If inflation is a bad thing, why is government policy designed to make us want more of it?

Britain is awash with debt, while government policy encourages inflation. But theoretical inflation sorts a lot of stuff out, while actual inflation will hurt.

So, you want to buy your first house. Let's assume (I know, I know, cloud cuckoo land, but let's go with it) you've scraped together a deposit and have persuaded someone to give you a mortgage. You'll be borrowing, on average, around £117,000. Oh, but that's assuming you're not in London. If you are, you're looking at more like £193,000 instead.

You've probably got some other debt outstanding too; most of us have. Last May, the average consumer borrowing - credit cards, overdrafts, car loans and so on - stood at around £3,207. That's an average, mind, so for a lot of us it's a lot more. Oh, and it had, by June, risen - only by £4, admittedly, but still, every little hurts.

Then there are student loans. In 2011, the Push university guide reckoned these averaged out at around £5,680 per student per year. That was before the new tuition fee regime, of course, and now you're probably looking at somewhere closer to £12,000 to cover fees plus maintenance. The resulting hole in your finances isn't really debt - even the government doesn't expect most of it to be paid back - but is more like an extra tax levied on those foolish enough to be born after 1993 (serves ‘em right). Nonetheless, it does mean yet another big red stain on the finances of those starting out in life.

The point, in case it's not quite sledgehammer enough for you, is that Britain is awash with debt - and the younger you are, the more likely you are to be drowning in it. Coalition ministers have spent a lot of time talking about how immoral it is to run up the nation's credit card and leave our children to pay it off. But they've seemed surprisingly blasé about running up our children's actual credit cards, and have cheerfully gone around loading them up with tuition fees and inflating the housing bubble all over again. Reports from the Office of Budget Responsibility, indeed, have been pretty explicit in their expectation that cuts to the deficit would be matched by a vast increase in personal debt.

All this is obviously horrible for those who'll have to pay those debts. But I wonder if it could have a more profound effect on the nation's attitude to its finances.

We're still living in an economic consensus defined, broadly, by the Thatcher government. For much of the seventies, inflation had run at over 10 per cent, which was commonly thought A Bad Thing. Thatcher's economic policies - monetarism, deindustrialisation, a strong pound - were all intended to get inflation down to the sort of level which didn't scare the bejesus out of investors, and keeping inflation low has been one of the main goals of policy ever since.

Now, though, a large and growing chunk of the population would, in the long term, do quite nicely out of spot of inflation. More than that, they're relying on it: some of the mortgages handed out over the last decade haven't got a hope of being repaid unless nominal wages start to spiral.

Think this through for a moment. If you woke up tomorrow to find that wages and prices had both doubled overnight, then the value of whatever debt you're sitting on has effectively halved. More than that, though, the value of the debt the government is sitting on has halved, too. Oh, and with a cheaper pound, suddenly Britain's exports look more competitive too. Halve the value of money in this country, and a lot of our problems suddenly look soluble. (This is economic model that used to work so well for Italy.)

The real world is not so kind, of course, and real inflation would be a lot more painful than that. Interest rates would rise. Holidays would become more expensive. The five or six British people still sitting on savings would see them whittled away, and anyone about to retire gets shafted.

Worst of all, wages are extremely unlikely to move in lockstep with prices, and those that lag most would likely be the ones paid to those with least bargaining power. That means, in all probability, the poorest. Those same people are also the least likely to benefit from an increase in asset prices (houses again, mostly) that'll accompany any inflation.

Oh, and there's the tiny problem that the deficit means we're still dependent on the faith and credit of the international bond markets. Theoretical inflation sorts a lot of stuff out. Actual inflation will hurt.

Nonetheless, though you'll never catch them saying it out loud, this seems to be the plan the government have lumped for. To get out of the mess we're currently in, there are only really three options. One is a sustained and historic boom (unlikely). Another is default (horrible). The third is to try to inflate the debt away and hope nobody notices. If you're young, middle class and sitting on a massive mortgage, this works in your favour. If you're an investor, a pensioner, or, worst of all, poor, it doesn't.

All the reasons inflation was bad in the Seventies still apply. There are many good reasons for wanting to keep it down. But we can't have everything. The larger the share of the population that is sitting on unsustainable debts, the less frightened of inflation the electorate will become. Any monetarist baby boomers out there might want to think about that, next time they're talking gleefully about how much their house is worth.

A boy with a kite made of banknotes in Germany during the depression of 1922 when escalating inflation rendered much of the currency worthless. Photo: Getty

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. He is on Twitter, almost continously, as @JonnElledge.

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Donald Trump ushers in a new era of kakistocracy: government by the worst people

Trump will lead the whitest, most male cabinet in memory – a bizarre melange of the unqualified and the unhinged.

“What fills me with doubt and dismay is the degradation of the moral tone,” wrote the American poet James Russell Lowell in 1876, in a letter to his fellow poet Joel Benton. “Is it or is it not a result of democracy? Is ours a ‘government of the people by the people for the people’, or a kakistocracy rather, for the benefit of knaves at the cost of fools?”

Is there a better, more apt description of the incoming Trump administration than “kakistocracy”, which translates from the Greek literally as government by the worst people? The new US president, as Barack Obama remarked on the campaign trail, is “uniquely unqualified” to be commander-in-chief. There is no historical analogy for a President Trump. He combines in a single person some of the worst qualities of some of the worst US presidents: the Donald makes Nixon look honest, Clinton look chaste, Bush look smart.

Trump began his tenure as president-elect in November by agreeing to pay out $25m to settle fraud claims brought against the now defunct Trump University by dozens of former students; he began the new year being deposed as part of his lawsuit against a celebrity chef. On 10 January, the Federal Election Commission sent the Trump campaign a 250-page letter outlining a series of potentially illegal campaign contributions. A day later, the head of the non-partisan US Office of Government Ethics slammed Trump’s plan to step back from running his businesses as “meaningless from a conflict-of-interest perspective”.

It cannot be repeated often enough: none of this is normal. There is no precedent for such behaviour, and while kakistocracy may be a term unfamiliar to most of us, this is what it looks like. Forget 1876: be prepared for four years of epic misgovernance and brazen corruption. Despite claiming in his convention speech, “I alone can fix it,” the former reality TV star won’t be governing on his own. He will be in charge of the richest, whitest, most male cabinet in living memory; a bizarre melange of the unqualified and the unhinged.

There has been much discussion about the lack of experience of many of Trump’s appointees (think of the incoming secretary of state, Rex Tillerson, who has no background in diplomacy or foreign affairs) and their alleged bigotry (the Alabama senator Jeff Sessions, denied a role as a federal judge in the 1980s following claims of racial discrimination, is on course to be confirmed as attorney general). Yet what should equally worry the average American is that Trump has picked people who, in the words of the historian Meg Jacobs, “are downright hostile to the mission of the agency they are appointed to run”. With their new Republican president’s blessing, they want to roll back support for the poorest, most vulnerable members of society and don’t give a damn how much damage they do in the process.

Take Scott Pruitt, the Oklahoma attorney general selected to head the Environmental Protection Agency (EPA). Pruitt describes himself on his LinkedIn page as “a leading advocate against the EPA’s activist agenda” and has claimed that the debate over climate change is “far from settled”.

The former neurosurgeon Ben Carson is Trump’s pick for housing and urban development, a department with a $49bn budget that helps low-income families own homes and pay the rent. Carson has no background in housing policy, is an anti-welfare ideologue and ruled himself out of a cabinet job shortly after the election. “Dr Carson feels he has no government experience,” his spokesman said at the time. “He’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.”

The fast-food mogul Andrew Puzder, who was tapped to run the department of labour, doesn’t like . . . well . . . labour. He prefers robots, telling Business Insider in March 2016: “They’re always polite . . . They never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.”

The billionaire Republican donor Betsy DeVos, nominated to run the department of education, did not attend state school and neither did any of her four children. She has never been a teacher, has no background in education and is a champion of school vouchers and privatisation. To quote the education historian Diane Ravitch: “If confirmed, DeVos will be the first education secretary who is actively hostile to public education.”

The former Texas governor Rick Perry, nominated for the role of energy secretary by Trump, promised to abolish the department that he has been asked to run while trying to secure his party’s presidential nomination in 2011. Compare and contrast Perry, who has an undergraduate degree in animal science but failed a chemistry course in college, with his two predecessors under President Obama: Dr Ernest Moniz, the former head of MIT’s physics department, and Dr Steven Chu, a Nobel Prize-winning physicist from Berkeley. In many ways, Perry, who spent the latter half of 2016 as a contestant on Dancing with the Stars, is the ultimate kakistocratic appointment.

“Do Trump’s cabinet picks want to run the government – or dismantle it?” asked a headline in the Chicago Tribune in December. That’s one rather polite way of putting it. Another would be to note, as the Online Etymology Dictionary does, that kakistocracy comes from kakistos, the Greek word for “worst”, which is a superlative of kakos, or “bad”, which “is related to the general Indo-European word for ‘defecate’”.

Mehdi Hasan has rejoined the New Statesman as a contributing editor and will write a fortnightly column on US politics

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 January 2016 issue of the New Statesman, The Trump era