Papers should run accurate articles about climate change. Photo: Getty
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The danger of ideology-based newspaper coverage of climate change

A warning against the publication of columns promoting climate change denial.

Last week, The Times provided further evidence that its coverage of climate change is being dictated by dogmatic ideology.

On Monday, it published a column by Matt Ridley, under the headline "Scientists must not put policy before proof", accusing the Royal Society and the World Meteorological Organisation of “poor scientific practice” because of its recent announcements about the impact of rising greenhouse gas levels in the atmosphere.

First, he complained that the World Meteorological Organisation should not have released a preliminary analysis showing that “the year 2014 is on track to be the warmest, or one of the warmest years on record”.

Ridley argued that instead the WMO should have noted that “this year is unlikely to be significantly warmer than 2010 or 2005”.

What he neglected to admit was that 2005 and 2010 are the two warmest years ever recorded, and that 13 of the 14 hottest years have occurred from 2000 onwards, providing clear evidence of global warming.

He also criticised the WMO’s decision to make the figures public on 3 December as policy-makers from around the world assembled in Lima, Peru, for the United Nations climate change summit.

Yet, Ridley’s article coincided with the final week of negotiations over a new international agreement on climate change, and was no doubt intended to undermine the confidence of the UK Government in the scientific evidence.

His column also criticised a Royal Society report about "Resilience to extreme weather", which was published last month.

He claimed that the Society had decided to “cherry-pick” information for the report, and “could find room for not a single graph to show recent trends in extreme weather”.

This was utter nonsense. The report includes a table summarising changes in extreme events that have been observed since 1950, based on a comprehensive assessment of the scientific evidence by the Intergovernmental Panel on Climate Change.

Among the conclusions highlighted by the Royal Society report were “medium confidence that anthropogenic influences have contributed to intensification of extreme precipitation at a global scale”, and “medium confidence that anthropogenic influence has contributed to some observed changes in drought patterns”.

The use of the term “medium confidence” reflects the fact that it is difficult to detect statistically significant trends in extreme weather, which, by definition, are rare events.

Writing in the Foreword to the report, Sir Paul Nurse, the President of the Royal Society, indicated that “by presenting evidence of trends in extreme weather and the different ways resilience can be built to it, we hope this report will galvanise action by local and national governments, the international community, scientific bodies, the private sector, and affected communities”.

Finally, Ridley dredged up false allegations about “the hiding of inconvenient data” by scientists at the Climatic Research Unit at the University of East Anglia.

This was based on e-mails that were distributed on the web in November 2009 by climate change "sceptics" to try to undermine efforts to agree a new international treaty in Copenhagen.

An independent inquiry into the content of the so-called Climategate e-mails concluded that, “on the specific allegations made against the behaviour of CRU scientists, we find that their rigour and honesty as scientists are not in doubt”.

But Ridley ignored this inconvenient fact and instead ranted that “the scientific establishment closed ranks”.

Yet he made no criticism of the hackers who illegally obtained the e-mails, or of the police investigation which failed to bring the criminals to justice.

Readers of The Times may be shocked to learn that the newspaper would publish an article that was riddled with so many inaccurate and misleading statements.

However, the number of errors is perhaps no surprise, given that Ridley, a hereditary Conservative peer, has a PhD in pheasant breeding, but no qualifications in climate science.

What may be of even more concern to readers is that The Times chose not to disclose that Ridley is a member of the all-male Academic Advisory Council of the Global Warming Policy Foundation.

The Foundation was set up by Nigel Lawson in 2009 to lobby against government climate policies.

Earlier this year, the Charity Commission concluded that the Foundation had violated its rules because, “it promoted a particular position on global warming”.

The Times seems to be heavily promoting the views of climate change "sceptics". Earlier this year, there was controversy when an article by the newspaper’s science editor, Hannah Devlin, was altered to put a "sceptical" spin on climate change research. Devlin has since announced that she is leaving The Times to join the Guardian.

Given the apparent increasingly ideological approach of The Times to its coverage of climate change, it may not be long before many more of its readers follow Devlin’s example.

Bob Ward is a Fellow of the Geological Society and policy and communications director at the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science.

Bob Ward is policy and communications director of the Grantham Research Institute on Climate Change and the Environment at London School of Economics and Political Science.

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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?