I’ve just finished scanning through this piece from the Atlantic, The End of Middle Class Growth. What I find interesting about it is that a large part of it’s story is the relative returns to capital and labour – how one has grown, and the other hasn’t. I’ve yet to have a serious crack at reading Marx (Peter Singer’s introduction is on my list, but I’ve yet to order a copy). But soon.
Also from the Atlantic – a look at private sector debt levels – you should read the full report, which I’m doing now.
Once you start thinking about debt above a certain level as a drag on growth, it also feels natural to me to start thinking about it as a temporal transfer – higher consumption is paid back by lower growth (and consumption) at a future point. I found Rogoff and Reinhart’s This Time is Different to be just a fantastic piece of work (although dense at points) in looking at how the current sovereign debt crisis fits into a broader context (although when they were writing, the financial crisis hadn’t kicked into a fully fledged sovereign crisis), and how sovereign default (either outright, or through the printing press) isn’t that much out of the norm.
On a less serious note – the Australian Prime Minister reminds us that even if you’re a member of the G20, you’re still allowed to have fun.
Update: Now that I’ve finished the paper on private debt, it strikes me that they reach a broadly similar conclusion to Rogoff and Reinhart. Private debt (R&R look at the financial sector, whereas the paper looks at the private sector more broadly) increases – after the crisis government debt increases, as private debt is slowly (or not at all) paid down. Interesting too in that the conclusion the paper’s authors reach is a caution about jumping too quickly on the fiscal stimulus bandwagon, with a focus instead on debt restructuring (and careful caveats about moral hazard).