Why the difference? Thorstein Veblen had one answer. In
capitalist society, he said: And Americans are more prone to do
this than others because Americans, much more than Europeans,
believe wealth comes from hard work rather than luck; even the
poor remain hopeful of moving up. It is a cliché that Americans
see a flash car and think; “if I work hard I’ll get one of
those” whereas the British think “tosser.” This naturally leads
them to save little and spend much - to get into debt. And this
is where inequality comes in. As this rises, the less well-off
feel the need to stretch further to appear to keep up with the
wealthy. A 1000 square foot house might be adequate when others
live in 1500 sq foot houses. But it’s not when they live in 3000
sq foot ones. As inequality rises, then, so savings fall and
debt rises as people scramble to keep up with the rich. The
result is a greater vulnerability to financial crisis caused by
people defaulting on loans. This story is beautifully told by
Jon Wisman in this new pap