Are fiscal conservatives even certain of what they're arguing about?

One of the problems fiscal conservatives have is that most of them can't actually agree about what they are conservative about.

One of the problems fiscal conservatives have is that most of them can't actually agree about what they are conservative about. Debt? Deficit? Absolute, or relative? And how should we talk about the issue?

For instance, one would guess from their name that deficit hawks care about the deficit – that is, the amount that a country spends each year in excess of the amount of revenue it receives, officially called (in Britain, at least) public sector net borrowing (PSNB). Last year, PSNB stood at a shade over £120bn, and this year, it's forecast to be £91.9bn. That's the government's deficit reduction strategy at work, albeit at far slower work than we were promised in 2010.

But other fiscal conservatives go after debt (the official measure of which, Public Sector Net Debt, stands at £1.03trn). Fraser Nelson, for instance, condems the elision between the two in today's Telegraph:

Cameron faces the same problem. He says he is “dealing with the debt” when he is actually increasing the national debt by as much as Labour proposed: an almighty £600 billion. But he has not yet been rumbled. An unpublished YouGov poll by Policy Exchange, taken after last year’s Budget, found that just 14 per cent of voters realised the national debt is rising. Another poll, released this week, found that only 10 per cent see what’s going on. Now, just as under Labour, ministers play word games and talk about “cutting the deficit”, knowing that most voters will hear “cutting the debt”. Astonishingly, almost half of British voters think that debt is falling.

It's certainly the case that debt is rising, and will be rising for some time. And confusing debt and deficit – as, say, Nick Clegg does – is unacceptably economically illiterate. But it's unclear how, exactly, being a "debt hawk" would work.

It is emphatically not the case that Britain can begin reducing its debt any time soon. For all that Nelson attacks the government for increasing the national debt, to reduce it would entail turning a deficit into a surplus overnight. Just considering the pain involved in entering into a seven-year deficit reduction program, doing it any faster would be politically impossible.

And in fact, given the various multipliers in effect from government spending, it may be economically impossible as well. There is strong evidence to suggest that the mere fact of trying to cut the deficit too quickly led to the contraction we're now experiencing; and that contraction has reduced government revenue and increased mandatory spending to a degree that makes it difficult to do any deficit reduction at all.

Being a debt hawk would thus seem to necessarily imply being a deficit hawk, at least for the time being. When – if – the structural deficit is eliminated, then the two groups can argue over whether debt should start being reduced; but while there is a deficit, it's silly to pretend that national debt going up is somehow surprising, and unless you want to go full Paul Ryan, you aren't going to get rid of it in a year.

All of this confusion is compounded by the fact that if it's unclear what we ought to be trying to reduce, it's doubly unclear how we ought to go about measuring it. Debt hawks favour quoting absolute figures, like those I've used at the top of the post, because frankly one trillion pounds sounds a lot more than "65.7 per cent of GDP". Yet the latter is probably a more accurate representation of where we are; for one thing, it allows us to accurately compare the economic situation with similar ones from history, as this chart (from Wikimedia Commons) does:

And for another, it conveys an important truth about the debt, which is that we can shrink it in two ways: either by paying it off, or by growing our economy big enough that what's remaining doesn't matter. This is the truth behind arguments over "deficit reduction versus growth".

But there is an even better way to discuss the national debt that in terms of a ratio to GDP, and that is in terms of it's cost.

The only downside to having debt is that you have to pay interest on it. But more debt doesn't necessarily mean higher interest payments – in fact, it's the exact opposite. Joe Weisenthal explains:

Using data from Bloomberg, we looked at basically all of the big emerging and developed markets* with a big bond market, and good data on debt to GDP and decided to check to see if there was any connection at all between debt to GDP and the yield on their 10-year bonds.

The answer, quite clearly, is no.

In fact, using an exponential regression, we detect a slight shift down and to the right, meaning that the more debt a country has relative to its GDP, the cheaper it is to borrow.

As debt goes up, interest rates go down. So doubling debt doesn't double interest payments, and halving debt doesn't mean you pay half as much servicing it. In chart form, that claim looks like this:

 

Our interest rates are so ridiculously depressed at the moment that even though we've almost doubled our national debt to GDP ratio, the amount we pay to service our debt has barely gone up by half.

This is what the debt hawks should be looking at. Not debt to GDP, and certainly not absolute debt; nothing matters to debt except the cost of holding it. And that cost doesn't present a particularly compelling reason for cutting it.

Gold, as a common and universally accepted store of value, is particularly useful to illustrate stories about abstract economic concepts like debt. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
Show Hide image

From war and slavery to prison – life inside an immigration detention centre

David spent five years locked in a house in Britain. Then he spent two years in immigration detention centres. 

Visitors at the immigration detention centre are met by Sid the Sloth, balancing an acorn just as he does in the family film Ice Age. The picture is one of the brightly coloured murals adorning the otherwise bare walls of the visitor's entrance. The lurid paintwork sits in stark juxtaposition to the barbed wire outside, and the metal detector and eight sets of doors which visitors must pass through.

It is a thin veneer which fails to mask a system containing institutionalised abuse from top to bottom. It isn't surprising, then, that one of the conditions of my visit was not to identify the centre - the volunteers I joined fear having visiting rights withdrawn by the company in charge.

Once inside I met Sivan, a 32-year-old Kurdish asylum seeker who came to Britain clinging to the underside of a lorry. He had been tortured by the Turkish authorities. For Sivan the children’s cartoons in the visitor’s entrance held a particularly cruel irony. Detainees at the centre are not allowed smartphones, and with no access to email Sivan’s wife, also a Kurdish asylum seeker, is unable to send her husband pictures of their first child. The couple have not seen each other in the two months since Sivan was detained. That day, in the visitor’s lounge, Sivan saw his son for the first time. Holding photographs of the little boy in his hands, Sivan’s face momentarily lit up as it split with joy and then sorrow.

Sivan does not know when he will be able to see his young family - or if they will ever be able to be together.

Across Britain more than 3,000 people, many fleeing war and torture, are locked up indefinitely in immigration centres. They arrive in Britain seeking refuge. But are shut away in privately-run prisons before being forcibly removed. Often with little or no English, detainees rely on volunteers to help them navigate Britain’s complex immigration system.

At the volunteer hub, which helps 80 of the 500 men in the centre each week, I met former detainees who all had one thing in common: the mental torture that indefinite detention inflicts. Like David, a quiet Ghanaian who has never really been free. He was kept as a slave on a plantation until traffickers brought him to Britain aged 13. Here he spent five years locked in a house, when not being forced to work 14-hour days in a warehouse. He finally escaped only to spend 11 years waiting for his asylum application to be processed - still ongoing despite clear medical evidence of his torture during imprisonment. He has spent two years in immigration detention centres. And as he waits he now has to register his presence with the authorities every Tuesday. He is terrified that when he does he won’t return to his four-year-old daughter, but instead be returned to captivity by the Home Office, without explanation.

Another former detainee Daniel, a tailor from Iran who fled five years ago, spent five months in detention when he first arrived in Britain. He describes being locked up with no time limit as "one of the worst times of my life", and still needs anti-depressants. “It really damaged my mind,” Daniel told me. “You don’t know when the process will be finished and you’re just waiting, waiting. You don’t know what’s going on.”

I heard from detainees who have had medical appointments they have waited months for cancelled because the centre wouldn’t pay for transport. Some kept three in a room with a toilet between the beds. Others woken in the middle of the night to see their friend dragged from their bed and assaulted by guards before being taken for deportation. Detainees employed to clean the centre for an exploitative £3 a day, just to afford necessities like toiletries. Or they stay trapped by fear in their rooms because they are afraid of the ex-prisoners, many who have committed serious crimes, locked up around them. I heard too of solitary confinement used routinely as a punishment for those considered not to be compliant. More than one detainee said immigration centres are worse than prisons. And they are right.

Britain is the only place in Europe which still locks people up with no time limit. Despite the government’s promise to reduce both the numbers - and the time spent there - progress is still far too slow. Last year 27,819 people entered detention. Some have been there more than five years.

Barely a week passes without a new report of violence or suicide or rape or abuse, inflicted on those who came to our country for help. The government should hang its head in shame. The Home Office must stop turning a blind eye to what it must know what is happening to those in its care. It’s clear that this is a broken and barbaric system. After seeing it for myself, I’m more convinced than ever that the use of indefinite detention has to end.

Names have been changed to protect the identities of those interviewed for this article.

Jon Bartley is the co-leader of the Green Party.