Dickson Igwe, Senior political contributor
There are two types of player in the market economy: the producer and the consumer. Producers and consumers can be further described as savers and spenders; and lenders and borrowers. This is an important dichotomy of the marketplace.
Jack Big Spender and Tom Cheap are both crucial to economics. The thrifty are a minority in the marketplace. The vast majority of players in the market are spenders.
The reason for the existence of these two opposing groups is a mystery in economics. However, there may be historic, cultural, and sociological reasons why people behave in specific ways in economics.
Now, Jack the Bohemian is a thrifty type. Jack, in Virgin Islands parlance, ‘’ does not spend a bad cent.’’ Jack is a wealthy man. Jack is easily a millionaire many times over. The great hotelier is in the top 10 percentile in terms of wealth measures.
However at the lunch table, while this ‘’ struggling member of the 90% will swiftly gloss over the bill and frequently pay without as much as a second glance at the dreaded piece of paper, Jack peruses the lunch receipt with the exacting approach of a forensic scientist. Jack may be termed, ‘’CHEAP.’’
Whenever it is time to ‘’cough up’’ after a splendid meal, a broad smile appears on Jack’s handsome face. Jack is in his element. This is a time for ‘’deep thought’’ for the natural negotiator. If the meal is ‘’praiseworthy’’ Jack will make that known loudly and unequivocally. Jack will tip ‘’big,’’ when jack is pleased with his food and wine.
Photo courtesy https://www.blackenterprise.com/
On the other hand, with a terrible meal, Jack possesses the smile on the face of a tiger. A poor meal will meet Jack’s disapproval, swiftly and bluntly.
Once, Jack demanded a refund after a particularly poor lunch. The salad was ‘’off’’ and the coleslaw was made of a mix that was simply, awful. This was a buffet at a well – known ‘’outfit’’ in Road Town.
This Old Boy was shocked and embarrassed at Jack’s vocal and overt protestations. Not Jack! Jack could care less about his clear irritation and anger at a public venue. Jack was in the process of making a loud and lengthy speech in the crowded establishment about the ‘’horrific experience’’ he just had, when the horrified manager waived the bill. The lovely woman stated that it was OK that the two Old Boys at the table leave without paying a cent. Such is Jack’s exacting nature when it comes to spending his cash.
Jack is clearly of the Chicago School of Economics. Jack is a supply sider. Jack is a producer: a savvy businessman and an advocate of Austere Trickle Down. What is good for Jack is clearly good for the 90% in Jack’s world.
This Old boy on the other hand is a natural consumer. He possesses ‘’porous pockets.’’ Cash in his pockets has a short life. Yours truly is one of life’s spenders. A ‘’fat wallet’’ in his hands will swiftly shrink as he waltzes about the shopping mall, high street, and the bar at Nanny Cay Resort.
The 1% tend to be frugal. The 1% are instinctive savers. Those that inherit wealth focus on protecting that inheritance. Thrift is a culture that appears to be inherited, passed on from generation to generation, like a gene. The rest of the wealthy build businesses from scratch, or are promoted to chief executive officer in a Fortune 500 corporation, and eventually buy stock and further, receive stock, as executive bonuses.
Globalism and deregulation has exponentially increased the wealth of the 1% to such an extent that 100 families today control the global economy.
A number of the super rich are simply investors who play the markets. They probably began saving at an early age, or inherited cash and appreciating assets. They use this largesse to buy and sell currency, commodities, treasury notes, corporate stocks, and various investment assets, and instruments.
These investors buy stocks cheap and hold on to those stocks, sometimes for decades, even generations. Anyone who purchased stock in Apple or Microsoft – when those businesses first sold shares to Joe Public – and held on to those shares, are smiling from ear to ear today.
The 1% spend a lot of time and effort contemplating on how to maximize returns on investment, or pondering on that new invention or innovation that promises to place Jack in the solid fold of the ‘’jet set.’’ The wealthy possess an entrepreneurial mindset. The 1% will take a well calculated risk.
Spenders are in a separate parallel. Spenders are life’s consumers. Spenders are more concerned about the model of their next car, their next vacation, or an expensive home electronics purchase. Usually these are made on credit. The product purchases and credit used to make these purchases are owned by the ‘’frugal rich.’’ In fact all debt is ultimately owned by the wealthy- or better stated, owed to the wealthy. Spenders tend to live from paycheck to paycheck.
Ok, both Jack the Thrifty and Joe the Big Spender need each other. This is a symbiotic relationship that is a great mystery of economics. It is also a paradox.
To be continued
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Dickson Igwe is an education official in the Virgin Islands. He is also a national sea safety instructor. He writes a national column across media and has authored a story book on the Caribbean: 'The Adventures of a West Indian Villager'. Dickson is focused on economics articles, and he believes economics holds the answer to the full economic and social development of the Caribbean. He is of both West African and Caribbean heritage. Dickson is married with one son.
