the second most expensive place on the continent. Unfortunately for the Ungobungos, it might be the second priciest place on the continent but wages in Ungobungoland are still 20% below those of their richest neighbours. Thus, the average person is getting relatively poorer not richer. This may seem counterintuitive with the economy just coming out of a boom but the little Ungobungos who read the colonial literature of their former occupiers would recognise the anomaly from Charles Dickens. Dickensian Britain boomed yet it was also a place where the poor got poorer and the rich got richer. Meanwhile, the new middleclass spent their daylight hours in terror of falling back into the clutches of the working classes and so they borrowed and pawned to spend like the very rich. Much Victorian literature, from Dickens to Hardy, focuses on this neurotic and fascinating class.
Little Ungobungos who study contemporary politics would also recognise this “middle income poverty trap” as typical of developing countries in South America. In Ungobungo land, like Dickensian Britain, the immediate trap has been avoided by borrowing. Unfortunately even Junior Cert economics teaches the little Ungobungos that one does not avoid reality by borrowing.
Indeed, personal borrowing holds the key to understanding the recent plight in Ungobungoland. Over the past few years, the Ungobungos, unaccustomed to relative prosperity, have forgotten how to save. They have been spending as if it is going out of fashion and borrowing to bridge the gap between their relatively modest take home income and their outlandishly extravagant tastes. This personal borrowing has driven the economy – and, in particular the domestic economy – ever higher and in the process, pushed tax revenues through the roof. The buoyancy of the state’s coffers is a direct function of the amount of money borrowed. For some bizarre reason during the boom, borrowing was seen as a sign of prosperity rather than what it actually was – a sign of desperation. Equally weird was the mainstream economics view that in some way personal borrowing was less bad than government borrowing. A cursory glance at the implosion of the Asian Tigers, none of which had so much as a sniff of government debt, suggests that the world has change little since Macawber’s day. Debt is debt no matter who owes it. In fact, in the 1980s when Ungobungoland was indeed a quantifiable basket case, its citizens could avoid paying back the debt the government borrowed on their behalf by emigrating – a move hundreds of thousands chose to make.
Now that borrowing has begun to fall, it is becoming clear the extent to which the money for the health service is dependent on nurses borrowing ten grand for a new Nissan Micra. No new Nissan Micras, no tax revenues, no money for doctors and no cash for dialysis machines. Simple really. The more the private sector borrowed, the less the public sector had to borrow and the better the underlying so-called fundamentals looked. Yet the so-called fundamentals, based as they were on a misconception that the more Ungobungos borrowed the richer they were, led directly to the bizarre world of the fund for future Ungobungos. By misdiagnosing a cyclical boom in borrowing as a fundamental change and initiating the pension fund as a way of taking borrowed money out of the economy to prevent inflation breaking some arbitrary target, the rulers of Ungobungoland have made an elementary mistake. They couldn’t see the wood for the trees. Is the bigger crime not preventing the Chairman of the Ungobungo fund for future generations from benefiting indirectly from the pension fund or setting up the fund in the first place? I’m not too sure about that one; both stem from woolly thinking – not unusual in Ungobungoland.
As the rains teemed down, the police stitched up publicans on trumped up drug dealing charges to get promotion. Allegations abounded about politicians being bribed for lucrative telephone licences. The rain poured down while state boards overflowed with political appointees – people of dubious relevant qualification. Meanwhile, 500 of the brave police force were reduced to rounding up 11 illegal migrant workers for the crime of working in the country’s hotels, minding its kids or collecting its rubbish. To paraphrase Rupert Brooke, “There’s some corner of the North Atlantic that is forever Africa”.