What they don’t ask

by Chris Bertram on August 4, 2011

Last night’s BBC Newsnight in the UK featured “an item on living standards”:http://www.bbc.co.uk/iplayer/episode/b0132003/Newsnight_03_08_2011/ (at about 29′) and an interview with Doug McWillians of the “Centre for Economics and Business Research”:http://www.cebr.com/ think tank (whoever they are). McWilliams asserted that the UK faces a decline in living standards of 25 per cent over the next 20 years or so because of wage competition from overseas: “we” are going to be 25 per cent worse off. I have no idea how plausible this is.{fn1} However, if I’d been the interviewer I’d have followed up by asking McWilliams, “so, the economy is going to shrink by 25 per cent over the next few years?” Because I’m pretty sure that the economy is going to continue to grow, and that McWilliams also believes this, (eventually, and maybe sluggishly) and asking that follow-up would have forced him to make it explicit that he thinks we face a future of contraegalitarian redistribution (and, judging by some of the other elements in the item, longer hours). Unfortunately, the question never came. Until these questions get asked though, we’ll still have a political debate dominated by the assumption that growth-promoting policies will provide people with better lives, even though it seems that they won’t. (Which doesn’t, of course, establish that in the absence of such policies things wouldn’t get even worse.) To protect and improve the real living standards of ordinary people, we need to get redistribution explicitly onto the agenda and not just allow the assumption that rising tides lift (the key political assumption of “left neoliberalism” it seems to me) to stand.

1. To be fair, McWilliams says the decline isn’t predetermined, but can be avoided if “we” provide ourselves with enough in the way of high-tech skills to “command a premium”. Of course this is another feature of the “left neoliberal” toolkit, but as the experience of new Labour shows, it is one thing to sloganize (“education, education, education”) it is another to actually change things.

UPDATE: For some reason Matthew Yglesias has “linked to this post”:http://thinkprogress.org/yglesias/2011/08/04/287553/the-new-labour-record-on-income-growth/ taking it to be a data-free assertion that Blair and Brown failed on inequality (I believe that they failed, but it isn’t the subject of this post) and then waving around a Lane Kenworthy graph that he’s fond of in refutation. Two points: (1) the only point in the post that touched on the failure of New Labour was the footnote, which alludes to their record on education not inequality; (2) “Brian posted a few months ago”:https://crookedtimber.org/2010/10/01/fun-with-gini-coefficients/ in response to “the last time”:http://thinkprogress.org/yglesias/2010/09/30/198683/new-labour-and-inequality/ Matt deployed his favourite graph against “me on New Labour’s record”:https://crookedtimber.org/2010/09/30/its-about-the-distribution-stupid/ on inequality, given that, I’m surprised Matt is still waving it around.



Tim Worstall 08.04.11 at 8:02 am

“McWilliams asserted that the UK faces a decline in living standards of 25 per cent over the next 20 years or so because of wage competition from overseas: “we” are going to be 25 per cent worse off. I have no idea how plausible this is.{fn1}”

Pretty much nonsensical.

A 25% decline in absolute living standards? Pshaw!

A 25% decline in relative living standards? Entirely plausible, even desirable. This would mean convergence, the poorer countries/economies growing faster than the UK. Not just desirable in fact, something devoutly to be wished for.

I can’t see the iPlayer, being in foreign parts, but my assumption is that that’s what he’s talking about. Relative, not absolute, decline.


dsquared 08.04.11 at 8:07 am

Always with the hi-tech skills, always with tthe assertion that we compete head-to-head with our training partners. If someone doesn’t understand Ricardian comparative advantage, I need an absolutely compelling reason to persuade me to be interested in their other policy views.

As I said on my own blog – China produces x thousand engineers per year, but has never produced a single decent TV gameshow. Why would anyone think that in a world where China’s economic significance is rising, Britain needs more engineers and fewer arts graduates?


Britta 08.04.11 at 8:13 am

Considering many Americans can no longer afford to shop at Walmart , I think a 25% decline in absolute living standards for countries who’ve chosen to pursue neoconservative (neoliberal?) economic policies doesn’t seem out of the ballpark.


ejh 08.04.11 at 8:26 am

A 25% decline in relative living standards? Entirely plausible, even desirable. This would mean convergence, the poorer countries/economies growing faster than the UK. Not just desirable in fact, something devoutly to be wished for.

You reckon that’ll be a 25% drop for everybody, or are we only devoutly wishing it on some of us?


ajay 08.04.11 at 8:34 am

Is “relative living standards” even a thing? As in, my relative living standard has dropped this year because one billion Indians have got slightly richer? Is this something real economists talk about?

On the actual question, wouldn’t it be possible to combine economic growth with falling living standards if you assume, say, much higher energy prices?


Britta 08.04.11 at 9:11 am

Good point. As a consumer of Chinese television, I can verify the game show trade deficit definitely runs in our favor. At this rate, the Chinese may never be able to pay back all the game shows they’ve dubbed/pirated from the West, and thus will firmly remain in our debt forever.


Emma in Sydney 08.04.11 at 9:15 am

China produces x thousand engineers per year, but has never produced a single decent TV gameshow
But srsly, has anywhere ever produced a decent TV gameshow? Successful, I grant you, but decent?


Henri Vieuxtemps 08.04.11 at 9:33 am

Ricardo’s little thought experiment might work for entities with a few thousand people each, but I don’t think it’s applicable to large entities like the UK, and, most certainly, China.


IM 08.04.11 at 9:41 am

That can’t be a argument. The UK alread had some millions inhabitants in Ricardo’s time.

relative decline of living standards – doesn’t makes much sense.


Chris Bertram 08.04.11 at 9:44 am

FWIW, McWilliams clearly means that most people (or typical family) will be worse off compared to how they are now and NOT that people elsewhere will be relatively better off. So a matter of absolute not relative decline.


Henri Vieuxtemps 08.04.11 at 9:47 am

The UK already had some millions inhabitants in Ricardo’s time.

So, it already wasn’t applicable in Ricardo’s time. It’s just a theoretical model that may or not (and probably won’t, in real life) result in a Nash equilibrium.


Jonathan 08.04.11 at 9:57 am

This is becoming increasingly common. Terry Smith from a city fund made similar claims, again quite unchallenged, on Today last Friday (about 1:32 in):


I emailed Today to complain about dubious claims (the govt’s own figures don’t support the claim that public sector pension provision is unsustainable; indeed Today’s Evan Davies has pointed this out to govt ministers) and the effectively political arguments being made. So far I have only got an auto reply. Ironically Mr Smith ended by describing his safe investments he’s intending to live on – including in Norway.


Roger 08.04.11 at 10:02 am


‘Doug McWillians [sic] of the Centre for Economics and Business Research think tank (whoever they are)’

If you paid any attention to economics you’d know that CEBR is a well-known and AFAICT ‘highly respected’ economic forecaster.

And if you don’t there’s this thing called google.

Is it really so hard for you to produce a post that doesn’t sneer in passing at those you regard as your social and intellectual inferiors?


IM 08.04.11 at 10:05 am

That is another argument. That was Krugman great achievement, wasn’t it? To show that developed countries still produce the same goods, no comparative advantage sorting the production and trade.


Chris Bertram 08.04.11 at 10:28 am

_Is it really so hard for you to produce a post that doesn’t sneer_

FWIW I wasn’t sneering. But yes, on the wages they pay us here at Crooked Timber it is really hard to produce posts that won’t disappoint you Roger. However, I can offer a full refund on your subscription or, if you prefer, a full supply of Crooked Timber for the next year, completely free of charge.


Chris Bertram 08.04.11 at 10:31 am

Oh, just checked Roger, you’re the guy who accused me of slandering the “decent left” in my last thread. So just go fuck yourself.


Roger 08.04.11 at 10:32 am

It also seems to me that CEBR could be doing one of two things:

1) Joining the neo-liberal chorus for whom ever more savage austerity programmes are the only solution to capitalism’s problems , or

2) Pointing out that deficits are less important than the structural problems in our economy which require massive investments in education (and training and research and development) if we are not to suffer a sharp relative decline in our standards of living over the long term.

(and I agree with Tim @ 1 that as McWilliams is not an economic illiterate he can only be talking of relative decline).

‘Left neoliberal’ (actually a very useful formulation) or not, surely it is better for us all – and particularly for all of you who suck on the teat of state -funded higher education – for a think tank or forecaster to push agenda (2) rather than agenda (1)?


ejh 08.04.11 at 10:39 am

‘highly respected’ economic forecaster

Exclusive club if ever there was one


IM 08.04.11 at 10:40 am

>sharp relative decline in our standards of living over the long term.<
But nobody said anything baout relative decline. So it was absolute decline of living standards; and that means either a shrinking economy or a growing economy were most people don't profit. And CEBR may be "serious", but that question should be answered.


Latro 08.04.11 at 11:00 am

Dunno. It seems to me clear we in the West (except US) will have a severe drop in standards of living in the future. As in “you used to have a decent healthcare service provided by the State, now you dont”. Depending on who, that may be as high as 100% drop in standards of living, by being dead as a result.

So, yes, the biggest risk seems to be in the austerity and not the competition from abroad. Unless we think the austerity drive is due because we have to get competive with countries where being exploited is a step up from utter despair and abandon.


Roger 08.04.11 at 11:02 am


Firstly if ‘whoever they are’ isn’t a sneer, what was it?

Secondly you did attack the ‘decent left’ in your last post.

However justified you feel your attack was you really can’t complain if one or two of the people you accuse of being part of the ‘epistemic environment’ that produced a particularly monstrous mass murderer saw it as a slander and defended their position.

And because you made your attack while they were still counting corpses I responded more emotionally than I should have done (I am an emotional guy made more so by having just spent too many hours trawling through the sub-Dostoevskyian hell of Breiviks ‘manifesto’).

But seriously what response did you expect?

If you are going to spend the rest of your life prosecuting this feud then you need to toughen up a bit and accept that occasionally someone will try and hit back.

And if they don’t how will you know that any of your blows have landed?


Andrew F. 08.04.11 at 11:08 am

25% sounds… well it sounds ridiculous.

I agree with Chris that a follow up on income inequality would have been great. I’d also like to hear how in the world he arrived at that number. Lately I’ve had growing doubts about the benefits of free trade for Western societies as a whole – though from a global perspective there’s no doubt that free trade is an immense boon to humanity.


Roger 08.04.11 at 11:16 am

ejh @ 18

Those scare quotes around ‘highly respected’ were there for a reason.

I did at one point take all of the historical key indicators from the Treasury’s monthly digest of UK economic forecasts over IIRC 2005-9 and compared them to actual outcomes to see which if any forecaster had the best success rate.

FWIW although I lost the spreadsheet when I moved jobs I can’t remember CEBR being significantly worse than the others.

And on a brief skim of their recent releases I think I detect an undertone of criticism for the current neoliberal consensus – but as agencies like CEBR make all their money from selling their reports to businesses this has to be very muted and Aesopian indeed.


Walt 08.04.11 at 11:21 am

Roger: Feud? Seriously? Don’t you have hobbies or something that would better occupy your time?


Chris Bertram 08.04.11 at 11:37 am

_If you are going to spend the rest of your life prosecuting this feud_

It is fairly easy to search my posts to see what I write about Roger.


Roger 08.04.11 at 11:56 am

My bad.

Of course your feud is not with me – as a non-academic I hardly count as a human being at all.

As you well know the feud is actually with the ‘decent left’ – Geras, Cohen, Berman, Walzer etc – or in your most recent formulation:

‘people who think of themselves as being on the left but who backed the Iraq war, strongly supported Israel over Lebanon and Gaza and who disseminate propaganda attacking those who take a different line to them on the Middle East as antisemitic racists’.

But as your real targets have better things to do with their time and as I was one of those 2,800 (or whatever it eventually was) benighted souls who signed the Euston Manifesto I occasionally pop up here and make a thorough hash of defending their position.

Why I should bother when Norm, Nick and the rest sensibly ignore you is a good question – I suppose its because the other contributors to CT still have interesting things to say so it is difficult to avoid your posts altogether.


Colin Reid 08.04.11 at 12:08 pm

The UK economy as a whole will grow, but perhaps the circumstances of that growth will allow a minority to siphon off all the gains and then some, so that median income per hour worked goes down relative to cost of living. It’s more or less what’s been happening in the US over the last 30 years.


Jonathan 08.04.11 at 12:14 pm

As far as I can see, it’s clear that CEBR and others are talking about real falls in household income, not relative ones. Apart from anything else, it’s been happening in the UK and elsewhere for some time now as nugatory rises in money wages – or zero change or actual falls; even in the early 2000s a significant minority of the UK workforce say falls in money wages – come up against inflationary pressures and the petering out of falls in manufacturing prices that had somewhat helped real incomes. Widespread job losses tend to compound this, with people typically finding jobs on lower incomes with worse prospects. The disconnect between income growth amongst fairly middle income households and GDP or productivity growth has crept up on us (or, rather, labour economists have been slow to cotton on to as they remain rather stuck in the view that technological change and/or globalisation only really impact negatively on the lowest skilled)

(Shouldn’t really rise to Roger, but 2800 signed the Euston Manifesto. Wow! As its proponents insisted it included people who opposed the Iraq war, it does rather suggest that the ‘pro-war left’, for all its media profile, was probably about the same size as the far left groupscles it so disliked.)


Chris Bertram 08.04.11 at 12:26 pm

Roger, I have written just one post critical of Geras in the past five years. A few more on Nick Cohen (who is after all a mainstream columnist) the last of which was in 2008, also one on Walzer in 2008. Other CT contributors have written more (critically) on all of those people in the interim. So I’m afraid you’re the victim of an overactive imagination.


ejh 08.04.11 at 12:37 pm

In general, the idea that Nick Cohen sensibly avoids the prosecution of feuds would require some highly ingenious defending.


Roger 08.04.11 at 12:55 pm

[aeiou] Jonathan at #28

I actually agree with you – in fact I’d estimate that there are rather more than 2,800 members of far left groupuscules and of course belonging to the SWP or whatever represents a vastly greater level of commitment than signing what amounts to an online petition.

And IMO it was a project that ‘failed’ (although it is difficult to think of any meaningful measurements of what might have constituted ‘success’) and therefore deserves serious and thoughtful criticism.

But Chris never does this – rather he picks on a monstrous and almost literally incomprehensible atrocity committed by a far rightist to score petty political points against fellow leftists by including them in the ‘spectrum’ of hate that produced him – and when called on whether this is altogether appropriate resorts to playground insults.


Chris Bertram 08.04.11 at 1:00 pm

OK Roger, that’s enough. You’re off topic and you’re peddling untruths for the purposes of provocation. Go and play elsewhere. You are permanently banned from commenting on any of my posts here.


soru 08.04.11 at 1:18 pm

I find a 25% gdp decline implausible, if only for the reason that the kind of mechanism that could cause that would have no reason to stop there. Or indeed at any other particular point where you could still have people in offices tallying up the percentage, as opposed roaming a post-apocalyptic wasteland.

Now, as CB suggests, in the absence of politics, 25% household income decline, for a pretty large slice of households, would be perfectly compatible with moderate GPD growth.

But I suspect the correct interpretation to be looking at here is ‘gdp 25% lower than it would otherwise be’. If there is a national-level political problem that actually has an implementable solution, then presumably one or more current economic peers of the UK will implement it. Few would begrudge, say, Pakistan ‘catching up’ to the UK the way South Korea did. Rather more would be worried by, say, French people, becoming noticeably more prosperous on average than Britons. Especially when the best available explanation will be that their politicians made the correct call where UK ones got it wrong.


Jonathan 08.04.11 at 1:47 pm

A fall in household real incomes of 25% over 20 years I make would be a compound yearly fall at about 1.4%. Does sound a bit large – but you need to make a bold claim to get some attention – but not completely out of line with recent trends:


The point surely is not that anyone expects UK real GDP to fall by 25% over the next 20 years, but increased stratification to lead to a disconnect between aggregate growth and household incomes even amongst those with previously reasonable levels of skills and education as globalisation increasingly eats into either job prospects directly or continues to erode what little bargaining power labour has left. It could happen.


bert 08.04.11 at 1:50 pm

It goes without saying that The Man will try to stick it to the Common Man.
But when was it any different?

China’s comparative advantage is cheap labour.
Makes any other trade advantages it may enjoy look small by comparison.
An attempt to compete by cutting labour costs will, in the absence of other factors, end up a losing strategy. Which suggests that drawing an inference of swingeing “contraegalitarian redistribution” purely on the basis of this evidence would be an unwise thing to do, and attaching a 25% figure to it would invite ridicule.

The emphasis on improving training and skills acknowledges this, and rests on the assumption that a skilled workforce will be able to extract better terms from international capital. The problem with this is that a comparatively skilled, comparatively cheap workforce is at present India’s advantage relative to the developed West.

A better approach in the short term might be to secure our position in the value chain through the use of restrictive practices. If you devise a widely copied gameshow format, intellectual property law allows you to extract rent from it.
This approach offers us a better chance of paying our bills for the next few years than, for example, the Germans’ stereotypically unimaginative approach of making high-quality products that people will actually pay good money for.

I don’t want to pick on someone now deprived of any comeback. But less than a week before NewsCorp withdrew the BSkyB bid, Roger was confidently predicting it would be nodded through. Whichever epistemic community he belongs to, they’ll be unlikely to see him as an asset.


Pete 08.04.11 at 1:59 pm

I suspect the decline in living standards will appear through rising housing (rental) and fuel costs, the evaporation of benefits, and having to work around those bits of the state that no longer function properly because they’ve been sabotaged.


MPAVictoria 08.04.11 at 2:39 pm

Britta, apparently they can’t even afford to shop at dollars stores anymore.


Anonymoose 08.04.11 at 2:41 pm

It is certainly true that if inequality grows fast enough, then growth is irrelevant to those in the lower centiles of the income distribution. But inequality would have to grow at a ridiculous pace for that to actually happen, and you don’t put forth a convincing argument on why that would be the case.

For example, in the U.S. I’m sure you agree that inequality has grown tremendously in the last decades. But even the bottom of the distribution has benefited significantly from growth (see e.g. http://papers.nber.org/papers/w17164). So, while in principle growth does not necessarily get distributed to everyone, in practice it’s hard to imagine it not being so, especially in the U.K.


Davis X. Machina 08.04.11 at 3:04 pm

The disconnect between income growth amongst fairly middle income households and GDP or productivity growth.

…a disconnect between aggregate growth and household incomes even amongst those with previously reasonable levels of skills and education.

The incredible shrinking tree-house. Just when you think you’ve safely pulled up the ladder, you find yourself back on the ground


Matthew 08.04.11 at 3:53 pm

I guess you could argue something like this – consumption + govt consumption is something like 85% of GDP, with 17% investment and a 2% trade deficit.

If the trade deficit becomes a surplus, and investment rises to 25% of GDP, that could see consumption falling to 73%. So that’s a 14% decline in living standards.

You could then note impact of budget deficit cuts on consumption and the devaluation – 25% – on overseas purchasing power (I think national accounts ignore this on grounds you are still buying imports, but I think that is misleading).


piglet 08.04.11 at 3:59 pm

“wouldn’t it be possible to combine economic growth with falling living standards”

Of course it is possible. Through redistribution. And that is precisely what is happening. Granted GDP growth is slow at the moment but even slow growth shouldn’t lead to falling living standards absent redistribution. That is a simple arithmetic observation. Ok to be precise, we should be looking at per capita GDP. In the US, per capita GDP is somewhat lower than it was at its 2007 peak but the numeric difference cannot explain the drastic deterioration in the economic well-being of tens of millions of Americans. Only distributional effects can explain that.

Most economists seem to be taking it for granted that positive economic growth is required just to maintain current living standards but that implicitly assumes wealth concentration as a given. As economic growth in the developed world becomes a more and more unlikely prospect, attacking inequality will be the only viable strategy to maintain decent living standards for the masses.


Chris Bertram 08.04.11 at 3:59 pm

_you don’t put forth a convincing argument on why that would be the case._

Not the point of the post. The economist interviewed assumed a decline in living standards. I then (reasonably I think) attributed to him the belief that the economy would grow over the same period and asked how those two things could be consistent. One way they could be consistent is a massive increase in inequality where all gains go to the top.

The point of the post was to ask (1) why the interviewer didn’t follow up and (2) to suggest that actual redistribution-as-such downwards should be on the political agenda (rather than just neolib substitutes like rising tide and more education).

As for that paper you link to, I can see how it might appeal to people with conservative (in the US sense) politics, but it is contrary to the other stuff I’ve read (Piketty, Stiglitz etc). If dsquared on John Q want to adjudicate, I’d be happy to listen.


piglet 08.04.11 at 4:04 pm

“Ricardo’s little thought experiment might work for entities with a few thousand people each, but I don’t think it’s applicable to large entities like the UK, and, most certainly, China.”

Ricardo’s little thought experiment was based on assumptions that are not valid in today’s economy: it assumed immobility of labor and especially of capital. I think economists are in principle aware of this dirty little secret but they mostly prefer to not mention it. Any economists here who would disagree with that?


Chris Bertram 08.04.11 at 4:46 pm

There’s now a weird reaction to this post over at Yglesias, I’ve updated above in response.


piglet 08.04.11 at 6:05 pm

Did the link I am trying to post trigger any alerts?


SamChevre 08.04.11 at 6:44 pm

Wouldn’t the obvious way for a fall in living standards to be consistent with a rise in GDP be that input costs are going up relative to wages? (So, for example, the quadrupling of oil prices since 1999 is makes a dollar of oil–a GDP measure–consistent with only 25% as much driving–a living standards measure.)


piglet 08.04.11 at 8:14 pm

“Wouldn’t the obvious way for a fall in living standards to be consistent with a rise in GDP be that input costs are going up relative to wages?”

But rising input costs – inflation – are supposed to be accounted for in real GDP accounting.


Tim Worstall 08.05.11 at 6:46 am

I’ve seen another report from the same economist:

“British families’ living standards have fallen by almost five per cent over the past five years, said Douglas McWilliams, the chief executive of the Centre for Economics and Business Research. The centre forecast that, over a 25-year period, this figure will reach 25pc, meaning that over a single generation families’ quality of life will fall significantly. ”

He really is saying that absolute living standards will fall. Essentially, that the economic troubles of the past 5 years are likely to continue for the next 20.

I think it’s most unlikely, but that is what he’s saying.


SusanC 08.06.11 at 10:34 am

The fall in living standards over the last couple of years seems to be unevenly distributed, both at the individual and probably the regional level. Looking around at all the people I know who have lost their jobs, and the businesses that have closed down, it’s easy to identify many families that have taken a bigger than 25% loss already.

However, at a very rough guess of the mean fall where I live, it’s nothing like 25% yet.

Emotionally (if not mathematically/economically) it’s easy to imagine the mean fall reaching 25% just by a increase in the proportion of the population that has taken a big cut. Particularly as there’s positive feedback visibly in operation: increased unemployment causes reduced spending, which causes more businesses to fail, which causes more unemployment. (Yes, sure, there’s no particular reason for the positive feedback to stop at just 25%).

In the UK, the heads of University departments I’ve spoken to are pretty concerned about the upcoming changes in student funding (like, it’s the first thing that comes up in conversation even if you’re really there to talk about something else.). Such that a 25% fall in total student numbers wouldn’t be unexpected. And if that happens, either the qualification requirements for what are now graduate jobs go down, or the number of people going into that class of job goes down.

If this happens (and here’s hoping not!) I presume it would be a fall to both GDP and living standards.


Britta 08.07.11 at 9:03 am

Dsquared @ 2
We stand soberly corrected. I was watching Chinese television the other night, and I have one (well 4) words for you: Michael Jackson impersonation competition.


Lemuel Pitkin 08.07.11 at 10:14 am

Wouldn’t the obvious way for a fall in living standards to be consistent with a rise in GDP be that input costs are going up relative to wages? (So, for example, the quadrupling of oil prices since 1999 is makes a dollar of oil—a GDP measure—consistent with only 25% as much driving—a living standards measure.)

Possibly, insofar as oil has a larger weight in the consumption basket than in GDP as a whole. Health care is another, possibly bigger, factor here. The divergence between the CPI and similar measures on the one hand, and GDP on the other, doesn’t get as much attention as it should in these discussions. This is one area where Marxists do better, thanks to Marx’s focus on the relative price of wage goods. It’s an interesting fact that in recent expansions, while real wages have not risen any faster than GDP, the relative price of wage goods gas accelerated, so the wage share has risen.


Alex 08.10.11 at 2:04 pm

Tim, are you pretending to be dense? If growth in average wages is less than inflation, living standards are falling. Average wages in the UK have been flat since 2003 and inflation has been nonzero.

It’s quite possible for this to coexist with positive GDP growth – if, for example, incomes for the very top of the income distribution were growing and others were falling, or the labour share of GDP was dropping.

A thought arising: everyone who wants more QE, a high positive inflation target, or an NGDP target is basically relying on wages following inflation upwards, thus eroding the debts let behind by the Great Bubble while not changing the relationship between wages and prices. Basically, a readjustment of debts funded by a silent tax on the rentiers. Great.

But what if, far from a wage-price spiral, the workers aren’t even getting any indexation? Then you’d expect to see worsening standards of living (check), debt erosion (check), and rotten GDP because 90-odd% of the population has no money. I suppose it helps with the public debt. Oh yes, rich entities with debts would do nicely…like big business…

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