Today's teenagers are going to grow up to save the world. Photograph: Getty Images
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Laurie Penny on today’s teenagers: smarter, tougher and braver than my generation – and yours, too

Almost every time I speak to teenagers, particularly to young female students who want to talk to me about feminism, I find myself staggered by how much they have read, how creatively they think and how curiously bullshit-resistant they are.

A few weeks ago, I found myself squirrelled away in the corner of a posh party, talking politics with two teenage girls. Were I a right-wing hack addressing an audience of concerned Tory parents, this would be occasion for a stern, salivating rant about how today’s teenagers are abject, semi-criminal, knicker-dropping savages, weaned on violent video games and internet pornography. That’s why they are invariably the most interesting people at any party.

One of them smoked a succession of perfect, hand-rolled cigarettes of the sort I didn’t learn to construct until my twenties, and asked me intelligent questions about rape culture and the application of feminist theory to campaigning. The other had ambitions to be a foreign correspondent and was deeply suspicious of the culture of adventurism in conflict reporting.

They asked me about ethics, about how to deal with sexism at school, about privilege, about trauma. Staring up from the bottom of two gins, I tried to give helpful answers that weren’t simply asking them to please stop smoking, because it’s taken me years to quit and clearly we need young women like them around for a long time because the world isn’t going to save itself.

Almost every time I speak to teenagers, particularly to young female students who want to talk to me about feminism, I find myself staggered by how much they have read, how creatively they think and how curiously bullshit-resistant they are. Because of the subjects I write about, I am often contacted by younger people and I see it as part of my job to reply to all of them – and doing so has confirmed a suspicion I’ve had for some time. I think that the generation about to hit adulthood is going to be rather brilliant and that anyone else who has made it through the bio-existential maelstrom of puberty intact has a duty to give them every bit of help they ask for.

The generation coming up doesn’t even have a name yet, and that’s a good thing. Naming generations – the Baby Boomers, Generation X, Generation Y – can be a facetious media shorthand that obscures as much as it reveals. In a 1994 commencement speech at Syracuse University, Kurt Vonnegut asked students: “You young twerps want a new name for your generation? Probably not; you just want jobs, right? Well, the media do us all such tremendous favours when they call you Generation X . . . two clicks from the very end of the alphabet.”

Chronologically, today’s teenagers ought to be Generation Z, but the finality of that cuts a little close to the marrow of modern suspicions that the end times are upon us. (I prefer to think of them as “the people for whom Kurt Cobain has always been dead” but that doesn’t fit neatly into a headline.)

Young people getting older is not, in itself, a fascinating new cultural trend. Nonetheless, the encroaching adulthood of people who grew up in a world where expanding technological access collided with the collapse of the neoliberal economic consensus is worth paying attention to. Because these kids are smart, cynical and resilient, and I don’t mind saying that they scare me a little.

Marc Bolan was wrong: the children of the revolution are depressingly easy to fool. The children of austerity, however, are not. They have grown up with the internet, they are keyed in to the news and they understand, most importantly, that adults have no idea what they are doing.

My generation figured that one out a little bit too late, leaving us fired up with furious energy but not necessarily equipped to tackle the sudden lack of jobs, public services and education. Today’s teenagers have simply always known. They know that there’s a war on and they won’t be taken in by empty promises that hard work, good behaviour and respect for one’s elders will lead to rewards by themselves. They are also facing unique pressures.

It is as hard to be a teenager as it ever was, especially with an uncertain future, the constant stress of exams and the bullies who can follow you home on Facebook. In Britain, the launch of a new support platform, MindFull, for the 850,000 young people in Britain with a diagnosable mental health condition, comes along with disturbing research detailing quite how many are self-harming, starving themselves and attempting suicide. “There’s a different set of pressures on young people now,” says MindFull’s director, Francis Burrows, “and a huge number of them are not getting the support they need.”

In my mid-teens, I had a severe breakdown that required hospitalisation. It worries me that many of the vital services that helped me to recover – fast, free treatment on the NHS, support in the community from my doctor and college nurse, and the guarantee of an affordable place at university that allowed me to continue my education – are no longer available. College fees have tripled, benefits have been slashed, the Education Maintenance Allowance has been cancelled. Funding for child and adult mental health services, which were never swimming in spare cash, has been reduced by over a third in some areas. Early-intervention services, helping to support young people before they reach the point of collapse, are particularly under threat. Just when today’s teenagers need help most, that help is being snatched away.

Those are the facts. Now here’s a feeling: today’s teenagers are going to grow up to save the world. I get the feeling – too cautious and unformed to be an honest hope yet – that with the right support, this cohort of young people has the tools my generation lacked to hack a way out of the economic and environmental crisis closing in on us.

It’s up to us to help them and that starts by listening to teenagers when they tell us what help they need, and by offering it without patronising. Oh, except about the cigarettes. Trust me on this one and lay off the fags – I promise, they’re not worth it.

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 15 July 2013 issue of the New Statesman, The New Machiavelli

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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?