The oxford English dictionary defines economics as,"the science of the production and use of goods and services".There are various ways of looking at economics.The Marxist view of economics and the Anglo Saxon view of economics are two popular ways of looking at economics.India,after 1947,has experimented with both the socialist model and the Anglo Saxon model.
The interesting thing to be noted is that the economics practiced by the Indian has never changed over the millennia,though the Indian state has experimented with different economic models,after Independence.Any economist will tell you that the difference between the traditional Indian economic model and the Anglo Saxon model is that the indian model is based on saving,while the Anglo Saxon model is based on spending.It was this mindset that led india to prosperity.India was such a rich country that every nation,all over the world was jealous of her wealth and prosperity.India was self sufficient and her children were contended and peaceful.
After India adopted the Macaulay system of education,there was a deliberate attempt to impose the Anglo Saxon model on the Indians.And the Britishers seem to have succeded,to a great extent as far as the Indian state is concerned, though a majority of the Indians continue to follow to the traditional model of economics,based on savings.
But,slowly one can sense that even the Indian on the street has started to lean towards the Anglo Saxon model.The reason which is often attributed to this change in mindset is globalization.The concept of globalization assumes that it is in the best interests of nations,all over the world,to eat the same food,wear the same dress,speak the same language and so on.Globalization assumes that homogenizing societies is the key to development of the nations.
Any nation has its own people,languages,culture etc.These are influenced by geographic locations,way of thinking etc.It is natural to expect that each nation knows what is good and what is bad for it.It is only when some external power starts dictating that confusion sets in.This is more so when the mind itself is held hostage by the external power.
For the last two decades or so,India has adopted the policy of liberalization,paving the way for globalization.The popular perception in India is that India has boomed because of globalization.Unfortunately,figures and statistics seem to suggest otherwise.
Before 1986,30 percent of India lived below the poverty line.Today,more than 70 percent of India's population lives below the poverty line.How does it matter to the man on the street,whether India's image as a global destination has grown or not,or at what rate Infosys is growing?All that matters to him is whether he and his children have food for the next day.Has globalization helped him feed his children?
The reader will probably be tempted to argue that globalization has worked wonderfully in developed countries like America.While there is no denying the fact that America has indeed benefited from globalization,few are aware that it is at the cost of other nations.
From being one of the world's largest investors in the 1980s,the U.S,today is the world's largest borrower.America,owes $7 trillion dollars to the world,and it is borrowing at the rate of $2 billion a day.Who gives America the money??
Out of the $1.5 trillion risk loans, the EU Central Bank issued a cheque for $512 billion in December 2007. The EU money was lent in the US, not in the EU. Today, America has become a burden on the world.Without going too technical,let us try to understand the meaning of the term sub-prime loan.
Sub means lower in importance and prime means main.A sub-prime loan is a loan which is given to an unworthy borrower.In other words,the loan is given to a borrower who is highly unlikely to repay the loan.It is one of the most fasionable concepts in America.Loans are given indiscriminately.The question arises,are Americans foolish enough to give loans just like that?
The answer is NO. In fact,the Americans are the most brainy people on Earth.This is because,the sub-prime loan being given is not from America's money.It is the world's money.It is the rest of the world which has made a fool of itself.Americans must go to malls,freak out in pubs and go berserk in parties at the cost of the money lent by the rest of the world. It is the world that keeps America going.Not the other way round,as is being believed.America has become the burden of the world,and the rest of the world must bear the burden.As long as the world keeps pumping money,Americans continue to spend extravagantly.This is precisely the reason why no Indian wants to return back to India,after living in America for about 5-6 years.The hardworking people in India will save their money in Indian banks,which will in turn lend it to American banks through the World Bank route,and the Indian American will continue to lead an extravagant lifestyle.So many Americans consider it foolish to save their money these days.The reason is obvious.
The tragi-comedy is that,Indians who are under the impression that everything that is
good for the West is good for India as well,has started to emulate America in this
aspect as well.You see malls coming up everywhere,and teenagers flocking them with
their friends.Of course,such a mindset has just started to set in.But,its scary to think
what will happen if this mindset continues to grow among Indians.Unlike America,no
body is going to pitch in for us if we become spend-thrifts.
My friends often ask me as to why i avoid going to malls.Try telling them all this and
they might even consider "unfriending" me forever.But,these are the facts.I really
hope that the reader is able to understand what will happen if this trend continues.
Curiously enough,the idea of shopping in malls reached much popularity in America
only after the 9/11 attacks.
Recession on one side and terrorism on the other brought down the American economy to its knees. The American Industry experts thought unless the Americans started spending again there was no way to revive the economy . Out of desperation, to make the people spend they came up with an outlandish Idea called “SHOP FOR AMERICA”.
The former President, Mr Bill Clinton asked his countrymen “to get out and shop”. September 30 was celebrated as “SHOP FOR AMERICA DAY”. General motors started their campaign “to keep America rolling” by introducing 0% financial offer. The result was all automakers cleared their un-sold stocks. It was preached that what is good for General motors is good for America. Time Europe Magazine in its Jan 28,2008 issue says ”since September 11,2001 consumerism has been cast as new patriotism”.Shopping was preached as the national duty of every American citizen!!
The consumerism, which was preached as a solution for recession gave birth to Sub-prime mortgage lending on houses. How come the rise in value of houses promotes spending? As the price of their house,rose, people went to the bank, got loans against the increased price of their house as an additional equity and spent them in malls and other extravagant activities.
For example a house which was priced at Rs 50 Lakhs pre recession rose to Rs 1 crore because of additional demand. The House owner took a loan on this increased value of Rs 50 Lakhs and complted his national duty of shopping.
The money lent on sub-prime basis was not American money. The mortgaged loans of the US banks belong to banks in the Middle East, in Korea, in Taiwan or even in India.It was a US crisis at global cost. That is why it affected the world.
Globalisation helped America to make the local loans, global loans.This is why,recession,which ought to have been America's problem,became a "global" problem.Recession is America's gift to the world.
The interesting thing to be noted is that the economics practiced by the Indian has never changed over the millennia,though the Indian state has experimented with different economic models,after Independence.Any economist will tell you that the difference between the traditional Indian economic model and the Anglo Saxon model is that the indian model is based on saving,while the Anglo Saxon model is based on spending.It was this mindset that led india to prosperity.India was such a rich country that every nation,all over the world was jealous of her wealth and prosperity.India was self sufficient and her children were contended and peaceful.
After India adopted the Macaulay system of education,there was a deliberate attempt to impose the Anglo Saxon model on the Indians.And the Britishers seem to have succeded,to a great extent as far as the Indian state is concerned, though a majority of the Indians continue to follow to the traditional model of economics,based on savings.
But,slowly one can sense that even the Indian on the street has started to lean towards the Anglo Saxon model.The reason which is often attributed to this change in mindset is globalization.The concept of globalization assumes that it is in the best interests of nations,all over the world,to eat the same food,wear the same dress,speak the same language and so on.Globalization assumes that homogenizing societies is the key to development of the nations.
Any nation has its own people,languages,culture etc.These are influenced by geographic locations,way of thinking etc.It is natural to expect that each nation knows what is good and what is bad for it.It is only when some external power starts dictating that confusion sets in.This is more so when the mind itself is held hostage by the external power.
For the last two decades or so,India has adopted the policy of liberalization,paving the way for globalization.The popular perception in India is that India has boomed because of globalization.Unfortunately,figures and statistics seem to suggest otherwise.
Before 1986,30 percent of India lived below the poverty line.Today,more than 70 percent of India's population lives below the poverty line.How does it matter to the man on the street,whether India's image as a global destination has grown or not,or at what rate Infosys is growing?All that matters to him is whether he and his children have food for the next day.Has globalization helped him feed his children?
The reader will probably be tempted to argue that globalization has worked wonderfully in developed countries like America.While there is no denying the fact that America has indeed benefited from globalization,few are aware that it is at the cost of other nations.
From being one of the world's largest investors in the 1980s,the U.S,today is the world's largest borrower.America,owes $7 trillion dollars to the world,and it is borrowing at the rate of $2 billion a day.Who gives America the money??
Out of the $1.5 trillion risk loans, the EU Central Bank issued a cheque for $512 billion in December 2007. The EU money was lent in the US, not in the EU. Today, America has become a burden on the world.Without going too technical,let us try to understand the meaning of the term sub-prime loan.
Sub means lower in importance and prime means main.A sub-prime loan is a loan which is given to an unworthy borrower.In other words,the loan is given to a borrower who is highly unlikely to repay the loan.It is one of the most fasionable concepts in America.Loans are given indiscriminately.The question arises,are Americans foolish enough to give loans just like that?
The answer is NO. In fact,the Americans are the most brainy people on Earth.This is because,the sub-prime loan being given is not from America's money.It is the world's money.It is the rest of the world which has made a fool of itself.Americans must go to malls,freak out in pubs and go berserk in parties at the cost of the money lent by the rest of the world. It is the world that keeps America going.Not the other way round,as is being believed.America has become the burden of the world,and the rest of the world must bear the burden.As long as the world keeps pumping money,Americans continue to spend extravagantly.This is precisely the reason why no Indian wants to return back to India,after living in America for about 5-6 years.The hardworking people in India will save their money in Indian banks,which will in turn lend it to American banks through the World Bank route,and the Indian American will continue to lead an extravagant lifestyle.So many Americans consider it foolish to save their money these days.The reason is obvious.
The tragi-comedy is that,Indians who are under the impression that everything that is
good for the West is good for India as well,has started to emulate America in this
aspect as well.You see malls coming up everywhere,and teenagers flocking them with
their friends.Of course,such a mindset has just started to set in.But,its scary to think
what will happen if this mindset continues to grow among Indians.Unlike America,no
body is going to pitch in for us if we become spend-thrifts.
My friends often ask me as to why i avoid going to malls.Try telling them all this and
they might even consider "unfriending" me forever.But,these are the facts.I really
hope that the reader is able to understand what will happen if this trend continues.
Curiously enough,the idea of shopping in malls reached much popularity in America
only after the 9/11 attacks.
Recession on one side and terrorism on the other brought down the American economy to its knees. The American Industry experts thought unless the Americans started spending again there was no way to revive the economy . Out of desperation, to make the people spend they came up with an outlandish Idea called “SHOP FOR AMERICA”.
The former President, Mr Bill Clinton asked his countrymen “to get out and shop”. September 30 was celebrated as “SHOP FOR AMERICA DAY”. General motors started their campaign “to keep America rolling” by introducing 0% financial offer. The result was all automakers cleared their un-sold stocks. It was preached that what is good for General motors is good for America. Time Europe Magazine in its Jan 28,2008 issue says ”since September 11,2001 consumerism has been cast as new patriotism”.Shopping was preached as the national duty of every American citizen!!
The consumerism, which was preached as a solution for recession gave birth to Sub-prime mortgage lending on houses. How come the rise in value of houses promotes spending? As the price of their house,rose, people went to the bank, got loans against the increased price of their house as an additional equity and spent them in malls and other extravagant activities.
For example a house which was priced at Rs 50 Lakhs pre recession rose to Rs 1 crore because of additional demand. The House owner took a loan on this increased value of Rs 50 Lakhs and complted his national duty of shopping.
The money lent on sub-prime basis was not American money. The mortgaged loans of the US banks belong to banks in the Middle East, in Korea, in Taiwan or even in India.It was a US crisis at global cost. That is why it affected the world.
Globalisation helped America to make the local loans, global loans.This is why,recession,which ought to have been America's problem,became a "global" problem.Recession is America's gift to the world.
Let us understand this in an easier manner.You give me loan.I use the money to buy things from you.I never repay the loan.Thus,you get fooled twice.America imports products from other countries using its sub-prime loans.This is what America is doing to the world,and the world knows it.
It is this life model,which our economists are trying to enforce upon us.Isn't it obvious that such a policy will turn detrimental in the long run??
It is foolish to think of economics just in terms of money.There is a moral,social and cultural aspect to economics as well.Take a look at the society in India and compare the figures
for public expenditure for private purposes, which is called the social
security system in the West. 30% of the GDP in America is spent for social
security, 48% in England, 49% in France, 56% in Germany and 67% in Sweden. This
private expenditure is nothing but what you and I do by taking care of parents,
our wives and children, brothers and sisters and grandparents, widowed sisters
and distant relatives. This expenditure is met by the society in India.
Now,this is where the Anglo Saxon model fails.It looks as economics just in terms of money.The Anglo Saxon model looks at individuals separately.The Indian model looks at the society at large.This is because of the strong family system prevailing in India.It is this family system which keeps the Indian economy stable.
These days,we find so many Indian intellectuals arguing that family based lifestyle is not a must.The Supreme Court itself has given legal sanction to live-in relationships and pre-marital sex.But such opinions are meaningless as long as the aam aadmi continues to uphold the age old traditions and customs of his ancestors.
"Asia is long-lived, Europe brief, ephemeral. Asia is in everything hugely mapped, immense and grandiose in its motions, and its life-periods are measured accordingly. Europe lives by centuries, Asia by millenniums. Europe is parceled out in nations, Asia in civilizations... Everything in Europe is small, rapid and short-lived; she has not the secret of immortality."
These are the immortal words of Shri Aurabindho. He goes on to predict that India shall rise on the ruins of the West.
These are the immortal words of Shri Aurabindho. He goes on to predict that India shall rise on the ruins of the West.
But that is possible only if a time comes when the Indian mind will shake off the darkness which has engulfed it,and cease to hold opinions at second or third thought,and that is when India shall rise again,to ascend the throne and assert her rightful place among the comity of nations.
I hope that by the grace of God,we shall be able to break the shackles that we have imposed on ourselves.
"Where the mind is without fear
and the head is held high
Where knowledge is free.....
Into that heaven of freedom,my father
Let my country awake"
- Rabindranath Tagore
Let us all pray God that Tagore's prayers come true one day.
(To be continued)
"Where the mind is without fear
and the head is held high
Where knowledge is free.....
Into that heaven of freedom,my father
Let my country awake"
- Rabindranath Tagore
Let us all pray God that Tagore's prayers come true one day.
(To be continued)
It's great!
ReplyDeletelol...thanks:)keep visiting bro:)
ReplyDeleteHi Ambi, boy turned into economist across 4th part of your blog on this subject. Try to read "Breakout Nations" by Ruchir Sharma will give you more perspective on Global Economy. Cheers
ReplyDeleteHi na,
ReplyDeleteThank you for your comment.Will take your suggestion for sure na....To be frank this post has taken a lot from the articles of S.Gurumurthy,as would've been the evident.Anyway,the idea was not to showcase my knowledge of economics,but to make my friends come to terms with the effects of the mall culture..
Regards,
Ambarish
A rather complex post for me to understand!!! But it makes an interesting read! :) Anybody can preach things but it takes a great deal of courage to follow them. And you do that!
ReplyDeletelol...its the least i can do...keep visiting:)
ReplyDelete