An examination of Americans’ household balance sheets uncovers something to discourage everyone: For those with preferences for minimalistic government and a maximally free economy, the disastrous state of our private finances must force some skepticism about the traditional conservative belief that people are, if sufficiently incentivized, capable of making rational long-term decisions about their own economic affairs. For those better disposed toward the welfare state and government intervention in the economy, the same data should inspire a great deal of skepticism about the ability of well-intentioned political steering to produce results that are something other than catastrophic, especially for the least well-off among us. We are collectively many trillions of dollars — $6.6 trillion, according to a recent Senate report — short of the savings we will need to maintain our standards of living in retirement, which will necessitate a greater reliance upon Social Security, itself more than $20 trillion short of what it needs to fund its promised benefits.
First, the big picture: In terms of median adult wealth, Credit Suisse calculates that the United States, at $38,786 per adult, is a relatively poor performer, not only lagging small outliers such as Luxembourg ($153,967) and Switzerland ($87,137), but also well behind Japan ($141,410), Italy ($123,710), and Canada ($81,610) — with barely 20 percent of the median wealth of category leader Australia ($193,653). It is tempting to draw facile conclusions about macroeconomic policies from these rankings, but both Scandinavian social-welfare states such as Sweden ($41,367) and the freewheeling capitalists in Singapore ($95,542) enjoy higher median wealth than does the United States, which comes in at No. 27 on the world rankings.