COMMENTARY: The Thrift Paradox
By Dickson Igwe, Contributor
There are two types of player in the market economy: the producer and the consumer. Producers and consumers can be further described as savers and spenders; and lenders and borrowers.
This is an important dichotomy of the marketplace. Jack Big Spender and Tom Cheap are both crucial to economics. The thrifty are a minority in the marketplace.
The vast majority of players in the market are spenders. The reason for the existence of these two opposing groups is a mystery in economics. However, there may be historical, cultural, and sociological reasons why people behave in specific ways in economics.
Now, Jack the Bohemian is a thrifty type. Jack, in Virgin Islands parlance, ‘does not spend a bad cent.’ Jack is a wealthy man. Jack is easily a millionaire many times over. The great hotelier is in the top 10 percentile in terms of wealth measures.
However at the lunch table, while this struggling member of the 90% will swiftly gloss over the bill and frequently pay without as much as a second glance at the dreaded piece of paper, Jack peruses the lunch receipt with the exacting approach of a forensic scientist. Jack may be termed, CHEAP. Whenever it is time to ‘’cough up’’ after a splendid meal, a broad smile appears on Jack’s handsome face.
Jack is in his element. This is a time for deep thought’’ for the natural negotiator. If the meal is ‘’praiseworthy’’ Jack will make that known loudly and unequivocally. Jack will tip ‘big’ when jack is pleased with his food and wine. On the other hand, with a terrible meal, Jack possesses a smile on the face of a tiger.
A poor meal will meet Jack’s disapproval, swiftly and bluntly. Once, Jack demanded a refund after a particularly poor lunch. The salad was ‘’off’’ and the coleslaw was made of a mix that was simply, awful. This was a buffet at a well – known ‘’outfit’’ in Road Town. This Old Boy was shocked and embarrassed at Jack’s vocal and overt protestations. Not Jack! Jack could care less about his clear irritation and anger at a public venue. Jack was in the process of making a loud and lengthy speech in the crowded establishment about the ‘horrific experience’ he just had, when the horrified manager waived the bill. The lovely woman stated that it was OK that the two Old Boys at the table leave without paying a cent. Such is Jack’s exacting nature when it comes to spending his cash. Jack is clearly of the Chicago School of Economics.
Jack is a supply-sider. Jack is a producer: a savvy businessman and an advocate of Austere Trickle Down. What is good for Jack is clearly good for the 90% in Jack’s world. This Old boy, on the other hand, is a natural consumer. He possesses ‘’porous pockets.’’ Cash in his pockets has a short life. Yours truly is one of life’s spenders. A ‘’fat wallet’’ in his hands will swiftly shrink as he waltzes about the shopping mall, high street, and the bar at Nanny Cay Resort. OK. The one percent tend to be frugal. The 1% are instinctive savers.
Those that inherit wealth focus on protecting that inheritance. Thrift is a culture that appears to be inherited, passed on from generation to generation, like a gene. The rest of the wealthy build businesses from the scratch, or are promoted to chief executive officer in a Fortune 500 corporation, and eventually buy stock and further, receive stock, as executive bonuses.
Globalism and deregulation have exponentially increased the wealth of the one percent to such an extent that 100 families today control the global economy. A number of the superrich are simply investors who play the markets. They probably began saving at an early age, or inherited cash and appreciating assets.
They use this largesse to buy and sell currency, commodities, treasury notes, corporate stocks, and various investment assets, and instruments. These investors buy stocks cheap and hold on to those stocks, sometimes for decades, even generations. Anyone who purchased stock in Apple or Microsoft – when those businesses first sold shares to Joe Public – and held on to those shares, are smiling from ear to ear today.
The 1% spend a lot of time and effort contemplating on how to maximize returns on investment, or pondering on that new invention or innovation that promises to place Jack in the solid fold of the ‘’jet set.’’ The wealthy possess an entrepreneurial mindset.
The 1% will take a well-calculated risk. Spenders are in a separate parallel. Spenders are life’s consumers. Spenders are more concerned about the model of their next car, their next vacation, or an expensive home electronics purchase.
Usually, these are made on credit. The product purchases and credit used to make these purchases are owned by the ‘’frugal rich.’’
In fact, all debt is ultimately owned by the wealthy- or better stated, owed to the wealthy. Spenders tend to live from paycheck to paycheck. Ok, both Jack the Thrifty and Joe the Big Spender need each other.
This is a symbiotic relationship that is a great mystery of economics. It is also a paradox. To be continued
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More rubbish and blabbering from the fat man. For the sake of all people please, please, please do not continue this vomit pouring from your racist mouth. You only look to divide and separate the people of the Territory. Please spew your nonsense when standing in front of a mirror. Then the only one who cares will be listening
Please no more student union level politics tinged with racism!
You are clearly an Igwe fan- that can be the only reason you come here to spew your racism- go on – people like you make Igwe greater and even more popular
Please stop spewing your rum vomit, racist rubbish from your mind and the rotten filth from your intestines on media.
Noone cares whether you hate Mr. Igwe or not.
Noone has ask you to read his commentary.
So, do yourself and the local reading population a favor, get on a plane or boat, and when it has reached across the ocean, please jump off or out.
Your commentary is filthy, degrading, depressing and inhumane.
Jack the Bohemian? Nobody cares.
The Old Boy? Nobody cares.
Stop this nonsense series.
Of course they do – and you do even more – so why are you here reading Igwe? You are really very stupid aren’t you
So why are you reading it- racist hypocrite
Two common idioms fling around are 1) Talk is cheap and money buys land, and 2) It takes money to make money. There is a significant wealth gap among Whites, Asians, Blacks and Hispanics;Whites/Asians/Hispanics/Blacks. Race and ethnicity are contributing factors for the wealth disparity. Further, the rate of saving, income levels and economic opportunity also plays a key role in the wealth disparity. The rate of saving is influenced by culture, history, social, demographics…….etc factors. People with money, ie, higher income stream, education, inheritance…….etc have the ability to save and invest, building on their wealth; people living on the margin are less so.
For the most part, people (Black and Brown) at the lower rung of the economic ladder struggles to meet basic needs and have less, if any, disposable income to save and invest. Those that earn the less have to spend more to survive. The Marginal Propensity to Consume (MPC), the ratio of consumption and income, is higher among the poor people and in underdeveloped countries. The more consumed the less saved. The MPC is typically between 0 and 1 and can be greater than 1 if borrowing is used to supplement income.
Moreover, the rich basic needs are satisfied so any additional income earned are saved and invested. On the other hand, the basic needs of the poor are unsatisfied so most, if not all, of their additional income earned is spent on meeting basic needs and less, if any, is a available to save and invest. People with money, people with more disposable income can earn income by investing in bonds, stocks, mutual funds, real estate……..etc. Investing and the power of compounding are a powerful/profitable combination for wealth building. Nonetheless, all that said, people at the lower rung of the economic ladder must take action to reduce MPC and increase margin propensity to save (1-MPC) and invest.
Millionaires and billionaires are driven to make as much money as possible and are generally frugal people, eg, Warren Buffett, a deca billionaire. They can afford to drive expensive vehicles (can buy the whole dealership), buy expensive big toys, dress to kill, feast on and drink the finest ……etc yet they typically refrain from doing so, ie, living high on the hog. They invest their money on appreciating assets, building wealth to pass on to the next generation and the next generation. Thomas Sowell in his book Basic Economics says as soon as we are living comfortably, we jumped to living extravagantly.
@Diaspora, pure rubbish. It is blaming others for wanting to live a champagne life on beer money. Instead of investing on footwear, wheels, jewelry, name brand clothing……etc people should make it a habit of forcing themselves to save a likle and invest. Next thing you will hear that Anglos had an unfair advantage in acquiring resources so that they can afford to save and invest and that Whites are keeping Blacks and Latinos back.
Well, Slavery over a long time ago so slave descendants should be doing better. Stop blaming the Man, Babylon. Stop trying to live large and in charge if you cannot afford it. Live within your means and stop trying to keep up with the Joneses and Johnsones.
” Once, Jack demanded a refund after a particularly poor lunch. The salad was ‘’off’’ and the coleslaw was made of a mix that was simply, awful..” Did Jack eat the meal and then complain?
What a pathetic place the BVI is. Please UK let them on go there way
Yes it is a pathetic land but the Brits should take over. The locals shouldn’t be given this beautiful land. They have destroyed it enough with their garbage, racism, crime and environmental damage. The local black is a squatter to this land and they have ruined it.
The UK will cease to exist soon
Here is a much easier version of the diatribe that is above.
Poor people who get money flaunt it to show they have money
Rich people covet their money and don’t like to spend it.
Think JayZ 20 yra ago full of Gold now he wears cardigans
I admire what I assume to be the desire to make understanding economics ‘accessible’ to the masses, but all this article does (as is the case too often with Mr Igwe) is dumb it down to a level where it has nothing to offer. All it seems to achieve is support a low-lying racist assumption that all white people are well-off and that saving will make your rich.
Saving will not make you rich, investing to generate wealth will make your rich. Wealth is not a ‘producer’ of anything of benefit other than to the owner of that wealth. Anybody supporting pure, capitalist, free-market economics and taxation policies will only feed this beast.
Being a thoughtless consumer through spending your own money is not a crime, but consuming anything without taking the time to understand the origins and ethics around the production of that good or service should be strongly discouraged (imagine if the people of the UK had based their consumption of sugar or rum or cotton or tobacco around ethics, what different place the works may be).
@@Anonymous
When you get some sense, find your jackass on a plane and go back to britan.
Mr. your ancestors murdered and exterminated the original people of these lands. They paid zero nothing for them.
What gives you the idea that they own them? Colonialism,equals come in take and own does not make it yours buddy.
The off spring of the Black people that produced wealth for your country and citizens have more rights to these lands that any english man.
We been here longer and we are owed quadrillions.
So take your racist, Black people and BVIslanders hating ignorance back to your sewre in england thoughts somewhere else buddy.
Don’t read the man’s commentary whether they a student level or not. But you are wrong to ask him to stop because you think he shoiuld. Maybe you should stop complaining and go read your magic book. Or pack up suitcase and get to hell out of the BVI.
There was no racial haterd, prejudice and racism until you people heard about paradise and come looking.
Now you want to take it over and run it with evil and filth and make us second class in our own lands.
WEll, never happen. We will see to that. Ole bear, witch craft, voodum, the whole shebang will be our weapons to maintain our freedom. So bring your ecil hateful mind and come.
Wow, we have these ugly, hateful, prejudice, racist devils living and working among us. Wow!!
“Imperialism is a system of exploitation that occurs not only in the brutal form of those who come with guns to conquer territory. Such was cause of extermination of the original people
Imperialism often occurs in more subtle forms also. When people refer to the country and its inhabittannnts as “pathetic,” and plead for the the former human exterminators and enslavers to come and take back these lands, because the Black peopl are not worty of them, that is the mind of an imperialist.
Those are the kinds of mids that will kill and exterminate entire peoples if they could.
Those are the kinds of devilish demonic minds that will poison your food, water, medicine and contaminate vaccines with life taking agents.
These kinds of minds are now living among us BVIslanders.
Mind YOUR business cave-monkey. BVI issues have nothing to do with you resource-stealing savages.
The nerve of you genetically-inferior miscreants to think YOU of all nations of peoples has the right to think for other people when there has never been a Native people that was better for coming in contact with you. And you got the nerve to ask britan to take over?
Please hurry and leave. Will be glad to see the last of you in zoos.
A lot of racists coming into the territory these days – we need to stop that