Adair Turner (2015) Between Debt and the Devil: Money, Credit, and Fixing Global Finance (Princeton: Princeton University Press: 0691169640) http://amzn.to/29ZT6UM
The Devil We Sort of Know: Adair Turner's book http://amzn.to/29VqW1z has, I believe, at its core an argument that I trace to John Maynard Keynes : that we are approaching the age of the euthanasia of the rentier.
In the past the world was poor enough, economic growth was fast enough, and the capital requirements of enterprise high enough that the world was genuinely short of savings. As a result, society found that the promotion of enterprise required more than those who brought to the table their labor, their skills, their knowledge, their drive, their technology, their willingness to experiment, and their willingness to bear risk. Society also needed to induce those who would otherwise consume resources now to delay. Thus the simple commitment of current purchasing power to an enterprise could command a healthy return, and one could live well as a rentier off of the coupons from bonds and debt that were safe stores of value.
On the plus side, this form of economic organization did induce people to postpone consumption and did mobilize savings and thus resources for the enormous capital investments needed for economic growth. On the minus side, this form of economic organization would inevitably lead to episodes in which debt securities that had been widely believed to be safe turned out not to be so—and there would then follow one hell of a mess.
Now, however, we are in an age of what Larry Summers calls secular stagnation http://tinyurl.com/dl20160725e—Keynes’s euthanized rentier. The mere willingness to postpone consumption no longer commands a real return, as anyone who has tried to augment their wealth without taking on risk since 2008 knows very well. There appears little prospect that the mere willingness to postpone consumption will command a real return as far out into the future as financial markets forecast.
Debt, therefore, no longer has a productive role to play at the margin.
But it still carries its dangers—for the episodes in which debt securities that had been widely believed to be safe turned out not to be so will still lead to one hell of a mess. Time, therefore, Adair Turner says, to treat debt as a form of economic pollution and tax it. Labor and skills and knowledge should be recompensed with wages and salaries. Technology should be recompensed with royalties and licensing fees. Drive and willingness to experiment should be recompensed with profits and options. And willingness to bear risk should be recompensed with equity returns. But, in Turner’s view, the era in which debt is good and we can look benignly on high or increasing leverage is over.