Thort For The Day
I am still irked by this "family budget analogy" that is out there doing so much damage in the world. Here's another go:
Let us assume for the sake of argument (even though it isn't really true) that when poor, working-class families experience hard times, they have to "tighten their belts", reduce their consumption and concentrate on reducing their debt levels.
Even given that, we must also be aware that rich families, with large amounts of assets, don't have anything like the same constraint. Does Warren Buffet reduce his lifestyle and look at his outgoings when his share price falls? Does he hell. Even much further down the chain, if a senior executive is made redundant he won't immediately take the kids out of private education or sell his car. In many cases, professional people going through redundancy might even be sensibly encouraged to go back into further education or invest in retraining for a different career, taking on more debt to do so.
Are the USA and UK, if we are to analogise them to families at all, more like the working poor, or more like the very richest families in existence? Particularly in the case of the USA, it kind of answers itself, doesn't it?
What really irritates me is that you know that a sizeable majority of these tools going on about austerity and managing household finances have never seen a credit card bill they couldn't pay in their fucking life. And a majority of the rest are actually the kind of people who run up a million dollar bill at a jeweller's just because they can.
Always surprised that none of the analogies seem to regard getting a job, ie increaing household income as a means of addressing the overspend
ReplyDeleteI distincly remember D^2 making that argument somewhere in comments over at CT some time ago.
ReplyDeleteD^2 also makes that argument in the post he links above.
ReplyDeleteIf we're going to torture analogies how about this one:
ReplyDeleteThe austerity measures are like a man in debt deciding to save money by not buying soap and as a result turning into the smelly guy at work who misses out on a pay raise.
D^2 also makes that argument in the post he links above.
ReplyDeleteD'oh.
Just that the way he phrased it back then stuck with me as being particularly apt (apparently not enough that I remember it though).
The austerity measures are like ... a man who's run up a large debt saying that his employer should show 'solidarity' with his financial difficulties by cutting back on their own expenditure and firing him.
ReplyDeleteNice article, thanks for the information.
ReplyDelete1. Most households do not pay their debts in a currency which they print.
ReplyDelete2. Most households do not have the most powerful armed forces in the world.
3. Most households do not have millions of people willing to loan them money at negative real interest rates, and with zero collateral.
other than those, an apt analogy