However, when debt obligations become permanent in terms of provisions for retirement needs and expansive operating expenses, they can become problematic. That is particularly true, when debt is associated with aggregate time use negatives in populations which result from service structures. When too much government debt is forced to compensate for low skills valuations, it becomes difficult to detect the points where obligations can't be met through normal resource means.
Many primary debt formations are closely related to the non tradable equilibrium which represents assets to services flows. What's more, the real catch-22 for government debt loads is the lack of incentive for today's services structures to reform from the inside. For government, changing the debt equation means being able to adjust some services formations where they become capable of generating wealth directly, instead of through redistribution and production residuals.
For now, resistance to change on the part of special interests has also resulted in a backlash from the left. Calls for a debt jubilee on the part of the Occupy movement, are in a sense a reaction to the government generated equilibrium between asset and service formations. As Kevin Erdmann noted, the jubilee concept is conservative in the sense it seeks to preserve institutional formations as they have already existed. Of course the paradox is that much of the loan forgiveness would extend to portions of the marketplace (education and healthcare) which never had a chance to develop in free market terms in the twentieth century.
How to think about debt obligations in terms of family formation? It depends on income levels. While higher incomes can lose time use efficiency, particularly through tight definitions in asset formation (housing), debt related problems for low incomes tend to manifest as income deficiencies. Hence in debt based terms, the real scarcity tends to manifest in income among the poor, much as the same mechanism manifests in a lack of time for those with greater income. Timothy Taylor notes the similarity of higher and lower income response to this factor:
If you compare my own behavior in living deadline to deadline under a shortage of time, and the behavior of a low income person in living check to check with a shortage of income, some of the patterns look much the same.This has bearing as to why so called "excess" debt structures are not obvious in terms of aggregate resource valuation. It makes little sense to insist on arbitrary divisions of resource use - for instance - which condemn individuals to live their lives within extremely limited social contexts. This is important if only for health reasons, in the sense that a life of solitude can decrease life expectancy to a greater degree than either smoking or obesity.
Hence, it can be difficult to disentangle what is necessary for anyone, from what may be construed as hedonic in measures of lifestyle gains. When we are forced to think about practical decisions for resource use, it makes more sense to consider one's time use perspective first. Otherwise, the arbitrary nature of hedonic measurement - enlightening though it may be in some respects, might not clarify societal needs. Also, it can be helpful to look at time use obligations for producer/consumer options at all income levels, so that changing the debt equation becomes possible in ways that all income levels have a chance to benefit.
For a low income family, government gains in the form of housing asset flows can sometimes be the family's loss, in that little is left for other necessities of life. Mortgage and installment debt for families in the bottom quartile are far greater than credit card debt, for instance. Natalie Scholl's chart illustrating the leverage ratio of the poorest families, is a good indication that irresponsibility may be a smaller factor than it seems - particularly given the fact that installment debt is often necessarily to finance the car that gets one to their work destination.
If individuals are willing to commit to responsible processes more than they are given credit for, how can this be parlayed into constructive structural change? Many options exist at local levels to do so: if not where people live and work now, in new decentralized settings which can generate local investments to keep economic dependence on distant governments and cities to a minimum.
Not every city wants to take part in the methods that change debt equations, and understandably so. For instance, a news report on tiny houses came with a disclaimer from Austin, that structures such as this would be considered viable! I would have been quite surprised, had the news report been otherwise. Just the same, more cities and towns will find it in their best interests in the future, to seek new ways in which to change the debt equation.