Give the US credit
May 3, 2012 9:17 AM Subscribe
posted by airing nerdy laundry (106 comments total)
25 users marked this as a favorite
"In other words, credit has become America’s welfare policy
," says Sheldon Garon, Princeton University professor and author of Beyond Our Means: Why America Spends While the World Saves
. The US savings rate currently = 3.8%
, while the Euro Area savings rate = 13.7%
Garon comments: Although it’s not clear why welfare states actually correlate with high saving I think there are a couple explanations. One, by keeping most people from falling into destitution, welfare states ensure that most households remain financially stable. This automatically results in a higher national savings rate. Whereas in our country, although stable households also save at pretty good rates, we have a significant portion of our population living in poverty. They have to borrow to make ends meet, and so they go further into debt...
Also, I think welfare states increase saving by providing citizens with national healthcare and free or low-cost higher education. Healthcare and education are big costs for the average American household. These expenditures, I think, further diminished our savings rate.