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Joseph and the principle of precautionary saving

There are many aspects of Joseph’s life that we could talk about: his dreams of greatness; his suffering at the hands of his brothers; his servitude in Potiphar’s house; his resistance to temptation; his ability to prophetically interpret people’s dreams, etc.

However, there is one element of the story that is often overlooked; nevertheless, it’s as pertinent as ever for citizens of the COVID-19 world. Genesis 41 tells us that Pharaoh had a dream in which he found himself standing by the River Nile. Suddenly there came up out of the river seven cows, fine looking and fat; and they fed in the meadow. Then seven other cows came up out of the river, ugly and gaunt, and stood next to the first group of cows on the bank of the river. Next thing, the ugly and gaunt cows attacked the fine looking and fat cows, and completely devoured them!

Then Pharaoh had another dream in which seven plump and good heads of grain came up on a stalk. Then seven thin heads of grain, blighted by the east wind, sprang up and devoured the plump and full heads. Needless to say, Pharaoh woke up in a rather agitated and distressed state of mind. He hastily called for all the magicians and wise men of Egypt and told them his dreams, but no one was able to interpret their meaning or explain their significance.

Finally, the chief butler recalled his encounter with Joseph in prison, and his unique ability to interpret dreams. Pharaoh sent and called Joseph, and they quickly brought him out of the dungeon. Pharaoh said to Joseph, “I have had a dream, and there is no one who can interpret it. But I have heard it said of you that you can understand a dream, to interpret it.” Joseph replied, “It is not in me; God will give Pharaoh an answer of peace.” After hearing the dreams, Joseph said,

“God has shown Pharaoh what He is about to do … The seven good cows are seven years, and the seven good heads are seven years; the dreams are one. And the seven thin and ugly cows which came up after them are seven years, and the seven empty heads blighted by the east wind are seven years of famine … seven years of great plenty will come throughout all the land of Egypt, but after them seven years of famine will arise, and all the plenty will be forgotten in the land of Egypt; and the famine will deplete the land and be very severe.”

Joseph advised Pharaoh to select a discerning and wise man, and set him over the land of Egypt, and to appoint officers over the land to collect one-fifth of the produce of land in the seven plentiful years and store it in warehouses in the major cities. Then, when the famine arrived, the grain could be sold to the people to make bread.

In the providence of God, this act of prophetic wisdom not only sustained the nation of Egypt, but also preserved the fledgling nation of Israel and ensured the continuity of the Messianic line.

Modern economic theory and ancient biblical wisdom

Under the inspiration of the Holy Spirit, Joseph was urging Pharaoh to embrace what would be called in modern economic parlance, “Precautionary Saving Theory”. To put it simply, Precautionary Saving Theory works on the assumption that everything in life is cyclical; good times don’t last forever, nor do bad times. And the secret to success, if not survival, is to act with “prudence” (foresight or sagacity) during the good times, and save a proportion of your income as a hedge against future risks.

“Saving” does not necessarily mean depositing money in the bank; it could (and should) include investments that generate fixed capital and achieve economic growth. Think: real estate, stocks, bonds etc. The goal of precautionary saving is to ensure a smooth stream of consumption over an extended period of time. To put it another way, precautionary saving means deferring your current consumption in order to maintain a utility level of consumption in the future if your income drops. It’s a lifestyle that insures you against unpredictability and uncertainty.

Precautionary Saving Theorists recognise that the “Roaring Twenties” may be followed by the “Depressed Thirties”. Seven years of plenty may be followed by seven years of famine — it’s what you do with the profits you make during the years of plenty that will determine how well you live during the years of famine. It’s one thing to “eat, drink, and be merry” now, and forget about tomorrow. But tomorrow will surely come, and if you’re not careful, you might find yourself hungry and destitute.

One of the major problems in society is the demand for instant gratification. “I want it all, and I want it now.” A case in point is the emergence of financial technology company Afterpay. Afterpay is essentially a “buy-now, pay-later” service that allows in-store and online customers to purchase a product immediately and pay for it later with four equal repayments. Interestingly, millennials are Afterpay’s main customer demographic, comprising 75% of its users.

I’m not criticising Afterpay per se, as it is obviously a profitable and well-run business. Rather, it’s the concept it represents that concerns me — the idea that you can have it now, just because you want it, even if you can’t afford it. I grew up in the days of “Lay-by”. But the difference with lay-by was that you didn’t get to take the product home until you had finished paying for it. That gave you an incentive to save and sacrifice and pay it off so that you could enjoy it sooner rather than later.

If there’s one thing we can learn from Joseph, it’s this: work as hard as you can while the harvest is there to be reaped. But don’t spend everything you earn. Put some of it away in a secure storehouse. And in time to come, you’ll have enough to feed yourself and others as well!

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