Announcing the New Statesman Centenary Issue

We celebrate 100 years with the largest single issue of the magazine in its history.

The New Statesman, founded in 1913, will mark its centenary with a 180-page souvenir issue, to be published on Thursday 11 April. It will be the largest single issue in the magazine’s history. The centenary edition will include contributions from leading writers and political figures, including Julian Barnes, A S Byatt, David Hare, Mark Mazower, Melvyn Bragg, Michael Gove, David Miliband and Robert Skidelsky. There will also be a number of yet-to-be-announced guest writers and reprints of classic articles by T S Eliot, Virginia Woolf, George Orwell and others.

Under the award-winning editorship of Jason Cowley, who joined at the end of 2008, the title has been revitalised, thanks to a stable of talented writers, a series of agenda-setting scoops and notable guest-edits by Jemima Khan, Richard Dawkins, Rowan Williams and the Chinese dissident artist Ai Weiwei.

Among the scoops that have helped to transform the profile of the New Statesman are: Hugh Grant’s hugely popular article “The bugger, bugged”, which turned the tables on a former News of the World journalist; the controversial attack on the austerity policies of the coalition government by the then Archbishop of Canterbury, Rowan Williams, which led to a rift between Downing Street and Lambeth Palace; Vince Cable’s recent intervention on the government’s economic strategy; Jemima Khan’s denunciation of Julian Assange; and the discovery and publication of “Last Letter”, a poem by Ted Hughes about the night his then wife, Sylvia Plath, committed suicide.

Boosted by Kindle and digital subscriptions, the circulation of the magazine is approaching 30,000. Meanwhile, newstatesman.com has had a 300 per cent increase in traffic since 2009. It is now the country’s biggest politics website, with 1.4 million unique visitors and 3.6 million page views during this March alone – exceptional numbers for such a small team. The first episode of a weekly New Statesman podcast went out this week and a new iPad app for the magazine will go live in May.

“A great magazine with the status of a national treasure.”

– Richard Dawkins

 

“The New Statesman distinguishes itself not just by the quality of its writing and the thoughtfulness of its content but by the breadth of its editorial mind - something from which other publications of both left and right can learn much.”

- Simon Heffer, the Daily Mail

 

“A great magazine...grab hold of a copy.”

– Russell Brand

 

“Under its current editorial team, the New Statesman is the best it’s been in my lifetime . . . sharp and interesting and valid.”

– Daniel Finkelstein, the Times

 

“The NS has become a consistent home for important points of view ignored by other media - and therefore plays a crucial role in the moral and intellectual health of the nation.”

– Alain de Botton

 

“The new New Statesman is thoughtful and surprising. Britain needs fresh progressive thinking and debate, and the NS is generating it.”

- David Milliband

Jason Cowley said:

The New Statesman is no longer on life support and is returning to robust health. I’m confident that it is now the best written and most intellectually stimulating magazine in Britain. We have rethought it and relaunched the website. We have broadened our political range and collaborated with some interesting and unexpected people. We have drawn influence from our Fabian tradition but also from Keynesian Liberalism – it is often forgotten that in 1931 the New Statesman merged with the Nation, the old voice of Bloomsbury social liberalism. 

The centenary issue will be full of great journalism and cultural criticism in the best tradition of the magazine. We will be looking back but we’ll also be asking what the next 100 years might bring in politics, public life and culture. Whatever that is, we are now confident that the New Statesman will be here to engage with it, online and on paper.”

Centenary celebrations began on 4 April with a sold-out debate on the future of feminism, chaired by our web editor, Caroline Crampton, and featuring the New Statesman’s crack squad of feminist bloggers. On 18 April, editor Jason Cowley will chair a second debate with the motion “This house believes the left won the 20th century”, in which the Daily Mail’s Simon Heffer, the Huffington Post’s Mehdi Hasan and the New Statesman’s deputy editor, Helen Lewis, will be pitted against ConservativeHome’s Tim Montgomerie, the Independent columnist Owen Jones and Ruth Porter of the Institute of Economic Affairs.

The New Statesman Century, a 300-page special issue of the magazine showcasing the most incisive, influential and amusing articles from the New Statesman archive, will be published in the summer. A book will follow.

In this centenary year, the New Statesman will also be working with Jeremy Vine’s BBC Radio 2 programme on a series featuring some of the leading thinkers and writers of our time. From 29 April and continuing every week into the summer, Jonathan Sachs, Brian May, David Puttnam, Stephen Hawking, Mary Robinson, Susan Greenfield, Alain de Botton and others will attempt to answer the most fundamental question of all: “What makes us human?” Their essays will be read and discussed on Jeremy Vine’s radio show and published in the New Statesman.

The New Statesman was founded on the eve of the First World War by the social reformers and economists Beatrice and Sidney Webb, with support from George Bernard Shaw and other members of the Fabian Society. From defying Fascism under long-standing editor Kingsley Martin, to kicking off the Campaign for Nuclear Disarmament, as well as arguing for women’s, LGBT rights and constitutional reform, the magazine has backed many radical causes over the years, in spite of libel costs and funding difficulties which resulted in near bankruptcy in the 1990s.

Throughout its colourful history, the New Statesman has remained committed to publishing the best writers and journalists. The roll call of great political and cultural writers who have contributed to the magazine includes H G Wells, John Maynard Keynes, Bertrand Russell, Paul Johnson, Julian Barnes, Virginia Woolf, Christopher Hitchens, Will Self and John Gray. More recently, the magazine has been a platform for a new generation of talented journalists such as Laurie Penny, Mehdi Hasan and Helen Lewis.

The New Statesman Centenary Issue will be availble for purchase on newsstands and on our website from next Thursday, 11th April 2013.

Charlotte Simmonds is a writer and blogger living in London. She was formerly an editorial assistant at the New Statesman. You can follow her on Twitter @thesmallgalleon.

Getty
Show Hide image

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?