The language money speaks

By Manohar Malgonkar

WORDS which were quite unfamiliar even a generation ago are now in everyday.

Pizza. Who knew what the word stood for in the days of the Raj? It was only after the end of World War-II, when American G.I.s returned home to their world of meat-stuffed hot dogs and hamburgers that they began to miss the cheese-topped pies that they had been forced to put up with in a meatless wartime Italy. So pizza crossed the Atlantic and, within 40 years, succeeded in driving out ground-beef-and-pork filled sandwiches to the sidelines — reeling.

And billion? Even educated people rarely used the word because for one thing no one seemed to be sure how much a billion was. A hundred million or a thousand million? Eight zeroes, or nine?

That was because no one needed to mention such a figure in the normal course of conversation. A million seemed to be quite adequate, and that was how a man’s wealth was assessed. The Carnegies, the Rothchilds, the Rockefellers, some Indian maharajas, the Shah of Iran, were millionaires. The richest men in the world. Even national debts were assessed in terms of millions.

Now, 50 years later, to be a millionaire is to be a member of the upper middle class. No more. As will be seen, millions of dollars is what a well paid American business man earns in a year. To assess the wealth of one of the richest men in the world in terms of millions would be like measuring the height of the Empire State building in inches.

For instance Bill Gates’ wealth, of 51 billion dollars. One would have to describe it as "fifty-one thousand million dollars." And to write it down as a figure would be no less clumsy, requiring a daisy-chain of nine zeroes after the number 51.

Here is an interesting statistic about Mr Gates’ earnings.If they grow at the same rate as they have in the past two years, in the time that it takes to read this article — seven minutes — he will have made yet another $ 150 thousand.

A sum which most of us would look upon as a tidy fortune, worth a cool Rs 60 lakh.

That 60 lakh. When I began earning a living, in the mid thirties, it would have represented a sum beyond the dreams of avarice. Only the maharajas had that sort of money. Business salaries were still in hundreds, and no one got Rs 1,000 a month. When Jehangir Tata was called upon to take up the chairmanship of the famed Tata business empire, his salary was, "less than a thousand rupees a month," as he himself has revealed.

On that salary he lived like a prince, in a two-storeyed bungalow on a hill, and also kept a seaside cottage at Juhu for week-ends.

Nowadays directors’ salaries in big business houses are around a lakh of rupees per month. And for that lakh, you could not afford even that week-end cottage which Mr Tata kept in Juhu.

Not that there are any cottages in Juhu any more. The entire area is crammed with high-rise apartments.

Even assuming that the rate of inflation remains the same as it has been in the past 50 years, what do you think a maidservant will get in the year 2050? More than a lakh of rupees a month!

Absurd? But then who would have believed it, in 1937, that, in 1998, a maid who cleans the pots and pans would be paid more than the chairman of Tatas got then?

But then in the USA, salaries seem to have gone altogether out of control. When a glamorous film star in the great days of Hollywood was paid $ 500 per week, he or she was deemed to have it into the big league: Nowadays, even a waiter in a restaurant makes that sort of money. And as far as business executives are concerned — their salaries have jumped over the moon.

The head of General Electric, Jack Welch is paid a million- and-a-half dollars per month, and Heinz, the food giant, pays its CEO a million a month, as does the Merchant Banking firm, Solomon Brothers.

But most of these big-name executives are also given other sweetners to keep them happy; they’re called ‘Compensation packages’, and these often run to millions of dollars. For instance, G.E.’s Mr Welch, who has to make do on a salary of a mere million and-a-half a month, was given another $ 18 million as bonus, by way of shares, jacking up his monthly take-home pay to well over $ 3 million. Intel pays its company’s head, just under a $ 100 million a year, as does The Green Tree Financial Corporation.

Is not a $ 100 million worth Rs 400 crore in our currency? Or have I become a little confused just thinking of those eye-popping salaries?

Anyhow, I don’t profess to be any sort of an expert on the subject of money; why so much of it should be needed to buy so little? But then it is my firm belief that no one really knows, neither John Galbraith nor George Soros.

The orthodox Hindu view of money is just as serviceable as the most learned theories of the Pundits of the profession. It is that money is a Goddess, Lakshmi, a woman of moods and with a will of her own. No one can take her gifts for granted, as indeed the most advanced and progressive economies in the world, those of Japan and South Korea, have discovered.

A question arises. Why are salaries of high-profile business executives in India only a fraction of those paid in the USA? One explanation would be our murderous income tax structure. Higher salaries would be gobbled up by the tax man. Someone earning a crore a year might find it difficult to hold on to even 10 lakh of it.

About 30 years ago, India’s own star economist, Nani Palkhivala, wrote a book on our income tax structure. He gave it the title: The Highest Taxed Nation. The paradox was that, while we were the highest taxed nation in the world, we were also perhaps its poorest, because this was at a time when every fourth chappati that we ate was made of wheat that had been sent from America.

In the USA, of course, you are allowed to keep about 40 per cent of your earnings no matter how astronomical they are. Then again, there are what are called loopholes in the system and all businessmen, here as in America, are experts at discovering them and taking the fullest advantage.

But the best country to earn big money, aside of course from countries like Kuwait where there is no income tax at all, must be Australia.

The richest man in Australia is Kerry Packer. He owns TV stations, radio stations, chains of newspapers, real estate and god knows what else. He is even better known as the original sponsor, indeed the Godfather, of one-day cricket. His annual earnings must be in millions of dollars. His income tax liabilities for the past three years have totalled only $ 18.

That’s right. It looks like a fleabite even in rupees. Around Rs 250 a year.