Things are extremely busy at the moment. The approaching bye election and the local elections have me out canvassing every night and starting my day early and finishing late. I love campaigning but you do need to take tine out to recharge the batteries.
Did that yesterday. One of the things that I did was update my beloved podcasts. One of my favourites is the MSNBC programme ‘Meet the Press’. I watched 3 episodes of it last night and early this morning.
Many of you reading this will now recoil at this, wondering in what world this equals relaxation. In my defence can I say that I also visited the Museum of Modern Art, watched Prison Break, jumped up and down watching the shoot out between Everton and Man U AND cooked a bar-b-que.
However (finally) getting to the point of all of this I was struck by one point from ‘Meet the Press’ (the leading American political chat show). All the commentators and politicians were united in saying that there is no return back to where America was. This is because the levels of personal and public debt are now unsustainably high and also because China would not keep on funding American personal consumption.
They were unambiguous that levels of American personal affluence were a thing of the past.
This is important for us. We keep on talking about the recovery. It will happen. Perhaps sooner than thought. But (and a big but) the levels of personal disposable income will not get back to where they were. This will be a combination of higher levels of taxation and higher interest rates. Total income levels (or nominal income) will also be gradually reset in response to international competitive pressures.
The management of this situation, and the profound change that it represents, will be the crucial domestic challenge for politicians of my generation.