How on earth is my religion to blame for Asian gangs and sex abuse?

Melanie Phillips's latest outburst against Islam and Muslims is opportunistic and goes beyond the pale.

So there I was, on a Monday morning, in a rather good mood, having had Ed Miliband give my forthcoming book about him a free plug, live on Sky News and BBC News, and still recovering from the shock of having Norman Tebbit (yes, that Norman Tebbit!) aim some warm words in my direction in a blog post on the Telegraph website about British Muslims; a post in which he wisely concludes:

There are Muslims out there seeking an accommodation with our society. They may not be able to defeat the Islamist fanatics, but we would be foolish to reject a hand held out in understanding and reconciliation.

But then I turned to the Daily Mail and, specifically, to Melanie Phillips. The headline?

While Muslim sexual predators have been jailed, it is white Britain's hypocritical values that are to blame

My first response? Can you imagine a headline that said, "While Jewish murderers have been jailed . . ." or "While Hindu bank robbers have been jailed . . ."? When was it that we first started classifying crimes and criminals by religious affiliation?

Phillips, of course, has long suffered from a sort of Muslims Tourette's syndrome -- she refers to Muslims 18 times in her column today. From the outset, she makes clear that she plans to go beyond Jack Straw, Leo McKinstry and others who have fallen over each other to make spurious arguments about the "cultural" factors behind the so-called on-street grooming of young girls for sex by criminal gangs. Nope, Mel has the dastardly religion of Islam in her sights:

Police operations going back to 1996 have revealed a disturbingly similar pattern of collective abuse involving small groups of Muslim men committing a particular type of sexual crime.

Sorry, but I have to ask again: what has the assumed faith of these men got to do with the crime itself? I must have missed the chapter of the Quran that encourages Muslim men to go out and ply young girls with alcohol (!) and drugs and then pimp them out to older men for sex. While I disagree with Straw, McKinstry, Yasmin Alibhai-Brown, David Aaronovitch and others who have speculated about the various cultural factors behind these crimes, I'm not that surprised that "culture" has raised its ugly head -- and I, for one, would welcome some peer-reviewed, nationwide studies of this particular crime and the perpetrators of it. But religion??

Phillips writes:

For while, of course, most Muslims repudiate any kind of sexual crime, the fact remains that the majority of those who are involved in this particular kind of predatory activity are Muslim.

First, we don't know that's the case. Sorry. But we don't. You can't extrapolate from such a small sample (50 out of 56 men) in one corner of the country. That's also the view, I might add, of the two UCL academics whose research was cited by the Times in its original story last Wednesday. In a letter to the Times published on 7 January, they wrote:

While we were heartened by the open and insightful discussion of the crime, we are concerned that limited data can be over-extended to characterise an entire crime type, in particular, in terms of race and gender. The identity of victims and offenders identified to date, primarily in the Midlands and the north of England, may misrepresent this crime on a national level.

In our work, based on two major police operations, we found that perpetrators were predominantly but not exclusively of Pakistani descent: several other ethnicities featured, too. Only through nationwide scoping studies can ethnicity be reliably established. If we allow ourselves to be blinded by this emergent and untested racial stereotype, we risk ignoring similar crimes perpetrated by offenders of other ethnicities.

It is also worth remembering that the "fact remains" that the "majority of those who are involved in" internet child sex offences (95 per cent) are white, as are the majority of prisoners (80 per cent) behind bars for sex crimes. And, as Chris Dillow notes:

Straw gives us no statistics to justify his claim.
Those that do exist seem to undermine his claim.
Table 5.4b of this pdf shows that, in the latest year for which we have data, Lancashire police arrested 627 people for sexual offences. 0.3% of these were Pakistanis. That's two people. 85.5% were white British. In Lancashire, there are 1,296,900 white Brits and 45,000 Pakistanis. This means that 4.163 per 10,000 white Brits were arrested for a sex crime, compared to 0.44 Pakistanis. If you're a journalist, you might say that the chances of being arrested for a sex crime are nine times greater if you're white than Pakistani. If you're a statistician, you might say they are 0.037 percentage points greater.

So what conclusions should we draw about white people from such statistics? Has Melanie checked with her white husband Joshua or her white son Gabriel as to why white men are so much more likely to commit sex crimes in this country than men from non-white, minority communities? Is this a problem of "white culture" or Judeo-Christian culture? Why the "conspiracy of silence"?

Phillips continues:

For these gang members select their victims from communities which they believe to be 'unbelievers' -- non-Muslims whom they view with disdain and hostility.

You can see that this is not a racial but a religious animosity from the fact that, while the vast majority of the girls who are targeted are white, the victims include Sikhs and Hindus, too.

"Religious animosity"? According to the Times's own research, several victims of a British Pakistani gang in an unnamed northern city were Bangladeshi Muslim girls. So much for Islamic solidarity among Asian gangs. And has Phillips, or Straw, ever been to Pakistan? Don't they know that young girls are sold into sexual slavery in Pakistan, too, where they all happen to be Muslims, as do the perpetrators of this heinous crime?

The only "fact" that we learn from Phillips's rant is that she is willing to find an Islamic angle to any story, no matter how horrific the story, no matter how tenuous the angle. For someone who rails against anti-Semitism under every bed and foams at the mouth at the first sight of journalists or bloggers stereotyping or generalising about Jews or Israelis to then make such sweeping and lazy assumptions about Muslims is particularly hypocritical and, I would add, unforgivable.

Since the Times story broke last week, just two people have decided to "Islamise" it and thereby exploit it for their own Muslim-baiting agendas: Nick Griffin and Melanie Phillips. Shame on them both.

UPDATE:

On a side note, I should point out that I am the co-author of the Ed biography that I referred to in passive, above, and that is provisionally entitled Ed: Ed Miliband and the Remaking of the Labour Party. My co-author on this project is my former New Statesman colleague, James Macintyre. You can read more about our forthcoming book here.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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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?