Three weeks earlier, Lehman Brothers had filed for bankruptcy and there had been a run on the Northern Rock bank. These were the early rumblings of a financial crisis that would engulf most of the world in 2008. The British economy went into recession in the second quarter of 2008 and remained there until mid-2009.
As the graph below shows, it took until 2014/15 for GDP and median incomes to return to pre-crash levels. Median wages have still not caught up.
None of this pain could be felt in 2007 after more than a decade of uninterrupted economic growth. For miserablists at the Guardian, it was growth that was the problem. Sneering at people's desire to own 'stuff' and wanting the market economy to be replaced by a vaguely defined 'sustainable' and 'steady-state' (ie. zero growth) system was a standard, flat-pack anti-capitalist opinion at the time (see chapters 4 and 7 of Selfishness, Greed and Capitalism).
Worn and wearisome though this view was, Monbiot presented it as iconoclastic as he began his article...
If you are of a sensitive disposition, I advise you to turn the page now. I am about to break the last of the universal taboos. I hope that the recession now being forecast by some economists materialises.
He goes on to complain that some people on jet skis had recently spoilt his visit to an estuary and that the world is getting too noisy. This, he argues, is because people are getting too rich. He then touches on his favourite topic, global warming, with a lament that 'carbon dioxide emissions are higher than they were in 1997, partly as a result of the 60 successive quarters of growth that Gordon Brown keeps boasting about.'
It cannot be seriously argued that the problems Monbiot identifies are not, in part, facilitated by economic growth. The question is whether the benefits of growth outweigh the costs. Monbiot does not deny the benefits. He admits that recessions cause 'hardship' and he acknowledges that...
The massive improvements in human welfare - better housing, better nutrition, better sanitation and better medicine - over the past 200 years are the result of economic growth and the learning, spending, innovation and political empowerment it has permitted.
But at some point, he argues, the costs must exceed the benefits. And he says that point is now (ie. 2007).
It seems to me that in the rich world we have already reached the logical place to stop...
Surely the rational policy for the governments of the rich world is now to keep growth rates as close to zero as possible?
But why was 2007 the logical place to stop, as opposed to 1997 or 1957 or 1907? If carbon emissions are the real issue, the optimum point at which to stop was some time in the nineteenth century, but that would require a dramatic fall in living standards.
Monbiot does not want to go that far. He just wants to settle for the living standards of 2007 and sacrifice future gains. This, I would suggest, is because existing living standards are tangible and we would feel their loss whereas we cannot feel, or even necessarily imagine, the benefits of future economic progress.
Could Monbiot really be confident that the balance had been tipped by 2007? At any stage in the last 150 years you can find people saying that people are rich enough and that the job of government is to redistribute the wealth that exists rather than encourage people to create more. With the benefit of hindsight even the likes of the anti-growth New Economics Foundation would struggle to argue that they were right.
One of the themes of JK Galbraith's The Affluent Society (1959) was that people do not really need to have such extravagances as wall-to-wall carpets, televisions and vacuum cleaners. He claimed that the desire to own such frivolous goods was magicked into them by advertisers.
A lot of people, particularly on the left, agree with Galbriath's analysis but you will never hear them use his particular examples. Nobody outside the lunatic fringe would claim today that a vacuum cleaner was a luxury, or call for economic growth to be wound back to the point at which wall-to-wall carpeting is unaffordable.
Their desire to stop progress now rather than wind the clock back is a tacit acknowledgement that people's lives would be made worse if progress had stopped a few years earlier. It also reveals a lack of imagination and/or optimism about what the future has in store.
Writing in the 1950s, Galbraith would not have been able to imagine a thing called The Internet, and yet access to high speed broadband is now on the verge of becoming a legal right. Galbraith would have thought nothing about wearing leather shoes, whereas Adam Smith - writing in the 1770s - remarked that neither leather shoes nor linen shirts were 'strictly speaking' necessities and were only considered essential for even the 'poorest creditable person' as a result of 'custom'.
If ordinary people are able to take for granted goods and services that had once been the preserve of the wealthy, most people would see this as a good thing (as Adam Smith did). But for the miserablists, it is a sign that everybody is rich by historical standards, therefore we can stop bothering with the whole capitalism thing.
By 2007, the equivalent of Galbraith's vacuum cleaner was a mobile phone, and Monbiot adjusted the Galbraith argument to fit the times:
I now live in one of the poorest places in Britain [rural Wales - CJS]. The teenagers here have expensive haircuts, fashionable clothes and mobile phones. Most of those who are old enough have cars, which they drive incessantly and write off every few weeks. Their fuel bills must be astronomical. They have been liberated from the horrible poverty that their grandparents suffered, and this is something we should celebrate and must never forget. But with one major exception [which is housing, as Monbiot later explains - CJS], can anyone argue that the basic needs of everyone in the rich nations cannot now be met?
This is an argument that you would usually associate with right-wing conservatives: 'Don't talk to me about poverty! They've all got widescreen televisions!' It is not an argument we've heard much in the Guardian in the last ten years, even from Monbiot, and that is not because the poor have got poorer. As the graph from the ONS shows, the incomes of the bottom fifth of households has risen by 13 per cent (in real terms) since 2007.
Far too close, I would say. What a miserable decade it's been. We have seen stagnant productivity, a fall in real wages and a trivial amount of economic growth (all of which are connected). Meanwhile, the government has managed to borrow £1.3 trillion pounds (and counting) with no obvious means of paying it back.
Perhaps there are fewer boy-racers on the streets of Wales as a result. Perhaps there are not as many jet skis to ruin George Monbiot's day trips. Perhaps carbon emissions are slightly lower than they would have been. But what a price to pay.
Monbiot was not the only pundit pining for recession in the carefree days before it became a reality. The following year, the Observer published 'Hurrah for the recession. It will do us a power of good' in which Hephzibah Anderson suggested that being 'poorer in pocket may not make us richer in spirit, but it could just help us get there'. The Independent, which used to be a newspaper, published a column by Tim Lott under the self-explanatory headline ‘Bring on the pain of the recession and purge our coarsened souls’. The Sunday Times published an article by India Knight headlined ‘Aah, what a relief the boom has turned to bust’ in which she was 'happy to observe that the decades of vulgar excess are finally over.'
The theme of all these articles is that we - the little people - had become vulgar consumerists with too much money for our own good and would benefit from a little make-do-and-mend. Saying 'this bad thing is actually good' is bread and butter for op-ed writers. Even so, it was a stupidly callous line to take on the eve of the biggest financial downturn since the Great Depression. As I said in The Spirit Level Delusion: 'When the full impact of the recession hit home a few months later, these columnists had the good sense to shut up about unemployment cleansing the soul for fear of being lynched by their readers.'
Thereafter, journalists began agonising over every 0.1 per cent of GDP growth and lamenting the government's failure to get the economy moving at full throttle. This is how the cycle works - when the economy is bust, we are too poor, and when the economy is booming, we are too rich. We will only know for sure that the economy is back on its feet when Monbiot is calling for another recession.
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