Freedom is perhaps one of the most important yet underrated things in the world. On this day of independence, let’s explore freedom in this post.

In today’s world, we are free to pursue almost anything. We can pursue our dream of becoming astronauts, building large businesses, working at cool companies, learning anything from the internet, saying our opinions on social media. No one is stopping us from pursuing our dreams.

As most of us are living in a free world, we sometimes take it for granted and don’t realize how important freedom is. We can’t imagine a world without freedom. A world in which someone can control your destiny is like a nightmare.

One of the most important pieces of freedom is financial freedom. Till we are dependent on someone else financially, we are not totally free.


Financial Freedom

In layman terms we can describe financial freedom as the state of having enough income that satisfies your living expenses without depending on some single entity.

We can also see financial freedom this way, which is about removing the income dependency from one or handful of entities. If you’re running any kind of business, you may have hundreds or thousands of customers. If one of them leaves, you won’t get affected much. So, your income is not dependent on a single entity, unlike jobs.

Goal of not depending on a single entity is, the risk that your total income can go to zero in the near future is higher than when you have multiple sources of income which are good enough to cover living expenses.

When your income is not dependent on one single entity, it’s unlikely that it’ll become zero in the near future. Unlike a job, where if an employer wants to fire you, your income is gone. But if you’ve invested a high enough amount from that job’s income to equity markets, mutual/debt funds it’ll keep growing & your living expenses will be covered.

Debt also can be a big problem for some people. We may take bad debts which do not yield enough returns to even cover the interest rates. There’a great saying about debt:

There are two ways to conquer and enslave a country. One is by the sword. The other is by debt. -John Adams

As of March 2021, India has US$ 570.0 billion of external debt. Which we need to pay someday in future. The GDP to debt ratio of our country is also very high.

So I think till we do not achieve financial freedom, we’re not really free. Someone can control us if they want if we are financially dependent on them.

Capitalism also has played a big role in individual’s freedom by providing proper economic incentives. Let’s explore that a bit.


Capitalism

In today’s capitalist world, people are free to become so rich that their net worth will be larger than the GDP of entire countries. Today anyone can become almost anything provided they can learn required skills. Internet has democratised knowledge. We can learn almost anything online freely and apply that knowledge in the real world.

Capitalism plays a very important role in our freedom. As people are economically incentivized to make better products and services that their other people love and are willing to pay for. So, entrepreneurs and businessmen will make products and services which solve other people’s problems. And because there’s competition in the market, we are free to choose anyone’s product/service we like.

What if Steve Jobs was not free to make Apple computers and iPhone? We will not have those products. What if Larry Page and Sergey Brin were controlled by someone else and they were not free to make something which could democratise knowledge? We will not have Google.

All these imaginations sound a bit weird but it is possible. Many developing countries including India were controlled by British people for many decades. People of these countries were not totally free.

But capitalism provided very high economic incentives for businessmen and entrepreneurs of developing countries like India to build products and services which were solving people’s problems. And using those products and services, people of developing countries became better and better, enough to start their own businesses and repeat the cycle again.

Jio is a great example for this. Mukesh Ambani made his fortune from oil and gas industries and invested that money to create Jio. Which lowered the internet data prices so low that almost everyone can afford to use the internet. Because of Jio, the internet became a commodity.

Millions of people came online because of very low prices of internet plans. And because of that, startups like Paytm, Ola, Swiggy, Zomato, OYO, BigBasket got access to a customer base of millions.


Equality

Freedom and equality are like two side of a coin, can’t be in existence at the same time. When we give freedom to people, some of them(i.e. businessmen and entrepreneurs) will grow so much that their net worth will become larger than GDP of entire countries.

If we give more importance to quality, then we have to restrict people’s freedom to pursue some things & grow much larger. Check out this post on the topic of “Freedom vs. Equality” which explore this exact same topic in detail.

Our society has chosen to give more people more freedom than worrying about the quality of all people. That’s why we see the growth of capitalism & because of that, some people are getting richer faster than other people do.

Here’s another similar post of the topic of “challenging assumptions” which explores the idea of questioning existing beliefs is good for the progress of humanity.