• urjitd2000

The Financial Divide...

Time and again we see media reporting that across the globe, the rich are getting richer, and there is a unbridged Financial Divide being created in the country and around the world. This is indeed true. As observed personally, at the turn of the century, we had the digital divide and a decade later, we have been seeing the Financial Divide. Why so? Is capitalism failing? What is capitalism? From what I understand, capitalism says that making money, over earning a living, is not bad. But, making money in the narrow sense should translate into creating wealth for the society in the broader sense. So , then, we do have startups and some companies, who have given stock options. Is that not good enough? There are people benefiting from the globalization, and class market products and services of yesterday are being made made available to mass markets today. Plus, with the middle class incomes rising, the propensity for people to buy these has increased. Well, to a reasonable extent this is good. But, the divide is larger than this perceived facts.


Let us also understand that West has been a tradionally consumer economy and the east has been a savings economy. The common investor is being led to believe that MF is good. The FI, Banks, industry, govt are all borrowing money from the retail common investors without interest, and doing business at someone's expense. More often than not, the brokerage houses and Fund Managers are complicit with industry and play a trump card. Plus, When we say that GDP increases by 7%, the absolute figure could be around 10 lacs crore. Well, if out of this, 3 lac crore are made by the top 100 rich guys, the per capita GDP goes down. Further , if that money is spent in buying PR residency abroad, or in investing money abroad, that money does not help in growing the local domestic jobs & economy. The jobs so created will be underpaid jobs with little wage growth.


Coming to more modern aspects to companies, if dollars are created by acting lower down the value chain, the wealth sharing of the company does not actually contriute to the idea of capitalism. The money doled out is for retaining employees, and wealth does not get created as a product or service. SO, what is needed. 1. Labor reforms. 2. Ability to be self-responsible, client sensitive and providing solutions over getting paid for work to carry out instructions in isolation of the big picture.


One would argue that Labor reforms are fraught with risk and employees in companies and labor unions hate it. Well, there has to be a parallel system of vendors evolved to create alignment of core competence, and the agencies so created should be equally good in providing the basics of employment; and the safety net that goes with it. The insurance sector can also play a role and the health benefits and unemployment insurance can be covered. The vendors can retain a fraction and allow the economy to thrive around domestic consumption. The other important aspect of enjoying a working life is to be self-responsible. The external & internal clients should at some point in time converge.


Hence, in conclusion, the idea is to propagate that; just like private sector, govt, and mass awareness fuelled knowledge of technology, and the digital divide was narrowed, there has to be effort of one and all to bridge the Financial Divide. Till such time, crimes of all kinds(civil & otherwise), will perpetuate, because of the causal effect of the said divide. If we can bridge the systemic divide, then all other divide can be bridged. :)



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