The Altruism of Saving
Saving is income not spent, or deferred consumption. Savings have been under the spotlight since the crisis. Those most heavily affected by the global crisis were the individuals, companies and nations who had saved less. The tale of the ant and the grasshopper says as much: it's in tough times that the grasshopper finds neither food nor shelter.
In its latest reports, Bankitalia says the net position of Italian households is worth 2.8% of GDP, down from 4.5% three years earlier. Similarly, the drop in investment has not reduced the indebtedness of firms, which has instead climbed to 3.6% of GDP at the end 2008, from 2.1% at the end of 2005. In the spring of 2009, as they looked into the macroeconomic causes of the crisis, the Bank for International Settlements and Financial Services Authority highlighted the existence of global imbalances expressed by the differential in saving propensities between emerging economies (such as China) and advanced economies (such as the US).
This imbalance in terms of saving rates led to capital movements from emerging economies toward capital-rich industrial economies, and consequently to an excessive current account deficit in the latter. This phenomenon, combined with low interest rates, triggered a credit boom which also involved the share of the population with low incomes and/or zero savings. Thus credit became a substitute for savings for the purchase of real estate property and the financing of consumer goods.
Until a few years ago the emphasis, also in relatively parsimonious economies such as Italy, was on consumption. Even after the crisis, governments have highlighted the importance of consumption in driving domestic demand. To this day, there are those who are perplexed by economies (such as Germany) which defend their choice to save and refuse to take the place of the US as drivers of world demand.
It is as if the act of saving were synonymous with a closed and selfish economic model, and the act of consuming signaled altruism and progress. However article 47 of the Italian Constitution states that the Republic protects savings and favors popular access to home ownership for families, and property of the land for farmers, and to the direct and indirect investment in the big production complexes of the country. This constitutional principle lends itself to the following comment: in a society such as ours, where the unspent part of cashed incomes goes into the financial system and thus is reinvested into the economy, individual savings do have the highest social meaning.
The decision to save is inherently moral. To save means to care about your dear ones and to care about the future, which means fearing worse times and hoping for better times. In their first course in finance, students are taught that savings are worthy of protection, because they drive credit and economic growth. Financial savings are not about selfishness. To the contrary, they are about the future and about concern for oneself and the others, your family and your nation.