There was an intriguing headline in the Telegraph by Jeff Randall this morning, Debt juggernaut rolls us into a madhouse. The article describes conditions in the U.K., but could easily have been written about their cousins across the pond. Speaking about a television show that would air today they said:
Our interviewees are a cross-section of modern Britain, where millions of people have been lulled into a false sense of prosperity by the soporific sound of easy money, credit on tap.
Gordon Brown keeps telling us that, under his stewardship, this country has enjoyed its longest-ever period of economic growth. Were a business to make a similar boast, you might expect it to have cash in the bank.
Yet, according to a survey by KPMG, 22pc of Britons are struggling to repay their debts and 35pc fear that this year it will become even more difficult to make ends meet. The Brown boom has, perversely, produced a massive explosion in the numbers going bust.
Since the start of the new millennium, British households have been spending more than they earn. The gap has been bridged by an unprecedented borrowing binge. We want, but can’t wait, won’t wait. Tomorrow is too late.
I was struck by Randall’s statement:
This country has enjoyed its longest-ever period of economic growth. Were a business to make a similar boast, you might expect it to have cash in the bank.
Compare it to this statement on the White House website:
Our economy has seen the longest uninterrupted period of job growth on record – 52 months of job growth – but job creation has slowed recently. Consumer spending has been growing, but the housing market is declining. Business investment and exports are still rising, but the cost of imported oil has increased.
It sounds as if the U.S. has been experiencing "economic prosperity". One dictionary definition of "prosperity" states:
prosperity - an economic state of growth with rising profits and full employment
economic condition - the condition of the economyboom - a state of economic prosperity
What seems to have gotten lost in our views of "prosperity" is net worth. In this celebration of "growth" there is no mention of the debt it took to achieve it. The guy in the McMansion with the Hummer and toys may appear prosperous, but if this lifestyle is maintained by debt, it’s bound to come to an end sooner or later. Unsustainable "prosperity" isn’t "prosperity". Isn’t the guy in the modest home and the used car and money in the bank really the more prosperous of the two? Couldn’t the same be said of a nation’s prosperity- that it should be definied by the rising net worth of it’s citizens, and not by profits and employment achieved through massive debt?
