WHAT ARE YOU WORTH?
Wealth is not an absolute. Its worth is relative and keeps changing, say Jug Suraiya and Narayani Ganesh
A Greek king once asked Solon, the renowned lawmaker, “Tell me, have I had a good life?” Solon replied: “No one can say.” The point that the jurist was making was that no life could be considered either happy or sad while that life was still continuing because a sudden reversal of fortune could, overnight, transform happiness into sorrow or sorrow into happiness.
The same holds true for financial fortune as well. As any good finance manager will tell you, all wealth is notional until you cash it in. For example, if you own shares or property, the value of these is only in the mind. You derive no immediate actual benefit from it. The value only gets actualized when you sell the property or shares and convert these into cash and exchange the cash for goods and services. Had you held on to these assets without cashing them in, their value would have always remained purely theoretical. They could have either gained or lost but without affecting the material quality of your life in any way. It is only when you cash in assets and convert them into money their value is actualized. However, even this cash value is relative.
First of all it is relative to individual status. For instance, a cash realization of say Rs 50,000 would be very significant and substantially change the lifestyle of someone whose net asset value was Rs 1 lakh. But an infusion of Rs 50,000 in cash would make no real difference to someone whose NAV (net asset value) was a crore, ten crore or one hundred crores of rupees.
This is not all. A lakhpati in the 1950s, for instance, was considered a wealthy person indeed. Today, many young IIM graduates are snapped up in jobs which start them on a salary of Rs 1 lakh-plus per month. Yet their sense of achievement or level of contentment might be at great variance with those of the previous generation who might have started with only a fraction of the amount of what youngsters in the same peer group earn today, and yet they probably experienced a far higher degree of fulfilment.
Money and wealth are not absolutes. They belong to the realm of relativity. Just as to a six-foot tall person someone who is of average height of five feet six inches is a ‘shorty’, but would be considered tall by someone who is four feet ten inches, there is no real person who is absolutely rich but is rich or not rich only in comparison to someone else. Which is why we have these voyeuristic “richie rich” lists grading individuals in terms of their guesstimated wealth. Such lists of course give you a distorted picture because to use the phrase of Jean Paul Getty who in the 1970s was considered one of the richest individuals in the world: “A billion isn’t just what it used to be.”
It’s not just that inflation debases currency. Technological, scientific and medical progress also alters the concept of wealth. For example, in Akbar’s time a heart surgery would have been out of the question even for the great Mughal himself. In the 1960s, a well-heeled, adequately insured person could easily afford such a procedure. Today such surgery is within reach of the middle class. Much the same can be said for goods and services as diverse as foreign travel, long distance communication, sanitary fittings and climate control systems.
Once we establish that profit and loss are part of the same process and actually not just two sides of the coin but often the same side of the coin, we’ll begin to put the current economic downturn into its proper perspective.
Even in the grip of this financial crisis the world, by and large, and most, if not all the individuals in it, are richer by far than they have ever been before in terms of access to food, shelter, medicare and other amenities of life.
This is what we need to bear in mind and not lose heart because someone tells us that Anil Ambani has developed a huge hole in his pocket where a fortune used to be. He is reported to have lost $30 billion in 2008 on account of sliding markets and is being described as topper in the list of ‘billionaire blowups’ of the year — in less than a year of being feted as the biggest ‘gainer’ in the world.
But Anil isn’t really poorer by so many thousands of crores any more than he is suddenly shorter by so many inches. Because, since wealth, like height, is not an absolute and can only be gauged in comparison to someone or something else, Anil’s so-called loss is compensated by the fact that his peer group has equally lost. If everyone is made financially “shorter” by six inches, everyone ends up being of the same economic stature.
What is truth and what is untruth? Philosophers say that there is no such thing as an untruth because no truth is absolute. There are as many truths as there are perspectives. And every one of them could be right. To the host, the bottle is halfempty whereas to the guest, it is halffull. Both are right, of course.
Fortune and misfortune, loss and gain, they're not permanent states; neither is existence permanent. And going by the Anekantvad school of thought, existence itself has many sides; what we get out of it is what we make of it for truth is relative to the perspective.
So when things look bleak and you feel that the future holds nothing but ruin, remember Solon who saw that both sorrow and happiness are notional values — as are the financial ratings of an individual’s wealth on a “richie rich” list like that of Forbes that described Anil as the world’s biggest gainer before dubbing him as the world’s biggest loser even before the year ran out.
(From Economic Times dated 11th Jan 2009)