Osborne is failing on his own terms as deficit increases

The budget is floating on a raft of windfall revenues.

The latest borrowing figures for the public sector have been released, and they show that George Osborne continues to be not particularly good at achieving his stated aim of deficit reduction.

Public sector net borrowing — the accounting name for what is usually called the deficit — was £15.4bn in December 2012, £0.6bn higher than it was in December 2011. This still leaves the cumulative deficit for the financial year 2012/13 on target to be considerably lower than it was for the financial year 2011/12 (£78.5bn compared to last year's £99.3bn), but success of deficit reduction has been reduced again. That figure, however, takes into account the windfall revenue from the transfer of the Royal Mail pension scheme. Excluding that windfall, the deficit would be £7.2bn higher this cumulative year than last.

In addition, and crucially, the last quarter of financial year 2012/13 is expected to see the transfer of profits from the Bank of England's quantitative easing program and the proceeds of the 4G spectrum auction — both of which are subject to political controversy, and both of which are expected to lead to sizeable reductions in the 2012/13 deficit. The 4G auction led to upset around the time of the autumn statement, when the Chancellor brought forward the revenue from it in order to be able to claim to be reducing the deficit; while the transfer of QE profits was called by our economics editor David Blanchflower a "smash-and-grab" raid on the Bank of England (even if it may not have been that bad in hindsight). The ONS concludes:

the transfers from the BEAPFF [the QE transfer] will reduce [the deficit] by £11.5 billion… the sales of the 4G spectrum will reduce [the deficit] by £3.5 billion.

Both of those are also windfall revenue, in the classic sense: the chancellor can't claim any fiscal prudence by pointing to the revenue they raise, since they will come once and only once. (And the latter, at least, might well turn out to be fiscal imprudence, if the Treasury ends up having to pay back more than it appropriated.)

The failure to cut the deficit may not be a bad thing, of course. If the economy is suffering from a paucity of aggregate demand, then the government cutting spending as fast as it wanted to would be terrible. Even while the government has been slashing public services, its inability to promote even minimal growth has meant that automatic fiscal stabilisers — things like means-tested and out-of-work benefits — have caused the resultant deficit reduction to be minimal. Keynesians should thank George Osborne for being so ineffectual at achieving the goal he has staked his political career on. His own party might not be quite so forthcoming.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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I am special and I am worthless: inside the mind of a narcissist

There's been a lot of discussion about narcissists this week. But what does the term actually mean?

Since the rise of Donald Trump, the term “narcissistic” has been cropping up with great regularity in certain sections of the media, including the pages of this journal. I wouldn’t want to comment about an individual I’ve never met, but I thought it would be interesting to look at the troubling psychological health problem of narcissistic personality disorder (NPD).

People with NPD (which is estimated to affect about 1 per cent of the population) have a characteristic set of personality traits. First, they have a deeply held sense of specialness and entitlement. Male NPD sufferers frequently present as highly egotistical, with an unshakeable sense of their superiority and importance; female sufferers commonly present as eternal victims on whom the world repeatedly inflicts terrible injustices. In both cases, the affected person believes he or she is deserving of privileged treatment, and expects it as a right from those around them.

Second, NPD sufferers have little or no capacity for empathy, and usually relate to other people as objects (as opposed to thinking, feeling beings) whose sole function is to meet the narcissist’s need for special treatment and admiration – known as “supply”. In order to recruit supply, NPD sufferers become highly skilled at manipulating people’s perceptions of them, acting out what is called a “false self” – the glittering high achiever, the indefatigable do-gooder, the pitiable victim.

The third characteristic is termed “splitting”, where the world is experienced in terms of two rigid categories – either Good or Bad – with no areas of grey. As long as others are meeting the narcissist’s need for supply, they are Good, and they find themselves idealised and showered with reciprocal positive affirmation – a process called “love-bombing”. However, if someone criticises or questions the narcissist’s false self, that person becomes Bad, and is subjected to implacable hostility.

It is not known for certain what triggers the disorder. There is likely to be a genetic component, but in many cases early life experiences are the primary cause. Narcissism is a natural phase of child development (as the parents of many teenagers will testify) and its persistence as adult NPD frequently reflects chronic trauma during childhood. Paradoxically for a condition that often manifests as apparent egotism, all NPD sufferers have virtually non-existent self-esteem. This may arise from ongoing emotional neglect on the part of parents or caregivers, or from sustained psychological or sexual abuse.

The common factor is a failure in the development of a healthy sense of self-worth. It is likely that narcissism becomes entrenched as a defence against the deep-seated shame associated with these experiences of being unworthy and valueless.

When surrounded by supply, the NPD sufferer can anaesthetise this horrible sense of shame with the waves of positive regard washing over them. Equally, when another person destabilises that supply (by criticising or questioning the narcissist’s false self) this is highly threatening, and the NPD sufferer will go to practically any lengths to prevent a destabiliser adversely influencing other people’s perceptions of the narcissist.

One of the many tragic aspects of NPD is the invariable lack of insight. A narcissist’s experience of the world is essentially: “I am special; some people love me for this, and are Good; some people hate me for it, and are Bad.” If people with NPD do present to health services, it is usually because of the negative impacts Bad people are having on their life, rather than because they are able to recognise that they have a psychological health problem.

Far more commonly, health professionals end up helping those who have had the misfortune to enter into a supply relationship with an NPD sufferer. Narcissism is one of the most frequent factors in intimate partner and child abuse, as well as workplace bullying. The narcissist depends on the positive affirmation of others to neutralise their own sense of unworthiness. They use others to shore themselves up, and lash out at those who threaten this precarious balance. And they leave a trail of damaged people in their wake. 

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times