The Rule of Zeros

It was a coincidence that the first 100 days of Radoman Bozovic's government matched the statistics report on March inflation. The connection is simple and evident: when you add two zeros to the above mentioned figure, you get the annual trend of price level increase. So the Serbian government has completed its adaptation period with a 10,000% inflation, but that need not worry the devotees of Bozovic's policy. The ruling party's majority in the Parliament has smoothly rejected a motion by two MPs to discuss the government's achievements during these 100 days, and if the situation remains the same, a change in the behavior of Socialist MP's is not to be expected. Therefore it still remains to be seen how many zeros are needed until a turning point appears, at least on the horizon.

According to the behavior of officials, major changes are not to be expected in the near future. It seems that the economic and political authorities in Serbia are preoccupied with anything other than the fact that the inflation rate here in 4 - 5 days matches the cumulative inflation rate in Germany and Japan for the past six years. For those who prefer a comparison with the WW II Allies, here are these figures as well: for the past six years, inflation has risen 26.1% in the United States, 19.4% in France, and amongst the big ones, the highest rise was registered in Great Britain -41.2% (The Brits have just managed to undercut the 43.9% March price level increase in Serbia).

A supposedly trifling detail from Washington probably gives the best picture of what is happening here. The only thing to do with Belgrade to be presented to the viewers of a prime time TV news program in Washington at the beginning of the last week, was a statement made by the Serbian National Bank's Vice-Governor that a stabilization program cannot be expected within the next three months. Of course, the Americans are familiar with inflation, but not with governments which publicly announce that they will be doing nothing about it for the next 100 days, despite the fact that hyperinflation is already raging. The stoicism of the citizens of such a state, where such a government manages to exist and survive, must also seem strange to them.

For the purpose of getting a better picture of the whole situation in Serbia, it is helpful to repeat the explanation given for the last electricity price increase. Fellow citizens, said the democratically elected government, your family budgets will remain intact although the summer season price of electricity will be equal to its winter season level increased by slightly over 26%. For a careful monitoring of your behavior, dear consumers, has revealed that you spend less electricity in the summer months, so you will be paying the same amount as usual!

If it were not tragic, as the saying goes, one would have to laugh. Following this logic, maybe consumers would pay less if they consumed more electricity? Maybe they would not pay at all if they increased their consumption to an adequately high level? Or, turning it the other way round, maybe they would have to to give up ating bread in order to pay for the electricity they do not use. Naturally, we are not discussing whether and to what extent the electricity price increase is justified. The main point is that some wires are crossed here; i.e. firms are forced to think about social policy, instead of their own efficiency. In normal countries, social policy is primarily the government's task.

Mr. Bozovic's recent photographs show him in the company of members of the government's Economic Council, from where the introduction of a basic anti-inflation policy is being announced within the next three weeks. Meanwhile, the government is doing its best to make a stabilization program less feasible. The Economic Council has already drawn the government's attention to this fact, warning that nationalization is not a good way out of the deepening crisis. The fact that the current government does not have a scape-goat for its own faults is meager consolation, because it will have to bear full responsibility for the total disintegration of the economy and poverty of the majority of population.

Bozovic's time will probably be remembered by police oppression or rampaging crime. The daily chronicles are already full of reports on robberies and banditry. Apart from the usual criminal offenses, there are some new ones: goods such as food, soap and the like are being stolen. And it is clear that the illegal possession of these goods is not to enrich the humiliated culprits, but enable them to live within the norms of civilized customs such as washing, bathing, eating... It is not an overstatement to say that people are humiliated. This is clear from official reports on supermarket thefts which relate more precisely that the most numerous amongst those caught with unpaid merchandise are elderly people. One must reflect upon the number of people spending the last decades of their lives in the joy of hiding milk cartons under their coats. Provided they have a coat.

Officially, the March inflation in Serbia is on the mark of 43.9%. There is no irony, nor doubt, in the word "officially". However, one is struck by the fact that Tomislav Milisavljevic (Market Research Institute in Belgrade), contrary to the official figures, claims that the March inflation rate was some 60%, from which follows that the annual inflation will be 28,000%. This estimate was based upon a poll among businessmen. But, unless Mr. Milisavljevic has some information which he is not publicly disclosing, we had better stick to official statistics.

The Statistics Bureau Director, Milovan Zivkovic, does not doubt the official March inflation figure, but emphasizes two facts. Firstly, that only price increases prior to the 21st day of a month are included in the calculation of the said figure, and that inflation has largely accelerated during the last ten days of March. Secondly, for several reasons, the prices in March tended to increase more slowly than those in January and February (an exception was the year of the "damned" Markovic's stabilization program, when monthly inflation was reduced from month to month, eventually going below zero in June). Therefore, a real picture of the price level increase trend will be provided by the April figures.

However, none of the economists or businessmen to whom VREME has talked expects that price trends will be moderated in April. Almost everyone is expecting the boosting of prices. And let us remember that a 70% monthly inflation generates an annual inflation of around 38,000%, and once we have the 38,000, we can easily have 380 thousand, million, billion...