Immigration: Cameron, Brown and Clegg all talk the language of limits

If St George were alive today, this non-EU citizen wouldn't score very highly on any points system.

This Friday, England will celebrate the life of a third-century Palestinian who was executed by the Emperor Diocletian for refusing to renounce his Christian faith.

The festivities may be a little muted for, as patron saint of England, St George, and his cross, have been much misused by nationalists with a narrow idea of what "Englishness" should mean; which is at least partly why so many English people of more refined sensibilities feel reluctant to mark the day with enthusiasm comparable to that displayed by the Irish diaspora on St Patrick's Day every 17 March.

The trio of party leaders who took part in ITV's debate last week are, however, likely at least to acknowledge St George's Day on Friday. And this made me wonder how comfortably our patron saint's Levantine roots sit with the rhetoric of all three when the subject of immigration arose during the debate.

Cameron, Brown and Clegg all talked the language of limits.

The Liberal Democrat leader warned against "unreasonable strain on housing and public services". The Leader of the Opposition said it had "got out of control and does need to be brought back under control", while the Prime Minister responded in a manner that tried to make it sound as though Labour was already being tough: "I do not like these words," he said, "because we are bringing it under control."

I am not a regular reader of Socialist Worker, but I do find myself in agreement with this comment in the paper:

The consensus was perhaps most annoying on immigration. Cameron has been to places where poor people live and has even met "a black man" who was against immigration. "I want us to bring immigration down so it's in the tens of thousands, not the hundreds of thousands," said Cameron looking to the ceiling so to further look down his nose at the rest of us. Brown boasted that immigration had been falling since he moved into 10 Downing Street. Clegg said immigrants had to be lined up with jobs in a region before being allowed in. Clegg did manage to remember to say that there were some nice immigrants.

In the past there was much grumbling about the fact that immigration was a toxic subject - you could not bring it up without being accused of racism - and that Labour's failure, in particular, to address white working class concerns was fuelling the rise of the BNP. (Not that the Immigration Minister Phil Woolas has ever given the impression of being even vaguely liberal in the policies he's advocated. Indeed, he has been attacked by the Archbishop of York over his "unmerciful" stance.)

In principle I don't think there's anything you shouldn't be able to discuss in a democracy, so of course I believe it is perfectly legitimate to bring it up. It is somewhat disappointing, however, to find that now we have decided that we can talk about immigration, the leaders of the three main political parties all agree. It is, from the start, something to be worried about. They all, to a greater or lesser degree, paint it as an issue to watch, not benignly, but as something with the potential to cause havoc.

And you don't have to go very far down that path to be back with words like "swamping" or, these days, "Eurabia".

Those who claim to be worried about immigration always say that it is nothing to do with race. They always have. Here is what Enoch Powell had to say about it when challenged by Archbishop Trevor Huddleston on the BBC in 1969.

Huddleston: "What I still want to know from you, really, is why the presence of a coloured immigrant group is objectionable, when the presence of a non-coloured immigrant is not objectionable."

Powell: "Oh no, oh no! On the contrary... the reason why the whole debate in this country on immigration is related to coloured immigration, is because there has been no net immigration of white Commonwealth citizens... It is not because there is anything different, because there is anything necessarily more dangerous, about the alienness of a community from Asia.... that we discuss this inevitably in terms of colour."

I leave open the question of whether Powell, in many ways a remarkable man who was at various points not only the youngest professor in the British Commonwealth but also the youngest brigadier in the British Army, was a racist. There is no doubt, however, about the views of many who were inspired by his speeches.

But I would like to quote further from his debate with Huddleston, for it seems to me that the issue of how we treat our fellow men and women - whether one starts from a Christian or a Human Rights viewpoint - is always predicated in the language of universality. Immigration, however, is a subject that immediately shrinks its borders to that of nationality. It stands directly at odds with the universal beliefs we profess about rights and duties to one another.

Huddleston: "The Parable of the Good Samaritan tells us that our neighbour is everyone... it specifically says the Samaritan, the enemy of the Jewish people at that stage of their history, the man who could not be thought of as a neighbour because of his religious and cultural differences, this is the man who shows love to the other. Now, has this not got anything to say to you about the attitude of the white race to the black race?"

Powell: "It says to me that in Christianity there is neither black nor white, bond nor free; but in the world in which I live there is black and white, bond and free.... I find it insuperably difficult to draw deductions from my Christian religion, as to the choices which would lie open to me in my political life."

I don't think it's at all difficult to draw deductions from one's belief system and apply them to politics. In fact, I think a politics that did not draw from such principles would be no more than shallow managerialism.

When it comes to immigration, I freely admit that it is a difficult area and I do not pretend to know what the answer is - although my strong inclination is to ask why we should close the door to anyone, if we too wish to be able to travel and work freely around the world. I also find it hard to see how either a Christian or a humanist could square with his beliefs the act of turning away a "neighbour", merely because he wasn't in possession of the right passport or papers certifying his abilities at carpentry or plumbing.

I'll come to a close here, but would like to leave you with two final questions. If St George were alive today, he would be a non-EU citizen and his skills - dragon-slaying in particular - would probably not score very highly on any points system. Would we let England's patron saint in if he wanted to come and live here now?

I think we know the answer. Is it one of which we can really feel very proud?

Sholto Byrnes is a Contributing Editor to the New Statesman
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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?