Men walk past a bank of television screens in the BBC headquarters at New Broadcasting House. Photograph: Getty Images
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We must defend the BBC from Murdoch and death by a thousand Tory cuts

If we want to preserve quality public-service broadcasting in Britain, we must defend the Beeb.

Rule one of politics, as Barack Obama’s former chief of staff Rahm Emanuel once remarked, is: “Never allow a crisis to go to waste.” Right-wingers in the UK have heeded his words: they certainly aren’t allowing the crises engulfing the BBC “to go to waste”. And their strategy is as brazen as it is cynical and opportunistic: to magnify and exaggerate the sins of the hated Beeb while quietly minimising the crimes of their friends at News International.

A case in point was Boris Johnson’s Telegraph column of 12 November. After blithely declaring that the “real tragedy” was the “smearing [of] an innocent man’s name” by BBC’s Newsnight (and not, as you might think, the sexual abuse of children), Johnson claimed that Newsnight’s reporting had been “more cruel, revolting and idiotic than anything perpetrated by the News of the World”.

Sorry, what? Dare I remind the Mayor of London that more than 4,000 people have been identified by police as possible victims of phone-hacking, including the families of dead British soldiers, relatives of the 7/7 victims and a murdered schoolgirl? Yet the cultural vandals on the right only have eyes for the BBC, whose existence has always been anathema to their free-market, anti-regulation ideology.

Hysteria and hyperbole

The Newsnight debacle has provided the perfect cover for an attack on the corporation that has been a long time in the making. Remember, in opposition, the Conservative Party in effect allowed James Murdoch and NewsCorp lobbyists to write its media policy. And on coming to office, the Tory-led coalition froze the BBC licence fee for six years. An unavoidable cost-cutting measure, perhaps? Not quite: a gleeful David Cameron let the mask slip when he referred to the BBC “deliciously” having to slash its budget. (For the record, the BBC costs each licensed household less than 40p a day.)

In recent weeks, conservatives – both big and small “c” – have queued up to denounce the broadcaster and demand that it be downsized or even broken up. “The BBC must do less, and do it better,” declaimed the Telegraph on 13 November. The Defence Secretary, the Conservative Philip Hammond, suggested in (where else?) a BBC radio interview that the future of the licence fee might be in doubt.

What we are witnessing is a shameless, co-ordinated assault on the BBC’s reputation and output by Conservative politicians and by their outriders in the right-wing media echo chamber. Don’t believe me? Ask yourself: where were these doughty Tory defenders of media ethics when Christopher Jefferies, the landlord of the murdered architect Joanna Yeates, was being smeared as a “creepy” killer by the press? Eight newspapers, including the Sun, the Mirror and the Daily Mail, had to pay “substantial” libel damages to the former schoolmaster. None of those papers’ editors quit his job; none “stood aside” from his post pending an independent inquiry.

It is also worth asking why so few Tory MPs and Tory-supporting columnists have gone after ITV – the network on which the presenter Phillip Schofield idiotically ambushed the Prime Minister, live on air, with a list of alleged paedophiles culled from the internet. Schofield is still in his job. So, too, are the chairman and chief executive of ITV.

To try to delegitimise or dismantle the BBC, the world’s biggest and best broadcaster, on the basis of Newsnight’s double failure – first over Jimmy Savile, then over Lord McAlpine – is unfair both to the corporation and to Newsnight itself. Ask the brave people of the besieged Syrian city of Homs what they think of the show. Newsnight’s acclaimed film Undercover in Homs, which reported their plight to Britain, won an Amnesty media award in May.

The BBC is bigger than Newsnight – though you might not have guessed it from the recent hysteria and hyperbole in the press. Consider some of the award-winning and popular BBC output of the past 12 months: Panorama, David Attenborough’s Frozen Planet, Andrew Marr’s History of the World, Strictly Come Dancing, The Archers, Sherlock, the Today programme, Children in Need, the Proms, Woman’s Hour, CBeebies . . . the list goes on. Figures released by the corporation suggest 96 per cent of the UK population consumes BBC services every week.

The inconvenient truth for right-wingers is that their hatred of the taxpayer-funded, publicly owned BBC has never been shared by the tax-paying public. As the Financial Times noted on 12 November: “In a survey by Ofcom, the media regulator, in November 2011, 59 per cent of people said the BBC was the news source they most trusted. The next, ITV News, scored 7 per cent.” The reporters added: “No newspaper beat 2 per cent.”

Beware the Rupert

The BBC has bent over backwards to hold itself to account. How many other media organisations would have allowed their editor-in-chief to be flayed in public by one of his own employees, as Ent­wistle was by the Today programme’s John Humphrys on 10 November?

Full disclosure: I was once a BBC employee and I now do paid punditry for various BBC programmes. But I am no dewy-eyed defender of Auntie: I have, on these pages, condemned the Beeb’s “establishment bias . . . towards power and privilege, tradition and orthodoxy” and its “stomach-churning” coverage of the monarchy. And I agree that the corporation’s “bonkers” (© David Dimbleby) management structure is stuffed with “cowards and incompetents” (© Jeremy Paxman).

But what is the alternative? Death by a thousand Tory cuts? The Foxification of the British media landscape? Make no mistake, Rupert Murdoch – who incidentally hasn’t had to resign as chief executive of a media company where phone-hacking was conducted on an industrial scale – is waiting in the wings.

The BBC, despite its many faults, must be protected from its right-wing enemies. In the battle to preserve high-quality, non-partisan public-service broadcasting, Auntie is our last line of defence.

Mehdi Hasan is political director of the Huffington Post UK and a contributing writer to the New Statesman. This piece is crossposted with the Huffington Post 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.

This article first appeared in the 19 November 2012 issue of the New Statesman, The plot against the BBC

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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?