Thursday, November 02, 2006


In Science, as we go two steps forward, we retreat one step. A famous author in Marathi, N. C. Kelkar had this view when he referred to clothes as an invention. He said man invented clothing to conceal the body. And today we see invention of Nylon which is used to show the body more than it can conceal. Likewise, Einstein invented nuclear power. But USA used it against Japan and bombed Hiroshima and Nagasaki. The impact was so deep that today’s generation is also facing problems because of those explosions. It has just annihilated people there.

Today’s generation is high-tech generation. The employment today is not like yesteryears when Government job was highly esteemed because of its security and post-retirement benefits. Today we see youth craving for highest-paid jobs. I agree that they work hard to earn these jobs. But getting a fat pay-cheque isn’t an end to this. Today, we are living very happily because our parents or grand-parents had saved for their future. OK, they might have Government jobs and pension benefits today. But from what does these post-retirement benefits come? From savings only! So we have to agree that sacrificing current consumption to some extent will make future generations live happily as we are doing today.

Today a 25-year old boy works in an IT company and earns at the age of 30 what his father must have earned in his whole life. That sounds good, no, very good! But alas! This boy consumes almost all of the income he earns. Not only that! Today we see so many credit card companies distributing their cards freely. So people earn and consume, borrow and consume. There is no saving. Or I should say, a little saving. I wish to force people, young people, to save more. The zeitgeist must change.

We have gone two steps ahead of our parents through higher pay-packagese, but we are coming one step back by not saving. By saving more today, we can reduce the future burden on ourselves. Because as we grow in globalization and privatization, one day will come when there will be no pension. People will have to invent ways to accumulate money so that their future will be better after retirement. Saving more requires that we consume less or work more. Either case entails some sacrifice on the part of the current generation. So today’s generation must learn to sacrifice something. It is not difficult. Saving is a habit. You have to inculcate on your inner self that “I have to save so and so and this sacrifice is for my children and grand-children.” And why do we require an economist for this? Any experienced financial advisor can tell you how different avenues of saving can be utilized. There are pension plans, there are monthly income plans, there are many ways.

Our economy is booming today. But a booming economy will not boom forever. Every thing has an end and this boom time will also end. But in good times we must not ignore the trends that may develop when bad times come and they will come, one day! In my view, economic cycles go on. After boom there will be gloom and after gloom, there will again be boom sometime. So there is nothing to worry on that front at least. What we should worry about, is how well will we be placed when bad times come? Will our economy have a crash-landing like Japan did? Or we want to have same standard of living for our future generations like ours? I think some serious thought process has to be started about savings. Saving is conscience! Conscience does not prevent you from committing a sin, but it definitely prevents you from enjoying it. Similarly, saving will not prevent a recession, but it will unquestionably take the sting out of it through future possible consumption!

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