A bad few weeks for girls' schools in Pakistan

Blasphemy and mob rule in Lahore.

It has been a bad few weeks for girls’ schools in Pakistan. The shooting of 15 year old educational activist Malala Yousafzai in October sent shockwaves through the country. Other female activists spoke out about being targeted, and the spotlight has been placed on the Taliban’s numerous attacks on girls trying to get an education.

The latest incident was the burning down of the Farooqi Girls’ High School in Lahore on Thursday. This was not the doing of the Taliban, but an angry mob. Why? Because a teacher, Arfa Iftikhar, had allegedly set a piece of homework that contained derogatory references to the Prophet Muhammad. Iftikhar has been forced into hiding, while the 77 year old principal of the school, Asim Farooqi, has been detained for 14 days on blasphemy charges. At the protests on Thursday, the mob distributed photocopies of the offending homework, and broke and burnt everything they could lay their hands upon. Unsurprisingly, the school has been closed ever since.
 
Blasphemy is an extremely inflammatory issue in Pakistan. Insulting the Prophet or the Quran can carry the death penalty, while even the suggestion that blasphemy has taken place is enough to trigger violent outburst of public anger. Not a single newspaper has specified exactly what the alleged blasphemy is – indeed, to do so could lead to fresh charges being directed at the publishers. On this basis, accusers can even refuse to repeat the blasphemy in court, leading to a situation that would be farcical were it not so dangerous. The light burden of proof means that the law is often used to settle scores – indeed, it has been suggested that this charge could be a plot against the school, which is one of the most successful in Lahore. The complaint was lodged by Abdullah Saqib, the vice principal of Jamia Kareemia Sadidia, a religious school in the same area.
 
Possible conspiracies aside, what does this incident tell us? First of all, women and girls are ready to defend their right to be educated. Following the violence of the mob reaction, around 2,000 students, parents and teachers took to the streets on Saturday to demand that the school reopen. The crowd, predominantly made up of teenage girls, carried placards and chanted slogans including “release our principal”. Just like the reaction to the Malala shooting, this demonstrates that society is not willing to compromise on its right to educate its daughters, whether the threat is coming from armed militants or from an angry mob.
 
Secondly, it shows that the tide has not turned against blasphemy laws. After a cleric was found to have fabricated blasphemy charges against Rimsha Masih, a Christian child with Downs Syndrome, many national and international commentators suggested that a turning point may have been reached. Yet it would be naïve to think that this was not a hugely popular law, despite widespread revulsion at the Rimsha case. Since reform is entirely off the table, following the assassination of two politicians who spoke out against blasphemy laws last year, hope for reducing its power to inflame violence and attack minorities can only lie in making its application fairer. Charges were recently issued against Muslims who attacked a Hindu temple – an unusual move – with several other cases against Muslims following suit. While no arrests were made, it was a very small step towards rationalising the law. Prosecuting those who make false allegations or take the law into their own hands would be more significant ways of bringing the law under control. It is worth noting that Saqib, who lodged the complaint, told the domestic media that he had met with local clerics and residents to decide to pursue the case legally: “We tried to stop the violent protesters, because they bring a bad name to our religion.”
 
Yet this brings us to the third point: religious issues are extremely, extremely sensitive in Pakistan. Despite Saqib’s apparent desire to avoid violence, one of the Farooqi School’s administrators claimed that statements about the supposed blasphemy had been made in local mosques with the aim of inflaming the public. Blasphemy is an issue that can mobilise people instantly, with the accused not only presumed guilty as soon as the word “blasphemer” has been uttered, but frequently losing their lives to mob violence before they’ve had a chance to be sentenced to death. In a country with such high levels of poverty and deprivation, discontent and unrest is frequently bubbling below the surface, waiting to explode. According to reports, many of the protestors did not even know what they were protesting about. With little hope for reform of the law and no sign of the authorities seeking to clampdown on rioters, it is difficult to see the situation improving any time soon.
 
More than anything else, this incident demonstrates that Pakistani citizens have to contend not only with militants and their acts of terrorism, but with the regressive streak of thought that runs through society, and the rumbling discontent which means that violence can break out at any moment. For the girls in Lahore who will not be going to school tomorrow morning, it makes little difference that their school was destroyed not by the Taliban, but by citizens supposedly supporting a piece of state legislation.
Students of Farooqi Girls' School in Lahore demand its re-opening (Photo: Getty Images)

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for 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?