« Previous | Main | Next »

Niall Ferguson: Reith Lecture pt.1 - The Human Hive

Post categories:

Richard Fenton-Smith 09:00, Tuesday, 19 June 2012

Professor Niall Fergusson presents The Reith Lectures on BBC Radio 4


“Society is a contract… the state is a partnership not only between those who are living, but between those who are living, those who are dead, and those who are yet to be born.”

This quote from the 18th Century political theorist and philosopher Edmund Burke summarises much of the argument put forward in the first of the 2012 Reith Lectures given by the economic historian Niall Ferguson, which broadcast on Radio 4 this morning.

Professor Ferguson says we are currently witnessing an unparalleled breach of this partnership because of the huge debts being racked up by governments, which are set to be passed on to younger – and unborn - generations.

Furthermore, says Professor Ferguson, many governments are dishonest about their true level of debt. The present system, he says, is “fraudulent” and “huge government liabilities are hidden from view.”

“No legitimate business could carry on in this manner and the last corporation to publish financial statements this misleading was Enron.”

In the lecture, Professor Ferguson listed a series of proposals for reform of government finances:

  • Public sector balance sheets should be drawn-up so that government liabilities can be compared to assets.
  • Governments should adopt the Generally Accepted Accounting Principles, which corporations abide by. 
  • Above all, governments should be prepared, on a regular basis, to make absolutely clear the inter-generational implications of current fiscal policy.

In the current climate, austerity is something young voters in particular should welcome, he argues – but concedes that winning support for this is a mountainous task.

But, says Professor Ferguson, if we do not embark on wholesale reform of government finance, we will end up with the scenario where Western democracies are going to carry on until one after another they follow Greece and other Mediterranean economies into “the fiscal spiral of death”.

Alternatively, we all become like Japan and face decades of low to zero growth.

What do you think of the issues raised in the lecture?

  • Are Western democracies in denial about their debt levels?
  • Are the alternatives to austerity more effective?
  • Do you agree the baby boomers have benefited at the expense of younger generations?

Listen to the full lecture on the Radio 4 website

Download Niall Ferguson's 2012 Reith Lectures

Richard Fenton Smith is a Senior Broadcast Journalist for News and Current Affairs Radio.


Niall Ferguson’s first Reith Lecture, titled The Human Hive, will be repeated on Radio 4 on Saturday, 23 June at 22:15 BST.

The second lecture in the series, titled The Darwinian Economy, will examine the issue of financial regulation. This will broadcast on Radio 4 on Tuesday, 26 June at 09:00 BST


  • Comment number 1.

    At last, someone who points out the profligacy of relying on future income (taxation) to pay for present follies. He also implies that the position of successive chancellors on hypothecation (ring-fencing funds for their - apparently - intended purpose) is foolish, even fraudulent.
    The effect of this and of the present ethos of financial dealings (to be covered, it seems, in another lecture) on society at large is summed up in a well-known song,
    "I want it all and I want it now!"

  • Comment number 2.

    I thought this was supposed to be a programme that fermented the best of thinking and outlined potential future directions. Instead the "unbiased" BBC has handed a neocon, neoliberal "thinker" huge amounts of unchallenged airtime to propagate the exact muddle-headed "solutions" that got us into this sorry pass instead.

    How about a real alternative thinker who doesn't subscribe wholeheartedly to the Chicago school of economic wrecking? No. Bit too radical and non-Conservative for the BBC to consider, just as they never get alternative viewpoints on their news programmes or bulletins either. Pathetic - our greatest economists will be spinning in their graves.

  • Comment number 3.

    This is completely the wrong format for his kind of content and it really does make you wonder what on earth the radio 4's editorial team are up to. When at the end of the lecture he essentially says the message of this lecture is to "vote conservative" , how can this be seen as anything other than 45 min political broadcast.

    Don't get me wrong I disagree with Fergusson's views but they should be part of a debate on wider issues of economic history and policy. Wouldn't it have been much better, fairer and in keeping with the BBC's mission of impartiality to have had a series where Fergusson was in conversation with someone on the left such as Will Hutton, to provide both sides of the argument.

  • Comment number 4.

    Niall Ferguson argues that the older generation are leaving unsustainable debts to the younger generation and suggests that budget cuts, logically to fall on older people, are the solution. The current generation of pensioners paid 40+ percent of income in direct taxes, as opposed to the 30 percent paid by current workers. Another solution would be to raise direct taxes. In any case UK government debt has been incurred by the bank rescue, not by government expenditure. The problems are too complex to deal with in four short lectures. Demonising pensioners, most of whom live on savings through pension plans, is no answer.

  • Comment number 5.

    I was fascinated by Niall's analysis, based on the development and decline of the UK's institutional framework. In his next lecture he mentions the word 'Darwinian', and likewise he implies that these institutions are experiencing a Darwinian cycle of flourish, flower and decline.

    I agree that the insertion of party-political comments is not helpful, and people tend to jump on this with arguments-by-assertion for and against. However if we listen to Niall's theories, they are fascinating enough to keep us out of the political mud-wrestling.

    I'd like to hear the evolutionary analysis extended a bit. For example, if Darwin posits the survival of the fittest by natural selection ('fittest' being 'most adapted to the environment' and not 'best'), then what does that mean for the evolution of our institutions? How can we adapt them to improve 'outcomes'? Because after all we are part of the evolutionary process, and can affect it to a certain extent for better or worse. Maybe more will be explored in the next lecture.

  • Comment number 6.

    It's kind of worrying that Niall Ferguson attends the (not so secret anymore but still respectfully ignored by the media) Bilderberg meetings in Chantilly, Virginia and within Days is delivering lectures.

    The sequence of events (and the BBC's blackout on Bilderberg) raises all kinds of questions about their agenda or their complicity in global power games.

  • Comment number 7.

    All too true, but we have seen just how willing voters are to listen to politicians with their hearts not their heads.

    The crunch has come sooner than any of us really predicted and the future for my kids looks much bleaker than when I was their age. Yet my financial future looking towards retirement (with no final salary pension) also looks poor compared to my parents. This makes it really tempting to vote for promises of jam tomorrow.

  • Comment number 8.

    Niall Ferguson calls for 'economic heroism' (in making cuts): It is easy to be heroic with other people's lives and a typical Chicago school approach.

    The Chicago school of economic theorists can't even accept intra-generational solidatority so why should we believe that they really think that one generation owes anything to future generations? What is his, and their, true agenda?

    I can't wait for the next lecture when, I hope, he will criticise our North Sea Oil money being spent on one generation via tax cuts rather than being spread across the generations by investing it in productive infrastructure.

  • Comment number 9.

    Professor Ferguson is selective in his use of figures. The high percentages of government debt to GDP in 2012, which he cites as evidence that governments are pushing debt onto the shoulders of future generations, are high because of the current recession. The much lower figures for 2000, given in the printed version of his lecture, are more representative of recent levels - 40% 0f GDP for the UK rather than 80%, for example.
    This level was typical for the UK since 1975, and is much lower than it had been at any time since 1915. Professor Ferguson told us that debt had exceeded 250% of GDP after the Napoleonic wars; but he did not tell us that it had reached 180% of GDP after the 1914-18 war, had remained over 150% 0f GDP for most of the time until 1939: had reached 238% of GDP in 1948; and had then fallen steadily to reach 44% of GDP in 1975. It fell further in the 1980s before rising in the recession of the early 1990s, and falling again into the 2000s.
    The figures do not therefore support Professor Ferguson's argument that governments have recently been keeping voters happy by increasingly financing public expenditure by borrowing. In the UK, government borrowing had fallen slightly as a proportion of GDP in the 40 years before the recession began, and had fallen very substantially since 1948.
    This Reith lecture is a statement of political policy supported by carefully chosen and misleading data. It is not an analysis of historical evidence; and it it is not what we expect from a Reith lecture.

  • Comment number 10.

    Bilderberg academic henchman preaches austerity for the young

    Posted By admin On June 18, 2012 @ 7:40 am In Featured Stories | 19 Comments

    Alexander Baron
    Digital Journal [1]
    June 18, 2012

    A distinguished academic is about to deliver a lecture on the virtues of austerity. For us little people, not for himself and his masters.

    Why the young should welcome austerity is the title of the article by Niall Ferguson published by the BBC [2] on June 17. According to his own website [3], Ferguson is Laurence A. Tisch Professor of History at Harvard University, and his many affiliations include the Hoover Institution. Small world, did he ever run into Antony C. Sutton [4] on his travels?

    Probably not; the world may be small but academics’ minds are smaller, certainly when their lucrative sinecures depend on willful blindness.You see, according to Professor Ferguson, austerity is good. For us, but not for him. There is no mention in his essay of his flying second class or taking the bus instead of a limousine to the last Bilderberg meeting.

    That’s right, the learnéd professor is a Bilderberger; he attended the recent meeting [5] at Chantilly [6]. And the advice he will be giving in his Reith Lecture [7] is that the young of Britain and the world should pay off national debts now to avoid a miserable future. And to whom should they pay these debts? Follow the money, namely the people who paid for Professor Ferguson’s ticket.

    No mention that all this debt has been conjured up out of thin air, just pay so that banksters can continue holding lavish functions, jetting around the world, dictating to the people of Greece, Spain and anywhere else they choose.

    Do we really need lessons from Professor Ferguson on how to run our economies? Or should we be looking for alternatives, like breaking the chains of the banksters and freeing mankind from slavery by taking control of our own currencies: pounds, dollars, drachmas and everything else?

  • Comment number 11.

    I always understood a contract as being a confirmation of a mutual agreement. This mythical inter generational 'contact' alluded to in this lecture has no such characteristics. Correct me if I'm wrong but it seems to me that it is instead an assumed or imposed 'contract' with one generation stealing a prosperity for the present from the future without even a discussion let alone a contract. As I myself understand
    Burke, his intergenerational concerns, being informed as they were by his paternalistic /traditionalist/monarchist sentiments, had been affirmed by what he himself had seen regarding the environmental degradation the unregulated profligacy of the East Indian Company had wreaked on India.

  • Comment number 12.

    Brilliant as his lectures are in terms of global perspective, his obsession with the supremacist view of the "West" casts doubts on his biased analysis...in the 500 years he refers to, do we now have a more JUST world(?) or have any prospects of saving the Environment with half a millennia of greed and exploitation that it has pursued?

  • Comment number 13.

    David Sawers above writes such rubbish I couldn’t stop myself responding to his comment.  The reason that government debt was so high after the two wars was that production of consumer goods virtually ceased in wartime, as industrial effort was devoted to the production of munitions.  Because exports were practically non-existent, these activities had to be funded through bond issues.  Such debt was possible to pay off, because after the war we had a solid manufacturing base which could be switched from munitions production to exportable goods.  To describe current debt as the result of recession is pure self-delusion, just as saying that debt levels of 2000 are a more accurate representation of our current financial health is utterly mendacious.  We have been in recession only since 2008, so he is choosing to overlook eight years in which government debt soared while GDP increased.  What is so worrying in the current situation is that the debt was not incurred with a large proportion of our economic engine out of action.

  • Comment number 14.

    I was unsettled by this lecture. Prof. Ferguson attempts to rally support from those he flippantly refers to as the 'indignados' by referring to this clearly sensitive issue of intergenerational responsibility. The young, who seem to a larger extent to be the disenfranchised, might understandably want the older generations to share the load and to take more responsibility for the future of society and of the planet. However the suggestion that the disenfranchised should whole-heartedly support austerity measures is wrong, and politically motivated. His political allegiance is not even barely concealed - he calls on the young to 'join the tea party' - and this could be forgiven if it weren't so obviously self-contradictory. The austerity measures proposed clearly do not serve the future generations, unless we are talking only about the monied classes. What a lecture like this serves to unhelpfully reinforce is the sense that there are only two options, austerity or profligacy. There must be a third way and as far as I can tell, this is what the occupy movements are attempting to work out. We need the public space for genuine discussion of alternatives, rather than airtime devoted to the self-satisfied prating of the well-off. Ferguson appears as the mouthpiece of the rich, their public, academic justification.

  • Comment number 15.

    The worse lecture I have ever heard on this programme. It was so bad that I can't even be bothered to give quality feedback to this obnoxious point of view.

  • Comment number 16.

    There was some interesting material covered in this first lecture; Niall Ferguson's call for governments to publish genuinely transparent accounts is the only way we can make an informed choice at the polling station.

    But sadly, like so many conservative thinkers, Niall Ferguson fails to identify it is not only the public sector that's to blame for the massive debt Western governments face. Moreover, no consideration is given here to providing and maintaining public services as part of this "partnership" with future generations

    I listened with growing irritation as Niall Ferguson delivered what sounds more like a Party manifesto speech than a Reith lecture. It really was not the appropriate content for this forum. I will listen to his thoughts on market regulations - but I'm not going to like it.

  • Comment number 17.

    Why have the BBC allowed such a right wing polemic to have uninterrupted airplay in this manner?
    Niall's lecture was politically partisan to say the least, I believe David Cameron was mentioned by name at least once. It would have been far better to include him in a debate format where he could be challenged on his views. Instead he was allowed to make unqualified statements like (in praise of right wing policies) 'however, we are right' or 'if young Americans knew what was good for them, they would all be in the tea party', utterly unchallenged . His historical narrative was totally bias; his account would have us believe that the civil war ushered in a utopian age of prosperity for all. No mention that those 'five hundred years of prosperity' encompassed slavery, workhouses, grotesque inequality and bloody repressions of normal people by his beloved 'institutions'. He also fails to understand or acknowledge one of the basic arguments of the left; that in a global community, where all the historical presidents he is at pains to outline have little relevance, 'institutions' do not add to the wealth of society at large, they have no Sovereign allegiance and act to take wealth out of the system and distribute it to a minority. The BBC should have thought more carefully about this.

  • Comment number 18.

    I found this lecture to be puerile Teaparty politics. It had no serious academic basis.

    The lecturer's opinions belong in Francis Wheen's book "How Mumbo-Jumbo Conquered the World".

    Please round up the lecturer and immolate him in the interests of science.

  • Comment number 19.

    Most of this blog seems to be from people complaining about the audacity of the BBC inviting someone right of centre to give a talk. This is obviously ridiculous. The purpose of the Reith lectures is to encourage lively intellectual debate and thinking. You don't have to agree with it. The role of the BBC is not to be a preserve of left wing thinking. The Reith lectures over the years has had people from the whole political spectrum and so should this continue. Therefore, for the people who strongly disagree with what was said, why not use this blog to offer some counter arguments as there is seems to be very little of this so far.

  • Comment number 20.

    Well, I hope Steve Keen - don't know that Will Hutton cuts it for me - gets to expound the post Keynesian alternative at similar length and in a similarly prestigious a format (the Reith's).
    Mason Gaffney - Corruption of Economics - https://homepage.ntlworld.com/janusg/coe/%21index.htm
    Henry George - Progress and Poverty. landvaluetax.org

  • Comment number 21.

    As usual the bankrupt Left come up with nothing more than wingeing in response to an informed, coherent and comprehensive argumentation from one of the world's leading living historians. Far from "Western Supremacy" Fergusson's analysis simply points out that basic & sound economic and political institutions and management led to a divergence in Wealth between the West and other forms of governence. That this gap is now being eroded is undeniable. But it is not a zero sum game. Increased wealth in the rest of the world is welcome - but so too is increased freedom, increased rights, increased rule of law and this is unlikely to emerge with a weak West because the "new tigers" still maintain political systems that the windgers would do well to witness. Excellent programming - and to those on the left - Freedom of speech, grounded in the rule of law give you the right to make arguments! Arguments are grounded and relevant points that contradict the view of the author. Calling people obnoxious or reeling out conspiracy theories do not constitute arguments - neither does censoring people because they say they are "conservative". Are you or have you ever been a member of the Communist Party? Remember?

  • Comment number 22.

    Once again, historians show that they may be good at analysis of the past, but their views of the present are highly coloured by their politics, like the rest of us. He starts off with an excellent analysis of why England's economy kick started itself through institutions, and contrasts this with the "Extractive Economies" of historic China and recent Egypt, where a small elite creamed off all the cash for themselves and the institutions were not there to recycle investment for the wider good. The logical projection of this theory to me is that we have drifted into a new kind of extractive economy which is creating the same state of economic stagnation. A new international / multinational elite, (the 1% that he derides) is creaming off the goodies for themselves and are salting it away in offshore tax shelters, rather than recycling it through the institutions of their home country. This elite has no loyalty to any home country and move their resources around playing off one country against another (the Jimmy Carr syndrome). If these resources were properly fed back into the system and put to use where they were extracted from the the social benefits we have would become affordable again as they were in the much harder post war years.

  • Comment number 23.

    Hello Androo - good suggestion. We recently interviewed economist Prof Steve Keen for Radio 4's Analysis.

    Like The Reith Lectures, this was a public event at the London School of Economics. Prof Keen was interviewed by Newsnight economics editor Paul Mason in front of a packed house.

    You can listen again on the Radio 4 website: https://bbc.in/JRuka1

    You can also listen via the Analysis download: https://bbc.in/kyntRM

  • Comment number 24.

    Ferguson's lecture started well with a good analysis of the historical interaction between economic activity and socio-political development (e.g. entrepreneurs pushing for laws and institutions to allow them to accumulate and safeguard their wealth) - almost Marxist in fact, though no doubt inadvertently so.

    But then, when he came to analysis of the current slump, it was downhill all the way. The narrow 'financial' side of things (i.e. the 'deficit') was privileged at the expense of everything else, when it is symptom and not problem. The whole thing was seen as being caused by a swollen 'public sector' and even, at one point, by that old enemy, the 'unions'. This meant that, for Ferguson, the solution was the utterly banal one proposed by the utterly banal Cameron and Osborne, of slashing the public sector and hammering the unions.

    The reality, however, as others have pointed out, is that very large deficits can exist quite happily as long as there is an economic boom, since there is sufficient capital sloshing around for governments to borrow to pay their way and no one thinks twice about lending. It only becomes a problem when that capital stops sloshing around. This happens when overproduction in certain areas and the knock-ons of that mean that goods can't be sold at their previous price and it becomes unprofitable for those with capital to invest. At that point lending to governments also dries up, at the same time as the amount governments can collect in taxation is also drastically reduced.

    Consequent government policies aimed at cutting costs by cutting in the public sector are a consequence of this situation not its cause. Morever, such cuts do not have any impact on the slump in train. The only thing that will have that effect is for market prices to fall low enough for investment in production and services to start up again since there will then be profit to be realised by it.

    Is Ferguson aware of any of this? If so, he didn't show it and so unfortunately he has failed to built anything like a solid foundation for the lectures to follow.

  • Comment number 25.

    Howard's comment above misses the point of this lecture entirely.  While his analysis is an adequate description of how governments can cope with deficits encountered routinely during the economic cycle, he does not seem to appreciate - as Niall Ferguson compellingly laid out - the sheer scale of accumulated debt (and not merely deficit) we have to deal with.  His solution appears to rely on creating an immediate and dramatic boom, which is simply impossible given the travails of our major European trading partners.  And he seems not to appreciate that increasing government borrowing increases the cost of that borrowing still further - the death spiral already seen in Ireland and Greece.

  • Comment number 26.

    Thanks to Mantuesday for comment on mine. I think there's a misunderstanding. I was definitely not suggesting 'creating a boom'. All attempts to do that (such as inflating the money supply, so-called 'quantitative easing' are doomed to failure), just as attempts to resolve the crisis by 'austerity' policies are equally doomed. The crisis will only be resolved, as I tried to explain, when prices have fallen to a point where those with capital can invest at a profit. And even at that point recovery will only be a gradual process. After the current slump is over (and we are talking about an unpredictable length of time), government deficit (or debt) will, as usual in non-slump conditions, cease to have a great deal of relevance one way or the other.

  • Comment number 27.

    Inter-generational transactions? In essence Nial Fergerson is correct, maybe 95% of our society does not consider their quality of life as a product of the labours, mental and physical, of previous generations, although many do consider what might be left to their children. However, I think there are two exceptions; the first is the landed gentry, who are very much in tune with the passage of generations rooted to one location, and linked to this is the second, a point more closely linked to our common past, that of agricultural communities and families, only representing 2%-5% of the western world's population but far higher elsewhere. A farm or forest is a long term business, one that is often handed from generation to generation within the same family without question and one where there is an acute awareness of the debt to past generations and responsibility to those as yet unborn. We could do worse than to visit the values of our common past with a view to learning how we might change our culture for the future.

  • Comment number 28.


    After the first ten minutes, which had some compelling ideas - all cited to other thinkers - it turned out to be one long, incoherently composed rant without a connecting thread. He mentions benefits for the old but fails to mention that these were ring fenced until Reagan and other US presidents started to raid the pot.


    And no mention of the 100s of trillions spent on the US war machine, one nuclear arms that could never be used, that could have devastated the planet 100s of times over. No mention of the Vietnam war, which with it's escalating costs (combined the social programs on a far smaller scale) led to Nixon taking the dollar off the Bretton Woods Agreement (which backed the dollar with a certain amount of gold). Nor any mention of the 700 plus bases around the world, a military-industrial complex with no bid contracts, products not fit for purpose and obsolete. The rantings of a far-right lunatic, who in coming segments will argue for deregulation - which has led to the sorry state of the world economy. Silly voodoo economics and absolutely no intellectual rigour whatsoever. No cause and effect.

    A dim and retardedly thought through diatribe. A One hour party political broadcast. A Reith lecture to utterly ashamed of. After the brilliance of the Sandel one from a few years ago, this shoddy excuse, I'll not be listening to any more of his rants, nor future Reiths, the whole of the BBC's news output is utterly shallow, 24 hour rolling nothing, a Panorama-lite for a decade. The only thing catching occasionally is Newsnight.

    Absolutely worthless.

  • Comment number 29.

    I'm surprised that so many listeners who've commented, appear to have abstracted only what they want to hear. There are 4 lectures in the series and - from my analysis of the first - I believe Nial Fergerson is going in the direction that all of the left (from leaners to rabid) will applaud. There is a problem; the 'fix' will come; 'Occupy' will have it's day - but it won't be tomorrow. I suggest that throughout the course of remaining lectures - and beyond - everyone asks themselves one question - 'What can I do to improve the future for my children?'

  • Comment number 30.

    I like Niall Ferguson, but I think that his History is better than his Economics. His comment on "Inter-generational debt" I find extreme. Current uk debt is heading towards 80% post from WW1 onwards UK peeked at approx 240% (Due to war spending). We managed to steadily pay that down to approx 30% in the early 1990's.
    "mantuesday"'s comment that we "switched on" the manufacturing base post war I find odd. The war time factories were tooled up for the production of military goods not the consumer and industrial products that there was a post war boom in. Also the infrastructure and supply chains were damaged due to German attacks. These took a great deal of time and investment to improve. Although I agree that we have neglected our manufacturing base over last 30 years. The City of London does not understand / favour the slow steady returns of manufacturing investments.

    My main problem with Ferguson's view he ignores Britain's biggest problems; Private debt which is now approx 300% of GDP if international interest rates return to average levels then pressure on private incomes will lead to a drastic drop in demand in the economy. This is private debt lent to individuals by private banks not the "big bad" state. Before the comments its government who regulates the banks. UK finance always called and lobbied hard for less and less regulation (as did the extreme right wing) backed up by millions of pounds of lobby money and political influence. "Leverson for the banks" I want to see it.

  • Comment number 31.

    Reply to RussP: not sure why you find my comment odd. If a large chunk of your skilled manufacturing base is devoted to making armaments, it's not able to contribute to generating wealth. When the need for manufacturing armaments passes, that skilled manufacturing labour can be employed in private enterprise. The British motor industry contributed more to GDP post war than the same workers did during the war making tanks. That's hardly a controversial point.

  • Comment number 32.

    Niall Ferguson is so enamoured of neo-conservative and Western ways of thinking that he sometimes can't see the wood for the trees. Twice he mentioned in the course of his high-pitched, slightly hysterical lecture that in 1978 the Americans had 22 times, reducing with the years to 5 times, Chinese incomes. Twice, suggesting he thought it important. How, then, amid what another blogger has referred to as his 'mumbo-jumbo' could he fail, as a historian, to make the simple observation that some 60 years after shedding a long-term dynastic tradition that makes the Americans' comparable shedding of British rule - and with a protective ocean intervening - seem child's play, followed by a civil war, again making the 19th-century American version of same seem modest by comparison; then invasion and 10-year occupation by the Japanese (an event, pace Pearl Harbour, the US has been spared throughout its history), and on to re-building the nation under Communism, with the hostile Taiwan Nationalists offshore, just as Communism in the USSR and Eastern Europe was crumbling: all this during a period in which the USA, with its nuclear arsenal and aggressive/persuasive capitalism, was taking over the world - how could he fail to observe that during these 60-odd years the fates of the two nations, China and USA, were so different, and so in favour of the US, that the wonder is that the Americans were not merely 22, but 200, or 2,000, times more prosperous than the Chinese? If capacity for recovery from catastrophe is the criterion for evaluating the economic viability of a nation and its systems, this would suggest that, not neo-conservatism, but communism, holds the key to the future.

  • Comment number 33.

    I listened to this whilst walking around Asda. Weird. Anyway, I don't see a conspiracy theory. I spend a lot of time defending the BBC against left-wing bias so I've got some decent ammo from the conservative critics. The BBC is, overall, balanced and much maligned.

  • Comment number 34.

    Lecture 1, the point is fudge?

  • Comment number 35.

    In the Reith lecture of 26 June characterising the financial crisis and regulation, the analogy with Malthus and Darwin is irrelevant, but the quotes from Bagehot are appropriate.
    Banking risk regulation is not complex except technically to implement if given time to understand properly the few thousand pages of advice, risk accounting equations, and how to model banks in the macro- economies in which they do business.
    Doing this work fully is a job few are given or trained for, certainly not the lawyers that Ferguson gives too much attention to. He overlooks the immensely important bug errors in the risk models of ratings agencies.
    Nearly all 'front-line' bankers avoid taking the trouble to manage risk directly, leaving this to lower echelon back office geeks to express the rules in computer systems.
    Ferguson when reading Begehot is right to point out that hard to quantify personal judgement is important, but that also goes wrong. The most relevant complexity issue is that 'universal banking' developed far beyond the human ability of main boards to comprehend and manage, the only justification really for Dodds-Frank and the UK's Vickers Commission Report recommendations.
    It is wrong of Ferguson to assume all developed countries had housing bubbles. For example, banks in Germany did not stoke housing prices by lending predominently to property but to industry instead (and proportionately ten times more to small firms than UK banks lend), while in others, above all USA, also UK and others, banks lent mainly for household and corporate mortgages.
    It is a mistake of Ferguson to accept the homespun media story that China bought $trillions of US securities to prevent its currency appreciating. The Renmimbi is not a floating currency. China gained dollar reserves from its export surpluses and has deposited most of these reserves in domestic banks to support loans to industry.
    Insofar as there was regulatory failure this followed from central banks' inability to deliver clear warnings to banks about skewing their lending too much to any one sector of the economy. Greece's central bank did so in good time, several times, but was rudely ignored by its banks. Monetary and fiscal stances of governments are less relevant than the inevitability of economic and credit cycles, about which Ferguson is silent, even though these are what banking regulations (Basel etc.) are principally concerned about coping with, not least so that the burden of recovery does not fall entirely on government budget deficits and sovereign debt.
    Recessions have to have triggers but are inevitable. For the USA, the triggers this time were historically high trade deficits and a concomitent property bubble. For other countries, triggers can include fall in export demand or governments too speedily balancing their budgets.
    Basel regulations apply to private banks who do international business and set minimum regulatory capital reserves at a level expected to be nominally wiped out in a normal recession after which half of current nominal losses are expected to be recovered over the following few years as losses become finally realised. The Credit Crunch caused banks in USA and other countries such as the UK to nominally lose double their minimum capital reserves. This was because retail banks could not replenish their borrowing from the money markets at what they perceived to be viable rates of interest.
    Governments and central banks had to step in to fill the role that the more fearful and greedy private sector would not fill. Governments on and off balance sheet replenished half of banks' losses, but not without exerting high rates and charges, exerted on banks desperate to ensure the ledger balance between their loans and deposits.
    Investment banks that went under did so as a side-blow to the bigger picture because they gamed their financing with hedge funds and prime dealers and borrowed too much short to go long. They misread the timing of the market crash and grossly underestimated the underlying economic cycles. There eventual net losses, which took a few years to calculate, were however far less than originally estimated gross.
    Few bankers may have gone to jail so far but there have been nearly a thousand arrests, mostly in the USA. Prosecutions are in train or pending that will take a decade or more to complete. Shareholders were severely punished, short-traders got rich for a time, and bonus-earners stayed rich years longer than they should.
    Millions of non-bankers lost their jobs, but no more than expected in a normal recession. The real calamity is the slowness of recovery in output and jobs and, in Euro-land and the money markets, the cold-hearted and greedy responses to the plight of small countries only guilty of enthusiastically following examples set by larger 'credit boom', property obsessed, trade deficit economies. without whom export surplus countries Germany and China can not keep growing.

  • Comment number 36.

    Fred calls for 'a series where Fergusson was in conversation with someone on the left' - That is called a debate. This was a lecture. Please see dictionary for definitions.

    Ferg. gets attacked for being a conservative. Has free speech ended? Are we not to have anyone challenge the decades long practice of stealing from our children to pay for today. All that our political masters of both shades have done is to create a bankrupt state that will have no choice but to tighten the chains until we all squeek.

  • Comment number 37.

    'UK government debt has been incurred by the bank rescue, not by government expenditure'. - so wrong - by both.

    Aircraft carriers built and scrapped before a voyage, nuclear weapons, ID card fiascos, Scottish parliament £billion building, Edin trams £billion, PFI, millionaire doctors striking for more, wars for WMD etc etc
    - governments are the main cause of wasted billions - you only need open a newspaper any week of any year to see how your taxes are flushed down the drain.

  • Comment number 38.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 39.

    You have to laugh at the 'Bilderberg conspiracy' posts - sounds like an old Mel Gibson film!

    'indignados' by the way wasn't Ferg's term - please feel free to use google.

    Amazed how samurairo missed the point completly. F explains how our weak ruling elite rob from the young and unborn to pay for sky rocketing welfare for the old and you think he is attacking the young?
    F's point is that the % in work is shrinking as the population ages and taxpayers can't afford the bill. This population timebomb isn't really news as it has been debated for decades now.

    People still just don't get it. If you are drowning in debt you can't solve it with more borrowing. Hello? In a hole? - stop digging!

    Do you really think we can carry on this decade as normal. The game is up and unless someone finds a dozen new massive oil fields pronto then all our kids better learn some Chinese.

  • Comment number 40.

    I agree with Beverley at comment 15. Had more to say on the subject but was sanctioned by an overly sensitive Moderator at comment 38.

  • Comment number 41.

    I'm afraid Mr. Ferguson has done nothing to help the image of this lecture series. There are more informed, less biased, individuals that could give us a much more useful outline of the subject matter in question. Oh! and by the way, there is also a fine line between Moderation and Censorship on the BBC?

  • Comment number 42.

    ScottishTaxPayer @36
    "Stealing from children"

    Most will welcome Professor Ferguson's concern for children, tomorrow's as well as today's. Before accepting any prescription we would though like to know, on whose children the concern focusses, and what is the likely fate of children who are not the subjects of concern. If 'the concern' is not 'for all', then 'we' might wonder to what and why are we listening. Let us here assume a genuine 'concern for all', however paternalistic or misconceived, some relation to 'democratic aspiration'.

    Some supposed 'conservatives' might state their concern to be 'for competition', for winners to lead all wherever the fancy takes 'them'. They might explicitly invite all to trust, in 'them', to lead where 'others' will see or discover themselves 'well' to be led. Failing 'trust', they might 'invite' us just to expect 'the inevitable', other views to be out-competed, in argument, or by 'natural weight' of propaganda, or cowed 'if it must be' by experience, poverty, gang-emergence, species of martial law.

    Others, less inclined to trust or to sell trust, taking true conservatism to be a socially agreeable 'holding to good except to accommodate better', will be concerned that on-going trust should have a rational basis, not just 'the requirement of trust' that we might in emergency ask towards group survival. Even for those, the vast majority, whose 'group' might be decided as 'humanity', the question will remain: "What kind of humanity, and what proportion or selection of survival do we, can we, hope for?"

    Assuming 'moral equivalence' in our 'expressions of concern', our distributional prescriptions for 'fairness and survival' might be seen as contingent: that of secure equality being appropriate for perhaps some billions of years making progress in peace, that of 'the strong-man' being best if life is agreed to be of perpetual emergency.

    Whatever the conscious or unconscious motives of parties along the spectrum that extends from equality to chaos, it should not be assumed that presented options are all in fact 'honest' or even viable. If fully thought-through, any agreement might serve: but can a viable civilisation really be based on 'agreement to disagree' on so fundamental an issue as our sharing of what together we make, in our access to goods, services and representation, in the direction of our world and our steer for the future?

    Against the notion of 'moral equivalence' in the propositions, it can be argued that leadership amongst equals is not precluded, merely to be won and accorded by earned respect, arguably a better basis than purchase from however-earned advantage in money. Further, the idea of 'perpetual emergency' might be rejected as too much conditioned by experience of 'internal emergency', from the conflicts engaged in by all in times past, before due consideration of what is in fact a real choice, that between egalitarian co-operation and possible auto-extinction.

    Short of human or planetary extinction, ignorance and inequality have already 'delivered' the full range of horrors, for individual, tribes and whole civilisations in our history. My counsel would be against the continued rule of Fear and Greed, against rule as if in perpetual emergency, and in favour of Lincoln-updated: "Rule Of, For, By The Equal People". We need to think about, to get used to the fact, that equality is the necessary shareable foundation of 'agreeable life together', of viable civilisation.

  • Comment number 43.

    In democracies the principle of treating all citizens equally must be respected. This makes overburdening the next generation with debt undemocratic.

    The same principle must apply to taxation obviously so taxing some more than others, as happens for indirect taxes, is also not only undemocratic but dishonest.

    Another inequality now apparent is that of Government created bank credit. When mortgages to public sector workers, government debt, loans to companies supplying government and involved in capital programmes, plus any savings by welfare recipients, are taken together banks are seriously exposed in recessions and to falls in tax revenues. Common sense says that the incentives should all be to the private sector yet job security and the collateral of future guaranteed benefits show the opposite to be the case, which makes nonsense of attempts at fiscal consolidation and shows deficit spending to be economic suicide.

    All of these inequalities will eventually lead to a very unequal society and must also eventually set the scene for social unrest perhaps even violence. They also by their nature create circumstances where higher taxes and the printing of money will be the only ways politicians have of dealing with the outcomes. Demand will constantly reduce so supply must also, the former affecting the poor and lower earners and the latter the higher earners.

    There are no winners here and this dwarfs in risk those posed by China’s fifth killer app since the temptation to expropriate private property will be huge. Taxes on property and deposit interest already are in place and also affect the poor more than the rich and those saving more than those already borrowed.

    If the lectures don’t deal with this they will be missing a focal point around which events will unavoidably occur and with tragic consequences. Omitting to do so would seem like indicating that the law(s) not in place elsewhere are the only problem when we have here such a serious and perhaps fatal democratic deficit.

  • Comment number 44.

    Michael @43

    I fear that your enthusiasm, whether it is for homage or polemic, somewhat runs away with you! Unless you have employed direct quotation, the professor will not I think understand your starting point.

    That 'democracy' demands "treating all citizens equally", a fellow most 'absolute' might take as a 'principle' to demand equality of ice-cream consumption or hat-size or even VAT.

    For the rest I commend Occam's Razor.

    Need more be said?


More from this blog...


These are some of the popular topics this blog covers.

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.