Danger to the nation?

Two years ago, the FBI added a religious eccentric to its list of America's top criminals. The hypoc

Back in 1950, J Edgar Hoover began the FBI's legendary practice of issuing a "Ten Most Wanted Fugitives" list. Posters of dangerous criminals such as serial murderers, rapists and drug warlords were distributed to post offices, and television shows such as America's Most Wanted shot to the top of the ratings. Americans loved playing detective, but only 150 of the most wanted have ever been arrested as a result of assistance from the public. By far the biggest name on the current list is Osama Bin Laden, who has a $25m ransom on his head and (the FBI helpfully tells us) "should be considered armed and dangerous".

What, then, was 50-year-old Warren Steed Jeffs doing on the list two years ago? Like Bin Laden, he was also considered "armed and dangerous" and, we were told, "may travel with a number of loyal and armed bodyguards". Such dramatic warnings were worthy of Hoover himself, but in the event, the former private schoolteacher and accountant was led away with the minimum of fuss in 2006 after cops stopped his Cadillac Escalade on Interstate 15, north of Las Vegas, because its number plates were not visible. They found they had landed a supposedly very big fish indeed.

Let us now fast forward two years, however. Last month, Jeffs was flown to hospital by helicopter suffering convulsions because he had repeatedly banged his head against the walls of his prison cell. He had also tried to hang himself, and developed festering sores on his knees after days of praying non-stop in solitary confinement in Utah's Purgatory Correctional Facility.

Yet, almost certainly uniquely in Hoover's 58-year-old Most Wanted programme, Jeffs was never accused of killing or hurting anyone himself, of stealing, drug-running or arms-running, or of personally committing any violent crime. He became one of America's top ten most wanted fugitives for one overriding reason: he sought the freedom to practise his religion the way he wanted, but discovered instead that there was a catastrophic irreconcilability between the traditions of his church and the law.

Before we go any further, I should say that from everything I have learned about Jeffs, he is neither a pleasant man nor a religious martyr. He is an avowed racist, for example. He was leader until last year of the Fundamentalist Church of Jesus Christ of Latter Day Saints (FLDS), one of the three main sects that broke away from the Mormon church when it publicly disavowed polygamy in 1890. He and the three groups' estimated 37,000 followers believe "plural marriages" are essential prerequisites for entry to the "Celestial Kingdom", heaven's holiest enclave. He succeeded his father, who died in 2002 and had 19 or 20 wives, with whom he sired at least 60 children.

Hypocrisy

Four years ago, the younger Jeffs acquired 1,700 acres of scrubland 170 miles north of San Antonio, Texas, to house 700 of his followers who were fleeing increasing scrutiny from the media, police, and anti-polygamy groups in Utah and Arizona. He named the ranch "Yearning for Zion". As well as a gleaming 80ft white temple, the ranch had log cabins, a medical centre, a cheese factory, a rock quarry and a water-treatment plant. The reference to Zion indicated the sect's profound fundamentalism: they said they were following the Old Testament examples of Abraham and his three wives, Jacob with his four and David with his seven (at least).

Here we come to the rub. Only Jeffs, as "President and Prophet, Seer and Revelator" of the FLDS, could sanction marriage among members. In 2002, he arranged the marriage in Utah of a 14-year-old girl to her 19-year-old cousin - and it was this that landed him on the Most Wanted list. By facilitating a sexual liaison involving an underage girl, he was charged with "accomplice rape" and, for good measure, incest.

Last November he was found guilty on all counts and sentenced to prison for two consecutive terms of five years to life. The state of Arizona then moved in, charging him with eight more sexual offences against minors and incest - again, as "an accomplice". He reportedly had a nervous breakdown in jail before resigning as spiritual leader of the church last November. In decades, when Utah and Arizona have finished with him, Jeffs will face yet more charges in Texas.

The notoriety the FBI had needlessly afforded this rather inconsequential oddball, however, has already had further tragic consequences. Last spring, a disturbed 33-year-old woman, who had no connection with the Mormon church or any of its breakaway branches - and who, like many people who lived in the area, disliked and mistrusted the "weirdos" who lived at the Yearning for Zion ranch - made a series of anonymous phone calls in which she claimed to be a 16-year-old girl inside the ranch who was being physically abused by her 50-year-old husband.

That was enough for Texas's finest, who also resented the polygamists' presence in their midst. In scenes chillingly reminiscent of the fiery massacre exactly 15 years before of the Branch Davidian sect in Waco, Texas - in which 54 adults and 21 children were killed - Texan police duly assembled automatic weapons, Swat teams, snipers, helicopters, and even a tank to launch an assault on the ranch and rescue the non-existent 16-year-old girl. "Law enforcement is preparing for the worst," a spokeswoman grimly told a local newspaper. Last April state troopers finally moved in.

Luckily, FLDS members did not put up a fight in the way the Branch Davidians had done. Police, with the (on this occasion) inaptly named Texas Child Protective Services, were easily able to break into the temple - considered highly sacred to church members, and into which outsiders were not allowed - where the fictitious 16-year-old girl had supposedly sought refuge. Not surprisingly, they did not find her.

Meanwhile, though, hundreds of children on the ranch were being wrenched forcibly from their parents. Busload after busload of mothers and suddenly parentless, crying, traumatised children - 250 girls and 213 boys by the most authoritative count - were driven away under armed escort to Fort Concho, a military facility with inadequate food, lavatories or bathing facilities, and little privacy for people to whom modesty was a basic dignity. Mothers in the group were forbidden even from waving to each other across halls.

Then the entire group of detainees was bussed to a new home, a small sports stadium called the San Angelo Coliseum, where there was an outbreak of chicken pox among the children. Others were subjected to medical tests against their will, including the taking of DNA samples. The authorities announced triumphantly that 31 of 53 girls aged between 14 and 17 were either pregnant or already mothers. In this febrile atmosphere, 400 lawyers descended voluntarily on the court to offer to represent the children. The local newspaper in Eldorado, the tiny town nearest the ranch, put up a sign saying simply, "No interviews. Violators will be shot. Survivors will be prosecuted."

It took six weeks for an appeals court in Texas to halt all this nonsense and bring everybody to their senses. In a blistering rebuke of Judge Barbara Walther, it said that the court which first heard the case "abused its discretion in failing to return the children" because the Texas authorities had failed to produce evidence to justify what they did. They "did not present any evidence of danger to the physical health and safety of any male children or any female children who had not reached puberty". A week later, the Texas Supreme Court ruled that all the children must be returned to the Yearning for Zion ranch.

The tragedy of the whole terrible episode is that the deeply unappealing Jeffs and his philosophies actually mirror the mores of his society far more than all the frothing indignation suggests. In the states of South Carolina, North Carolina and Kansas, for example, it was legal for older males to marry 12-year-old girls as recently as the past decade.

David Henkel, a pro-polygamy campaigner who estimates that there are 100,000 polygamists in the US - Jews, Christians, and many Muslims among them, besides rebel Mor mons - senses profound hypocrisy: "Someone like a Hugh Hefner will have a television show with three live-in girlfriends and that's all OK," he says. "But if that man was to marry them, then suddenly he's a criminal. That's insane."

Part of the indignation has been fostered by politicians such as 68-year-old Senator Harry Reid, current Democratic leader of the senate, and former Massachusetts governor Mitt Romney, the 2008 Republican presidential aspirant and still a strong contender to be John McCain's vice-presidential running mate. Reid, backing calls for the creation of a department of justice task force to combat polygamy, told the senate judiciary committee three weeks ago that polygamist sects are "a form of organised crime". What I did not see reported is that Reid himself is one of America's 5.8 million conventional Mormons who are bitterly opposed to the breakaway groups, as is Romney.

The upshot of this whole terrible mess is that the pitiful Jeffs, wanted man number 482 in Hoover's lists, will now rot in jail. Studies have shown that arranged marriages tend to have much the same success rate as conventional ones - although the 14-year-old girl whose marriage Jeffs originally sanctioned is now married to another man.

Heaven knows what lasting psychological traumas were inflicted on the 463 innocent children who were kidnapped from the ranch, or on their parents. Religious zeal had collided irrevocably with the law; few of us, after all, are anything but vehemently opposed to underage girls being forced into marriage or incest. But was it really necessary to make Warren Steed Jeffs one of America's Ten Most Wanted Fugitives? Or did it just seem like a good attention-seeking gimmick at the time, perhaps? Eerily, somehow, the ghost of J Edgar Hoover and all the harm he inflicted on America lives on in 2008.

Andrew Stephen was appointed US Editor of the New Statesman in 2001, having been its Washington correspondent and weekly columnist since 1998. He is a regular contributor to BBC news programs and to The Sunday Times Magazine. He has also written for a variety of US newspapers including The New York Times Op-Ed pages. He came to the US in 1989 to be Washington Bureau Chief of The Observer and in 1992 was made Foreign Correspondent of the Year by the American Overseas Press Club for his coverage.

This article first appeared in the 11 August 2008 issue of the New Statesman, Spies for hire

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt