Monday, December 27, 2010

Isn’t thoughtful austerity what we really need?

“Austerity” was recently named the word of the year. With every major world economy still deep in the recession, taking unaccustomed and previously unthought-of steps to contain the impact of the recession on their economy, this comes as no surprise. A search on the net for the word austerity pulls up pages and pages of government measures aimed at cutting cost. And this is not limited to any one country or region but spread across the globe. This too is a no surprise considering the fact that this recession is slowly turning into a pandemic in its own way.

But what surprised me were measures taken by some countries to cut the extravagance. I read of measures such as cutting back aid to existing schools and stopping funds for new schools, layoff of law enforcement and medical personnel, and deferring budgets related to enhancing public transport infrastructure, which in my opinion is unthoughtful. Schools, law enforcement officials and public transport are the back bone of any civilized society and if there is cut in spending on these, I am wondering, what are these governments even trying to achieve in the long term? A system affected by scoliosis? Also, some of the measures suggested were like blanket measures meaning they will extend for some more years. I am no expert in these matters, but my opinion is to come up with measures which are much more thoughtful and scientific.

A question crossed my mind as I read, is austerity really the solution? I think extravagance in a way, is one of the reasons for many of the advancements we are enjoying today. Thanks to the early adapters willing to pay the premium, products meant for the rich become available for the common man. Advancements in F1 cars trickle into passenger cars giving the common man technologically advanced yet affordable cars to drive. Air travel, which a few decades back was considered a luxury, is available for everybody today. I think most of the items around our houses were once meant for the rich folks who were ready to buy paying a premium for the technology which has now become affordable. If not for those who demand a better facility than what is already available, and who are willing to pay for something extra, those extras will never become affordable. Maybe in a way extravagance is required to make our lives easier and smarter. So I think instead of focusing on a blanket cost cutting exercise, we need to think of alternate ways to achieve efficiency and growth.

On a different note, this is the first time I am using the word austerity so many times. Also I think till a year or two years back, I had not used this word at all (wondering if I even knew the meaning of the word austerity 2-3 years back!!). Thanks to the recession, I got to know how to use the word austerity. As they say, bad times show new doors!!

~Narendra V Joshi

1 comment:

Anonymous said...

Extravaganza may good as long as one does not pass on the cost to is a completely different issue if luxury is on borrowed money. Thank China for the cheap loans to US that has helped spurred innovation. The question is how long can this continue ?