Why Can't Merchants in Istanbul Make Change? An Economic Mystery
I'm sure there's an obvious reason for this--I just have no idea what it could be.
Istanbul's small merchants often cannot make change. Bank machines regularly dispense fifty- and hundred-lira bills. Grocers, taxi drivers, small shop-owners and delivery people just as regularly look at these bills with mild dismay and say, "Sorry, I have no change." They then run all around the neighborhood looking for someone who can break the bill. It's almost as common for them to be unable to make change for a twenty or a ten. This happens to me daily.
I've worked in many small shops in the US. At the beginning of my shift, I always made sure there was enough change in the register. It was just one of those things I was supposed to do, like dusting the display cases and checking inventory stocks.
I've experienced this weird small-changelessness in no other city. It's unimaginable that in a culture as commercial as this one, no one has ever noticed that customers usually need change. Superficially, it seems that everyone here is inconveniencing himself, and his customers, by not making sure there's enough change in the register, or in the case of delivery people, on their persons.
There's got to be an economic explanation, right? (It's not fear of theft: the crime rate is way too low here for anyone to be so worried about that.) We're not talking about huge amounts of money, by the standards of the local economy; we're talking about the smallest-denomination bills you can get out of a bank machine.
What could it be? What am I missing?
Sorry if anyone was hoping the answer would be revealed at the end of this post. Unless someone on Ricochet knows the answer, this will remain forever a mystery. It's weird though, isn't it?
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May '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
It might be as simple as their central bank is not printing the proper distribution of bills. (???)
Oct '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
I have noticed this in several (mostly) Asian, read; Islamic countries, although I agree, in Istanbul it seems much more prevalent. One thought... merchants in Istanbul are very friendly in a commercial sort of way, and it might just be that the desire to please extends way beyond the desire to plan. Like you, I'm just guessing.
May '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Does the design of Turkish couches make them uniquely prone to remove small change from circulation?
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Scott, I'll bet that's the clue. It has to be. What's the formula for printing the right number of bills? How is that usually calculated? Why would they be getting it wrong, and why haven't they corrected the problem, since it's obviously been wrong for years?
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
The restaurants never run out of food, though. And I've rarely been in a taxi that runs out of gas. It's just change.
May '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
My wife is an editor at the Cleveland Fed. I'll see if she can ask somebody.
Jul '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
That's fascinating. I run across this problem in colonial American sources all the time, precisely because there was very, very little cash in the economy, and the solution was an economy of personal credit. Is personal credit granted in Istanbul between merchants and their neighbors? Or is it all cash all the time...and yet this inability to make change? And who controls the printing/minting of money in Turkey? Is there an anti-inflationary policy at work here?
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Personal credit, only in a real pinch, certainly not standard. (If I didn't have money in my wallet, the local merchants know me and they'd wave it off, saying "next time," but I doubt this happens often.) It's almost all cash and credit cards--the latter much less often used--and yes, certainly, one of the government's priorities has been to control inflation, but we're not talking about an absence of cash, we're talking about an absence of small bills and coins--I think.
Jul '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
How do you say "Keep the change" in Turkish?
Or, the merchant may be trying to get you to buy other items to bring your bill closer to the amount of your currency. If you're in a hurry, it may be preferable to waiting for him to run about the neighborhood.
How does a fifty and hundred lira note compare in terms of US currency? $50, $100?
Jun '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
I saw this problem in Italy circa 1978, and again in Egypt in 1987.
The Italian problem was due to rampant inflation. The value of the metal in coinage was worth more as salvage than was the posted value. The coinage simply disappeared as consumers cashed them in for the scrap value.
In Egypt the problem was poverty. The ten piastre note (worth about US five cents) was passed so often for small purchases (you could get a ride on public transit, or a falafel for that amount) that the notes literally disintegrated from use.
Edited on Nov 8, 2010 at 6:03amRe: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
They do, I think. Don't hold me to that; it would not surprise me if there were some separate bureaucratic organ involved here; you will never go wrong by overestimating the number of government ministries in Turkey, many of which have overlapping--or conflicting--responsibilities.
May '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Beware the Boyz in the Souk (OK, so that's not the right word, but we have this concpetion that Muslims are shrewd bargainers, and afterward attend the Star Wars cantina).
But maybe it's like this vacation destination that keeps showing up on my screen says starting at (there's a red flag) $299. Like we're supposed to think that means two hundred. Maybe they're hoping you just get tired of it and say "nevermind, keep it". It adds up.
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Tripedis Canis: How do you say "Keep the change" in Turkish?
Or, the merchant may be trying to get you to buy other items to bring your bill closer to the amount of your currency. If you're in a hurry, it may be preferable to waiting for him to run about the neighborhood.
How does a fifty and hundred lira note compare in terms of US currency? $50, $100? · Nov 8 at 6:00am
No, it's not that--it happens equally often in situations where that would be absurd--a 2.5 YTL bag of cashews, a 50 YTL note. And the culture of tipping isn't really the same here; it wouldn't be that normal to say "Keep the change" in most cases; and it would look kind of shameful and dishonest to appear to be angling for that. (I'm not talking about how tourists in the tourist areas are treated; this is Turk-to-Turk and Turk-to-Turkish-speaking-expat stuff I'm observing.) A lira is worth .71 USD today.
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
~Paules: I saw this problem in Italy circa 1978, and again in Egypt in 1987.
The Italian problem was due to rampant inflation. The value of the metal in coinage was worth more as salvage than was the posted value. The coinage simply disappeared as consumers cashed them in for the scrap value.
In Egypt the problem was poverty. The ten piastre note (worth about US five cents) was passed so often for small purchases (you could get a ride on public transit, or a falafel for that amount) that the notes literally disintegrated from use. · Nov 8 at 6:02am
Edited on Nov 08 at 06:03 am
Neither are the problem here; the last hyperinflation was in 2001, and Istanbul is really pretty wealthy, by global standards.
Jul '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
OK, so it's roughly equivalent to US ATM's dispensing fifties and c-notes, and merchants not having fives, tens and twenties, let alone ones.
A shortage of smaller denominations could be:
- It costs more to produce them than they are worth (a situation we are skirting with the penny). Unlikely, with paper currency, but who knows?
- The sources of small denomination paper are accessible to small merchants only with difficulty. The banks aren't open long enough, aren't making change themselves, aren't dealing with cash transactions without an active account, or some other administrative friction.
- When people get them, they hang on to them. Why? Who knows? When I was in college (early pleistocene) vending machines usually took only quarters, as did the video games and pin ball machines ("Pin what?" Nevermind). Quarters became, at least to us pre-productive members of society, more valuable than 25 cents, and we would hang on to them. Is there something in the Turkish economy/society that puts a premium on smaller denominations?
Jul '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Is it that change is an additional investment in the business increasing the cost of being in business? And the amount of change required is not easily determined varying from day to day. If others bring you the correct change, you've reduced your cost to be in business.
Here in the US, when buying donuts, the owner is often grateful when you give them the exact change, indicating, I think, that they keep the investment in change as small as they can reasonably guess.
May '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Bob Forrester: Is it that change is an additional investment in the business increasing the cost of being in business? And the amount of change required is not easily determined varying from day to day. If others bring you the correct change, you've reduced your cost to be in business.
Here in the US, when buying donuts, the owner is often grateful when you give them the exact change, indicating, I think, that they keep the investment in change as small as they can reasonably guess. · Nov 8 at 9:04am
This answer has my vote. I think it must be a working capital issue. Cash sitting in your till waiting to make change is a working capital cost that merchants may not be able/willing to make. The cost of running around the market fetching your change is lower than the cost of additional cash sitting idly in their till waiting on the big spending American cat lady to come and drop a c-note.
Aug '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
It could just be habit, unconsciously followed even in the face of the occasional difficulty.
I got an valuable economics lesson when I was a young man out with my father. We stopped at a local bakery to buy a schnecken, a sinfully rich pastry that was their specialty.
The were out. They explained "we always are out of them by 11 am". But they were open until 5 pm. It was clear to my father that this was the invisible hand slapping them, telling them "make more". But they seemed oblivious.
Jul '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
This post reminds me of my eternal question: why does it always take the people in line in front of me at a Starbuck's longer to decide on their order than it took the Founding Fathers to write the Constitution?
Sep '10
Re: Why Can't Merchants in Istanbul Make Change? An Economic Mystery
Because trying to navigate the menu items at a Starbucks is like trying to call a meeting of the UN Human Rights Commission to order: where exactly does one begin?