Friday 30 July 2010, 16:22
There are endless books and TV programmes that tell us that the period we have just lived through was the Age of Debt.
It was a time when debt was seen as good - an essential element of global stability. And those who said that rising debt levels were dangerous were dismissed as doom-mongers. Now they are "whistle-blowers"
These books and programmes also tell us how recently that idea - the belief that debt was good - came to dominate western societies. Only 30 years ago going into debt was portrayed as not only dangerous but morally wrong.
But what no-one has explained is why there was this sudden change?
Why did that attitude change so quickly? What drove it?
There is a really interesting new book by an economist Raghuram Rajan called Fault Lines. He argues that what led to the change was not just greedy banks, but growing social inequality in the West.
And - to put it crudely - when western governments were threatened by growing protests and dissatisfaction with this inequality, they simply bought the people off by giving them a mass of cheap money.
Raghuram Rajan has an extraordinary statistic. That if you look at the the growth in real incomes between 1976 and 2007, 58% of it went to the top 1%.
Faced with this, governments made a political choice. Rather than reform society, they removed all restrictions, gave up on their moral disapproval, and allowed a system to be created by the bankers that let everyone borrow.
It was better to give in and allow the "little people" to borrow rather than let them keep on striking and threaten social order. And what's more you could make lots of money out of it.
I am intrigued by this argument because it is the first time I have seen someone take the financial crisis and put it in a political and historical perspective.
It explains how the machinery of credit was used politically to try and manage and retain control the structure of power in the world. It was not a conspiracy, it was simply those in power taking the line of least resistance.
And it raises the question - if that system no longer works what will happen? The cheap money obscured massive growth in inequality and social stagnation. Will the resentment and envy re-emerge, and how will politicians deal with that?
I am researching this area, and I thought I would put up some of the films from the BBC archive from the time when there was moral disapproval by those in power of the "lower orders" wanting to "live beyond their means".
The programmes are quite extraordinary and riveting in their tone of patrician sniffiness about people borrowing on the "Never Never" and Hire Purchase. And not just from the bankers who are interviewed - it is also in the commentary.
But if you peer through that, you can see something else emerging in the ordinary people interviewed. It is a powerful desire to borrow money - so they can have what those above them in society have. The good life.
And beyond that there is a growing envy and resentment.
The first is a programme called Eye To Eye from 1958. It shows how back then everyone who wanted to borrow was investigated by this extraordinary organisation called the LAPT. The reporter calls it the private FBI - and it even had its own secret agents that would check up on people in every town and village.
There is also the wonderful Mrs Harrison - the wife of a managing director - in her kitchen showing off everything she has bought on HP. She looks just like Mrs Thatcher and she has a great food mixer.
This is a brief bit from a programme called Men and Money made in 1964. It's a stockbroker talking about the "little people" who want to buy shares. In just two minutes it shows how patronising and snobbish financial institutions used to be.
It begins with a great new device to protect money being transported around the City.
And here are three sections from a Man Alive made in 1968 called Beyond Their Means.
The interviews show just how much the televison-makers of that time, while claiming to be questioning and revolutionary, were in reality deeply involved in reinforcing the establishment attitudes of the time towards debt.
The first is a working class couple from South London and shows their weekly visit from the Tallyman. The commentary and the reporter's questions drip with a patronising snootiness - "Can't you make do with buying second hand furniture?"
The next is an aspirational couple who are continually in debt. The reporter again is brimming with disapproval because the couple are being reckless. They are living beyond their means but they aren't poor.
But the couple - the husband especially - are amazing. He is a fantastic character. He borrows money he says as a protest against those around him who are richer. "To fling away the pittance that I have is a protest."
They show in extreme form the growing force of middle class aspiration and envy that Mrs Thatcher was going to harness ten years later.
He reveals that he has written to famous millionaires asking for more money. One is Charles Clore who was a property developer who also owned Selfridges. Another is Nubar Gulbenkian who was an oil magnate and a famous socialite in London in the 1950s and 60s.
And the third is an upper-class couple who own a stately home that is falling down around them. Here the reporter treats them reverentially. The couple are presented as morally and socially good. They borrow because it is a duty to their country to keep their lifestyle and their house going.
Of course within 15 years TV-makers would switch sides and toe the new line on debt. A wave of programmes would help create the new system of Universal Leverage - showing everyone how they could use their property and other assets to create a personal mountain of debt.
But that's another story.
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