Recession, first spotted in USA, has gripped the world, and comparisons are being made with the 'GREAT DEPRESSION' of late 20's/early 30's of the last century. The odd comparison sets one to thinking. There are so many non-similarities between the two, that they can hardly be reconciled, except on one point - both have meant misery for the common man, albeit for contrary reasons.
During depression, everything was cheap, but no buyers, because there was no money, except in the hands of a select few. The masses were unemployed, and starving, which led to crimes or subversive ideologies.
The position now is marked by excessive money supply, (inflation) and very high prices, which masses cannot afford. That again is a mix that gives rise to desperation in youth or aggression by adventurers. The price level obtaining today is unmatched in history, although there have been isolated cases where inflation rate has been much higher.
Very few of the generation that lived through the 1920's are alive today - even fewer who can remember those events. However, most people have read in history books, or seen in literature/movies about that period. And, of course the relics of those days, the mafioso, the gangsters and mobsters, or even their ilk in white collars today, are still around, to keep the memory alive.
The period after the First World War set a chain of events in motion that still rocks the world. The victors in that war behaved in a way that gave rise to totalitarian regimes, in much of Europe that lay devastated, fragmented and in total disarray. The newly formed late, lamented League of Nations had parcelled out Arab and African lands to colonial powers (so-called 'Trustees') as spoils of war, as victors. The vanquished lived in misery and simmered with fury. That pent-up anger of the dispossessed gave birth to a world disorder, which still haunts every living creature on earth.
The 20's gave rise to Benito Mussolini and his Fascists in Italy, who over ran North Africa, besides institutionalising the worst form of tyranny called Fascism. His 'Black shirts' are legendary. Before him, the Russians had risen against the Tsars and under Stalin, spread seeds of Bolshevism and Communism around the world. Germany followed soon after with Adolf Hitler and his Nazi Storm-troopers who overran Europe. In Spain General Franco held sway, while Japan was ruled by General Tojo, and China by Generalissimo Chiang Kai Shek. The Japanese had occupied most of the Far East.
The Second World War, between Axis Powers and the Allies lasted six years (1939-1945) and engulfed the entire world. The end of the war had some dramatic and unprecedented results. Germany was carved up by the four occupying powers and its industrial base dismantled to prevent its rising again as a threat to the world.
However, the irony is that soon the victors split in 2 camps, and the Cold War era prompted Americans to initiate "Marshall Plan" to reconstruct Germany. One particular incident during that period sticks out in memory as it had far-reaching impact on world affairs.
The allies were ripping, dis-mantling and carting away German industrial units as war-booty. One of these was the KRUPPS works, the largest heavy machinery complex in the world. The dismantling of KRUPPS continued for 3 years, before the policy change in the west turned in Germans' favour vis-à-vis the Soviet Union and its allies in the Warsaw Pact.
The West decided to resurrect Germany (minus its armed forces) and allowed the remaining (as yet, not fully dismantled) KRUPPS to resume operations for civilian products only.
Marshall Plan and German ingenuity combined to produce the 'German miracle.' In a short period of 3 years, guided by the economist. Dr Schacht, Germany had outpaced everyone in Europe as the No 1 economic power, soon to be followed by Japan similarly. These two countries, defeated in war, are still the yard-stick by which other economies are measured.
The end of WWII saw the birth of UNO and IBRD (the World Bank). The slogan of the wartime 'A war to end all wars', which was the basis on which the foundation of UNO was laid, was soon forgotten. Not a day has passed since then when hostilities were not in full swing in some corner of the world, or the other.
Another development of post war period was the independence of Asian and African nations, formerly under colonial rule for centuries. One of the contributing factors (besides the national struggles for liberation) was the impoverished economy of the erstwhile colonial masters, and their indebtedness, among others, to their former colonies. To settle these debts, assets in the colonies were transferred to the newly emerging independent states. How those states fared thereafter is another story!
The conflicts that occurred since (some of which are still unresolved festering wounds, like Palestine and Kashmir) have kept the world in turmoil, and peace has eluded the globe.
Now we come to the main point of recounting this history. Inflation is the one constant that is ever present, and rising all the time almost every where, with few notable exceptions, like Switzerland. The once mighty dollar is falling and dragging the world economies down with it. New poles of economic strength are emerging, like China and India, while others struggle for bare existence.
In the context of Pakistan, a few examples from personal experience will throw light on the serious scale of the problem (Table I).
Pakistan, (formerly part of British India) came on the map of the world on August 14, 1947, a couple of years after the end of WWII. Prices and inflation were high during the war and the post-war period, and there was scarcity of food and other necessities in India. Refugees coming to Pakistan were pleasantly surprised to find food of good quality, plentiful and cheaper compared to India. The refugee influx distorted the picture somewhat, but the Korean war in early fifties was a boom period for Pakistan economy, when import and foreign exchange restrictions were lifted, and most of the import items were grouped under "Open General Licence.
"The euphoria didn't last long, and political and defence exigencies soon embroiled Pakistan in a vortex of economic malaise that still lasts, and is getting worse by the day.
AND NOW TO SOME EXAMPLES:
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1947 2008
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Bread
Nan (each) 1 paisa 4 rupees
Meat
(Mutton per kg) 12 annas 250 rupees
Average meal
at a middle class restaurant 1 1/2 rupees 300 rupees
A cup of coffee 4 annas 50 rupees
Cold Drink 5 paisas 15 rupees upto 30 rupees
A shirt 2/3 rupees 300/1000 rupees
Average Salary (office worker)p m 150 rupees 5000 rupees
House Rent (2 Bedroom)per month 10 rupees 6000 rupees or more
School fees (Secondary) monthly
Tuition per student 5 rupees 3000 rupees or more
Pocket Books, each 12 annas 350 rupees
Magazines ech 4 annas 100 rupees
Doctors fees 3 to 5 rupees 500 rupees
and so on
So where does the inflation end, and life (as we knew it then) begin?
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