Category: Economy

In work, but poor: barriers to sustainable growth and the need for a living wage

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While the UK has returned to growth, many workers continue to suffer economic hardship as real incomes have yet to recover. This means that, just as in the past, the UK economy is relying on an unsustainable growth model where workers spending more than they earn to support the economy. Setting the UK on a sustainable path and reversing the growth of in-work poverty requires policies to raise real wages, writes David Spencer. 

Rejoice. The UK economy is back to where it was before the crisis. The depression is over and sunny economic uplands lie in the future. Feel good, damn it, the economy is growing again. But there is a reason why the positive growth statistics are treated sceptically. That reason relates to the fact that real incomes have fallen in the UK. Despite the restoration of growth, workers in the UK have continued to suffer cuts in their real pay. One of the arguments for growth is that it raises real incomes – in the UK at least, the reverse is proving to be true. The economy has achieved growth, while many millions of workers have suffered increasing economic hardship with little prospect of improvement.

From a growth perspective, the grim facts of the recovery provide cause for concern. The UK economy has only been able to grow by workers spending beyond their means. Workers have run down savings and borrowed more to increase their consumption and this has driven growth. But workers can only go on behaving like this for so long. Without a rise in real pay, the spending must come to an end and with it the recovery. 

There is no sign yet of net exports recovering to support consumption and any rises in business investment will need to continually confound expectations to offset the further fiscal tightening to come. Again as in the past the UK economy is relying on workers spending more than they earn to support the economy. This is a growth model that cannot be sustained and will ultimately end in disaster.

Even the most ardent backers of the government’s current policy stance must harbour some concerns about the prospects for growth in the economy. Lower real wages may help firms keep a lid on their costs but from the perspective of raising demand on a sustainable basis they place restrictions on the ability of firms to grow output. Demand side barriers will bite in the end and terminate the recovery.

But beyond growth there are deeper issues here relating to work and its relation to poverty. Work has long been heralded as the best form of welfare and the route to economic success. This view – summed up in the mantra ‘work always pays’ – has been exposed as a miserable lie. Now it seems that work for many is no escape from poverty. Working hard for a living often means struggling to keep one’s head above water.

Evidence shows that in-work poverty is on the rise in the UK. Among working age adults in low income households, the number in working families has been growing and is now greater than the number in workless families. It used to be that worklessness was the prime determinant of poverty. Now it is more likely to be low waged work.

How did we get into this situation? The underlying causes are complex and multifaceted. They include the decline of unions, the deregulation of the labour market, an inadequate training system and the rise of the service sector at the expense of manufacturing. The UK has lacked the necessary modernising forces that would have otherwise led it towards a high wage economy. Instead, it has evolved an institutional structure that has favoured and entrenched low wages.

What can be done? In the short term, policies to raise real wages in the UK would help not only to sustain the recovery if that is the concern but also to address the problem of in-work poverty. The national minimum wage, although a welcome development, has not managed to address the problem of low pay and this is where calls for a living wage come in. Raising the minimum wage to the level of the living wage would be a bold but economically sensible step to take. Critics may say that this will lead to unemployment. Yet evidence shows that minimum wage hikes have not had adverse employment effects. Indeed, their effect has been to increase productivity via higher levels of worker morale and to reduce welfare spending.

Longer-term, the UK needs to break its reliance on a low wage growth model. For this, it needs a new industrial strategy that focuses on building things rather than on making money. It needs to invest in new industries via the help of the State. Challenging vested interests particularly in the world of finance and creating a model of sustainable prosperity based not on endless growth but on the promotion of human flourishing remain the ultimate goals. Whether these goals are achievable under current conditions remains a moot point. Yet they are goals that we need to keep in our sights and agitate for.

In the end, the UK cannot afford to pay workers less. Driving real wages down is a recipe for economic stagnation and human misery. For all our sakes, we should seek a rise in real wages. 

Note: This article gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Featured image credit:

About the Author

David Spencer is Professor of Economics and Political Economy at the Leeds University Business School.

Five minutes with Thomas Piketty: “We don’t need 19th century-style inequality to generate growth in the 21st century”

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In an interview with EUROPP’s editor Stuart Brown and British Politics and Policy at LSE’s editor Joel Suss, Thomas Piketty discusses the rise in income and wealth inequality outlined in his book, Capital in the Twenty-First Century, and what policies should be adopted to prevent us returning to the kind of extreme levels of inequality experienced in Europe prior to the First World War. Professor Piketty recently gave a lecture at the LSE, the video of which can be seen online here.

Your research shows that inequality is rising and that without government action this trend is likely to continue. However, are we correct to assume that inequality is a fundamentally negative development in terms of its consequences on society?

There is no problem with inequality per se. In actual fact, up to a point inequality is fine and perhaps even useful with respect to innovation and growth. The problem is when inequality becomes so extreme that it no longer becomes useful for growth. When inequality reaches a certain point it often leads to the perpetuation of inequality over time across generations, as well as to a lack of mobility within society. Moreover, extreme inequality can be problematic for democratic institutions because it has the potential to lead to extremely unequal access to political power and the ability for citizens to make their voice heard.

There is no mathematical formula that tells you the point at which inequality becomes excessive. All we have is historical experience, and all I have tried to do through my research is to put together a large body of historical experience from over twenty countries across two centuries. We can only take imperfect lessons from this work, but it’s the best that we have. One lesson, for instance, is that the kind of extreme concentration of wealth that we experienced in most European countries up until World War One was excessive in the sense that it was not useful for growth, and probably even reduced growth and mobility overall.

This situation was destroyed by World War One, the Great Depression, and World War Two, as well as by the welfare state and progressive taxation policies which came after these shocks. As a consequence, wealth concentration was much lower in the 1950s and 1960s than it was in 1910, but this did not prevent growth from happening. If anything, this probably contributed to the inclusion of new social groups into the economic process and therefore to higher growth. So one important historical lesson from the 20th century is that we don’t need 19th century-style inequality to generate growth in the 21st century, and we therefore don’t want to return to that level of inequality in Europe.

How would you respond to those who doubt whether there is sufficient evidence to draw this kind of conclusion?

This will always be an imperfect inference because we are in the social sciences and we should not have any illusions about what is possible. We can’t run a controlled experiment across the 20th century or replay the century as if World War One and progressive taxation never occurred. All we have is our common historical experience, but I think this is enough to reach a number of fairly strong conclusions.

The lesson we have already mentioned – that we don’t need the kind of extreme inequality of the 19th century in order to have economic growth – is simply one imperfect lesson, but there are other important lessons if you look at, for instance, the rise of inequality in the United States over the past 30 years. For example, is it useful to pay managers a ten million dollar salary rather than only one million dollars? You really don’t see this in the data: the extra performance and job creation in companies which pay managers ten million dollars rather than one. In the United States over the past 30 years almost 75 per cent of the aggregate primary income growth has gone to the top of the distribution. Given the relatively mediocre productivity performance and the per capita GDP growth rate of 1.5 per cent per year, having nearly three quarters of that going to the top isn’t a very good deal for the rest of the population.

This will always be a complicated and passionate debate. Social science research is not going to transform the political conflict over the issue of inequality with some kind of mathematical certainty, but at least we can have a more informed debate using this historical cross-country evidence. Ultimately that is all my research is aiming to do.

What specific policies can be used to prevent us returning to the kind of extreme levels of inequality you have discussed?

There are a large number of policies which can be used in combination to regulate inequality. Historically the main mechanism to reduce inequality has been the diffusion of knowledge, skills and education. This is the most powerful force to reduce inequality between countries: and this is what we have today, with emerging countries catching up in terms of productivity levels with richer countries. Sometimes this can also work within countries if we have sufficiently inclusive educational and social institutions which allow large segments of the population to access the right skills and the right jobs.

However while education is tremendously important, sometimes it’s not sufficient in isolation. In order to prevent the top income groups and top wealth groups from effectively seceding from the rest of the distribution and growing much faster than the rest of society, you also need progressive taxation of income and progressive taxation of wealth – both inherited and annual wealth. Otherwise there is no natural mechanism to prevent the kind of extreme concentration of income and wealth that we’ve seen in the past from happening again.

Most of all, what we need is financial transparency. We need to monitor the dynamics of all of the different income and wealth groups more effectively so that we can adapt our policies and tax rates in line with whatever we observe. The lack of transparency is actually the biggest threat – we may end up one day in a much more unequal society than we thought we were.

Thomas Piketty is a Professor of Economics at the Paris School of Economics. He is the author of Capital in the 21st Century (Harvard University Press, March 2014).

Britain’s housing crisis risks turning into catastrophe unless urgent action is taken

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We have an endemic crisis of housing supply – caused primarily by policies, like Greenbelt, that constrain the supply of housing land precisely where it is most wanted. Paul Cheshire argues that nothing short of radical reform will improve housing affordability. But radical reform, like intelligently loosening restrictions on Greenbelt building, is frightening.  

The housing crisis – worst in London, but bad across Britain – is fundamentally driven by lack of supply. For the past five years, we have been building fewer houses than in any peacetime period since before World War One. But house building has been on a downwards trend since the 1960s. Reasonable estimates suggest the shortfall in England has been 1.6m to 2.3m houses between 1994 and 2012. Moreover, too many of those we have built have not been in locations where demand is highest. We persistently build houses where they are relatively least unaffordable and job prospects are relatively worst.

This is true from Lancashire (compare Preston with Ribble Valley) to Northants (Corby to Daventry), but is perfectly encapsulated in London. In the four biggest building boroughs; Tower Hamlets, Islington, Hackney, and Southwark, unemployment in 2012-13 averaged 11.35 per cent and the affordability ratio (median house prices to median earnings) was 9.98, we added an average of 14.57 per cent to the housing stock in 2004-2012. In the four slowest building borough; Merton, Bexley, Sutton, and Kensington & Chelsea, where the unemployment rate averaged 6.75 per cent and the affordability ratio 15.07, we added an average of just 2.11 per cent to the stock over the same period.

We may have 32,500 hectares of Greenbelt land within the GLA – including around at least two Tube stations – but we have concentrated new supply where prices relative to earnings are least unaffordable and job prospects worst. And we are not just building too few houses; those we have been building do not satisfy demand. We have an endemic crisis of housing supply – caused primarily by policies, like Greenbelt, that constrain the supply of housing land precisely where it is most wanted. No wonder house prices are rising at over 10 per cent a year.

Fundamental reform is needed, but this has to be informed by a clear understanding of how markets work. Land markets certainly suffer from problems of market failure, but they still provide vital information about where there are shortages and what there are shortages of. So while we ignore price distortions at our peril, we need to be guided by them, not blindly obey them. But what do our political parties offer? Grandstanding and baby kissing. From the Conservatives, we have Help to Buy; from Labour, policies to control rents and increase security of tenure. Neither addresses the fundamental problem of supply. Both will probably make housing just a tad less affordable.

Following the watering down of the coalition’s draft National Planning Policy Framework, the Tory policy for the housing market morphed into cynical electioneering with Help to Buy, announced in the 2013 Budget. There are two schemes, but even the less toxic Help to Buy 1 – restricted to buyers of new build – may be making housing less affordable. Remember (as the OBR told the Treasury Select Committee within days of the Budget) that the underlying problem is almost perfectly inelastic supply. Anything that increases demand mainly adds to pressure on prices. While a proportion of Help to Buy 1’s financial help will increase supply, there will be a displacement effect. Given how inelastic the supply of houses is because of constraints on land supply, it is possible that the adverse effects of the good scheme on affordability will more than offset any positive effects via increased supply. Help to Buy 2 – the purely bad one – just makes access to mortgages for housing easier. Insofar as it has any effect, it will be almost entirely to increase house prices. Oh – and help us, the taxpayers, take on some housing risk banks did not want to shoulder.

Labour has announced its own version of baby kissing: partial controls on rents, increased security of tenure, and elimination of agent’s fees for finding housing for renters. The best that can be said for these proposals are that there effects will be modest. If these policies have any effect, it would be to modestly decrease rental supply, since it would become less attractive to be a landlord. The abolition of fees to agents will, of course, just get transferred into rents (because costs to landlords will increase). All forms of tenure are in the end substitutes for each other, so the net adverse impact on housing affordability will be small – perhaps negligible. It will just reduce the rate of growth of the rental sector and maybe frighten a few institutional investors who might be considering entering the market.

As I explain in the book I have just co-authored, nothing short of radical reform will improve housing affordability. But radical reform, like intelligently loosening restrictions on Greenbelt building, is frightening. Even excellent reforms will probably only make a real difference over a period longer than five years. But if people were convinced that prices of land and housing were going to behave as they do in Germany in the future, not as they have in England in the past, there could be a step change in prices relative to incomes, because expectations are built into current prices.

But the other frightening thing is that radical reform will have to come because the present system is building up pressures that, over time, will cause more and more damage. The issue is not will we reform, but will we reform in time to avoid something like a catastrophic collapse? In the meantime, kissing babies is sadly much more attractive for politicians.

Paul Cheshire is co-author, with Max Nathan and Henry Overman, of Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom (Edward Elgar, 2014). The  LSE/ Radio 4 debate “Where will we all live” , featuring Paul Cheshire will be broadcast on BBC Radio 4 on Wednesday 11 June at 8pm. A Storify of this event is available here.

Note: This article first appeared in City AM on Wednesday 4 June 2014 and gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics.

About the Author

Paul Cheshire – London School of Economics

Paul Cheshire is Professor of Economic Geography at the London School of Economics. He is co-author, with Max Nathan and Henry Overman, of Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom (Edward Elgar, 2014).

How to bring down house prices in London

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The London property market is potentially in bubble territory with demand clearly outstripping supply, causing prices to rise to eye-watering levels. What can be done to bring prices down? Kath Scanlon explores the possible policy routes in detail. She argues that local authorities can make it a condition of planning permission that dwellings remain in private rental for a specified period, encouraging the supply of new build housing that London desperately needs. But since new homes will only ever be a tiny proportion of transactions, she writes that we also need to persuade older ‘over-occupiers’ to downsize.

The jury is still out on whether there is a housing bubble in London, but we’re certainly approaching bubble territory in terms of the number of discussions, seminars and debates on the subject. The key issue is clear: London house prices have been rising fast—much faster than incomes. Why is this happening—and what can be done about it?

Let’s look at the basics; at supply and demand. Demand for housing in London has been growing but supply is stagnant. Demand is up because London’s permanent population is growing through natural increase and migration (from abroad and elsewhere in the UK) and there’s an increasing group of part-timers: wealthy foreigners who want a London base. Mortgage conditions, tightened in the wake of the Global Financial Crisis, have now begun to relax and loans covering 95 per cent of property value are again available. Underpinning these is London’s pre-eminent position as a national and global centre of governance, finance, education and culture.

There is less agreement about the reasons for the stagnation of supply. Discussions about supply can be confusing because in popular usage the term can mean two things: the net addition to the housing stock (that is, new construction), and the number of homes offered for sale at any given time—of which the vast majority are existing dwellings. Let’s take new construction first. The rate of new build has increased, but still doesn’t come close to match the number of new households in London—so in pure numbers term the housing deficit is growing, which tends to push up prices. There are many reasons for this, and each commentator has his or her favourite.  They include the greenbelt, NIMBYism and ‘land hoarding’ by developers.

In terms of housing transactions, though, the overwhelming bulk of supply is not new build but existing homes. And while house prices have risen strongly in the last five years, the number of transactions has risen much more slowly, and is still well below the peak reached in 2006—so in that sense, the supply response has been disappointing.

What can be done to bring prices down? There are three broad possibilities, alone or in combination: control prices administratively, increase supply or reduce demand. There are proponents of administrative control of prices in one part of the housing market, in the form of rent control. Interestingly, though perhaps not surprisingly, they never advocate capping house prices. There are, however, ways of exercising indirect influence on house prices through regulation. One is to limit the size of mortgage loans by capping loan-to-value or loan-to-income ratios, which would reduce effective demand.

Houses-London

Another possibility is to increase supply. In terms of new construction, there is a huge amount of housing in the pipeline in London. But even (or perhaps especially) on the biggest sites, new homes are produced very slowly—even though there are few technical barriers to faster production. One reason is that house builders have learned that putting many houses on the market at the same time reduces the price of individual homes. But that doesn’t seem to apply to rented housing—even if hundreds of properties are leased at once, it doesn’t affect rents much. This means that developers could be willing to build rental-only homes at a faster rate than homes for sale. This wouldn’t directly bring down the price of homes for purchase, but would have an indirect effect by increasing overall housing supply.

Why aren’t they doing so already? There are several reasons, but the most important has to do with the cost of land.  The price that developers can pay for land is the difference between the eventual sales value of the houses and the cost of development. Envision a block of two-bedroom flats—the kind of rented housing typically found in New York or Berlin. If the flats are sold individually to owner-occupiers, as normally happens in the UK, the sales price will be higher than if the developer sold the block as a whole to a landlord. That means that a developer building for owner-occupation or to individual buy-to-let investors will always be able to pay more for land than one who wants to build blocks for private rental—so the rental-only blocks just don’t get built.

There is a way around this. If the development has to be for private rental the overall value will be lower—and this brings down the price of the land. Under the British planning system there’s no special treatment of private rented housing—it doesn’t have a separate ‘use class’ or zoning. But the same effect can be achieved another way: local authorities can make it a condition of planning permission that dwellings remain in private rental for a specified period (say 10 or 20 years). This is known as ‘covenanted private rental’ and is one approach advocated in the Mayor’s Draft London Housing Strategy. Widespread adoption of this could help accelerate the supply of new build housing that London desperately needs.

But new homes will only ever be a tiny proportion of transactions. How could we increase the number of existing homes coming onto the market? If older ‘over-occupiers’—single people or couples living in family homes—could be persuaded to downsize, this would release their properties for younger families. Of course, not everyone agrees that this should be a policy goal: Mrs Thatcher famously campaigned for the poll tax by invoking the example of elderly widows unable to pay rates on their long-time homes. But we have to ask whether it is a sensible use of London’s housing stock to have older people living alone in large houses while families with small children are crammed into too-small flats.

One of the reasons that many older ‘over-occupiers’ remain in their large homes is that the alternatives are so grim.  Many would never move into a retirement home, however tidy and well-run, unless forced to do so by ill health or dementia. We need to create positive, attractive living arrangements for later life—homes that active older people would genuinely prefer to live in. There are some innovative projects that may suggest a way forward—for example, a new co-housing community for over-50s currently being created at Featherstone Lodge in South London could provide a model for that could be replicated elsewhere.

Finally, a few words about demand. The UK’s house-price surge is centred on London; north of Watford might as well be another country. Demand is strong in London in part because of the massive over-centralisation of the country’s economic and public life. In the USA, by contrast, New York is the country’s financial capital, Washington its political capital, Boston its capital of higher education and San Francisco its tech capital—but in the UK London plays all of those roles. Re-balancing this would reduce pressure on London house prices and contribute to a healthier country overall.

About the Author

Kathleen Scanlon – London School of Economics

Kathleen Scanlon is a Research Fellow at LSE London. She has a wide range of research interests including comparative housing policy (across all tenures–social and private rented housing as well as owner-occupation), comparative mortgage finance, and migration.

 

The French are right: tear up public debt – most of it is illegitimate anyway

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Debt audits show that austerity is politically motivated to favour social elites. Is a new working-class internationalism in the air ?

 

Chile artist burns studetn debt

Contracts for Chilean student loans worth $500m go up in flames – the ‘imaginative auditing’ of the artist Francisco Tapia, commonly known as Papas Fritas (Fried Potatoes). Photograph: David von Blohn/REX

 

As history has shown, France is capable of the best and the worst, and often in short periods of time.

On the day following Marine Le Pen’s Front National victory in the European elections, however, France made a decisive contribution to the reinvention of a radical politics for the 21st century. On that day, the committee for a citizen’s audit on the public debt issued a 30-page report on French public debt, its origins and evolution in the past decades. The report was written by a group of experts in public finances under the coordination of Michel Husson, one of France’s finest critical economists. Its conclusion is straightforward: 60% of French public debt is illegitimate.

Anyone who has read a newspaper in recent years knows how important debt is to contemporary politics. As David Graeber among others has shown, we live in debtocracies, not democracies. Debt, rather than popular will, is the governing principle of our societies, through the devastating austerity policies implemented in the name of debt reduction. Debt was also a triggering cause of the most innovative social movements in recent years, the Occupy movement.

If it were shown that public debts were somehow illegitimate, that citizens had a right to demand a moratorium – and even the cancellation of part of these debts – the political implications would be huge. It is hard to think of an event that would transform social life as profoundly and rapidly as the emancipation of societies from the constraints of debt. And yet this is precisely what the French report aims to do.

The audit is part of a wider movement of popular debt audits in more than 18 countries. Ecuador and Brazil have had theirs, the former at the initiative of Rafael Correa’s government, the latter organised by civil society. European social movements have also put in place debt audits, especially in countries hardly hit by the sovereign debt crisis, such as Greece and Spain. In Tunisia, the post-revolutionary government declared the debt taken out during Ben Ali’s dictatorship an “odious” debt: one that served to enrich the clique in power, rather than improving the living conditions of the people.

The report on French debt contains several key findings. Primarily, the rise in the state’s debt in the past decades cannot be explained by an increase in public spending. The neoliberal argument in favour of austerity policies claims that debt is due to unreasonable public spending levels; that societies in general, and popular classes in particular, live above their means.

This is plain false. In the past 30 years, from 1978 to 2012 more precisely, French public spending has in fact decreased by two GDP points. What, then, explains the rise in public debt? First, a fall in the tax revenues of the state. Massive tax reductions for the wealthy and big corporations have been carried out since 1980. In line with the neoliberal mantra, the purpose of these reductions was to favour investment and employment. Well, unemployment is at its highest today, whereas tax revenues have decreased by five points of GDP.

The second factor is the increase in interest rates, especially in the 1990s. This increase favoured creditors and speculators, to the detriment of debtors. Instead of borrowing on financial markets at prohibitive interest rates, had the state financed itself by appealing to household savings and banks, and borrowed at historically normal rates, the public debt would be inferior to current levels by 29 GDP points.

Tax reductions for the wealthy and interest rates increases are political decisions. What the audit shows is that public deficits do not just grow naturally out of the normal course of social life. They are deliberately inflicted on society by the dominant classes, to legitimise austerity policies that will allow the transfer of value from the working classes to the wealthy ones.

French Indignants A sit-in called by Occupy France at La Défense business district in Paris. Photograph: Afp/AFP/Getty Images A stunning finding of the report is that no one actually knows who holds the French debt. To finance its debt, the French state, like any other state, issues bonds, which are bought by a set of authorised banks. These banks then sell the bonds on the global financial markets. Who owns these titles is one of the world’s best kept secrets. The state pays interests to the holders, so technically it could know who owns them. Yet a legally organised ignorance forbids the disclosure of the identity of the bond holders.

This deliberate organisation of ignorance – agnotology – in neoliberal economies intentionally renders the state powerless, even when it could have the means to know and act. This is what permits tax evasion in its various forms – which last year cost about €50bn to European societies, and €17bn to France alone.

Hence, the audit on the debt concludes, some 60% of the French public debt is illegitimate.

An illegitimate debt is one that grew in the service of private interests, and not the wellbeing of the people. Therefore the French people have a right to demand a moratorium on the payment of the debt, and the cancellation of at least part of it. There is precedent for this: in 2008 Ecuador declared 70% of its debt illegitimate.

The nascent global movement for debt audits may well contain the seeds of a new internationalism – an internationalism for today – in the working classes throughout the world. This is, among other things, a consequence of financialisation. Thus debt audits might provide a fertile ground for renewed forms of international mobilisations and solidarity.

This new internationalism could start with three easy steps.

1) Debt audits in all countries

The crucial point is to demonstrate, as the French audit did, that debt is a political construction, that it doesn’t just happen to societies when they supposedly live above their means. This is what justifies calling it illegitimate, and may lead to cancellation procedures. Audits on private debts are also possible, as the Chilean artist Francisco Tapia has recently shown by auditing student loans in an imaginative way.

2) The disclosure of the identity of debt holders

A directory of creditors at national and international levels could be assembled. Not only would such a directory help fight tax evasion, it would also reveal that while the living conditions of the majority are worsening, a small group of individuals and financial institutions has consistently taken advantage of high levels of public indebtedness. Hence, it would reveal the political nature of debt.

3) The socialisation of the banking system

The state should cease to borrow on financial markets, instead financing itself through households and banks at reasonable and controllable interest rates. The banks themselves should be put under the supervision of citizens’ committees, hence rendering the audit on the debt permanent. In short, debt should be democratised. This, of course, is the harder part, where elements of socialism are introduced at the very core of the system. Yet, to counter the tyranny of debt on every aspect of our lives, there is no alternative.