We should celebrate the rise of mixed race Britain

One generation’s social problem has become the next generation’s proud family history.

“Mixed race? What’s all this mixed race nonsense? If you’re not white, you’re black.” That old point was jovially roared at me with some emphasis by one of this country’s leading public raconteurs on race and racism, shortly after we had been discussing a small storm in a tea cup, which the 24 hour news cycle had turned into a “race row”.

The conversation continued:

“But I’ve never thought I was black. Shouldn’t it be up to me to decide?”

“What are you then?”

“British. And English. My parents are from India and Ireland, so I am half-Asian and mixed race as well.”

“British? Why don’t you call yourself Indian? Are you ashamed of your father, boy?”

That seemed odd. I am not ashamed of my mother either, but I don’t see how it makes me Irish.

I do think of myself as “mixed race” – though perhaps more as a descriptive census term than as a particularly strong source of
identification.

So I was one of a million people who did tick the “mixed” box on the census, as about half of those with ethnically mixed parentage do. But the fact of “mixed” heritage doesn’t in itself seem as contentful as having some Indian and Irish family links. I am much more likely to mention the connection to somebody from Gujarat or County Cork, where my parents came from, than to look for the shared sense of “mixedness” with somebody with, say, French and Jamaican parents.

Maybe having a mixed background was always likely to predispose me to being sceptical about “community of communities” forms of multiculturalism, which always seemed to me to offer identity boxes too narrow for many people to fit into. Though there seem to be more census options every time, the boxes never quite seem to work. This time, I could tick “Asian/white” – but with no chance to acknowledge my Irish roots at all, which is an option for those who choose the “white” box first, and so write out the Indian part of the story.

More happily, I never did find community leaders claiming to speak out in my name for the Anglo-Irish-Indian community, but I never missed them. There has long been a growing revolt against that form of “gatekeeper” politics, often particularly strongly voiced by second and third generation Brits under thirty. Of course, a society that divides itself along tribal lines won’t appeal to those who wouldn’t have a tribe if it happened, but it isn’t something most people want anyway.

This latest census will see the rise of mixed Britain celebrated, as it was in George Alagiah’s often moving BBC documentary series – the story of how one generation’s social problem became the next generation’s proud family history. The fear of difference was trumped by lived experience, of life, and love, and loss – because the social “problem” of mixing, and the alleged clash of identities, was always agonised over more by those who were not mixed race. Surely everybody’s usual self is an unusual self, as Rita Tushingham’s character declared in A Taste of Honey.

If the fact of mixing is the good news about integration, the term “mixed race” feels pretty tired. It is not as ugly as “half caste” – still widely used as a descriptive term a generation ago – but it shares its roots in the fear of miscegenation.

A so-called mixed marriage was a controversial issue when my parents got married. Neither of their families turned up to bless the union. My grandfather had been trying to persuade my dad to return to India, offering to arrange a marriage for him. But he wanted to make his own choices. But nobody batted an eyelid when Stacy and I got married in Essex in 2001. She doesn’t see her own Irish-English parentage as being an ethnic “mix”. And the idea that I am in a “mixed race relationship” seems a pretty trivial truth. After all, if it would be true of any possible relationship that I could form with anybody white, black, Asian or indeed mixed too – even if I had married somebody else with Indian-Irish parentage, wouldn’t it still be the case? – then it is perhaps a meaningless statement.

Are our children “mixed race”? They certainly could be, if they want to be. I guess we had to tick census boxes for them too. Maybe I should have left the space blank. I feel that I should wait, and ask Zarina and Jay, Sonny and Indira, all under seven right now, what they think, when they are fifteen years old, before I pronounce on their identity or ethnicity for them. Their family history enables them to stake their claim to be mixed race – in pretty much the same way that Sebastian Coe could. They too have one Indian and one white English grandfather, though they can also call on two Irish grandmothers, one on each side of the family.

I want to respect the choices they decide to make. If I were to try to influence them at all, I hope it may just be by showing them that there are a million – probably two million now – different ways to be mixed race in Britain, sometimes claiming the label and sometimes not, and more than five million ways to be non-white, because there are sixty million ways to be British. There are, as it happens, tens of millions of ways to be white, to be English, and many more ways to be “white working-class” too than the media caricatures admit.

So being mixed race matters a lot to Ryan Giggs – “it’s your roots. It’s who you are, it’s what you are” – while it seems more of a simple matter of fact to Jessica Ennis. Others, like Daley Thompson, actively reject the labels which others ascribe to them, while Giggs must choose to declare if he wants it to be known.

My fourteen year old self used to have various sarcastic lines for those ignorant of the difference between India and Pakistan, though it’s twenty years now since anybody called me a “paki” in my earshot. But it didn’t feel to me, growing up in the 1980s, that racial identity could be as much a question of choice as a matter of fact.

So it is fascinating that, by 2020, that may well be how it seems to my children.

That is only a threat to those whose views of race depends on telling everybody else how to think about who they are.

So I will raise two cheers for the rise of mixed Britain. I guess I’m proud to be a mongrel Brit, but the motley tribe that I want to be part of is the one that everybody can share.

Sunder Katwala is the director of British Future.

British Future's new report "The melting pot generation: how Britain became more relaxed on race" was published today.

British Olympic heptathlon gold medalist Jessica Ennis. Photograph: Getty Images.

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.

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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?