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Mary Beard takes on Twitter, the vanishing Richard Burgon and my sympathy for the baby boomers

The classicist stays polite while being assailed by people with PhDs from the University of Extreme Self-Regard.

You know those bracelets people get that remind them to be strong in times of strife? I want one that says “WWMBD”: “What would Mary Beard do?” The Classics professor manages to stay polite after being repeatedly assailed on Twitter by people who think that she should shut up about Roman Britain. After all, they have a PhD in arguing the toss from the University of Extreme Self-Regard.

Beard’s crime was to disagree with a YouTube star called Paul Joseph Watson – whose Twitter handle is @PrisonPlanet – who became extremely vexed about a BBC cartoon that showed a dark-skinned man in Roman Britain. “I mean, who cares about historical accuracy, right?” he tweeted.

From there, a vortex of dickishness swirled ever faster, despite a former teacher called Mike Stuchbery pointing out: “Roman Britain was ethnically diverse, almost by design.” For reasons best known to himself, the public intellectual (and avid weightlifter) Nassim Nicholas Taleb became involved, presenting the intellectual upgrade of Watson’s original argument. Beard was “talking bullshit”, he averred, in a stream of tweets that included the phrases “Kapish?” and “I get more academic citations per year than you got all your life!” A stream of trolls followed in his wake.

Two threads stand out here. First, the insistence that historical diversity is merely a liberal shibboleth, without any basis in fact. Second, the way that Beard’s expertise was denigrated and she became the focus of the ensuing anger, rather than the male historians making the same case. These are alt-right tactics in a nutshell: insist that you are the lone voice of truth, merely presenting facts that the liberal establishment can’t handle. If that doesn’t work, find the nearest woman and try to bully her into silence.

Stir crazy

Labour’s unexpected success in June might have washed away doubts about Jeremy Corbyn’s electability, but other criticisms of the party are not so easily countered. For example, what the hell is Richard Burgon up to? You probably won’t recognise the name, because the shadow justice secretary is so inconspicuous that he might as well be in a witness protection scheme.

Our prison system, which has been creaking for years, is close to breaking point. The former prisoner Eric Allison writes in the Guardian: “I have never seen the system in such a chaotic and dangerous state as it is now.” In July, the chief inspector of prisons found that not a single young offenders’ institution was safe to house children. There have been riots at four prisons in the past year and a half. Chris Grayling stuffed the probation service up so comprehensively by carving off half of it to give to private companies that no one seems to know how to fix it.

And yet, at the time of writing, the latest tweet from Labour’s leading spokesman on prisons is this bit of partisan poking: “Spirit of unity: @PeoplesMomentum activists giving up spare time in GE2017 to help candidates previously abusive to them and Labour leader.” It’s August now, Richard. The election is over. There’s work to do.

Mythological parents

A prominent Remain-supporting politician once suggested there was a strange quirk in the demographics of the EU referendum vote. He claimed that although the over-65s leaned heavily towards Brexit, the oldest in that age group were less polarised. He wondered if it might be because they remembered the horrors of the Second World War.

I thought about that when I watched Christopher Nolan’s epic Dunkirk, which shows the casual, random nature of death in wartime and the complicated feelings of guilt and fear that it creates. But the film also left me with more sympathy for a group I have often criticised: the baby boomers.

The boomers are a strange cohort. They have experienced big gains in life expectancy; many have built up generous pensions; many have benefited from an increase in unearned wealth by acquiring a house before prices spiked. Yet they can be a bit… angry. Recent research by YouGov found that among Leave voters over 65, 71 per cent thought that “significant damage” to the British economy was a “price worth paying” to leave the EU. In the same group, 50 per cent said they would back Brexit even if it meant that they or members of their family would lose their jobs. (Of course, the majority of them don’t have jobs to lose.)

But watching Dunkirk made me think how hard it must have been to grow up with your parents’ generation so endlessly lionised. This wasn’t a war that people were ashamed to talk about once it ended; instead it became our national myth. We’re the good guys who beat the Nazis! To grow up as the child of heroes must be tough.

Speeding violations

Being beaten in his last solo 100-metre race was a sad end to Usain Bolt’s career. But what surprised me was the reason for the second drugs ban given to the man who beat him, Justin Gatlin (the first was for ADHD medication). Gatlin was suspended from competition after – he says – a physical therapist used a testosterone cream on his legs without his knowledge.

Testosterone is acknowledged to be such a potent performance-enhancing drug that its medicinal use is forbidden. Meanwhile, women’s running is tied up in knots about athletes such as Caster Semenya, who has testosterone levels much higher than the average woman. As Michael Johnson put it: “I can’t think of a single solution for this. It’s not Caster Semenya’s fault… There are some challenges where there is no solution and I think this is one of them.”

Whatever, Wilby

I’ll spare you my thoughts on Ink, the play about Rupert Murdoch’s creation of the Sun, for one reason: at the theatre, I saw Peter Wilby sitting three rows in front of me. Given my glitzy, showbiz existence (subs: please check) and his life of quiet contemplation in sleepy Loughton, it’s not fair to steal subjects from him. He’s back next week. 

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 10 August 2017 issue of the New Statesman, France’s new Napoleon

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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?