What happens when there is a lack of confidence in financial institutions? What happens when the levels of tax payable by ordinary people are high? What happens when there is a perception that government is at best incompetent, if not unjust, or even corrupt?
Money starts to disappear. Individuals horde cash. Barter emerges as a way of avoiding taxation. Funds move out of the country. Purchases are made across the border. People become coy about what they might or might not have. Outward appearances are of impoverishment. Whatever wealth there might be becomes hidden.
Richard Dowden notes a phenomenon in Africa: Altered Images, Ordinary Miracles of money suddenly appearing from nowhere:
Most people . . . whom you see on the streets of African cities are counted as absolutely poor by the UN Development Programme living on less than a dollar a day. That sounds very poor to anyone living in the Western world, but wealth comes in many forms and maybe there is wealth in Africa that is not measurable in economists’ dollar calculations. And that does not just mean valuable human capital that cannot be measured in monetary terms. When mobile phones went on sale in Africa, people suddenly found the money. Millions of Africans suddenly turned out to be richer than the economists and developmentalists said they were. A lot richer. How much more wealth is hidden in Africa uncounted by the official figures?
Is there not a lesson for Ireland in money disappearing?
The accumulated bad debts of the developers are colossal, €90 billion, the bulk of which is owed by just fifty developers (ponder that, they owe an average of more than €1 billion each!), but that sum is still less than 50% of annual GDP in Ireland, and the losses will only be crystallized when the properties begin to be sold off at discounted prices.
Where has the rest of the money gone?
Into the tills of Sainsbury’s and Asda and many other traders in Northern Ireland? Certainly, some of it. But there are people who are sitting on a lot of cash. People with houses bought before the boom years; people in steady employment; people with secure incomes; people who didn’t spend every last cent as the property bubble inflated the economy; some of them have cash. But they will not spend in a time of uncertainty. They will not spend when they are unsure of what new charges the government will introduce. They will not spend if they do not think it is worth it to do so.
When Africans thought there was something worthwhile upon which to spend their money; the cash appeared. Dowden writes:
The idea that phone companies would invest in network infrastructure for mobiles in poor Africa seemed far-fetched, the notion that ordinary Africa would buy them and use them even more so. . . .Everyone knew Africans did not use telephones. When the South African MTN Group investigated Nigeria as a possible market for mobile phones in the late 1990s, their experts estimated that the maximum number of potential subscribers would be 15 million. They opened in Nigeria in 2001. By 2007 there were nearly 30 million subscribers and the number of potential customers in Africa is estimated to reach 52 million by 2011.
That wild underestimation of Nigeria’s mobile phone market was repeated throughout Africa. It showed two profound misunder-standings of the continent: first, Africa’s ability to pay, and second its desire to communicate. Africa was a lot richer than the economists of the World Bank and the IMF had thought. Africa’s mobile market has been the fastest growing in the world. Between 1999 and 2004, the number of mobile subscribers in Africa jumped from 7.5 million to 76.8 million, an average annual increase of 58 per cent. It was because there were so few working land lines that mobiles were in such demand. Nearly three-quarters of all calls in Africa are now made through mobiles.
Connectivity, while not yet universal, reaches the remotest places. Suddenly you can call London from a village more than fifty miles from a town in northern Nigeria. It is not, as expected, just the middle-class professionals who use mobiles. Villages and shanty towns bleep and jingle as much as high-tec urban offices. Everyone wants a mobile phone, just as much as they once wanted shoes. The pay-as-you-go cards solve the problems of billing – the postal service does not work either in much of Africa. Decades of airtime are sold through plastic scratch cards available from private traders in smartly painted booths and shops in every village. The phone companies get their money back instantly and have all made fortunes.
Walk through a market in a Nigerian village and you will hear the market women checking the price of potatoes in the nearest town; visit nomads in Somalia and you will find them, herding-stick in one hand mobile in the other, learning the best moment to come to market to sell their animals. Fishermen off the Tanzanian coast check which beach or port to bring their catch to. And everywhere in Africa no taxi driver will let you get out before he has given you his mobile number. No-one predicted any of this.
There is an ability to pay in Ireland; not everyone has become poor overnight. What the Government must stimulate is a desire, by those who have it, to spend money; that will not happen while there is uncertainty. In Africa spending arose from a desire to communicate, what untapped Irish desires might be out there?