What would Jesus ban?

What is more offensive, a cartoon Jesus or the Advertising Standards Authority's decision to ban it?

In 2006, during the run-up to Christmas, the Grocer magazine ran an advert for the Big Prawn Company. The ad featured a Nativity scene, but with the traditional baby Jesus replaced by an edible crustacean. The slogan read, "A King is born. Order now to ensure a Christmas delivery". Twenty-eight people complained. The Advertising Standards Authority rejected the complaints, accepting that the scenario "would be seen as light-hearted by most readers of The Grocer" and was thus "unlikely to cause serious or widespread offence."

In 2011, just before Easter, the Metro carried an ad for the mobile company Phones 4U. It featured a winking, thumbs-up Jesus and the slogan "Miraculous deals on Samsung Galaxy AndroidTM phones". Almost a hundred people complained. This time, the ASA has rejected the company's (admittedly absurd) contention that the image presented "a light-hearted, positive and contemporary image of Christianity relevant to the Easter weekend."

Instead, the regulator concludes that the adverts "gave the impression that they were mocking and belittling core Christian beliefs", "were disrespectful" and "were likely to cause serious offence, particularly to Christians".

Clearly something has changed. There were more complaints about the second ad, but given the much larger circulation of the Metro compared to the Grocer, not enough to indicate that widespread offence had been caused. Indeed, the ASA does not usually take the number of complaints it receives into account at all, even when judging whether an advertisement is likely to cause "serious and widespread offence".

Nor is it obvious why depicting Jesus as a prawn -- and the use of a non-kosher foodstuff seems especially inappropriate given Christ's Jewish background -- should be considered less offensive than a smiling, recognisably human cartoon-character offering "miraculous" deals on mobile phones. Both images are somewhat crass and likely to offend the humourless. But neither poses a serious threat to the fundamentals of the Christian faith.

It also strikes me as somewhat over-the-top of the ASA to claim that the image of Jesus emplyed in the Phones 4U ad was "mocking and belittling core Christian beliefs". The cartoon Jesus may have been based ultimately on the Roman Catholic icongraphy of the Sacred Heart. Its immediate source, however, is to be found in the 1999 film Dogma, in which a marketing-obsessed cardinal introduces the figure of a winking, thumbs-up "Buddy Christ" as an antidote to the "wholly depressing" crucifix.

"Buddy Christ" figurines and tee-shirts remain on sale, and the film, far from being banned, is shown regularly on Channel 4. The similarity between the Phones 4U advert and the Buddy Christ figure, moreover, is no accident: the one is clearly derived from the other and the cartoon would make little sense to anyone unfamiliar with the film.

It's likely that the Big Prawn complaint would have been decided differently today. In the past few years, the ASA has been taking an increasingly strict, some would say humourless, line on suggestions of religious offensiveness. It has, for example, banned a series of ice-cream adverts featuring pregnant nuns and gay priests, and even one for curling-tongs which employed the slogan, "a new religion for hair". One of the adverts deemed likely to cause "serious or widespread offence" triggered a mere six complaints. The decision led the National Secualar Society to accuse the ASA of surreptitiously re-introducing the blasphemy law.

At the very least, the ASA seems to have an alarmingly low threshold as to what constitutes "offence" where religion is concerned. An advert, it seems, need not be objectively outrageous; it's enough that someone somewhere might potentially take exception to it. The ASA's code, it is true, states that "particular care must be taken to avoid causing offence on the grounds of race, religion, gender, sexual orientation, disability or age." But it does not explain why this should be necessary, and it's hard to see why advertising should be subjected to restraints that would be considered intolerable in literature, film, art or even television.

Does it matter that the ASA is now over-protective of the supposed sensibilities of believers, the great majority of whom will at most have been mildly irritated? Perhaps not to the phone company concerned, for whom today's ruling will provide a welcome shot of free publicity. But advertising is not purely commercial. It is also public art. Its ubiquity makes it the most pervasive modern art-form, with an influence on public consciousness and the popular culture going far beyond the product being sold. The best adverts provoke thought and debate, comment on and contribute to the world we live in, and stay in people's memories long after the product being pushed has been forgotten.

Banning an advert robs people of the opportunity to have their thoughts provoked by it. Potentially it impoverishes culture. The ASA should realise that it owes greater duty to society as a whole than to the unrepresentative and eccentric handful who take the trouble to complain.

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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?