Think before you retweet: why the "scrounger spike" is illusory

What happened between 2004 and 2010 is more people started writing about welfare.

This chart seems to have quickly acquired mythological status on Twitter:

It appears to show the number of times the word "scrounger" appeared in the UK press from 1994 to the present, with a huge unprecedented rise coinciding with the arrival of the coalition in power.

It’s easy to see why people have seized on it, given the sustained campaign against benefit claimants in parts of the print media and the government's willingness to stoke the flames by selective, and in some cases deceptive use of official data. But the picture it gives of trends over time is almost certainly exaggerated.

The underlying data in the chart comes from a database called LexisNexis. This is an indispensable resource for looking at media coverage over extended periods, but as any researcher who has worked with it will tell you, it needs to be treated with caution, and especially when trying to construct a time series.

The main reason is that titles appear in the database at different times: if you're looking at the mid-1990's, the only titles included are the Mirror, Mail, Times, Guardian and Independent. By the time you reach 2013, the Sun and Express are included, as well as the Telegraph. That is hardly a minor difference when you're doing searches on words like "scrounger".

When Kate Bell, Ben Baumberg, Dan Sage and I looked at media coverage of benefits last year for the charity Turn2Us, we commissioned a purpose-built database to iron out data problems, as well as manually cleaning the articles we'd sourced from LexisNexis to remove irrelevant material. Analysis of media coverage over time is a demanding task. Even with a customised database, producing and coding a series from 1995 to 2011 represented several weeks work.

We didn't just look for the word "scrounger", we constructed a set of word-lists intended to capture broad categories of negative vocabulary such as fraud and dependency. "Scounger(s)" was included in a word-list we called "non-reciprocity", along with terms like "handout(s)", "shirker(s)" and "something for nothing". The chart shows some of the results for a consistent set of titles from 1995 to 2011:

So has there been an unprecedented rise in the use of "scrounger" and related terms? Yes – see the purple curve on the chart – but it's on quite a different scale to that shown in the other chart.

The difference is, I presume, mainly to do with our use of a consistent set of titles. We just don't have data for the Sun and Express for the 1990's, and these are by far the most virulent titles when it comes to coverage of benefits.

What is perhaps of more interest is that overall use of negative vocabularies is very similar in 2010-11 and 1998-9 (the dotted red curve). But there has been a pronounced shift in the language used to convey negative messages away from fraud (although this remains very important) and towards non-reciprocity: from "cheats" to "scroungers".

Using consistent data which has been checked and cleaned makes for a less striking chart, but it allows us to put recent coverage into a longer-term context. On this evidence, negativity in press coverage of benefits has not been at unprecedented levels: the first years of New Labour's period in office were very similar to the coalition's first years in this respect.

The reason is that media coverage is strongly skewed towards negativity in all periods, and in both these periods there was simply a lot of coverage.

But since 2008, negativity has increasingly taken the form of accusations of "scrounging", while in New Labour's first years in office the focus was on fraud, largely because this was a theme the government chose to highlight.

It's widely argued that there has been a shift in public attitudes towards benefit claimants over recent decades, with no signs of an increase in sympathy when unemployment rose in 2008/9, in contrast to earlier periods. And it's tempting to see negative media coverage as the culprit here. Our report did find evidence that attitudes are influenced by which newspaper people read, but when it comes to explaining shifts in attitudes over the longer term, increased negativity in the press seems an unlikely candidate, just because UK media coverage of benefits has been strongly negative for as far back as we can go using this data.

It may be that the press and the political right have become more efficient in tapping into public anxieties and grievances – maybe "scroungers" is a stronger framing than "cheats". It may be that New Labour's borrowing of political vocabulary from the right ("something for nothing", "dependency culture") recast the terms of debate, so that negative attitudes which were always to some extent in play were legitimised and made respectable.

But a simple story of media manipulation, evidenced by counting occurrences of negative language, seems to be ruled out. That doesn't mean there is no manipulation of course. There is a lot, and most of it is clearly politically inspired. But this is only part of a larger story. Those worried about public attitudes to benefits and claimants need to ask why negative coverage finds such a ready audience.

An earlier version of this piece was originally posted on Declan's blog l'Art Social, and is reposted here with his permission.

Declan Gaffney is a policy consultant specialising in social security, labour markets and equality. He blogs at l'Art Social

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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?