2 January 2019   1 comment

I will be on vacation for the next two weeks, so posting will be sporadic during that time. But I will be back, I hope refreshed.

Global debt has always been difficult to measure. Many states do not publish data on the issue since it is embarrassing; some do not because they simply do not know; and many states use different metrics to measure debt. The International Monetary Fund (IMF) has just published its Global Debt Database to address some of these issues. Some of its insights include:

“Global debt has reached an all-time high of $184 trillion in nominal terms, the equivalent of 225 percent of GDP in 2017. On average, the world’s debt now exceeds $86,000 in per capita terms, which is more than 2½ times the average income per-capita.

“The most indebted economies in the world are also the richer ones…. The top three borrowers in the world—the United States, China, and Japan—account for more than half of global debt, exceeding their share of global output.”

“The private sector’s debt has tripled since 1950. This makes it the driving force behind global debt. Another change since the global financial crisis has been the rise in private debt in emerging markets, led by China, overtaking advanced economies. At the other end of the spectrum, private debt has remained very low in low-income developing countries.

“Global public debt, on the other hand, has experienced a reversal of sorts. After a steady decline up to the mid-1970s, public debt has gone up since, with advanced economies at the helm and, of late, followed by emerging and low-income developing countries.”

These rising levels of debt are worrisome since interest rates seem to be rising across the globe, making the debt more expensive to service, and global economic growth seems to be slowing. We will have to keep our eyes on this issue.

As global debt increases, the distribution of wealth in the world continues to become more concentrated. Visual Capitalist characterizes the situation in these terms: “Today, slightly less than 1% of the world’s adult population occupies the $1M+ wealth range. Despite their small numbers, this elite group collectively controls 46% of the world’s wealth, valued at approximately $129 trillion.” The visual representation of this skewed distribution is striking.

A study by the British House of Commons last April issued a report that was summarized by The Guardian:

“An alarming projection produced by the House of Commons library suggests that if trends seen since the 2008 financial crash were to continue, then the top 1% will hold 64% of the world’s wealth by 2030. Even taking the financial crash into account, and measuring their assets over a longer period, they would still hold more than half of all wealth.”

Inequality has serious social and political consequences, many of which are separate from the equally urgent issue of poverty. Inequality is more destabilizing to society than poverty and often leads to depressed demand in an expensive economy.

Eric Levitz has written a very good essay for the New Yorker on the dangers of thinking about the United States as an “exceptional” country. The word “exceptional” is used by many in the US to describe a distinctive role for the US in world affairs. It is an interesting term since there are some aspects of the US that do, in fact, make the US different from many other countries: its relative isolation from other countries (the Atlantic and the Pacific are impressive moats) as well as the extraordinary abundance of resources available within the territorial limits of the state (think about how resource-poor countries like Great Britain and Japan are). But the ideological aspects of “exceptionalism” are highly problematic since they are often used to justify both moral and pragmatic superiority. Levitz catalogs a number of ways the term is abused, and one of this insights is quite revealing:

“The exceptionalist narrative is most dangerous for the way it implies that assertions of American power on the world stage should be presumed well-intentioned, until proven otherwise. If the consensus view among liberal elites circa 2003 had been that American foreign policy is typically shaped by the mercenary interests of corporations (not least, arms manufacturers), they would likely have treated George W. Bush’s plans for Iraq with less credulity. Instead, in that instance (and many others), liberals championed a just, humanitarian intervention — only to find, to their shock and awe, that those prosecuting the war did not, in fact, have the purest of hearts. So long as progressive forces do not have a firm grip on the national security state, progressives mustn’t presume that the worst thing that state can do in the face of injustice overseas is nothing.”

US foreign policy in the Trump Administration is a strange combination of the varieties of American exceptionalism. President Trump’s desire to pull troops out of Syria and Afghanistan suggests limits to military power which sit uneasily with his desire to spend significantly greater sums on the military budget.

Posted January 2, 2019 by vferraro1971 in World Politics

One response to “2 January 2019

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  1. Have a great vacation Vinnie. Let’s hope that the cliff-side approach to the driveway has not eroded further. B/R, David


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