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What has happened to political pop music?

Where Red Wedge sailed on optimism, pop and politics today make odd partners.

I’ve been reading a great new book by Daniel Rachel – Walls Come Tumbling Down: the Music and Politics of Rock Against Racism, 2 Tone and Red Wedge, which tells the story of that moment from the late Seventies to the mid-Eighties when pop and politics seemed intertwined. The narrative is told entirely through direct quotations from participants – including yours truly, talking about my early experiences at RAR gigs and the big Anti-Nazi League rally in Victoria Park, as well as my involvement with Red Wedge, the loose collective of musicians who supported Labour in the lead-up to the 1987 election.

The book has a glorious stream of behind-the-scenes anecdotes. One of my favourites is told by Billy Bragg, recalling the time on tour when he and his mates were partying in a hotel room directly above mine, causing me to go into full Angry Mum mode and ask them to turn that racket down.

That very same night, thankfully in a different hotel, the entire Tory government was nearly blown up by an IRA bomb. Billy relates how, down in reception the next morning, he explained to me, in some detail, why it was a good thing the cabinet hadn’t been killed, as that would have led to the imposition of martial law. What I love most about the story is the image it conjures of us having this conversation – he, presumably tired and hungover yet still ranting at me about the government, while I stand with my arms folded, waiting for him to finish so I can tell him off for being a selfish and thoughtless hotel guest and ask him who he thinks is going to clean up that mess after him.

The book has lots of moments like that, and is full of personal insights into a time when artists were struggling to make sense of the political landscape and formulate a response to it. Sometimes one anecdote contradicts the previous one, and that seems very true to the spirit of the time, Red Wedge in particular being a fairly disparate group of people, with some shared aims and yet also vast differences in outlook, and background, and music.

What shines through is an optimism – an innocence, even – which I think would be regarded as political naivety now. Less cowed by potential criticism, we didn’t bother so much about whether we were doing the right thing, or whether we were doing enough, and (perhaps most importantly) we didn’t have to worry about getting slagged off on Twitter for doing anything at all. And so we just got on and organised gigs and marches and meetings. Maybe the pop world is more cynical now. Maybe the whole world is.

Did it seem easier because the fascists still looked like fascists? I’m reminded of that Michael Rosen poem: “I sometimes fear that/people think that fascism arrives in fancy dress/worn by grotesques and monsters”. In the late Seventies and early Eighties, the National Front really did look like monsters, and were so clearly the enemy. No hiding behind smooth suits and placatory rhetoric. We lived in tribal times, with clearly defined lines, and you knew which side you were on.

But it’s funny how it’s still artists from those times who get called on to feature at political events. Paul Weller, a Red Wedge stalwart, is about to do a gig in support of Momentum – with a band including Robert Wyatt. There are younger acts on the bill, too, but I can’t help thinking how Weller’s career began with the Jam in 1976, 40 years ago. Hard to imagine Rock Against Racism in 1978 rounding up artists from 1938. The Andrews Sisters and Bing Crosby, perhaps. Artists from before the war, for heaven’s sake.

It does say something about the more tenuous link between politics and today’s pop generation. And the upcoming series of Momentum gigs is named “Concerts for Corbyn”. I’m confused by that. Red Wedge was an attempt to unify all our causes into one common cause, but this new label is potentially divisive, even a bit culty. I’m not sure why they’re not called Concerts for Labour. Or Unity. Or Something. No doubt someone on Twitter will politely explain it to me. 

Tracey Thorn is a musician and writer, best known as one half of Everything but the Girl. She writes the fortnightly “Off the Record” column for the New Statesman. Her latest book is Naked at the Albert Hall.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage

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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?