"Politicians prostitute their sense and judgment to the supreme aim of survival politically": Paul Flynn. Photo: YouTube screengrab
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“One Nation – what the f*** does that mean?”: an interview with Paul Flynn MP

Nearing three decades in parliament, leftwing firebrand Paul Flynn, Labour MP for Newport West, discusses Labour’s chances, laments modern politics, and reflects upon MPs disrespecting their elders.

“Brick by brick we’re rebuilding socialism,” smiles Paul Flynn wryly from his wheelchair as his assistant helps him back into his office from a Commons vote, “a new Jerusalem”.

It’s the Labour MP for Newport West’s grim sarcasm and florid eloquence that defines the role he plays in parliament – his website has a testimony, among many others, from the Mail’s Quentin Letts emblazoned across the top in bold red letters: “Magnificently rude”.

Known as a principled but stubborn leftwinger, who causes difficulty for the whips, Flynn is nevertheless more complex than just a pain in the backbench. With too many ideas for change to be dismissed as having no influence, and too much wit to be merely branded a curmudgeon, Flynn remains an arresting voice on both the green benches and the committee corridor, as a member of both the Public Administration and Home Affairs select committees.

And rather than simply being a disruptive wildcard of Westminster – in September 2012 he was kicked out of the Commons chamber for accusing Defence Secretary Philip Hammond of being a liar – Flynn has given a lot back to the parliamentary world. His sardonic and searing humorous self-help guide, How to be an MP, was the most-borrowed book from the House of the Commons library last year.

“I’m sure they [the press] were expecting it to be 50 Shades of Grey, or How to Purchase a Duck House,” his lip curls, “I’m sure they thought it was going to be something that would be damaging to MPs, and it turned out to be my worthy tract.”

As someone who has studied the (imprecise) art of being an MP so closely, and has been in parliament’s confines since 1987, Flynn surely has insight into how politicians have changed over time. I mention the modern phenomenon of career politicians, and he calmly tears them apart:

“I mean it is bleak, and they tend to be one-dimensional, and vacuous,” he replies without missing a beat. “I think it was a good thing when there were miners and farmers and factory workers here; there was a variety of experience here, and there was a depth to the place it doesn’t have now, and I think there is a superficial layer of people who live in this tiny area of politics.

“And their language is banal as well. No one talks in the way that political parties send out press releases and so on. The language being used is that of a not very bright seven-year-old. It really is sort of insulting to people.”

He gives Ed Miliband and the Labour leadership’s favourite slogan “One Nation” as an example:

“One Nation? I think it has no resonance at all, the idea of One Nation. It might have under Disraeli. It might have meant something then for Britain, but it’s not understood, and I can’t see why you’d adopt it. I mean, they trialled it out to receive any reaction from people, and just a blank, open mouthed “huh?” was the best you could get. . . ‘We are One Nation’? And what the fuck does that mean? I’m sure that’s how people feel about it –it doesn’t mean a thing does it?”

Flynn was the only Labour MP to put Ed Miliband as his fifth choice for Labour party leader in the 2010 leadership election, and he smiles slowly as he reflects on his decision:

“I didn’t realise all these things were going to be published in these long lists!” he giggles. “In the fifth column there was just one cross, which was mine. I went for his brother, who I thought had more gravitas and presence. . .”

However, he is surprisingly optimistic about Labour’s chances in the next election, saying “I think things are going with us”, and concedes that his bottom favourite leadership candidate has had “some good moments” in his role.

As one of parliament’s more senior figures, at 79, does Flynn feel it’s important to stick around (he’s said he won’t be standing down) to provide some balance in light of the new, relatively young, crop of politicians on both frontbenches? Does parliament need its oldies?

“Oh God, yes!” he nods. “The line I take is that when people say ‘you’re not as good as you used to be’ is to agree warmly: I’m not as good as I used to be, I’m much better than I used to be, as I’ve been here longer! I know everything, and I still love it, still get a real buzz of excitement from it, and love being here, in the chamber asking questions.”

Why?

“Because you’re going against this great mountain of prejudice and stupidity, the fact that you can stop it every now and again and switch it in a different direction... because the general standard of political thought is pretty basic, and I’m arrogant enough to believe that we can be better.”

Does he find that his fellow MPs respect their parliamentary elders?

“No, they’re very contemptuous. I’m referred to by other constituency members as ‘PPC’ for ‘Prospective Parliamentary Candidate’ – in my constituency it stands for ‘Poor Pathetic Cripple’, and I accept that!” he chuckles.

He describes his condition as “a bone ache I’ve been getting since I was nine”, and explains that he eschews painkillers and other medicines to avoid their side effects, adding that he has some “eccentric theories about pain”.

“If Beethoven had been on antidepressants and Mozart had been on Ritalin, we would never have heard of them. You need certain angst in life, you need something to distract yourself from it and work is the thing, and that displaces physical discomfort.”

He merrily unbuttons his shirtsleeves to show me the lumps on his elbows – “I’ll flash my bumps at you; a rare treat,” he laughs. For someone whose speeches in debates drip with dry sarcasm, he is markedly more optimistic than I expected.

Indeed, he notes how the culture of Westminster is much better compared with when he arrived, and puts this down to the increase in number of female MPs:

“Having women MPs has civilised the place to a greater extent. . . I’ve seen none of the macho posturing of boys and the ‘whose is bigger than whose else’s?’ That was depressing. It wasn’t productive. It’s much easier for women MPs to get elected these days with the lists and so on, but that generation of Jo Richardson and Audrey Wise and Barbara Castle – I mean, they had to sacrifice their family life in many cases in order to stay on in parliament. It wasn’t obligatory, but they did. But they were tougher than the average and the present lot, and the present lot certainly wouldn’t put up with the nonsense of previous generations.”

However, his ultimate conclusion about our decision-makers is a gloomy one: “They [politicians] prostitute their sense and judgment to the supreme aim of survival politically... Most political decisions are prejudice rich and evidence free... I'm all in favour of having two spots on the ballot slip, one saying ‘None of the above’ and one saying ‘Write in candidate’. . .”

With his refreshingly candid approach to political commentary, perhaps voters would do well to “write in” this one.

Anoosh Chakelian is senior writer at the New Statesman.

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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?