At the heart of America’s problems is an economic policy which is designed to keep wages down but consumption up. That necessarily means more bubbles, more debt, more wealth and income inequality, and consequently more strife and social unrest when the gravy train ends. You cannot expect to hollow out a country’s manufacturing base, set up a bunch of McJobs to replace it, and still have consumers spend to support the economy.Well, you can, but it can't go on indefinitely. What's keeping wages down ? A toxic combination of union weakness and mass immigration. What keeps consumption up ? Debt. That scenario sounds like the UK to me.
Wednesday, March 31, 2010
Not Just America
Edward Harrison at Credit Writedowns :