Thread by @paraschopra

Some thoughts on how to rise up in the economic ladder.

(A thread)

1/ If your aspirations > earnings, you take debt.

Now there’s two ways you can use the debt:
- As a consumer (buy a car)
- As a produce (start a profit making enterprise or buy a profit making asset)

2/ If you use debt as a consumer, you are preparing for a longer slog as you have to pay interest in figure.

Also as a consumer trapped in status competition, profit making enterprises will make you salivate for more debt in future.

3/ When you take debt as a consumer, you are not just forcing a slog on yourself but you help raise prices for others so they have to slog extra as well.

By helping increase prices via debt-driven purchases, you make things expensive for future generations.

4/ This is why US college education (and India’s college education increasingly) has increasingly become expensive and yet students are in massive debts.

There are only limited seats in Harvard and everyone wants it.

Status competition —> debt —> slogging.

5/ The other way to use debt is to use it ‘productively’ and generate more profits than interest so you do one unit less slogging in future.

That sounds reasonable until you think how profit is generated.

6/ Profit is generated if you make someone else slog to pay you a premium over costs.

Someone else has to take debt to pay for your profits.

(That someone else could be people or nature).

7/ The accumulated profits are then invested and lent to others to help them rise the economically by slogging to pay back a return to you.

8/ If you don’t want to take debt, raise your earnings.

However those increased earnings don’t come from nowhere. If you are paid higher, it is because you are helping profits accumulate to someone, which is then lent out to consumers again.

9/ Increasing earnings is not easy.

The majority of population lives hand to mouth, or even in debt.

In fact, the profit accumulation insurance against slogging works only if someone else slogs on their behalf.

10/ This is why there’s a strong correlation between wealth inequality and debt.

“Cross-country differences in wealth inequality seem better explained by social expenditures and debt take-up than by demographic factors and the labour market”

oxfordscholarship.com/mobile/view/10…

11/ And because top income earners are either profit-accumulators or work for profit-accumulators, there’s a strong correlation between income inequality and household debt.

12/ Back to the question of how to rise economically

Short answer: either slog yourself or be in a position to make someone else slog

If you find this distasteful, know that as a society, we have an option to question status and consumption-driven economic progress

That’s it

13/ One of the moral arguments towards profit-accumulation is “trickle-down” benefits and philanthropy.

If the case was strong enough, we would not see the worldwide debt rise constantly.

14/ Sometimes people wonder: who does the world owe the debt to?

It’s not the world who owes debt, it is the people, governments, and corporations that owe debt to profit-accumulators.

15/ The drive for economic progress, the expectation of stock rising, pressure for GDP growth fuels this debt.

And after one dies post a lifetime of slogging, the burden of debt is passed to the next generation.

That’s why poor nations remain poor.

16/ It seems as if consuming less and not caring about status in neighbourhood will release majority from the debt cycle.

Our economic system is intimately tied to the philosophy we adopt and values we embrace.

17/ Perhaps in future we embrace what we have more than what we want.

Perhaps in future consuming less will become cool again.

Perhaps rich will start paying back the debt to nature that’s provided them with things for “free”.

18/ That’s when we will not rise economically, but beautifully.

The challenge we have to overcome is our deeply held belief that there are no alternative to indefinite economic growth.

19/ Want to dive further? I recommend thinking deeply and fairly about what money really is and how some people have more than others.

You can also watch this documentary: money as debt