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News Link • Economy - Economics USA

Historian Simon Schama: Are the Guillotines Being Sharpened?

At the very least, any emergency budget needs to take stock of this raw sense of popular victimisation and deliver a convincing story about the sharing of burdens. To do otherwise is to guarantee that a bad situation gets very ugly, very fast. Schama knows this terrain cold; his chronicle of the French Revolution, Citizens, made clear what a bloody affair it was. Even so, his account in the Financial Times in some key respects understates the degree of dislocation suffered by many in advanced economies. Schama depicts the crisis-induced change as merely the end of rising expectations, but the shock is deeper than that. Severe financial crises result in a permanent decline in the standard of living. For some citizens, that has come through contracts being reneged, in particular, pension cuts. Other people see their savings in tatters and have no realistic prospect for being able to fund their retirement. And for many of these individuals, the odds of finding continuing, reasonably paid work are low. Even before unemployment soared, people over 40 face poor job prospects. The idea that the middle aged cohort can earn back losses to their nest eggs is wishful thinking. And the young are not much better off. New graduates also face a hostile job market. Worse, students often went into debt to finance their education, believing the mantra that it was an investment.

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