June 26, 2012

Save the Economy, Save the Jobs, Save the World

This is one amongst the handful of most pressing problems we face today in the world. Some other prominent problems being - civil unrest, terrorism, white collar corruption, etc. Economic well-being is important for the world to be able to handle other problems. And economic well-being can only ensure that not even one person in our planet goes to bed empty stomach.

Government's Role

For fighting the economic crisis we need the governments of various nations to work together and take tough and hard decisions unanimously. Nation-based governments give space to national/local aspirations but tend to slow down the pace of decision making. All governments should put the world's collective interest above the national/local aspirations.

The 2008 Recession

With recession being around the corner since 2008 the cost we have paid as a society is already humongous. If the recession continues for another 4-5 years it will simply have disastrous consequences. Just yesterday I was watching a news item on one of the channels about a man committing suicide as he lost his job and he had no savings to support his family. Individual problems will always remain but when most of the individuals in the world face the same problem, the governments should consider that problem as an issue of international importance.

Failure of Governance Mechanism

And this is precisely where international bodies have failed us and that too despite many renowned economists turned politicians and policymakers who are involved with the economic governance. Names of these individuals are not important but the extent of failed leadership is. All of us need to ensure change in governance style across the world - let us all join hands to make sure that we hand our governance to able and just hands.

Creating Jobs and Safety Net for Failed Ventures

Another pragmatic idea - we need to turn into a world of entrepreneurs and job creators. I think there should also be a basic safety net for the failed enterprises that many entrepreneurs will necessarily go through. When 100 enterprising individuals start 100 new initiatives probably a handful will eventually succeed. For those who succeed life would be rosy and pleasant. But for the remaining who fail life will become thorny and rough. A basic safety net will be the right mechanism to ensure that the failed entereprises do not spell doom for the individuals who were associated with them.

Operationalizing Social Security in India

Anyone who is born an Indian must be assured of a minimal standard of living (or roti, kapda aur makaan - as we know them better) by the government. For the nation to prosper, this is really a sine qua non.

Why social security?
 
We all know the famous Hindi phrase "bhooke pet bhajan na hot, gopaalaa". Arts, culture, science, technology and overall economic growth in a nation all depend upon its citizens living comfortably. Social security system will provide a safety net to all citizens. The primary purpose of such a system will be to ensure and guarantee all citizens of India "a minimal standard of living".

Who will benefit?

Social security system will be targeted towards all those who have been forced by the vagaries of life to loose their wealth (job loss, layoffs, etc.) or health/well-being (disability due to accidents, life threatening diseases, natural calamities, etc.).

The economic value-added by a citizen plays an important role in his "usefulness" to the economy and the society at large - this is a harsh but true statement. At the same time, the loss of wealth and health/well-being will continue in the years to come. At an individual level all the citizens are vulnerable to this. The thought that "it could have been me" would have surely come to everyone's mind at one time or the other.

How to generate the funds for this?

Government can add an additional component to income tax which will be used for funding this. Alternatively, a part of the income tax collected can be allocated to fund this.

How to operationalize this?

Social empowerment through education is the best form of social security. Investment by nation in education will generally yield positive returns. However this may not hold good in the times of recession like the one the Indian economy went through in 2008 and 2009 (along with the entire world).

There were many well-educated, highly-qualified people who were rendered jobless. The factors which led to this were beyond the control of individuals and companies. Individuals come and go, companies come and go but governments remain. And only governments possess the resources and machinery to make things happen.

Let's not forget that social security system will be targeted towards all those who have been forced by the vagaries of life to loose their wealth (job loss, layoffs, etc.) or health/well-being (disability due to accidents, life threatening diseases, natural calamities, etc.). The factors cited above do not disappear due to higher levels of education. Also, they do not appear due to lower levels of education.

Building a citizen's database by issuing identity cards to all citizens is the first step required for operationalizing the social security system.  This would help determine the funding requirements and also ensure that only those who need/deserve the "safety net" are provided the same.

Challenges and Way Forward

Agreed, it's easier said than done but do we must, nevertheless. Let's also not forget that the loss of wealth and health/well-being will continue in the years to come. At an individual level all the citizens are vulnerable to this. The thought that "it could have been me" would have surely come to everyone's mind at one time or the other.

The steps suggested above are basic and entirely doable. Social security is all about roti, kapda and makaan for all citizens. By virtue of being born into India, all its citizens should be guaranteed a minimum standard of living. The government should mobilize schemes aimed at the BPL, lower middle and middle classes as they are the most vulnerable to the vagaries of life. How many times has anyone heard of a rich family getting drowned in floods or dying because they had nothing to eat for many days?

Industrialists, businessman and traders are very important for the prosperity of the nation but a "Developed" nation is one where the marginalized and the weaker sections of the society are also assured of a minimum standard of living. The social security system would precisely address this need of the society resulting in a prosperous, strong and vibrant nation. Economic well-being is important for the all this to happen.

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