Analogue age: an American couple read a newspaper at home in the 1950s. Photo: Getty
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Newspapers can make you look classy and stylish. What could be more perfect for a vintage revival?

Ditch the tablet and rediscover a love for print.

New technology does not always signal the death of the old. The rubbish dies; the good stuff receives a bounce from nostalgia. Pick up a style magazine, flick through the ads: you’ll notice how many of them are selling you a version of tradition. And it works. I write this wearing “vintage” jeans and a “vintage” shirt. I’m sitting on a mid-century chair. When the sun shines, I wear “vintage” sunglasses.

But none of these things is actually old. They all rely on new technologies; something of the essence survives, recast for a more demanding market. My shirt echoes the style of old-fashioned workwear but it is suspiciously soft. The sunglasses were produced by a company that has made eyewear in New York since the 1870s but mine are made with super-light acetate, not glass. They are authentic but not entirely authentic. And that’s a good thing. We like to indulge nostalgia in improved comfort.

That is the vintage sweet spot. My favourite (fairly) recent pop song, Gotye’s “Somebody That I Used to Know”, pulls off the same trick. The title line, very here and now, captures what people say about previous lovers whom they’d rather not talk about. But then we step back in time – “Have your friends collect your records” – as though we were living in Greenwich Village in the 1960s. After all, who wants a song about cancelling an ex-partner’s Spotify account?

Whenever something intrinsically cool loses its way, a vintage counterculture is just around the corner. So a technology on the wrong side of history can very quickly find itself on the right side of fashion. There are three preconditions for a vintage revival: a glamorous past, an uncertain present and a commitment to higher standards in the face of newer, cheaper means of production.

So how about a vintage newspaper? What could be more perfect for a vintage revival than newsprint? Something that retains the spirit of newspapers – the swagger of a disposable luxury – but without all the stuff that makes them seem directed at other people (or at parts of our own characters that we aren’t proud of).

The word “aspirational” often has negative connotations; it has become a subtler way of saying “social climbing”. But aspiration can be a hook to gain our attention, which, once captured, can be diverted to higher things. Paolo Sorrentino’s film The Great Beauty secured my attention with its lavish, unapologetic celebration of Italian style but it left me considering a writer’s life and its wrong turnings.

In the 1912 novella The Unbearable Bassington, Saki presents the case that even religion relies on an aura of aspiration: “Once let the idea get about that the Christian Church is rather more exclusive than the Lawn at Ascot, and you would have a quickening of religious life such as this generation has never witnessed. But as long as the clergy . . . advertise their creed on the lines of ‘Everybody ought to believe in us: millions do’, one can expect nothing but indifference and waning faith.”

I can’t follow my own logic to such unblinkingly cynical limits but the newspaper and magazine industries back up Saki’s broader argument. At the top end of the market, the titles that have survived or bucked the downturn in print sales have one thing in common: they are confident and aspirational. Whether it is economic, social, intellectual, aesthetic or even moral aspiration – I will leave you to apply the appropriate adjectives to the Financial Times, the New Yorker, Monocle, the Economist and the New Statesman – they all talk up, whatever the language, rather than down.

True connoisseurs of demotic taste will always make the mass market work – but it is a congested market. Clothes retailers have long recognised that cheap modern technology makes the middle ground almost untenable: you’ve got to be right at the top or shifting a lot of stuff at the bottom. Look confused while stuck in the middle and you’re doomed.

Of the titles I listed, only one takes an old-fashioned newspaper form and, from Monday to Friday, it is dominated by business. What about non-business folk? Is there not a niche for an elegant, long-form newspaper written by people who would want to read something similar themselves? A publisher in Australia thinks so. The Saturday Paper has just launched; it is a pared-down 32-page weekly paper, with fewer articles, pitched higher. Let the internet be the internet; we do things differently around here.

It is a mistake to think of substance and style as being in opposition. Most of us can take a lot more substance when it is stylish. Newspapers should ditch the focus groups and read more Garrison Keillor. Here he is in 2007, despairing of people in cafés plugged in to laptops with headphones: “It is so lumpen, so sad that nobody has shown them that opening up a newspaper is the key to looking classy and smart. Never mind the bronze-plated stuff about the role of the press in a democracy – a newspaper, kiddo, is about style. Whether you’re sitting or standing, indoors or out, leaning against a hitching post or planting your brogans on a desk, a newspaper gives you a whole rich vocabulary of gesture.” True, but it’s so much harder when the front cover says: “Collect tomorrow’s coupon for a free latte at Costa.”

Industries do not travel in a monolithic block. There are always counter-rhythms. Everything I’ve written about newspapers also applies to another struggling pastime: Test cricket. Far from aping Twenty20 vulgarity, it should run the other way. The way to make Test cricket relevant is to park it so deeply in remembered time that we pine for its nostalgia.

Reading a vintage newspaper while attending a vintage Test match: heaven. 

Ed Smith’s latest book is “Luck: a Fresh Look at Fortune” (Bloomsbury, £8.99)

Ed Smith is a journalist and author, most recently of Luck. He is a former professional cricketer and played for both Middlesex and England.

This article first appeared in the 10 April 2014 issue of the New Statesman, Tech Issue

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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?