Let the American anti-Quran pastor visit Britain

Theresa May is being urged to ban him. Free speech demands she shouldn’t.

I'm sure we all remember Terry Jones, the Florida pastor with a novel and bracing approach to interfaith dialogue – he's the one who thought the best way to mark the anniversary of the 11 September 2001 attacks this year was to declare it "International Burn a Quran Day" (although only, as you'll notice if you look at the poster he had made, between 6pm and 9pm).

The English Defence League has announced that Pastor Jones is due to address an event in Luton in February "on the evils and destructiveness of Islam". As a result, as today's Observer reports, the Home Secretary, Theresa May, is now "under intense pressure" to ban him from Britain.

The views of the EDL should be perfectly clear by now, as should the group's low opinion of Islam. (For those who require clarification, this report by my colleague Daniel Trilling, "God bless the Muslims. They'll need it when they're burning in effing hell", should suffice.)

As for Pastor Jones: although on one level his physical similarity to the hicks and halfwits who populate the town of Rock Ridge in Mel Brooks's Blazing Saddles inclines one not to take him too seriously, there was nothing remotely amusing about his hate-filled proposal, nor about the international furore it caused, earning him the condemnation of the US state department, the Vatican and the US army in Afghanistan.

Is he a welcome visitor? No, of course not. Neither was the Dutch politician Geert Wilders when he came to Britain in March. I find it sickening, and distressing, too, that they should propagate such an extreme and distorted picture of Islam – just as I find it sickening and distressing that there are some Muslim clerics who do the same.

But I am also alarmed at the alacrity with which many then jump to saying that this person or that – in this case Pastor Jones – should be refused entry into the UK. The Labour MP Jon Cruddas says, "We should not allow racial hatred to be whipped up in this manner in our country" and promises to table a parliamentary motion to ban Jones tomorrow, while the Hope Not Hate campaign has set up a petition to stop him coming.

I understand the feeling behind this, but it's just too easy a response – and a dangerous one, too. The same kind of sentiment lay behind the outrage when it became clear that Nick Griffin was to appear on Question Time. These opinions are repulsive, disgusting, beyond the pale – let's ban them.

But ban what exactly? You can't ban a viewpoint, at least not from being held in an individual's mind. And if the public, verbal or written expression of that viewpoint contravenes no laws, on what grounds would you curtail it?

I was absolutely for Griffin's right to appear on the Question Time panel, for instance, because he is the leader of a perfectly legal party (one for which over half a million people voted in this year's general election and nearly a million in last year's Euro elections) and an elected MEP. You cannot have one set of rules – still less laws – for "acceptable" parties and another for those we deem "unacceptable".

Griffin, however, is a British citizen, so there is no question of not letting him into the country. What of Pastor Jones? According to today's Observer: "The Home Secretary has the power to exclude or deport an individual if she thinks their presence in the UK could threaten national security, public order or the safety of citizens. She can also do so if she believes their views glorify terrorism, promote violence or encourage other serious crime."

Clearly Jones is not a threat to national security: but endangering "public order" and "the safety of citizens"? I find it rather unsettling that the Home Secretary is expected to justify excluding a citizen of a friendly country by using the kind of vague wording that authoritarian regimes the world over use to stifle free speech. It is clear, too, that this "Man of God" does not explicitly "glorify terrorism" or "promote violence".

We consider him to be distasteful, for sure, uncivilised, uncouth, the possessor of barbaric and ignorant views. But if we value free speech at all, those can never be reasons enough to ban him. David Allen Green recently pointed out on The Staggers for the NS that when the Quran-burning (non-)event became noticed, creating huge anger that could have put Americans abroad in harm's way, "even though it was plausible to contend that Pastor Jones was creating a clear danger to others, he was not arrested. It was the persuasive and not the coercive power of the US government which was deployed to stop the gesture happening." He then asked: "What would happen in the United Kingdom?"

We shall see when Theresa May chooses to act or not. One may well ask, as we are at it, why it is that we are so concerned with restricting people's free speech while the legislation that exists to punish them, should that expression constitute incitement to racial or religious hatred, is so rarely used. Surely that is the wrong way around?

So, say I: let Pastor Jones come to Britain, and if his speech breaks any law, then throw the book at him. Make it clear that such laws truly afford the mighty protection of the state to those they are meant to shield. But if his words do not, then I would ask this:

What has anyone to fear from a man so confused and deluded that, before his Quran-burning stunt, he could seriously declare that its aim was "to send a message to the moderate Muslims to stay peaceful and moderate"?

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?