Royals and dope smoking etiquette

Advice on meeting the queen, meeting foreigners and meeting your past...

Dear Marina

I am a young Arab male who has recently moved here from Iran to study, and I cannot tell if the UK is progressive and open-minded due to all the talk on multiculturalism, or if they are prejudiced and nationalistic and afraid of change. Does Britain welcome me earnestly or begrudgingly?

Omid, London

At a guess I’d say you are not at all welcome. However hard you study, however useful your skills base, the fact is, you’re not from round these parts, are you?

As a guest in a country where people from neighbouring villages treat each other with deep suspicion you’re up against it I’m afraid.

The Prime Minister’s from Scotland and that’s pushing it for many south of the border. But Iran? Blimey – they eat babies don’t they?

Once we start bombing your people it should become clearer to you. No doubt you’ll be rounded up with your fellow Iranians for incarceration leaving you in little doubt as to the true multiculturalism of this once great empire!

Multiculturalism by the way, refers to the fact that Britain is an island populated by people from all over the place.

There is nothing inherent in the reference that suggests we actively enjoy each other’s company.

But hey, the Brits are a complex bunch. They will happily berate the fact that foreigners over running the place while queuing for a takeaway chicken madras without feeling the slightest bit ironic.

No wonder you’re confused: so are we!

Dear Marina

I’ve been invited to a garden party at Buckingham Palace. As a republican I am loath to curtsey or address a fellow human being as “Your Majesty”. What should I do if presented to the Queen.

Liz, Lewes.

PS: Would it be disrespectful to smoke a spliff in the grounds.

I myself faced a similar dilemma just this week. Pulled from a crowd of 8,000 guests to meet the monarch was a surprise and to be honest I’d not given it as much thought as you have. So I had to think on my feet.

Last time I met royalty I stood in line next to Norman Baker MP as Camilla approached. “Are you intending to curtsey?” he enquired. “What do you think?” I replied. We both made do with a nod of the head.

So as the Queen approached myself and my friend whispered in agreement: “We won’t curtsey, we won’t.” Whatever the Lord Chamberlain recommends – a quick jerk of the knee, as it happens - they can’t MAKE you cowtow.

As it happens the curtsey bit takes care of itself. She’s so tiny one has to stoop in order to shake hands and that kind of passes as a curtsey if you’re quick about it.

I was much more concerned at the state of my hands. I’d just snaffled a cutting from her herbaceous borders and the royal dirt was clinging to my fingernails. But you can’t keep them behind your back when the regal glove is coming at you. Said dirt transferred and I can only assume a footman was later dispatched to remove them to the royal laundry basket.

She was surprisingly good company – we had a lively conversation covering gardening – she’s given it up but was most impressed with my muscles (from digging) - finding strength to go out and meet people when what you really desire is a duvet day and the need for her generation to get involved with the revolution. Expect the Queen to launch her own brand of community action against climate change soon. And we didn’t use Your Majesty or Ma’am (to rhyme with spam) once. Oops!

In short, while the minions that surround her seem to seriously believe we are not all equal, the Queen is well up for getting down with the people. I feel she drew great strength from our meeting. At least now she knows that while her government does nothing, her people care about the unsustainability of current lifestyle choices and some of us are actively trying to do something about it.

As for toking, I did notice a discreet sign just inside the grand entrance stating that it is against the law to smoke at Buckingham Palace. But it’s a big garden and if you skin up behind your hat, you will, like countless others before you probably get away with it. Indeed a quick toke might get you relaxed enough to enjoy dispensing with formalities. The revolution, is, after all, ON. And should you get an attack of the munchies, I recommend the Victoria sponge. It certainly worked for me.

Dear Marina,

Are you on Facebook and why do you think it's so popular? I'm finding it irritating everyone going on about it the whole time. Don't you think it's a bit sad, are we all living in the past or just plain nosey?

Thanks
Orlando Jones Birmingham

I recently tried to join Facebook and attempted to fill in details about the festival I’m organizing for September. That’s Out of the Ordinary (www.outoftheordinaryfestival.com) a community event designed to help us to engage with the landscape and do something about climate change. It’s going to be fun. I’m especially delighted with the response from the black community who don’t generally tend to get involved with such events, unless they’re onstage drumming, as a rule. A multicultural festival indeed.

The preparations are going well – but we do need to sell more tickets to balance the budget – hence me trying to use Facebook. But I couldn’t work it out.

I know Ming Campbell is very trendy and loves his Facebook, having more friends than any other political leader. But me, I just can’t keep up with this newfangled communications tool. Perhaps that’s why he’s leader and I’m a disenchanted town councillor.

As I have no idea really what Facebook is all about I can’t say what motivates users. Perhaps it signals the isolation in which individuals find themselves living in this ironically titled age of communication. Do please send a carrier pigeon if you work it out first.

Marina Pepper is a former glamour model turned journalist, author, eco-campaigner and Lib Dem politician. A councillor and former Parliamentary candidate, she lives near Brighton with her two children.
Why not e-mail your problems to askmarina@newstatesman.co.uk?
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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?