The simple political economy of secular stagnation
Yes, after 2008 we did entered an era of secular stagnation – i.e. depressed demand. Why do I think this? Macro demand consists of household consumption, government consumption, investments and exports. About this:
A) During the last decades, the labor share has declined (graph 1). Source. This leads to lower household consumption. Here more about this. Lowering the share of labor has been official government policy, by the way.
Graph 1. the secular decline of the wage share.
B) During these same decades, the rate of fixed investment has declined, too. In some countries (the Nordics, Germany, the Netherlands) this decline is visible since 1970. See for the Netherlands and Germany graph 2 (source: link above which also contains graphs for the other countries mentioned). In Spain and the USA, which had a lower rate of investment to begin with, the decline is very recent (Spain, USA).
Graph 2. The secular decline of the rate of investment to somewhere between 15 and 20% of GDP.
But in these cases it was masked by credit fuelled housing booms. Countries like Italy, France and the UK are somewhere in the middle. Anyway, partly because of the end of post war reconstruction and partly because of other reasons we have moved to a western world with a lower ‘structural’ rate of investment. No exceptions (and companies use the money to buy back shares).
Less consumption and less investments have after about 1970 been compensated by higher government consumption. And in Germany and the Netherlands by higher net exports. But net exports can only be a solution for a limited number of individual countries. And many governments are, at the moment, not too eager to expand expenditure even more. I.e.: household and government consumption are stagnating, the secular rate of investment has declined. And higher net exports are no solution.
Secular stagnation: it is that simple.
Just like the solution: higher (total) wages. Surely in a world where companies indulge in buying back shares.