Season 1 · Episode 367
Should we all earn less?
With so much money finding its way into inflated house prices and other financial assets, is that a sign that we are earning too much. No, says Steve Keen, it’s a sign that we are borrowing too much.
Debunking Economics - the podcast · Steve Keen & Phil Dobbie
September 6, 202342m 1s
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Show Notes
Are we earning too much? Many of us are now spending less than we earn on day-to-day consumption items We’re putting our excess income into our future earnings, through our pension funds, who use a chunk of that the money to buy non-productive assets, liking investing in shares on the secondary market, to no-benefit of the companies we invest in. Phil talks to Steve about why we have this imbalance between earnings and spending when, at an aggregate level, our income should equal our productive outputs. The difference is, of course, that we borrow a great deal, particularly to buy a house. It’s this reliance on borrowing which is increasing our consumption beyond the outputs we provide to the economy. And we borrow more than we can afford on the assumption that house prices will rise. So the question isn’t whether we should earn less, but whether we should borrow less.
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