For the sake of democracy, we need to get the young voting again. Here's how

Votes at 16; students registered by and at their place of study; a polling booth in every school, college and university. All of these reforms would help instil the voting habit.

Back to Greece: the scope for direct democracy by Andrew Adonis and Demos’s first director Geoff Mulgan was one of the organisation’s first pamphlets on the political process itself. It diagnosed an ailing democracy. Twenty years later, the patient hasn’t recovered – perhaps because the original diagnosis was, in retrospect, fundamentally mistaken. Instead of idealistic new forms of participation, the priority should be practical reforms to strengthen the basic foundation of democracy: the mass franchise.

What was written back then is substantially true today:

Modern government is exclusive and elitist. It... encourages political elites to trade simplistic, cut-and-dried solutions to problems as the currency of electoral politics. Political alienation and ignorance are systemic. But neither feature is new to the 1980s or 1990s, however stark they seem today. They have gone hand-in-hand with representative government; only their form, and the capacity to do anything to overcome them, have changed over the decades

In key respects, the patient has deteriorated. Voter engagement has been far lower post-1994 than it was pre-1994. In the 14 UK general elections between 1945 and 1992, the average turnout was 77 per cent. In 2001, turnout dropped below 60 per cent for the first time and in 2010 was still below two-thirds of the electorate. In the 4 general elections between 1997 and 2010, turnout averaged 64 per cent.

This 13-point drop in turnout between 1992 and 2010 has not been uniformly distributed across the electorate. What is most striking are the huge increases in the turnout gaps between different demographic groups. For example, the gap between AB turnout (managers and professionals) and DE turnout (unskilled and manual workers) has increased from 6 points in 1992 to 19 points in 2010.

As for age, whilst the turnout among over 65s has dropped from 83 per cent to 76 per cent, among 18-24 year olds it has fallen from 63 per cent to just 44 per cent. The ‘age gap’ of 20 points has become a 32-point chasm and there seems no prospect of recovery in the near future. The Hansard Society reports that, in 2013, ‘just 12 per cent of 18-24 year olds now say they are certain to vote. This is a 10 percentage point fall in the last year, and a decline from the 30 per cent recorded in [2011].’ This compares with 59 per cent (down from 72 per cent two years ago) of over-55s reporting that they are certain to vote in a general election. No wonder cuts in pensioner benefits are off the table whilst young people are increasingly expected to pick up the tab.

Turnout in local elections, which has always been lower than in general elections, has also declined. Average turnout in the 1940s was 45 per cent. In the 1980s it was still above 40 per cent. In the 2000s it fell to 36 per cent and in 2012 it dropped below a third of the electorate to just 31 per cent. Young adults barely vote or engage in local politics and there are very few young councillors. In 2012, Leeds had more councillors over the age of 75 than under the age of 35.

Mistaken diagnosis

The 1994 Adonis/Mulgan diagnosis was partly rooted in rational choice theory. James Fishkin and Anthony Downs were cited for their work on the ‘rational ignorance’ of ordinary citizens. Voters have no reason to find out about issues if their opinion will never be asked for. Downs went as far as to say that it is largely irrational to vote at all given the high costs – registration, travel, time etc – and the low probability of one’s vote making a difference to the result.

Yet most of the adult population does vote in general elections. This is what Morris Fiorina called ‘the paradox that ate rational choice theory.’ As James Fowler puts it:

Unless we assume collateral benefits like the rewarding feeling of doing one’s civic duty, rational choice models yield predictions that are at odds with the reality that millions of people vote in large elections... [and] a substantial literature that indicates most people are habitual voters.

‘Back to Greece’ simply took it for granted that general election turnout in excess of 70 per cent would continue. Rather than tackle the fundamentals of voter engagement in existing national and local elections, the Adonis/Mulgan recommendations on ‘informed participation’ sought to move up the escalator of democratic participation. In retrospect this was overambitious.

There were three specific suggestions:

·         Voter Juries
‘These national juries – perhaps held once or twice a year – would examine issues of major public interest or controversy... Each jury would consist of about 20 randomly selected adults. Each would last for one week with the aim or reaching verdicts on specific questions raised by the issues under consideration. Their verdicts would have no constitutional force, although we would expect them – and summaries of their discussions – to attract wide public attention.’

·         Voter Vetoes
‘The Voter Veto would introduce the advisory referendum into Britain for use in the specific case of legislation passed by parliament, or a decision made by a local council. At national level, if 1m voters – more than 2 per cent of the electorate – signed a petition for a referendum to be called, a poll would be held on the issue on the local election day in May following, and the legislation – or decision – would not be implemented pending the result. The outcome of the referendums would be advisory; parliament and councils would be free to refuse to modify their earlier decisions in the face of an adverse referendum majority if they so resolved, provided they formally considered the result before so doing.’

·         Voter Feedback
‘Our third suggestion is to draw on the many experiences from around the world in using new electronic communications to engage citizens in decisions.’

It is obviously essential to deploy new social and communications media to the cause of politics and government. The proliferation of media and – crucially – user-generated content has revolutionised traditional media industries and (to a lesser extent) the ways in which the electorate participate in democratic debate. But the shortcomings of the other two recommendations are stark in hindsight.

The idea that a state-led television series called ‘Voter Juries’ would get more than a handful of viewers, and command any special legitimacy, is risible. As for referendums, if basic voter turnout in general and local elections is so low, it is hard to argue that the solution is yet more voting with ever diminishing turnout. Furthermore, the 2 per cent hurdle virtually guarantees that many referendum issues – national and local – would be of passionate concern to only a tiny minority of the electorate.

‘Back to Greece’ also recognised that ‘until cable and other technologies reach near-100 per cent penetration they will not be legitimate as voting mechanisms.’ Two decades on, they still haven’t. Even the greater use of postal voting has given rise to increased concern about fraud.

Vote early, vote often

The key imperative for democratic reformers should therefore be to reinvigorate the mass franchise and stimulate greater turnout in national and local elections. Without this representative democracy could start to lose its legitimacy. It is vital that voting starts young, both to represent the young and also to instil the ‘voting habit’.

There is a significant body of academic evidence to show that casting one’s ballot on election day is habitual. As Donald Green and Ron Shachar put it:

If two people whose psychological propensities to vote are identical should happen to make different choices about whether to go to the polls on election day, these behaviours will alter their likelihoods of voting in the next election. In other words, holding pre-existing individual and environmental attributes constant, merely going to the polls increases one’s chance of returning.

Another study by Kevin Denny and Orla Doyle, concludes that ‘voting in one election increases the probability of voting in a subsequent election by 13 per cent.’ This number is brought down from an astonishing 26 per cent on the basis that some of their sample will have established a habit before the start of their data set and that ‘it is critical that one allows for the fact that politicization starts before the voting age and has long-lasting consequences for political behaviour.’ This suggests that the earliest voting choices have the biggest impact.

First time voting by teenagers and young adults is clearly critical to habit formation thereafter. The question is how to get young people to vote in far larger numbers. A combination of citizenship education, a voting age reduced to 16, and locating the first vote in a young person’s school or college seem the most promising options.

Not ‘back to Greece’ but ‘back to the ballot box’

Eric Plutzer writes of the voting habit:

As young citizens confront their first election, all of the costs of voting are magnified: they have never gone through the process of registration, may not know the location of their polling place, and may not have yet developed an understanding of party differences and key issues. Moreover, their peer group consists almost entirely of other non-voters: their friends cannot assure them that voting has been easy, enjoyable, or satisfying. Young people also lack many of the resources that can promote participation. Because they have little disposable income, they are not attractive targets for parties seeking campaign contributions or for interest groups mounting direct mail campaigns. Few of them own homes, have stakes in community politics, or have completed college. Thus it is not surprising that... their turnout is relatively low.

Votes at 16; students registered by and at their place of study; a polling booth in every school, college and university; preparation for voting being a key part of citizenship education – these simple reforms address most of Plutzer’s points. If they were implemented, virtually all 16-18 year olds, and about half of all 18 to 22 year olds (i.e. those at university or full-time college), would be registered at their place of study and cast their first votes there. Voting en masse would reduce many of the psychological barriers for young people approaching their first vote. It would be a group activity for young people and an expectation within their educational institution. Citizenship education (introduced into English schools in 2002) would then lead naturally to voting; mock elections would lead to real elections, just as mock exams lead to real exams; and local candidates and parties would treat schools, and their voters, with a degree of attention and seriousness largely lacking at present.

These reforms should apply not only for national elections but also for local elections, where the issues (such as local transport and amenities) are of vital concern to young people. They would also encourage the political parties to recruit more young members, and to stand young candidates – including students – for council elections in particular.

Green and Shachar conclude that if you manage to ‘lure someone to the voting booth, and you will raise his or her propensity to vote in a future election.’ Better still, bring the voting booth to the voter.

As for citizenship education, developmental psychologist Judith Torney-Purta, states that:

Schools achieve the best results in fostering civic engagement when they rigorously teach civic content and skills, ensure an open classroom climate for discussing issues, emphasize the importance of the electoral process, and encourage a participative school culture.

What better way to achieve this than to do it for real, with a vote at the end of the process?

England’s elite have always understood the importance of starting young. When Old Etonian, Jesse Norman, was asked why David Cameron was surrounded in his government by so many other Old Etonians, he replied:

Other schools don't have the same commitment to public service. They do other things. It's one of the few schools where the pupils really do run vast chunks of the school themselves. So they don't defer in quite the same way, they do think there's the possibility of making change through their own actions... Things like rhetoric and poetry and public speaking and performance are incredibly important to young people succeeding in life.

Indeed so. The imperative is not ‘back to Greece’ but ‘back to the ballot box’.

This essay is taken from the new Demos collection Twenty Years of Ideas, launched to celebrate its 20th birthday

Andrew Adonis is former Secretary of State for Transport and Minister for Schools. He is the author of the recently published 5 Days In May: The Coalition and Beyond and Education, Education, Education

Adam Tyndall is a researcher for Andrew Adonis

A mock ballot box to encourage people to vote in the Bristol mayoral election. Photograph: Getty Images.

Andrew Adonis is shadow infrastructure minister and the former transport secretary

Adam Tyndall is the co-founder of the China-Britain Youth Association and the India-Britain Youth Association

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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?