But what Brittan does not say is why we have that savings glut when the world is full of people living on the edge of despair about making ends meet and far too many are in real poverty. By failing to address that question Brittan misses the point which is that unless we address the very real inequality in this world and positively redistribute wealth we won’t get out of this crisis.
The strangeness is that it\’s the poor globally who are doing the saving. The savings rate here in the UK, or in the US, is trivial. The savings rate in China, a hugely poorer place, is massive.
Redistributing wealth from the UK and US to China would therefore, ceteris paribus, increase the savings rate, not reduce it.