The world economic system is driven by growth or declines in productive activities or sectors. Hence, what is commonly referred to as savings is the basis of this economic system and is externally invested to generate earnings to fund periods of reduce revenues or individual retirements and other social programs. While current income is used to develop, purchase and maintain skills, most economies borrow externally, by issuing country bonds, to fund infrastructure improvements. So, whether an individual or a Government, one invests to diversify into growing income streams and to soften declining revenues, but the actual investment decisions must be driven by improving living standards.To compound savings, where money saved from manual productive activities is put to work to earn more money. That is to say, putting aside a portion of the income generated as a result of physical or mental actions as savings and setting it to work by means of lending it to or buying into other productive activities. For example, an individual employed may use a part of the salary to finance another type of business and generate additional income or a Government may put aside a portion of its tax revenue into a heritage wealth fund to stabilize and diversify its economy while earning additional revenue from within other economies.
To fund retirement and periods of no or low productivity, that is when income levels from manual productive activities decline and can no longer cover basic expenses. Money generated in the form of interest income and dividends can supplement any loss of physical or mental income to the point of replacing it entirely. For example, an individual may suffer lengthy periods of unemployment or retirement but can continue to pay expenses from mutual funds’ distributions and pension disbursements or a Government may continue to fund it social and other programs even in a recession financed by revenues from its stability fund while taking measures to turn around the economy.
To fund development both infrastructure and skills, encouraging innovation, supporting efficiency and empowering people. Explicitly, it is to find the best and most cost effective method to deliver basic goods and services to benefit all people. For example, design, construct and maintain an efficient energy and water supply and distribution, housing, healthcare, schools, sporting and entertainment facilities, transportation and communication networks to get goods to markets and people to work with the least amount of stress or educate and provide healthy choices for individuals to be productive.
To fund any budget deficit while improving living standards, the objectives are political stability, justice, equality, morality and integrity (happiness). Simply put, unhappiness by any segment of society can easily erode or entirely destroy all investments. For example, gridlock caused by political opposition, high crime rates and slow justice, sections of society being discriminated against, dishonest public servants or people in power (elected or appointed) plainly stealing.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
