The Price of Capitalism

Capitalism, ah the widely debated topic the way of life the west has successfully adapted for the last 100 years is getting even more widely debated now especially in the times of economic slowdown. Capitalism in layman terms creates a free market for every one to compete and to prosper with minimal restrictions by the government. Whoever has capability prospers in such a system and amasses enormous wealth, consumers benefit from competition so that they get the best products at minimal pricing. If your product is exclusive you can demand a premium, if its not you have to be priced with the market. This holds true for the job market as well. Today's youth are motivated by money which is natural as more and more money is flowing in the hands of the youngsters and peer pressure and greater pleasures in life motivate youngsters towards working really really hard to make a big buck.

The risk of capitalism is not with the system but with the fact that when the times are good the market tends to go overboard and when the times are slow the market becomes over protective and business starts slowing down very soon and people start losing their jobs or taking salary cuts, people stop paying their mortgages and life changes in no time.

Now the good or bad thing is that the economic cycles never stay one way for long so whatever you lose during the down turn can be recovered and more during the reverse cycle.

Incidently this phenomenon is new to India and Indians and we have got properly "Capitalized" as an economy and we have seen some three downturns in the last 12 years which have left people flabbergasted. What is still different from the west is that Indians are probably still not as leveraged and most of us are still very conservative in their habbits but this is changing very fast.

People are losing jobs today for no fault of theirs, their salaries are being cut left right and center and are facing the darkness as the downturn is all over and its difficult to find another job especially with the same or equivalent salaries that one is working at. Today we face a scenario like this and its even more tough because your expenditures have gone up too and to take care of your basic necessities gets challenging.

The argument in favour of a pure capitalistic economy is that in the long run it all evens out in the favour of the people and this can be seen with the success of the western economies or even economies like Japan which have been in a recession for the last 30 years still have a better qualioty of life for their people than a lot of protectionist economies.

The world is opening up but then we have to wake up to the realities of life which come along with our new way of life. There are a few things that one can do to be ready with any eventualities that can come in

• Save for atleast basic expenditures upto an year and keep it liquid.
• Dont put in all your investments in risk assets as in the times of slowdown even the valuation of equity and real estate assets would be lower.
• Dont really go in for job options with high fixed salaries but look in for options with high probablity of making a higher variable as variable salaries are easy to save as compared to the component which comes in your salary every month.
• Dont go in for excessively expensive houses however convinced you might be for the property.
• Staying in a single jobs for atleast 3 years plus is very important as layoffs are usually for the more recent joinees.
• REMEMBER: High fixed salaries are not good, if you have a good deal you gotta be worried about sustainability .

As they say tough times dont last tough people do, i am sure India and Indians would come out of any global economic crisis stronger and bigger and we shall keep growing. we are more global than ever and we have to grow along with the whole world and we shall do.

Jai Hind