“As bad as things are in Washington,” Stephen D. King’s op-ed begins, “they are going to get much worse in the years ahead.”
In his New York Times op-ed piece, When Wealth Disappears, HSBC’s chief economist sees the end of western affluence is a systemic problem that will not be easily fixed.
The underlying reason for the economic stagnation is a series of remarkable one-off developments in the industrialized world will not be repeated, including:
- The global trade boom that appeared after WWII is unlikely to be repeated in advanced economies.
- Consumer credit, which spread in the postwar decades, is maxed out.
- Social safety nets reduced the perceived need for households to save for emergencies and retirement.
- Reduced gender discrimination flooded the labor market with the pent-up human capital of women.
- Quality of education improved and the number of college graduates grew from 15 and 4 percent of men and women respectively to over 30 percent of both sexes.
We all need to change our expectations.
“Not knowing who, ultimately, will lose as a consequence of our past excesses helps explain America’s current strife. This is not an argument for immediate and painful austerity, which isn’t working in Europe. It is, instead, a plea for economic honesty, to recognize that promises made during good times can no longer be easily kept.”
As sobering as this article is, it puts its finger precisely on the point: honesty is needed, both economic and political.
“Facing the pain will not be easy. And the waking up from our collective illusions has barely begun.”
Read the full op-ed on New York Times.