I am not an economist nor am I a business consultant, so do not expect this post to be overflowing with graphs and the sort of definitions that meander everywhere before saying: ‘I admit I am lost!’ Let me just say that it is too tempting to talk of an economy that is contracting or expanding, throw in some facts about general equilibrium, give a passing reference to the capacity of producers and the imbalances in demand, and then make some grand conclusion that the mainstream economic thought must take into consideration structural inadequacies before it can turn any economy into a viable and vibrant economy! Phew! That was the largest chunk of nonsense I could ever have written…
But to come to the simple facts now, I am going to defend spending. I have held on to a very dear to my heart theory that I had thought of years ago. The origin of this must surely have been inspired by Specky, my wife, who is also a mathematician. I don’t remember correctly but I’m sure we must have had a conversation almost resembling the one that I will now write about.
Specky: We need to start saving money. Things are getting expensive and our salaries aren’t keeping up with the inflation.Me: Yes.
Specky: But then the banks too are hardly giving any interest. We can’t even buy a flat to make our future secure because we don’t have any savings. This is giving me a lot of tension.
Specky: I am really confused. Do we put some amount in a savings account every month or go for PPF or save and go for an FD? Finance is mind-boggling but I know I have a knack for it.
Specky: Listen, a part of me asks me to buy things because after all, we cannot live without technology. Right? We cannot live like hermits because then our awareness goes down. But then if we don’t save, we just might never be able to buy property ever.
Now this was when Specky became aware of my single-word answers and she gave me one look of exasperation and went into the bedroom to continue her debate of saving vs spending in isolation. This had, however, started me thinking and that was the day I propounded my theory of spending. There weren’t any shankh-nads or conch octaves piercing our small two-bedroom flat nor were there people queueing up outside to buy the first copy of my theory when I launch it at midnight… but there surely were words waiting to be fitted into my sentences in my mind.
The thing with words is that they are always smarter than they look or sound… the bigger and more obfuscating ones among them are the dumber of the lot. The bigger and the seeming awe-inducing ones end up spending their lives in a niche called jargon that only sales executives from multi-national PR agencies use when they want to sell a non-existent service to a client who is stupid enough to believe them. But let us step away from my theory of words for a moment and get back to my theory of spending, lest I spend all my creative ink in writing out something that wasn’t supposed to be a part of this essay. I mean, even this is so much like life… we keep doing things with a lot of focus only to realise years later that we should have digressed from that digression and made a beeline for the right path.
So as I was saying, money decides its own size of a pile for an individual… and once the pile size is achieved, it stops accumulating. That’s it.
I’m sure a lot of my readers are thinking, ‘What? That’s it? This is that famous theory of spending that this fellow was about to reveal?’
Well, the best theories are always short… it is the interpretation that creates volumes. I’m sure there will be people to explain this sentence in a few volumes full of graphs and ably assisted by mathematical formulas. But then let me add that a corollary to this theory is: The more times you keep taking out money from this pile, the more times the pile goes all out to complete itself.
The wonderful thing about corollaries is that writers and thinkers love them as they make the scene a bit clearer for the mass of unresponsive brains around. So my next corollary goes on to say that misery is when an individual looks at his pile of money and laments its size as compared to the seemingly larger piles that others have and tries to hold on to it. The basic premise here is that we need to be happy with what we have… but the hidden premise is that if we spend our pile fast enough we may actually have spent and enjoyed more money than even the one who has the largest pile but spends slower. So the next corollary that emerges is that it is the speed of spending that is directly proportional to the speed of money that is added to your pile as it needs to maintain its pile size… and thus a day would come when more money would have passed through your hands than all the money held in a static embrace by an individual who has a larger pile but does not spend.
I know it is easy to get drowned in paragraphs that go on and on with piles… but the pile that I am talking about is what some philosophers may call ‘destiny’. We come with our own pile written into our destiny… however, what and how much we spend is not linked to it. So destiny has keep maintain this general equilibrium of its pile while you indulge in the classy art of spending. Another corollary to my theory is that the more your spending demands, results in more that is consumed from the pile and the economy of the pile in your destiny contracts or expands accordingly. The wonderful thing about this pile of money that destiny has granted each individual is that there are no structural inadequacies there. Thus the pile sizes that we are talking about are a natural consequence… the pure, organic genetic code written into it.
As all theories go, they need a simplified version that everyone can understand and follow. So if I have to tell all of this in one digestible chunk, it would be: Spend more. Spend without fear. Your destined pile will not dwindle into nothingness… and will neither increase if you hold spending and live a hermit’s life. Think about it.
This article was also published in ‘The Education Post’ dated 01 December 2014:
03 December 2014