Tuesday, September 21, 2004

saving is freedom

Today, I want to talk about freedom. However, I am particularly interested in what is freedom as defined in economic terms.
Consumption as opposed to saving (later used in investment activities) can be analyzed in terms of consuming freedom or buying freedom.

Why? Wealth is the accumulation of savings plus the accumulated returns on invested savings. This wealth is our “physical capital” that can be used for any projects that we wish to launch. This wealth allows us to make decisions without the interference of others such as creditors/shareholders.
Therefore, someone who is consuming more than he can afford (who doesn’t take into account that he has scarce resources) is virtually enslaving himself/herself through his/her excessive spending level.

We may therefore conclude that “consumerism” leads people to slavery. Excessive consumption may lead people to become greedy for any form of income without considering if he/she deserves to earn more income. This leads definitely to the break-up of communities as people sacrifice their social bondage by seeking more and more income in the hope he/she can get away with his/her excessive spending.

A similar way of thinking can be discussed with “human capital” The accumulation of knowledge - through a formal education process and/or self-teaching and/or learning-by-doing – eventually leads people to becoming “free” individuals.
That wealth of knowledge allows them to having access to more income without spending more time on productive activities.

A controversial conclusion may be that to access more and more freedom, someone needs to limit consumption spending to absolutely necessary outlays. An even more controversial conclusion is that people needs to reduce leisure activities to a minimum.

It is becoming necessary to make a distinction between freedom and happiness. Is it worth getting that much freedom at the expense of the genuine happiness that one gets when consuming and having leisure activities? Isn’t it dangerous for mental health – or even physical health – to become such an ascetic? What about the damage on the overall economy of the community when people stop consuming? Off-course, the economy may well adapt and supply mostly capital goods and knowledge-related goods.

There is definitely a right balance to pursue. It is worth noting that many philosophers in the past have defined true happiness as having an ascetic life-style (non-consumption) and/or valuing education as much as hard work. In that sense, a free person may therefore be defined as a hard-working ascetic craving for knowledge


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