Tony Blair and Russell Brand are right: career politics must end

Both men recognise that politicians need to live, to experience the world, its hardships as well as its highs, before taking office.

At a Q&A at the Mile End Group earlier this week, Tony Blair was asked whether there was any hope that the Labour Party would one day be led by someone who was not a former special adviser.

He replied: "I think there is a general problem in politics, not just in our system but in Western democracy - I mean, it’s a far bigger topic this. But, I do think it's really important.

"You know, I advise any young person who wants to go into politics today: go and spend some time out of politics. Go and work for a community organization, a business, start your own business; do anything that isn't politics for at least several years. And then, when you come back into politics, you will find you are so much better able to see the world and how it functions properly."

Both Ed Miliband and David Cameron began their careers in Parliamentary circles soon after graduation: Miliband worked as a researcher at Channel 4 before joining Harriet Harman’s team, while Cameron started off at the Conservative Research Department until he went to advise John Major at 10 Downing Street.

On the face of it, Blair’s words appear to have nothing to do with Russell Brand’s guest editorship of the New Statesman, his appearance on Newsnight and the subsequent fallout. Yet Blair’s despair at the disconnection between politicians and the electorate - the former described by Brand as "frauds and liars" - gets to the heart of the latter's thinking, and offers a hint of a remedy that stops short of Brand’s revolutionary means.

Some argue that elevating Brand’s argument to that of serious political consideration is ludicrous given that, a, he is a comedian; and b, he does not vote. On the first point, Alex Massie, Nick Cohen and Tim Stanley fail to realise that comedians are some of the most observant and astute commentators on society the country has to offer. All three of the above used a typical "lamestream media" trick of belittling Brand, something infamously attempted by the Morning Joe crew: if you dress weird and talk in a Cockney accent, you ain’t got any right to talk about serious stuff. Massie described Brand as an "adolescent extremist", Cohen compared him to Miley Cryus, while Stanley decided he needed to talk a bit more "down-to-earth" to engage with the man from Grays, Essex: "Actually, Russell babes", began one of Stanley’s sentences. (NB: He would have got more Brand brownie points if he’d used a “z” at the end).

On the second point (that Brand does not vote and, therefore, should have no say), why should we ignore the growing proportion of the electorate that is disillusioned with politics? Thirty five per cent of Britons did not vote in 2010, so should we all ignore what they have to say, or rather try to engage with them and understand why Cameron, Brown and Clegg failed to entice them in 2010?

This brings me back to Blair and Brand’s similarities. Blair wants aspiring politicians to see the world first and then go into a career that can sort it out; Brand decries that "all of them lot" in power went to the same schools and followed the same path. It is this disconnect, between the career politician plus school pals and the vast majority of the electorate, that leads to the apathy that is at the heart of Brand’s essay. "Apathy is the biggest obstacle to change", is what he writes, as well as "Apathy is a rational system that no longer represents, hears or addresses the vast majority of people." And it is apathy which Massie and Stanley fail to address in their attacks on Brand. Both are content to attack him on his call for revolution. Rightly so. I don’t agree with Brand on the call to arms, but I agree with his eloquent description of the frustration of the electorate, which forms the heart of his astute observation of British politics.

Massie writes: "The more someone sneers about how stupid and venal and corrupt our MPs are the less likely it is that they know anything about an MP’s actual life and work". He says politicians work awfully hard, helping out their constituents at surgeries behind the scenes. No doubt that’s true. But that’s not what people are complaining about. How is it helpful for someone who has lost their disability benefits to go to their local MP, who is powerless in the face of the austerity juggernaut? Or for a pensioner to complain at surgery of rising energy bills in the face of corporate greed?

Massie thinks politicians are hard-working lovelies that want to see us all face to face and understand our problems. If that is so, argues Brand, why are the Tories taking the EU to court to stop it curtailing their banker pals’ bonuses? Cameron must have had a long queue of men from the City queuing up on the streets of Witney asking for some face to face time after the last election.

Brand is rightly criticised for his performance against Jeremy Paxman when he failed to describe how we solve this apathy. But he is a politically-aware comedian who has a talent at observation; he is not here to solve all our ills. Rather, the best part of the interview was when Brand leaned in and had Paxman silenced: "I remember I seen you in that programme, where you look at your ancestors, and you saw the way your grandmother were out to brass herself or got fucked over by the aristocrats who ran her gaff. You cried because you knew that it was unfair and unjust. And that was what? A century ago? That’s happening to people now."

Brand gets at what Blair is implying: politicians need to live, to experience the world, its hardships as well as its highs, rather than pal around with their mates in the corridors of Portcullis House waiting their turn at the table of the anointed. That’s why, as a believer in democracy, for all its failings, I’ve always admired the US system, which, despite its own problems, most plainly seen during the shutdown, has a capacity to better reflect its demographics.

I’ve argued before for primaries in this country, a sure way to allow career politicians to become a thing of the past and allow anyone to come to the fore and speak up for the people. Brand’s call for revolution and for the young to get out on the streets goes too far. If we simply allow a more inclusive grouping of people to be able to become our representatives, we can change the apathy than hangs over us. Brand says that "young people, poor people, not-rich people, most people do not give a fuck about politics." But I’m reminded of a friend of mine who actually did go out on the streets and did pound the pavements calling for change. The only thing is, she went over to Nevada to campaign for Obama. She had been a community organizer and had some life experience before she entered politics. My friend does not pound the streets for Cameron, Miliband or Clegg.

Massie and Stanley would not like this US primary-style inclusive system. Why? Because America’s system has allowed, shock horror, comedians to become lawmakers. Al Franken, the current junior senator from Minnesota, was formerly a writer and performer for the television show Saturday Night Live. Franken was a key voice during the healthcare debates and has sought more financial regulation. He has focused on core progressive principles, showing people that comedians can be substantial.

Can you imagine Brand, that "adolescent extremist", entering Parliament, or attempting to keep quiet during Prime Minister’s Questions, or debating Osborne across the dispatch box? Actually, I can, even if he can’t and won’t.

Tony Blair speaks at the opening ceremony to the fifth annual 'Climate Week NYC' on September 23, 2013 in New York City. Photograph: Getty Images.

Kiran Moodley is a freelance journalist at CNBC who has written for GQ, the Atlantic, PBS NewsHour and The Daily Beast.

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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?