Saturday, October 07, 2017

for whom the numbers toll

It was late and everyone had left the restaurant except for a young man who sat alone in the corner.

He could have been Puzo-written. Olive-skinned. Expensively groomed black hair. And the ubiquitous designer sunglasses.

In another place, he would have been a Gambino soldier. But not here. He was up to something quite different. He was there to deal.

Instead of coming to his table to take his order, the waitress sat down. She handed him several peso notes. He passed something to her.

Then it was the day manager's turn. He re-enacted the same tango. Sit. Money. Something passed.

Several explanations danced in my head -- not all of them licit. But the people involved did not fit those narratives.

What truly bothered me was it all seemed familiar. That I had somehow seen this before. What is worse, I was positive someone had explained the transaction. But, all telephone calls to my memory bank went unanswered.

So, I did what I do when I get lost in Mexican culture. I talked with my friend Julio.

I went to the right person. He is a regular participant in this pass-the-money game. It is called la contrata and is a financial mainstay of our little villages.

Here is how it works. The young man I saw in the restaurant acts as the banker. The banker and 10 other "savers" are assigned a number from 1 to 11. 

Each saver then deposits a certain amount of pesos each week. Usually, $500 (Mx). Each week a number comes up in sequence. The holder of that money then gets back the money he has deposited with the banker -- less the money the banker receives on his week. He contributes nothing other than being the guarantor if a participant does not fully contribute. (I suspect there may be some Gambino moments when that happens.)

The result? In 11 weeks the savers will have deposited $5,500 (Mx), and will receive $5,000 (Mx) when their name comes up.

During his recitation, I realized Julio's predecessor at the restaurant had described the same process. But he described it as a lottery. And that confused me because he said that everyone wins the lottery -- just like a politician describing health care.

But I do not think that was why I forgot the explanation. It simply did not make sense to me why someone would think it was a good deal to pay someone to hold their savings.

Of course, many international banks are now doing that with commercial accounts (and some are considering extending it to individual accounts). Economists call it negative interest. I call it a bad deal.

When I asked other contrata savers why they thought it was a good idea to pay someone to hold their savings, why they did not just put their weekly payment in a shoebox at home and keep all of their hard-earned wages, they answered unanimously. "If I do not save that way, I will spend all of it when I get it."

I understand that impulse. When I was their age, there was no tomorrow. There was only now. It took two changes for me to join the  Josiah Bounderby set. The first was the wisdom of age. Nothing focuses one's attention on the future like the clatter of death's carriage.

The second was money. As the years went by, I started earning more than even my voracious consumerism could gobble. I also worked at a company that encouraged its employees to join tax-deferred savings programs.

If either of those two changes had not occurred, I am not certain I could now play the role of Second Dutch Uncle in my little morality play where I cluck my tongue at contrata participants.

In a society where banks are not trusted (often for faulty reasons), free individuals will devise market systems that meet their perceived needs.

Last week I was talking with an expatriate friend. One of his chief concerns is people who come to Mexico and bring with them what he calls "cultural imperialism" -- the belief that Mexico would be a far better place if everything was done just as it is at home.

I chuckled when I thought about my reaction to la contrata. I fell right into the same trap.

Maybe I should do penance by taking a number this week.

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