Have the arts become the preserve of the wealthy?

Young people today face difficulties, but shouldn't give up hope.

Do you really need to come from a privileged background in order to succeed in the arts? It's a question that is more topical than ever right now. For sixth-formers dreaming of an arts-based career, but with little in the way of financial backing, it’s more than theoretical – it’s a pressing concern. Should they apply to courses? Will they be able to afford to pursue that kind of career? Or have the arts become the sole preserve of the wealthy?

Olivier award-winning actress Clare Higgins certainly thinks so. She is so concerned about the current state of applications to theatre courses that she has revealed a plan to create a free drama school just for young actors from working-class backgrounds who “lack the means” to pay £9,000 a year for their training.  “One of the things I really care about is to get out there and say to young actors, particularly those who don’t have any money and who have not gone to Eton or Harrow, ‘Come and see me and I will train you for free’. If we don’t look out, LAMDA, RADA, Central and Guildhall are going to be full of rich kids, but there won’t be any working-class kids,” she told The Stage newspaper. “We can’t go on with this [situation] any longer, where only rich people can afford to train in the arts.”

Higgins is not the only high-profile performer to harbour concerns about the future of the industry. Although she won’t name names, she has hinted that she is working on the proposal for her new school in partnership with a few “very concerned” established actors. Earlier this month, Julie Walters echoed these views when she talked about what she considers to be a terrifying lack of opportunities for young working-class people in the arts right now. Talking about her own training, she said that “back then, it was still possible for a working-class kid like me to study drama because I got a grant. But the way things are now, there aren’t going to be any working-class actors. It’s just a shame that those working-class kids aren’t coming through.”

It’s an understandable concern. If you were to look at our television screens today, you might well conclude that the “Downton effect” is taking over. You could be forgiven for assuming that a plummy accent and convincing aristocratic air are now the main qualities required for entrance to the upper-echelons of British acting. If you were to read a list of the actors who have recently achieved success and have cemented their place in the public consciousness, you might have your worst suspicions confirmed. Dominic West of The Wire and Homeland’s Damian Lewis were both educated at Eton. Laurence Fox of Lewis went to Harrow. And if you believe the (slightly hysterical) hype, you may well have become convinced that you have to be born with a silver spoon in your mouth so that you can rely on the bank of Mummy and Daddy to support you if you wish to embark on this notoriously unstable career path. If you’re not a “rich kid” with stacks of connections and what amounts to a ready-made career, you’re doomed. That’s the message that teenagers are having drummed into them. There are no other options available, no possibility of an alternative path to the top. It’s hopeless. No wonder there are fewer working-class kids going into acting and the arts; this is a self-fulfilling prophecy.

But Benedict Cumberbatch, best known for playing Sherlock Holmes and looking a bit like an otter, offered an alternative view of the situation when he told the Radio Times last month that he believed his privileged background had actually been a stumbling block for his acting career. Tired of being typecast in “posh” roles and apparently thought of as a “rich, moaning, public-school bastard” (he too went to Harrow), he complained that the UK’s culture of “posh-bashing” made him long to up sticks to America, where, he assumes, he would not experience the kind of class prejudice that has hindered his career over here. Just who it was that thought of him in these terms is unclear and, unfortunately for Cumberbatch, his public whine only served to reinforce the opinion of his detractors and make it even more widespread. Personally, I had no idea what school he had attended until I read the article and, I suspect, neither did most people, barring the most ardent Cumberbatch fans. Who would have really cared, anyway? The beauty of acting is that it doesn’t really matter who you are or where you come from; nobody can really tell, because the entire point is that you are pretending to be someone else. There’s no reason why someone who went to Harrow couldn’t plausibly portray a more rough-and-ready character and it works the other way as well: a boy who grew up on a council estate could easily end up playing an aristocrat in a TV drama if he’s a good enough actor. Even if, for some inexplicable reason, you insist on only actors being hired whose real-life personalities fit the available roles, it’s clear to see that the BBC’s penchant for the “posh” is a passing fashion. The wheel will soon turn again.

An arts training is still a valid choice for young people with talent. Just as students from every kind of background are now expected to take out a hefty loan to cover their history or law degree, young people need to borrow money if they wish to be trained in a more creative discipline instead. Of course it’s tougher for young people from poorer backgrounds, with neither the money nor the connections to “make it big” in the arts – but then it always has been, whatever people might fondly remember, misty-eyed, about those halcyon days when tuition fees didn’t exist. The reality is that going into an arts-based career has never been the safe or sensible option and is naturally an easier choice for those with greater financial security. However, it’s not impossible to succeed, and would-be actors from working-class backgrounds with talent and drive should emphatically not be put off by tuition fees which admittedly at first glance look astronomical, but in reality are unlikely to turn into the crippling debt that they fear.

Certainly scholarships and schemes should be (and in most institutions are) in place to help disadvantaged students. But the overall outlook for young people in the arts might not be as bleak as we have all been led to believe. Perversely, it is probably the incessant gloom from the media that originally put off the despairing students whom Higgins wants to help. The more widely that these defeatist attitudes are propagated, the greater the number of talented “working-class kids” who will be put off applying to art, film or drama schools, and the more their understandably concerned parents will discourage them as well. Few people can afford to pay £18,000 up front, but with the way that student loans are structured and with graduates only paying back what they can afford, it is hardly unmanageable debt. Besides, contrary to what Julie Walters thinks, grants haven’t disappeared. Higgins’s intentions are good, but her concern is probably a tad premature and her proposed free drama school far from necessary. Young people who aspire to a career in the arts should keep their heads up, apply to courses and not let what they read discourage them from striving to achieve their dreams. Granted, this is much easier said than done, but if young people from poorer backgrounds give up on the system the arts really will become the  preserve of the wealthy. And it needn't be that way.

Benedict Cumberbatch: too posh to act?
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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?