Educating the English Defence League

The EDL’s demonstration in Luton undermines efforts by British Muslims to tackle terrorism and extremism.

When members and supporters of the English Defence League demonstrate in Luton on Saturday they will display their genuine but misplaced fears about Islam as a source of violence, extremism and disloyalty to the UK. Sadly, and merely because they wear distinctive "Islamic" clothing, some of Luton's most loyal and effective opponents of terrorism, extremism and subversion will be targets of EDL hatred and violent intimidation. Not only is this grossly unjust, but it also increases the risk of further violence and intimidation of Muslims in Luton – a town the EDL calls the hub of militant Islam in the UK. Shortly after an earlier EDL demonstration in the town, the Luton Islamic Centre was firebombed and several Muslims were attacked in the street. Of particular concern was the fact that the attackers used an accelerant that increased the petrol bomb's capacity to cause harm and damage.

Even in the face of such provocation, the managers at the Luton Islamic Centre have been prepared to engage with their violent opponents and to provide education about Islam and Muslims to help disabuse young local EDL supporters of their misplaced fears. Interestingly, these brave Luton Muslims compare the leadership of the EDL with al-Muhajiroun, a fringe extremist Muslim group that uses many names including Islam 4 The UK to stir up hatred and provide the EDL with an erroneous image of Islam. Each extremist group, they say from local knowledge, feeds off the other. To demonstrate their point, the mosque managers led a successful campaign to challenge al-Muhajiroun on the streets of Luton. This robust action served to weaken al-Muhajiorun's street credibility among young local Muslims and also to educate the wider local community about the nature of Islam.

This is an important lesson in street education I have seen repeated in Brixton and Finsbury Park. Like the Luton Islamic Centre, Brixton Mosque for many years has been at the forefront of self-generated local action challenging and tackling fringe Muslim groups like al-Muhajiroun as well as the more serious but equally fringe support for al-Qaeda-inspired terrorism. To illustrate, the Brixton Muslims sent Anjem Choudhury, leader of al-Muhajiroun, and his supporters packing when they sought to promote hatred and disharmony in the local community in 2009. Most crucially, a crowd of young Muslims watched as the hitherto impressive and assured Choudhury was out-argued by his Brixton hosts before being despatched back to Ilford with his humiliated supporters in tow.

No doubt a hard core of EDL members would resist any serious attempts to educate them about Islam, but experience suggests that many young EDL supporters might be reassured about Islam and their Muslim neighbours if their concerns were taken seriously, and if they saw some of their role models begin to demonstrate support for Muslims and Islam.

If young supporters of the EDL were educated in much the same way as many racists have been educated in the past two decades, then we might begin to see a significant reduction in EDL membership and to the threat the organisation poses to public safety and social cohesion. That at least is the view of a group of Luton Town football supporters, who told me that the success of campaigns such as Let's Kick Racism Out of Football might be repeated to the detriment of EDL membership if they embraced the challenge of Islamophobia with the same enthusiasm.

For the main part, that means informal education in the classroom, in workplaces, at sporting events and at social gatherings. Role models are widely understood to have played critical roles in reducing racism in football, and that may well be significant, given the extent to which EDL draws support from football fans.

The recent BBC Newsnight report on the English Defence League perfectly illustrated this affinity with football culture and highlighted the urgent need to educate EDL supporters about the religion of Islam. In Luton, Nottingham and Birmingham, both new and established EDL members are shown expressing fears about Islam as a source of terrorism, extremism, subversion, barbarity and criminal sexual exploitation of women. If Islam was genuinely the kind of threat to England that these EDL members perceive it to be, then their anger and determination to oppose it might be justified. The fact that Islam is not the threat that the EDL and many citizens genuinely believe it to be should therefore be the basis of urgent remedial action at both the national and local level.

Given the alarming growth of EDL membership and support, there is an onus on all of us with knowledge of Islam to help educate EDL members and supporters about Islam and Muslims. Or perhaps it would be more accurate to suggest that the EDL needs re-educating about Islam. The Newsnight report itself and Jeremy Paxman's subsequent interview with the EDL leader Stephen Lennon (aka "Tommy Robinson") illustrate how EDL organisers have spent much of the past two years learning about Islam. Unfortunately, they have drawn their new knowledge from a vast array of inaccurate, Islamophobic literature that has become widespread during the last decade.

While Paxman did his best to point out the deficiencies in EDL understanding of Islam, it became sufficiently clear that Lennon's personal experience in his home town of Luton required knowledge about Islam and Muslims that Paxman does not possess. Instead, these lessons are best provided by Muslims in Luton, Brixton, Finsbury Park and the many other towns and communities where such problems arise.

Dr Robert Lambert is co-director of the European Muslim Research Centre (EMRC) at the University of Exeter. He was previously head of the Muslim Contact Unit (MCU) in the Metropolitan Police.

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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?