A branch of Paradise brothel in Spain. Photo: Getty
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If you think decriminalisation will make prostitution safe, look at Germany's mega brothels

The Liberal Democrats and Greens both support the decriminalisation of prostitution - in the hope of making it "safe". But Germany legalised it in 2002 and it still isn't "a job like any other". 

Is there a right place for prostitution? In 2006, Steve Wright murdered five women in Ipswich. All five of them had drug dependencies, and all were engaged in prostitution to fund their addiction. Wright was a punter – a regular, not obviously more violent than any of the men who picked up women on Ipswich’s streets. Even when the women were scared for their lives, they weren’t scared of Wright. “He was always a late person to come out, he would drive round a couple of times, then choose the girl he wanted,” Tracey Russell told the Guardian (her friend Annette Nicholls was Wright’s fourth victim). “We used to call them ‘window-lickers’ if they went around a lot. He was one of them. We didn't suspect him.”

At the time, one popular opinion on the murders was that the five women had died because they were in the wrong place – and that criminalisation had put them there. In a piece published here in the New Statesman, the English Collective of Prostitutes (ECP) blamed the law around prostitution, claiming that “women are being driven onto the streets by raids on premises where it is many times safer to work.” At the time, I was convinced that the five would still have been alive under different legislation. Looking back over the case, though, the facts don’t quite fit the ECP’s argument. Although one of Wright’s victims, Tania Nicol, had been forced out of massage parlours and on to the streets, she hadn’t been driven by raids: according to the manager of one of the parlours, she was asked to leave because of her drug use.

The women Wright killed weren’t “sex workers” pushed into harm’s way by illiberal limits on their “profession”; they were women with chaotic, fragile lives, pushed on to the frontier of male violence by their addictions. This was not a choice. (Russell described prostitution to the Guardian as “horrible”: “You learn to blank it out over the years, and because you are on drugs, [you] just think of something else. I know that sounds odd, but you do. ’Cos you get used to it, and it's over within seconds. Hopefully.”) Even if there had been a legal brothel in Ipswich, it seems unlikely that these five women would have been inside it.

And yet the argument that decriminalisation will make prostitution safe persists – in the UK, it’s policy for both the Liberal Democrats and the Green Party. What this “safety” for women would look like in practice is less discussed, but there is an example we can learn from just a few hundred miles away. Germany legalised prostitution in 2002, with the reasoning (as Nisha Lilia Diu reported for the Telegraph) that this would make prostitution “a job like any other”. Sex work as work, with contracts, benefits, workplace protections and none of the stigma that supporters of legalisation often claim is the ultimate source of harm to women in prostitution.

The German experiment didn’t go as planned: women (often migrants looking to score fast profits and get out of the country again) didn’t register for benefits, and the brothels that sprang up didn’t want to offer any contracts or risk any liability. Instead, brothel owners function more like landlords, charging the same cover fee for men to enter their premises and for women to work there, meaning a woman in prostitution won’t even start to make money till her second or third punter of the night. And what does she have to do to make that money? This week, Channel 4 documentary The Mega Brothel went inside the Stuttgart branch of the Paradise chain (yes, brothels in Germany have chains, like fast food joints or high street clothes shops) and interviewed the women, the punters and the brothel owner.

If you have any hopes that Paradise might be an Edenic scene of liberated sexuality, you should surrender them now. Early on, one of the punters explains his philosophy to the programme makers. “Sex is a service,” he says. “If you want to have good sex, you must pay good money for this service.” (The idea that “good sex” might involve respect, intimacy or mutuality has apparently not occurred to him: it is just a service, a thing performed by women for men, like doing the laundry or cleaning the house.) The interviewer asks a question: “What effect does that have on the girls themselves?” And the punter seems genuinely stumped. After a moment’s silence, he volunteers: “I don’t know, I never thought about it.”

It seems that a lot of the men don’t think about what they’re doing to the women they pay to have sex with. When Josie, who works as a prostitute at Paradise, shares the contents of her bag with the camera, she’s offering a dreary inventory of pain – experienced, anticipated and avoided. “I have a vibrator… a small one because sometimes men can be a little bit too aggressive, a little rough,” she explains. A medicinal-looking tube turns out to contain genital anaesthetic: “It’s like a small insurance if the pain is getting too big,” she says.

What kind of “work” can this be, where women have to numb their vaginas to tolerate penetration by men who don’t even think of the person penetrated as capable of feelings? Certainly not the kind of work that women are respected for doing. Michael Beretin, Paradise’s head of marketing, describes the women he lives off with maximal contempt: “These people are a totally fucked up, dysfunctional bunch of people. Very few of them have any soul left … It’s very sad but it’s what they are.” (This strange accountancy of the human essence echoes something said by the madam of a licensed Nevada brothel to Louis Theroux in the 2003 documentary Louis and the Brothel: “Every girl who’s really good at what she does gives away a little piece of her soul every time.”) The theory that stigma would evaporate on contact with legitimacy turns out to be nothing but fantasy, itself simmering into nothing once exposed to the real world.

In Germany, there are still pimps (the “loverboys” who pressure the women into the brothel and then skim their earnings). There are still traffickers, trying to get their human product into Paradise. There is still hate for the women. And fundamentally, there is still the raw brute fact of women being fucked for money, fucked sore, fucked as though they were not at home in their own bodies. Prostitution is violence against women, inflicted by men. The violence of being roughed up with a vibrator is less than the violence of being suffocated, but even having to draw that comparison is sickening. There is no “safe” here – when women’s bodies are made open for men’s use, we are simply disputing the boundary between “terrorised” and “dead”. Prostitution isn’t merely an occupation with some unfortunate but inevitable (male, violent) hazards to be ameliorated: it’s an institution that insists on the dehumanisation of women, the grinding away of our souls so we become easier to fuck, easier to use, easier to kill. Under sky or under ceiling, it’s the same. No one suspected Steve Wright. He was just another regular. The regulars are the problem.

Editor's Note, 9 February 2014: This piece originally referred to the fact that "Germany decriminalised prostitution in 2002". It should have been "legalised". This has now been corrected.

Sarah Ditum is a journalist who writes regularly for the Guardian, New Statesman and others. Her website is here.

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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?