G D H Cole in 1927: “Whatever the BBC does is, of course, wrong.”

The Beeb has always been a space for debate on culture, ethics and standards.

Plus ça change. In 1927 the British Broadcasting Company was granted a Royal Charter, elected John Reith as its first Director-General, and set about its mission to “inform, educate and entertain” the largest possible number of Britons. A mere 43 days later, writing in the New Statesman, the historian and theorist G D H Cole was lamenting the BBC’s efforts “to devise programmes suitable and pleasing to [the] standard listener” across its nascent stations. “For,” he writes, “the standard listener does not in reality exist.”

One of many speculative pieces which accompanied the birth of the broadcasting giant, Cole’s piece, originally published in the magazine in 1927, assessed the possibility of “eduction by wireless”, while noting the enduring impossibility of pleasing everyone with this ideal.

The piece is republished here in full, on the 90th anniversary of the BBC’s first broadcast. This evening, a new composition by Damon Albarn will be played simultaneously across 55 BBC radio stations, with a possible listenership of up to 80 million.

Education by Wireless

Whatever the British Broadcasting Corporation does is, of course, wrong. At least, it is bound to appear wrong to a body of listeners large enough to deserve consideration. For broadcasting has hitherto been conducted on the basis of a false and impossible assumption – the assumption of the standard or average listener. The BBC has tried to devise programmes suitable and pleasing to this standard listener, and naturally it has failed. For the standard listener does not in reality exist.

There are listeners and listeners. Some want one thing and some another. All want some variety in the programmes presented to them, but not the same variety. To some extent indeed the possessors of the better receiving sets can achieve the variety they want by tuning in now to one station and now to another. But even so, they encounter the difficulty that nearly all the programmes are compounded to a single recipe, and based on this same erroneous assumption of the standard listener.

There are, indeed, some few things to which the great majority of people want to listen. The very latest news during a really serious crisis is the most obvious case; for people do want to hear such news, even if they have no reasonable assurance that it is likely to be true. The same desire that causes special editions of the papers to sell like hot cakes makes most listeners put on the ear-phones or let their loud-speakers talk. But such cases are relatively rare; for the most part different sorts of people want to hear different things, and the attempt to provide a common programme for all sorts is bound to be a most unsatisfactory kind of compromise. It results in programmes which are a mere hotch-potch, and it sets all sorts of people writing to the BBC or to the papers to offer their advice.

In fact, of course, the problem is insoluble along the lines hitherto followed. There is no way of solving it except by recognising the different demands of different types of listeners. It is intolerable, when the busy man has some free time, to confront him with the alternative of, say, listening to Sir Oliver Lodge or nothing – he may not like listening to Sir Oliver Lodge, or even to any sort of lecture. There ought always to be alternative programmes available, and the alternatives ought to be available to all sorts of listeners and not only to the possessors of expensive sets. But alternative programmes alone, as the owners of such sets well know, will not solve the problem. It is necessary that the alternatives should be devised to appeal, not all to the fabled standard listener, but to listeners of different types and interests.

This point arises most obviously as soon as any attempt is made to put the resources of the wireless to educational use. The BBC, we believe, is at present investigating this problem, and discussing whether it shall undertake to provide an alternative educational programme. Recent attempts to infuse further educational elements into the existing programmes have led to a good deal of public protest; and no wonder, for there are a great many people who have no desire whatever to listen to educational lectures over the wireless, while among those who do want an educational service many are not unnaturally contemptuous of the fare at present provided. An educational programme, broadcasted on the ordinary wavelength, and stuck into the intervals of the ordinary programme, is bound to be a poor affair at best. Lest the standard listener should be unduly outraged, the lectures are carefully made “popular” in their appeal. There are more odd single lectures than consecutive courses; and even consecutive courses have to be treated on the assumption that it is mainly accident whether they are listened to consecutively or not.

Under these conditions, it is neither here nor there to blame the BBC for the poorness of the fare. The conditions themselves are wrong. If the listener who does not must be protected against having either to be educated against his will, or deprived of any programme at all. Some day, it is to be hoped, it will be possible to provide many alternative programmes. Till that can be done, we must be content with less; but a beginning might well be made with a distinct educational programme, based on a separate wave-length of its own.

To some, entirely sceptical of the educational value of the wireless, this may seem an unnecessary innovation. But there is a strong case for the view that broadcasting can profitably be put to educational use. From the standpoint of those interested in the rapidly developing adult educational movement, the case is clear. Broadcasting is no substitute for the work they are doing already; but it may be a very useful supplement, both in reaching isolated and scattered students for whom it is impossibly expensive to provide by the regular means of classes, and for interesting that wider section of the public which is the potential recruiting ground for students in ordinary adult schools, such as those conducted by the WEA. To put the matter more plainly, there are advanced and scattered students for whom, in the subjects they desire to study, help can hardly be afforded by any means other than the wireless; and there is a large public which can be interested in educational work, and to which the wireless provides a valuable means of access. But, if the educationists are to have the chance of using broadcasting for these purposes, the types of listeners who do not want them must be protected against having education crammed into their unwilling ears.

There is another respect in which a separate educational wavelength could be distinctly useful. At present, there are fairly drastic restrictions on the broadcasting of controversial matter. As Mr Bernard Shaw put it the other day, only members of the Government – to whom we must not add Mr Shaw – are allowed to make controversial statements over the wireless. Ordinarily, the lecturer who is invited to broadcast has to submit a manuscript in advance, and is supposed to adhere to the letter of what he has written down and submitted to censorship. Such a condition is obviously, for a very large number of lecturers, fatal to good work. For, apart from the actual conserving of what is said, rigid adherence to a written lecture must have, for many speakers, a tendency to cause dull and mechanical talking. This would not, indeed, afflict all lecturers alike, and some would be suited by the conditions; but it is hardly compatible with getting the best men to do the best work.

Moreover, the exclusion of controversial matter is, in the long run, obviously a futile and impracticable policy. There are many subject which simply cannot be treated except in a controversial way, and the definition of what is controversial plainly varies with the person making it. The BBC’s announcements during last year’s “General Strike” – fair on the whole as the company tried to make them – were certainly not regarded as non-controversial by the main body of the strikers; but Mr Shaw – who has since got more than his own back on the Postmaster-General – was not allowed to be broadcasted some time ago because of his refusal to give a pledge to say nothing controversial. The restriction is absurd on the face of it; and yet there is a case for it, under present conditions. Could not a half-way house be found, for the moment, by removing the ban no controversial matter for educational programmed supervised by responsible educational bodies such as the Universities or the WEA?

In writing this in support of a separate educational wave-length, we do not wish to give an exaggerated impression of our faith in the educational value of the wireless. Broadcasting is in some ways very like the newspaper, which is certainly not in any marked degree an educational instrument. But it need not be, as it is at present, analogous to a world in which the only newspaper obtainable is the Daily Mail. It must continue to provide widely acceptable programmes, and, as long as the alternatives are limited to one or two, it cannot escape altogether from the fallacious assumption of the standard listener. But its responsible controllers can at least begin to think more in terms of the diverse sections of which the potential listening public is composed, and, without sacrifice of majorities, begin to make some effort to meet the needs of articulate minorities as well. This is clearly not to be done by merely multiplying lectures of the existing types, but rather by providing lectures and courses of different kinds. Moreover, it seems important that such work should be developed in the closest possible conjunction with the existing educational bodies. There is a place for the wireless in the world of such bodies as the WEA; but this clearly needs working out in close cooperation with the WEA and the teachers engaged in adult education. There is also an obvious place for the wireless in the school especially in connection with the study of music; and this again needs working out in co-operation with the teachers and the local education authorities. In both spheres, the contribution of the wireless is, we think, likely to be only a minor contribution; but that does not mean that it is not worth a good deal of thought and conscious control, if only to protect us from being flooded by an endless stream of popular lectures of as little value to anyone as of interest to the great majority of listeners. The place of broadcasting in educations needs thinking out; and we are glad that the BBC is taking up the problem. Any solution is bound for the present to be only experimental and provisional; for the wireless is still in an early stage of development, and we are still largely ignorant of its potentialities and limitations. It may have little educational contribution to make; but what it has will certainly be the better if it is made the in the right way.

The above piece was uncovered during ongoing research for The New Statesman Century, available August, 2013.

"Listeners put on the ear-phones or let their loud-speakers talk". Photo: Getty Images.

Philip Maughan is a freelance writer in Berlin and a former Assistant Editor at 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?