7/28/08
On South Asian street-economics- first, bargaining. Regarding items on the street, there are no fixed prices. If it’s not in a store, there is no “price.” The more they want to get rid of it, and the less buyers they have, the cheaper it is. That should seem simple enough. But on my vacation this weekend, I learned a few other bargaining concepts.
Souvenir salesmen seem to view sales periods in days, not quarters. I came across two stalls whose objects I was not too interested in (another very important part of bargaining for items here- never show interest or you’ll never get a good price) and I was dogged by the shopkeepers as I walked by, who quoted a price for a similar object that they kept lowering, and lowering.. until it was half the original price. I asked, after purchasing the item, what it was that made them lower so drastically, and was told that because they hadn’t had a single sale today due to low tourist traffic, they needed to make just one sale by closing time. On a similar note, shops close at dusk, and the closer to dusk it is, the closer to the end of that “sales day” window you are, and the more hurried they are to make a sale.
Bargaining with rickshaw drivers is entirely different. Especially Tamil ones, I am told. In other cities there are meters, but Chennai remains its crazy, haggle-and-argue self, with meters that are entirely un-trustable, usually are broken, and whose rates are not posted anywhere. So you always need to bargain over the fixed cost of the trip. Before I go anywhere I ask a local what the price to a location is for them, add 15-20% to their answer (I am told laughingly it is “the white man’s tax”), and make that my target price. I started out playing the game; for a trip that costs 55 rupees to a local (my house to my workplace), I round to 70, make that my target, and then hail a rickshaw and let the arguing and flailing limbs and exaggerated expressions begin. However, I found that I quickly got tired of playing the game of underbidding and listening to their outrageous counter-bids, even though I know that’s how the game works… sorry ILR, I know you would be ashamed of me. I just find the whole thing so disingenuous and unnecessary. So now I always start with my actual target, which I refuse to go above, listen to their outrageous counter-proposal, and then when they refuse, instead of arguing, gesturing wildly, or re-offering, I shrug and give them a smile and walk down the street to catch the next one (they’re as numerous as cabs in NYC). Boulwarism, baby! When they see I am not bluffing and could not care less who brings me to my destination, they run out and bring me back to the bargaining table, offering lower and lower prices until arriving at my originally quoted price or put-putting away (which starts like this, simultaneously: muttering in Tamil, frowning, Tamil-head-bobbling [a figure-eight shake], throwing their hand from their chest outwards and upwards).
If you are, at this point, feeling bad for the rickshaw driver, read on, dear reader, read on. The joke is on the rider, not the driver. They have ways to get you back, and will! First, factors that drastically increase the “actual price” (the best price you are going to get): darkness, rain, heavy traffic, and scarcity of drivers. Whenever any of these circumstances exist, they jack up their prices quite unreasonably. And, of course, they always have ways to get back at you for bargaining them too low; lately I find I keep getting brought to petrol stations (they never seem to have gas… how odd!) just as we disembark, and then asked for the money up front. First, I said no, because I smelled a tourist scam. They could drop me off before my destination and then yell in Tamil and motion me to get out (happened to me multiple times actually… so I was right). Then, I changed my tune when a co-worker explained to me that they live day-to-day and literally do not have the cash to pay for the petrol, so sometimes they actually DO need the fare up front. True to my suspicion, I was taken advantage of after heeding his advice; after paying (and therefore handing over all my power) I was brought way out of the way to what appeared to be the driver’s home, and was told to wait while he ran inside. But it was not over- he then pulled over on the way back to ask where the place was I was going (they’ll see “yes, yes” when asked if they know where ____ is, to get your fare, but then pull over multiple times to ask for directions later… “making that sale” is all that counts!) at which point the person he spoke to indicated that I should pay him a higher than negotiated fare because we were so far away and petrol prices were rising so fast. This was the only time I really lost it with a rickshaw driver. We ended up getting to my work 35 minutes late, had driven to the northern reaches of Chennai, and I was being asked to subsidize his own personal errands?!? After re-telling the story to my coworkers, I was told unanimously that Chennai is notorious for exceedingly cheeky rickshaw drivers, and even locals get cheated constantly. Of course… that makes the trips into adventures, no?
It’s interesting to think of the two fare systems- fixed price and metered (I’ll ignore the tip factor that would also normally influence behavior, as you don’t tip rickshaw drivers here, whereas in America that adds an incentive for drivers to be nice/not screw you over/drive sanely). As long as you keep your money ’til the end of the trip and don’t give in to the petrol-station maneuver, you really have all the leverage, and therefore they are induced to get you there as quickly and efficiently as possible so as to get another fare (and so as to have you pay the full negotiated price), whereas the meter system can be manipulated in two ways- they can either take you on a route that takes more time or mileage, increasing your fare, or sneakily change the rate to a night rate. So really, while many Chennaites (?) complain of their rickshaw drivers’ schemes and temperament, and I, the foreigner, must pay higher fares by default, I think it’s probably better than the metered system. The differential foreigners must pay is not much (we’re talking $0.50) and the potential for trickery is totally constricted, if you know where you’re going (just ask a local the price). But boy is it a hell of a ride.
Anyway, on to economics. An intriguing principle here is a seeming lack of economy of scale in retail products as far as I have observed. In the US, you can get groceries for really cheap at a mega-mart, more expensive at the local grocery store, or at an outrageous price at a mini-mart (we’re speaking price-per-unit, not overall cost, as mini-marts sell mini-things). You can get some juice for $2.00/half-gallon, or $3.00/gallon (25% cheaper per-gallon), etc… buy more, pay less per unit. Here, in at least the grocery stores I have perused, the price per unit of most items is the same regardless of size! In one case, cookies (sorry… “biscuits”) cost more per unit for the bigger package. So instead I bought more of the little ones and got more variety…. The same economy-not-of-scale seems to be with items on the street as well. I get cheaper prices at the local level which I would normally assume is being bought at those stores and then resold at places convenient for the consumer for a higher price. The only idea I have is that they are not buying from the stores, but are the ones actually supplying the stores… even though its usually a one-man and one-ox-with-a-cart operation, which would be quite impossible to cart in from the surrounding farmland.
Phew… all that… if it wasn’t for the fact that you get over 42 rupees to the dollar… I’d be sunk! In the meantime, I’m enjoying tipping 30% (rarely more than $1.50… the expected tip rate is 10%, if anything) at restaurants and feeling like a rock star.
Also interesting is what appears to be a rickshaw drivers union, run by the Communist Party here. I spent weeks trying to figure out why the kiosk where all the drivers hang out at the end of my street had a red sickle and hammer and communist paraphernalia all around, and every time I went down there I never connected the dots until I learned through my internship how unions form in India– through political parties, and rarely (although becoming more frequent) through unaffiliated means. I will write more about this later, in relation to my work experience here, but the interesting economic aspect of this is that, as with all rickshaw rides, you want to avoid these guys like the plague (they’re easily identified- they have the hammer-and-sickle pinned on their chest), as any driver that is parked, or near any others, will raise his price because he isn’t already on his way there or the multiple others can gang up on you and price-collude. This is evident in a recent experience I had, trying to get to Guindy (near the airport), which should cost 70-100 rupees. “250 rupees, sah,” I was quoted, with heads nodding all around. Interesting, I thought, and walked down the street to catch a guy already headed my way who started the bargaining at 100. On an unrelated but similarly discouraging note, the only time (and last time) I hired a guy from this stand was with the other American living in my house. When we finished bargaining with the driver, he produced a liter of vodka from his shirt, took a finishing swig, tossed it in the bushes, and motioned for us to sit down so we could get going. Safety first!
Anyway, last economic note. Essential goods are incredibly cheap here, mostly due to being grown locally or heavy government subsidization, such as with agricultural products and transportation. Rickshaws, trains, and buses are dirt cheap, as is most vegetarian Indian food, the fare at almost any “hotel” (codeword for “restaurant” here) or “dhaba” (roadside eatery). However, air travel is comparable to any Western nation, and car rental is about the same. Beer and Western restaurant fare are only slightly cheaper than in the U.S. (but comparably to alternatives, very expensive) and my digital camera actually cost more in USD than if I had bought it in the states. So in summary, anything that the average person uses or could be considered “essential” is amazingly cheap, whereas any luxury item or service that has a lesser-priced alternative ranges from relatively much higher (but not too bad) to almost absolutely higher.
(interestingly, movie tickets tend to be “essential” as well, flying in just under $2 at a big Regal Cinema-esque multiplex. Like Ganesh and the Ganges, what would India be without Bollywood?)
ILR in India 