I found this article to be interesting and important. Thoughts?
One Shutdown Lesson Is That Americans Need to Save More
By Tyler Cowen
January 28, 2019
https://www.bloomberg.com/opinion/articles/2019-01-28/shutdown-lesson-americans-need-to-save-more
Excerpts:
One common line of argument is that the cost of living is high in modern America, and families with children cannot be expected to save much. It’s easy enough to see where that intuition comes from, especially in an era when prices for medical care, higher education, and real estate have been rising at disproportionate rates.
Still, that is not an argument that people cannot or should not save. In fact, it might be an argument that they should save more and consume less.
...
There is also a new “gospel of savings” in the U.S., being led by such renowned (but non-mainstream) figures as Dave Ramsey and Mr. Money Mustache. They reach millions of Americans, imploring them to strip down their consumption to essentials and to save a much higher percentage of their incomes, sometimes 20 percent or more. Ramsey wrote a column giving advice to unpaid federal workers, including “sell stuff” and to cancel Netflix.
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In China, where per-capita income is closer to that of Mexico than the U.S., household savings rates are often well over 30 percent. One reason for this may be that the Chinese know their economic futures might be extremely volatile, and thus they hold funds in reserve.
Maybe you think that Americans, who live in a wealthier nation, shouldn’t have to be this way. And you’re probably right. But to the extent America is that way, the implication is that the savings rate should be correspondingly higher. For more than a decade Jacob Hacker has been writing about the “great risk shift” and the increased volatility of household incomes. To the extent these claims are true — and they are disputed — they bolster the argument for a higher savings rate.
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It has been a staple of common-sense morality for centuries that people ought to save for an uncertain future. It would be a shame if such talk is on the verge of becoming politically incorrect because it sounds too much like blaming the victim.
Submitted January 29, 2019 at 09:14AM by hey_grill http://bit.ly/2HQlTkL
