Developed World - a real oxymoron!

"The philosophies of the West and East had clashed from time immemorial. It would have been a treat for eyes and ears if we ever got to watch a clash of words between Socrates, Plato and Aristotle on one side versus Confucius, Buddha and Lao Tzu on other without worrying about the differences they would have among them within the East and West assemblage. A dream of every student of reason which would be played and replayed without worrying about the outcome. 

 

The heritage of difference of thoughts and ideologies are deeply linked to much more than the religious or cultural boundaries which modern day deep thinkers and historians had ever penned. 

"A nation is a community of people formed on the basis of a combination of shared features such as language, history, ethnicity, culture and/or territory." 

A close neutral observance of the people's behavior, mindset and culture which obviously is the foundation of the nation itself gives us an insight into the philosophies that drive the actions. To review it further, it would be wise to understand the fundamental differences how different societies handle the personal finance. 

A debt is often seen as an opportunity to invest more from someone else's capital to reap more gains. Most businesses works this way and it is well accepted in the modern world. When large corporates do it, it is borrowing for investment on higher income generating assets leading to greater profits and when people do it considered as a borrowing used to acquire an asset or finance a life situation. 

There are two sides of every coin and it is no different in the above case too. There are certain societies which absorb the definition and soak in quite well but there are other societies who still sees this as a risk which can cause peril in future. A general thumb rule, would be to see first whether we can afford to pay back the debt we take and secondly to scrutinize whether the investment can get you larger income post cost of maintaining the asset. A certain other society or nation(in a larger sense), prefer the second method. 

While we put our efforts in learning the companies listed in the stock market or driven by investments from angel investors, we often see that many of them are just staying afloat due to the influx of more capital while operationally are making huge losses and reaching sky high debts. Many a times these companies manage to attract fresh investments and keep floating. Some of them manages to generate cash via market and also well paid publicity and the cycle continues. This phenomenon itself is a certain type of business cycle which needs to be dwelled into often neglected due to the media glorification of the founders or the other parties. 

Further down we could fathom that as an individual looks at personal asset to liability ratio to find their net worth often the future possibilities of appreciation of wealth and earning capacities are neglected considering the capability of individuals going bust, something similar would follow when it comes to group of these individuals called a society or multitude of them termed societies. Whereas in the case of nations past performance is taken as a benchmark for future performance(only pun intended) and other nations or world bank comes forward to fund and let them adopt more debt. I was not surprised to see that the countries with highest debt are the ones we consider super powers.

US leads the chart with 30000000000000 USD which is like 60526 USD per person in the country owes already. Followed by UK, France, Germany and Japan. You might be confused to see the above list as a list of super powers in your might. China ranks 9th, India 18th and Russia 20th. Except for two countries Brunei and Lichtenstein most others have their own external debt worries. It is no wonder that most these country's stock market leads the globe in market capitalization. Considering the GDP of all the countries in various external debt charts, it won't be possible to break even in next few generations as most of the developed countries are struggling to maintain a positive GDP. I am sure you might be wondering this data doesn't match with the perception we have about debt and the countries. And also believe this is a misrepresentation of facts. Of course it could be my inability to understand the depth of it would have played its part. While we ponder the best option from above situations. Can a nation be seen as the sum of individuals mentality or divided into individuals liability? Isn't it a strange coincidence that in most of the developed and rich countries, its quite natural to run on credit and borrowing, be it a mortgage or loan or credit card? And has high availability of credit from various means? There is a high chance of losing money to inflation if ever tried to save? 

From where we started the adaptations of the lifestyle often misunderstood as living life king size even if on credit versus saving up for the hard time facing the tides of today can also be reflected in how countries and its people handle their lives. Of course we have outliers everywhere but there is a prevailing general philosophy which is quite evident to the seekers. 

Everyone who can afford higher and more credit can have a lavish lifestyle he or she wishes to in the current world, what matters is the risk appetite for it. Most people love to settle in developed countries often considered rich in itself due to higher salaries compared to their home nations which are often poorer in this case. However everyone should understand that the philosophy difference doesn't allow many countries to have the risk appetite to have higher debts and leave their citizens already indebted for next few generations even if we give a guarantee of grand future. This is often misunderstood as a country's inability but lets trust it as a calculated step forward. Maybe these countries might not have the latest facilities and greatest promise of dreams which is often a trap which leads to the never ending unexplored business cycle of ours discussed above. 

Life is really simple, but we insist on making it complicated - Confucius!

Versus

Simplicity is the ultimate sophistication - Da Vinci!

Life is for us to explore and decide what fits us but definitely a herd effect can't be overlooked wherever we are! 

The only true wisdom is in knowing that you know nothing - Socrates.

References:

https://en.wikipedia.org/wiki/List_of_countries_by_external_debt

https://www.investopedia.com/terms/d/debtgdpratio.asp

https://worldpopulationreview.com/countries/countries-by-national-debt

https://tradebrains.in/10-largest-stock-exchanges-in-the-world/

https://www.visualcapitalist.com/global-debt-to-gdp-ratio/

https://www.economist.com/content/global_debt_clock

https://www.macrotrends.net/countries/USA/united-states/gdp-growth-rate