The British countryside has always been an extended theme park for the rich

My Glaswegian father won't be celebrating the Glorious Twelfth, but the Scottish economy depends on moneyed tourists shooting grouse in a stylised countryside idyll.

Having lunch with my Father in Glasgow a couple of months ago, he was telling a friend about a planned trip abroad during August when his friend interrupted,"But you'll be away for the Glorious Twelfth! I mean, you couldn't possibly miss that."

My father put down his malbec, raised his eyebrows, looked up at his friend and said, "Aye."

'Aye' to a Scot is a word with multiple meanings. The tone, the timing, the context is everything. My Father never has dressed up in tweed, sauntered off to a Scottish moor and shot carefully positioned semi-wild birds - and I am willing to bet any amount of money that he never will. 'Aye' in this context was an able substitute for an expletive filled sentence. 

No one I know in Scotland goes hunting for grouse or partridge. Quite a few fish, and some do occasionally go pigeon-shooting, but never grouse. It is not something that people like me, us, do.

On returning from living in Spain, I began to consciously realise how differently we think of the countryside and shooting things in it. Hunting in most of Europe is something old men do in the country. Villagers get together and hunt: quails, partridge, pheasants. In France, more game is eaten in the countryside than in cities, and it is cheaper there. In Germany, hunting is something done by farmers, often as part of land management, and it is rare to find people in cities who are particularly interested in killing as sport. There is no great celebration in capital cities for the beginning of the season, no rush to be eating the first kill in the best place; it just arrives, as surely as wild mushrooms and figs. Elsewhere, the great Castillian writer Miguel Delibes often said in interviews that he considered himself a hunter who wrote. He would explain that his ability to express the language of the peasant in Castille, to understand the people of small towns and villages came from his many years hunting on the plains and talking to those he was with. I cannot think of any British writer who would say that hunting brought them close to the common man.

The issue, as with so many things in this country, is a class one, and is the result of more than 200 years of the upper classes idealising the countryside.

A perfect example of this is Thomas Gainsborough's painting of Mr and Mrs Andrews in 1750. They have engaged an important portrait artist at considerable expense and have arranged a delightful rural landscape to be at the centre of the painting. Mr Andrews has both a hunting dog beside him and a gun. Mrs Andrews is in a well made, high quality material blue "shepherdess" dress, the 18th century equivalent of an Alexander McQueen peasant gown. There are artistically arranged bundles of wheat and the outline of sheep in a field in the background. This is not the countryside of poor, malnourished peasants tending to the land, or indeed even well-off, well-fed ones; it is a theme park for the super rich.

This rural playground was highly stylised and managed. The great landscape gardener Capability Brown made gardens such as those at Blenheim Palace seem like wild landscapes. The clusters of trees, the artificial lakes systems of dams and canals to create an illusion of rivers, were all an exercise in creating a pleasing, artificially tame countryside idyll.

Nowadays the super rich can hire hunting lodges and go shooting and fishing in a wild landscape that no longer needs Victorian stereoscopes to look like the stylised ideal. Heather is burned and trees prevented from growing to enable grouse to flourish. Moorland has been greatly extended at massive costs to trees and forests, and while certain types of rare wildlife flourish in moorland, the lack of forest affects other, equally important parts of the ecosystem. The wild, untamed Scottish moors are, in reality, about as wild and untamed as a back garden in Surrey.

Grouse shooting brings in an average of £30m per year to the rural Scottish economy, bringing a few badly needed jobs away from the traditional tourist season. £30 million sounds like a lot, until you consider that the pay day loan company Wonga recently posted pre tax profits of £84.5 million.
The Glasgow Herald was in jubilant mood last week quoting Visit Scotland's Chairman Mike Cantlay: "The Glorious Twelfth provides Scotland with a great opportunity to showcase our country sports credentials to wealthy visitors from around the world." Rich people coming to play country aristocrats in rural Scotland brings in £250 million a year. Merlin entertainments, who run Alton Towers, Legoland and Madame Tussaud's, brought in £928.4 million in 2011 and made an operating profit of £222.5 million in the same year.

It is hard to make a living in the countryside; even modern farming is surprisingly difficult to turn into profit. Meanwhile, keeping vast tracts of land in a certain condition for the entertainment of the rich, deliberately creating land masses for the purpose of having enough suitable birds to make it easy to shoot them, making all these things "reassuringly expensive", and having a class-ridden elitist ideal of these sports isn't making enough money anymore either. Entertaining the rich, in these circumstances, just isn't profitable enough.

It seems that these pared-down bloodsport theme parks for the British moneyed may well be finally going out of fashion.

Gamekeeper Alex Hogg makes final preparations for the start of the grouse season on an estate in the Scottish Borders. Image: Getty
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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?