The Ignorant Investor

Krugman writes about Britain's austerity-based plan for economic recovery:

Meanwhile, in Britain, via Yves Smith, people have been digging into the details of the government forecast, and finding that it relies on the assumption that household debt will rise to new heights relative to income:

Why? Because the only way the economy can avoid taking a hit from government cuts is if private spending rises to fill the gap — and although you rarely hear the austerians admitting this, the only way that can happen is if people take on more debt. So we have the spectacle of a government that inveighs against the evils of debt pinning all its hopes on an assumption that over-indebted households will dig their hole even deeper.

The alternative to more private debt would be widespread wage increases for private workers. But in an era when the elites can call workers greedy and overpaid, how likely is that to happen?