Sod real equality of opportunity - in this economy, we all have to go to work

Like Nick Clegg, I also value equality for parents, not for “a stronger economy” but for its own sake.

A lifelong feminist, before my own kids arrived I was completely committed to the idea of shared parenting. Then my sons came along and I was confronted with that essential, almost physical need to be with them constantly. It wasn’t just breastfeeding but a broader consciousness of what “motherhood” truly meant, as though labour had awakened the… Only kidding. By month five of maternity leave I was climbing the walls. My return to spreadsheets and payslips couldn’t have come a moment too soon... (Again, only kidding. It was all about the cold, hard cash.)

Being a full-time career bitch from hell (as opposed to a lazy part-timer or a fluff-brained, cupcake-baking stay-at-home-mum), I ought to welcome Nick Clegg’s latest announcement on shared parental leave. After all, I want to be one of those “women up and down the country realising their potential, keeping their independence, fulfilling their dreams”. Indeed, it wasn’t for those pesky kids, it appears that my life would already be a Barbara Taylor Bradford novel. And yet I find myself reading Clegg’s depressingly titled "Greater Equality for a Stronger Economy" speech and feeling really bloody miserable. It all sounds so tiring. “You won’t get to 30 and suddenly have to choose: motherhood or work”, says Nick. Well, thanks for that. I might be a breeder but I’m already doing my bit for the economy (and equality, or so it would seem). I’m not complaining but please – will you get off my case? Feminism – and the fact that “we” (by which I don’t assume the likes of me) “have got so much better at telling young women: the sky’s the limit” – has made me into the obedient little economic unit I am today. Sure, I might spend my evenings reading Thomas the Tank Engine, but it doesn’t stop me being a Really Useful Engine come the next day.

Because that’s what all this feels like to me. Back to work, mummies. None of this stay-at-home slacking, not when “there’s no money around”. Sod real equality of opportunity. Sod extending paternity leave (or rather, let’s revisit it “when the economy is in a stronger state”). Sod the fact that the domestic arrangement Clegg derides – “Mum in the kitchen, Dad in the office” – is no longer affordable for most of us anyhow. Equality, if it means anything, means the important people herding everyone else back into low-paid jobs while telling them they’re realising their dreams. Excuse me if I find it less liberating than it sounds. Unlike Sam Cam, who might work two days a week but admits to “spending a lot of time thinking about work on her days off”, I get to be at work every single day. If it’s economically beneficial equality they’re after, the Coalition should look closer to home. Smythson are paying their creative consultants way too much and it’s preventing them from “realising their potential”.

I have nothing against paid work. There’s one rather obvious reason why it’s better than unpaid work (especially true if you’re female, since rather than waste your income on supporting a family, you get to spend it all on shoes or something). I was never stay-at-home mother material and would have gladly shared more of the leave I had following the birth of my children. And now, since both my partner and I work full-time anyhow, aren’t we precisely the model that Clegg’s hypothetical “young couple” should look up to? Follow us, young pioneers! No more shall “fathers miss out on being with their children” while “women lower their ambitions for themselves”. Way-hey! Three Men and a Baby domestic bliss for Daddy, Working Girl office advancement for Mummy. It’ll be just like the eighties, only minus the shoulder pads and champers (and the relatively small gap between top- and bottom-level pay, even if we didn’t think it small at the time).

It’s not just that flowery pro-equality language has been hijacked in order to sweeten the pill of making those who can’t afford to work unable not to. I have real issues with Clegg’s explanation of how gender equality will be promoted through this exploitative proposal. In Nick’s post-feminist vision, motherhood is to blame for all the hurdles faced by women in the workplace: “the moment they start planning a family, their options begin to narrow”. Hence the key to equality lies in getting Mummy back to work sharpish, breastpump in hand, providing Daddy can step into the breach. Yet is it really that straightforward? In a list of major factors explaining the pay gap, the Home Office website puts just 16 per cent of the gap down to “the negative effect of having previously worked part-time or of having taken time out of the labour market to look after a family”. Meawhile, 36 per cent remains unaccounted for, “suggesting discrimination may still be an important factor” (imagine that!). And if one is looking for evidence that plain old discrimination against workers for being female still exists, it’s not hard to find. Research suggests that if you are female, requesting a pay rise is more likely to have a negative impact on how you are perceived. You might have the best qualifications for a role, but if you’re not male, it might not be qualifications they’re after. As Cordelia Fine explains in Delusions of Gender, employers aren’t always conscious of discriminating and employees don’t always know they’re experiencing discrimination. It doesn’t mean it doesn’t exist, but if you blame its effects on the indisputable fact that some women bear children, you can make it appear invisible. 

But even if the gender pay gap were all down to the expectations we place on women when they become mothers, is three years long enough to sort the whole thing out? Because young couples, that’s all you’re being given. Three years in which to overcome the prejudice and guilt-mongering of employers, friends and relatives, in which to ignore the prod-prodding of the “Mum’s gone to Iceland” culture that surrounds you, in which to put your own financial priorities on hold in the name of the greater good that is economically prudent equality. New flexible leave laws come into effect in 2015 and then, says Clegg:

The next stage will be assessing if couples are using this new freedom. So flexible leave will be reviewed in the first few years, by 2018, and extending paternity leave will be looked at as part of that.

I’d imagine that whatever happens we still won’t be able to afford/prioritise extended paternity leave by 2018. But by that time we’ll know it doesn’t matter anyhow. The only couples who are interested in shared parenting are eccentrics such as me and my partner and those who can actually afford childcare which fits around their shift patterns. The rest of humankind will have proven once and for all that unpaid work is women’s work and that that’s what nature intended.

I’ll be honest, though. If I were to have another child, I am sure that my partner and I would want to make use of this new leave structure. I’d have a few months of being typically socially inept at baby group before heading back to the office with my trusty electric pump (which, if you’re sleep-deprived enough, appears to wheeze out the theme to Byker Grove while you’re expressing). I’d make use of the new legislation, but the fact is, ungrateful sod that I am, I’d just get on with it. I don’t see myself standing at the photocopier, breast pads ruining the cut of my work shirt, thinking “thank you, Nick! Thank you for allowing me to help men like you sort out the economy!”. The truth is, I value my job but I also value equality, not for “a stronger economy” but for its own sake. You might think that’s the only way you can sell it but alas, when you unpick the rhetoric, you’re not selling us equality at all.

Samantha Cameron works two days a week but admits to “spending a lot of time thinking about work on her days off”. Photograph: Getty Images

Glosswitch is a feminist mother of three who works in publishing.

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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?