Win, Win With Thrift
- Mar
- 04
Thrive with thrift
Perhaps the approach to money and economy that best reflects an outcome of greater wellbeing is that of thrift. Thrift could even be the key to unlocking the many challenges and opportunities we face in the modern world and helping us achieve our true potential. Here’s why.
Thrift defined
Thrift is a word that is probably derived from Old Norse, meaning ‘to thrive’.
Dictionaries define it as:
- careful management, especially of money
- healthy and vigorous growth
- avoiding waste and saving money for the future
Words associated with thrift include providence, meaning ‘to provide’, ‘having foresight’, and prudence, meaning ‘discretion’, ‘caution’.
Unfortunately, in the modern world, thrift is probably most associated with austerity and frugality. ‘The paradox of thrift’ is a mainstream economic concept that suggests if people save more, there will be lower demand for goods and services, and therefore lower output. As income and output must be equal this will lead to a downward spiral of lower savings and output.
As you can see from the definitions above this is an unbalanced view. People who believe in this theory have taken the word saving and focused only on that, and yet ‘thrift’ also denotes growth, careful management, avoiding waste and thriving.
Of course, if we were all to just save then things would come to a grinding halt. However, that is not what thrift means. If we are thrifty we will still take risks, but with discretion and caution. We will spend now, save, and invest for the future to achieve healthy and vigorous growth.
Wellbeing economics
I see being thrifty as:
‘Careful management of money and resources, avoiding waste and achieving healthy growth, so that we can thrive now and in the future’.
The incorrect, ‘paradox of thrift’ economic interpretation suggests we should spend, spend, spend with inferences that ‘vice’ and ‘greed’ are better for our economy. The definition above proposes that we build our economy on ‘virtue’. When investment, entrepreneurship, consumption and production are combined with virtue the increase to wellbeing can be transformative. I believe, taken this way, the concept of thrift can play a key part in the development of a wellbeing economy.
Why should we be thrifty?
Apart from the meaning of the word. ‘to thrive’ (who wouldn’t want that?) why else should we focus on being thrifty as individuals, organisations, communities and nations? Here are just a few of the key reasons:
Thrifty challenges
Overcoming hunger and obesity
The Food & Agriculture Organisation of the United Nations reports in 2017 the share of undernourished people in the world was approximately 10.9 percent. In its 2018 report ‘The State of Food Security And Nutrition in The World’ it states that, for the third year in a row, there has been a rise in world hunger driven largely by conflict, adverse climate and economic slowdowns.
On the other side of the coin, reflecting the growing divide between the ‘haves’ and ‘have-nots’, world adult obesity has been increasing steadily between 1975 and 2016. It is a staggering fact that, across the world, more people are now obese than underweight. The irony here is that both groups suffer lack of access to nutrient rich food.
A great deal of the world’s food is wasted each year but there are also many people who are eating poor diets and/or too much. We need to be more thrifty with our food choices and consumption.
Tackling consumersim and materialism
Two notable events which reflect our misplaced focus on consumption and owning ‘stuff’ are ‘Earth Overshoot Day’, the day each year when we pass the point of consuming more resources than the planet can replenish, and ‘Black Friday’, a day when we spend limitless amounts on our credit cards to purchase items with a fervour more typically associated with a hungry pack of wolves.
Wellbeing research tells us that experiences are better for our wellbeing than consuming more ‘stuff’. If we were to spend more money on experiences with friends and family and less on the latest gadgets or fashions we would generally be happier.
What can many of us consume less of? Food, cosmetics, alcohol, clothes, gadgets, fossil fuel energy and more.
What can we all consume more of? Experiences, nature, renewal energy, sustainable products, volunteering to help others and more.
Of course, consuming too much of certain things is also closely tied to climate change and biodiversity loss.
Tackling climate change and biodiversity loss
Some of the key reasons driving climate change and biodiversity loss are our high CO2 emissions along with destruction of forest for conversion to farming land. Climate change and the closer proximity we have to certain species are also two of the reasons given by scientists for why we can expect greater threats of more pandemics.
So by changing our consumption habits, and becoming more sophisticated about what we do and don’t consume, we can also help to tackle, and even perhaps reverse, some of these key challenges facing the human race.
Finite and scare resources
We have limited resources and unequal access to them. Let’s take water, for example. Other than the air we breathe, this is probably our most precious resource. Whilst water covers approximately 70% of our planet, only about 3% is freshwater, the stuff we can actually drink, use for irrigation, or bathe in.
Of this 3%, much is actually contained in frozen glaciers or is unavailable for use. As a result, about 1 in 7 of the world population lack access to water and over one third suffer from water scarcity for at least one month each year. I want to emphasise this point again:
• 1 in 7 of the world population lack access to water
• Over one third suffer from water scarcity for at least one month each year
Of course climate change is adding to the problem, with erratic weather conditions causing even further shortages in some areas and floodings in others.
The problem is not going away and it is estimated that almost half the world’s population will be living in areas of high water stress by 2030.
Other non-renewable resources such as fossil fuels and minerals are also under stress due to increasing use, the focus on economic growth, and climate change.
So with finite resources there is also a requirement for us all to become more thrifty, less wasteful and to do more with less.
A growing and ageing population
Compounding our limited and scarce resources is the growth and ageing of the world population. There has been a 105% increase in the global human population (from 3.7 to 7.6 billion) since 1970 and this has been spread unevenly across countries and regions. Following this trend, it is expected that the world population will grow by another 2.2 billion by 2050, with more than half of that growth predicted to come in sub-Saharan Africa due to limited access to healthcare, education, and continuing gender discrimination.
The increasing age of the population, particularly in well-established economies, will put pressure on pensions and healthcare. Consumption patterns will change and there will be an increasing demand on limited resources. We will all need to become more thrifty.
Thrifty opportunities
Hopefully you can see that consuming less in some areas and more in others can actually be beneficial to our individual and collective wellbeing, other species and the planet. This isn’t a win/lose game it’s a win/win. But what opportunities are presenting themselves that can help us be more thrifty?
Rich in data and knowledge
It is estimated that 90% of the world’s data has been generated in the last few years. With better data and information we can make more sophisticated decisions about our consumption, savings and investments to ensure they will deliver greater ‘social value’ whilst limiting any associated ‘external’ costs.
Clever, targeted, wellbeing-focused growth
The reality is that economic growth does provide the wealth and technologies needed to lift people from poverty. However, it is also a reality that unfettered, unsophisticated growth will continue to add to the many problems already covered in this post.
At the moment our view of growth is a little like the scattergun approach. All growth is good. Not all growth is good! Cancer is definitely not good growth; the excessive sprouting limbs on plants are trimmed by the prudent horticulturist in order for the plant to thrive and direct its energies most efficiently. We need to be smarter and more sophisticated in where, and how, we choose to grow.
Growth opportunities should be focused on those areas deemed to provide the greatest positive impact on wellbeing. Let’s look at some of these growth areas:
• Automation and Artificial Intelligence
• Technology development to support wellbeing
• Repairing, upcycling and recycling
• Climate change mitigation
• Environmental management, protection and renewal
• Sustainable agriculture
• Transport, infrastructure, architecture, planning and building for wellbeing
• Creative industries
• Education for lifelong learning and retraining
• Renewable energy
• Experience based leisure and entertainment
• Sustainable tourism
• Flying (if we can develop environmentally friendly fuels)
• Holistic health focused on prevention (Sleep, diet, exercise, relaxation)
• Caring for others
• Coaching and talking therapies
• Protecting culture and promoting diversity
• Local governance
• Local produce and services
• Organisational auditing and compliance to ensure businesses deliver ‘net wellbeing’
Even this incomplete list demonstrates that there are plentiful opportunities for growth and creating opportunities for people to contribute in ways that will be beneficial for our collective wellbeing. If you think about your own industry and experience where can you see opportunities for growth that contribute to wellbeing?
Freedom from want
Freedom from want was one of the ‘Four Freedoms’ proposed by President Roosevelt in his Annual Message to Congress of January 6, 1941. It is as relevant today as it was back then, albeit under much different circumstances.
Imagine a world where we were all free from want. Surely, this is a much better goal than a misplaced focus on growth for growth’s sake.
If we are to be free from want we must understand what currently traps or cages us. The obvious example here, as recognised by the UN SDGs, is poverty. We must work to reduce poverty across the world and many of the activities planned by the United Nations will help to move us in this direction.
However, it is not only the poor or destitute that are caged or trapped. Many so-called ‘wealthy’ people also feel this way.
• Trapped by debt
• Trapped by a lack of quality opportunities for work
• Trapped in mundane jobs
• Trapped in expensive lifestyles
• Trapped by the fear of losing what we have
• Trapped by ‘keeping up with the Joneses’
• Trapped by our fixed beliefs
• Trapped by addictions to things that aren’t really good for us
• Trapped in relationships that we don’t really want to be in
• Trapped by ‘having to’ rather than ‘choosing to’
• Trapped in lives that are comfortable and safe but are far from actually ‘living’
Please note, I am not comparing the plight of someone with nothing to someone who seemingly has everything here. I’m merely pointing out that we should not just assume that economic freedom is all about reducing poverty.
We are trapped by many things within our individual control and under the control of society, our cultures and the economy. This is why, to achieve economic freedom, we need activity at individual, organisational, and national levels. A thrifty approach to managing our finances and economies is a ‘release’ mechanism for many of these traps.
Thrift in summary
The ‘paradox of thrift’ is an unbalanced view of what thrift actually means.
Thrift is not just about saving. It also denotes foresight, prudence, investing for the future and thriving.
Thrift as a concept is, perhaps, best aligned to achieving greater wellbeing for all.
Thrift and a wellbeing focused economy can help us overcome many of the challenges and seize many of the opportunities that we face in our modern world.
Thrift can help us achieve more freedom and greater wellbeing as individuals, organisations and nations to create a world where we can all thrive.
Get in touch
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