The Flipkart and Wal-Mart Alliance
Flipkart is amongst the largest unicorns in the Indian startup ecosystem. Wal-Mart is a known international retailer with revenues upwards of $400 billion. Both of these companies are formidable in their own fields. However, they are set to merge. Wal-Mart has valued Flipkart at $18 billion and is all set to complete the acquisition. This […]
The Phenomenon of House Poverty
Homeownership has been at the center of every American dream for the past few decades. The conventional belief is that buying a home always turns out to be a good investment in the long run. This is the reason why owning a home is considered to be one of the biggest and the most important […]
Disadvantages of Omnichannel Retailing
In the previous article, we have explained the concept of omnichannel retailing. We have also seen how it is different from multichannel retailing and what are some of the benefits of using omnichannel retailing. However, there are many critics who believe that omnichannel retailing is only good in theory. When it comes to real life, […]
Pros and Cons of Financial Fair Play Rules
In the previous article, we have already seen how certain football clubs in Europe have been using their money power in order to muscle their way to the top of the league. Hence, in order to prevent this, certain organizations such as EUFA have created certain financial fair play rules. The aim of these rules […]
Advantages of Public Private Partnership Model
Building stadiums or other sporting venues is an essential activity that plays a crucial role in the success or failure of sporting leagues as well as sporting franchises. However, as we have seen in the past articles, the financing of such stadiums is not an easy task and requires committing huge amount of money as […]
The world is in crisis and one of the reasons for that is the excessive debt held by people, companies, and countries. The west is especially hit hard because of the profligacy of the last three decades starting from the 1970s, which have resulted in a consumerist lifestyle, and an accumulation of debt at all levels of society. The acceleration of this trend during the 1990s and the 2000s with the inevitable implosion happening in 2008 meant that the world and particularly the west are sitting on a time bomb that can explode anytime. As people, companies, and countries in the west pay down the debt, they are faced with a choice of either curbing the present consumption and paying down the debt accumulated so far or taking on more debt to pay off the existing debt and bankrupting future generations.
In other words, as all levels of society take on more debt to continue the present consumption, the situation is such that this debt has to be paid off sometime in the future and most likely, the future generations would be saddled with this debt. Like a head of the family who accumulates, debts and leaves to the future to pay it back, all levels of society in the west are continuing the present unsustainable way of living.
For instance, the United States is embarking on increasing its present debt and taking on more debt to pay off in the future.
Further, as there are many social welfare oriented schemes like Medicaid, Medicare, and Social Security that are entitled to be for the cause of social justice, the country has to budget for these entitlements as well so that the fabric of society is not ruptured. However, there are many experts in the United States who believe that the government must not honor its commitments to the elderly and the sick and instead, must give tax breaks for the rich and subsidies for the giant corporations. Coupled with the line of thinking that advocates more spending and more consumption, this line of action is a surefire recipe for disaster.
The point here is that the accumulated debt would be passed on to future generations who would find that they have to do without subsidized education, less spending on social schemes, and have to pay more taxes to repay the debt that has been accumulated so far.
The situation in Europe is slightly different, as the policymakers there have embarked on a debt reduction program by focusing on austerity. Of course, the existing debt is also being carried forward which means that in addition to cutbacks on social schemes and a general sense of lack of basic spending, they would also have to repay the debt.
The point here is that the situation in Europe is more severe than in the United States, which for the moment is postponing the problem. However, there are many experts who believe that the US would face this “Tsunami of Debt” and the “Debt Bomb” pretty soon and that the day of reckoning cannot be postponed forever. The clear implication of this is that eventually the world would have to wake up and face the reality of low growth, more austerity, and more taxes along with sacrificing comforts to just get along. This means that there are tough choices ahead for the present generation and the generations to come and therefore, it is better for those who are graduating now or are taking up jobs to be aware of these facts.
Finally, the present generation can limit the damage done so far by living sustainably and trying to innovate and ensure that growth returns through inventive and creative solutions. The other alternative is to live through an economic depression that would impact their lives drastically.
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