{"text":[[{"start":5.55,"text":"A couple of years ago, two young Colombian journalists, Valerie Cifuentes Martínez and María Camila González, became alarmed about their nation’s surging debt. All the more so since voters seemed so ignorant about the fiscal choices. So they launched a buzzy multimedia platform called Economía para la Pipol (Economics for the people) to educate voters, particularly those in Gen Z, about debt policy. “We need to change how we communicate,” Cifuentes recently told finance officials from around the world at an OECD meeting."}],[{"start":36.25,"text":"Investors and governments should pay attention. As the OECD reported this week, average national debt burdens are forecast to hit a record 113 per cent of GDP next year — and this will worsen if a “dark scenario” of lower growth and rising rates emerges due to a long Iran war."}],[{"start":53.8,"text":"Some countries, such as Portugal, have managed to cut their own ratio recently. But most have not. And many are now trapped in a vicious spiral: rising populism and polarisation make it hard for politicians to impose unpopular reform. But those phenomena are surging in part because fiscal woes and economic pain are sapping public confidence. As a recent OECD report on fiscal communication noted: “Governments are being asked to manage long-term fiscal risks in an environment where public trust and people’s willingness to tolerate trade-offs are low.” "}],[{"start":86.94999999999999,"text":"So what should governments do? I suspect that this trap is now so nasty that some will eventually decide that the solution is either to tolerate high inflation (to reduce nominal debt), impose selective defaults or embrace “financial repression” (keeping bond interest rates below inflation to slowly cut debt at the expense of bondholders). "}],[{"start":107.24999999999999,"text":"It was this latter route that helped the American and British governments to cut their vast debt mountains after the second world war, says the economist Carmen Reinhart. Repeating that trick today could be hard, given that repression can only work with capital and financial controls. But politicians might still want to try given that this approach would disperse the fiscal pain among bond investors — and thus be less visible to angry voters than, say, budget cuts."}],[{"start":135.39999999999998,"text":"However, leaving aside the merits of repression, no central bank or establishment economist is likely to lobby for such policies right now. Instead the OECD is pressing governments to reduce debts in more orthodox ways, by embracing budget cuts, tax rises and growth-enhancing productivity reforms. "}],[{"start":154.49999999999997,"text":"It is also urging them to acknowledge and address the political obstacles to dealing with debt by actively trying to win voter support and promote understanding for these measures. “Well-designed rules and institutions remain essential for fiscal sustainability, but they are no longer sufficient.” Communication matters in a populist world."}],[{"start":173.59999999999997,"text":"In practical terms, the OECD argues that governments need to take four steps: demystify the budget for politicians; communicate clearly with the public; give citizens a proper voice in fiscal policy; and co-opt civic bodies to be fiscal advocates."}],[{"start":189.99999999999997,"text":"This is starting to happen. Economía para la Pipol is one example. And a non-profit called the International Budget Partnership is raising pressure on governments to be more accountable by releasing an index that scores them on transparency, currently mostly focused on the global south. This shows that Brazil, say, is performing well — but Bolivia is not."}],[{"start":212.09999999999997,"text":"Other ideas also emerged at this week’s OECD brainstorming among finance ministers: using social media platforms, such as Instagram, to explain debt; embracing simple metaphors, such as a household budget, to explain fiscal choices. Margaret Thatcher famously deployed this analogy, and it was used again this week on the BBC by Sir Howard Davies, former chief UK financial regulator. "}],[{"start":237.44999999999996,"text":"Andrew Dilnot, a former head of the Institute for Fiscal Studies, urged governments to spend less time pontificating about abstract issues like debt-to-GDP ratios and fiscal rules — and instead explain exactly how taxpayers’ money is spent, as a priority. "}],[{"start":255.04999999999995,"text":"After all, most voters have no idea what a fiscal rule really is. But, as is shown by the experience of a country like Switzerland, with its canton-based fiscal system, when voters truly understand how revenues are raised and spent — and can vote on it — they tend to become more prudent, fighting to keep debt in check. Accountability pays."}],[{"start":273.54999999999995,"text":"This is very sensible. But the sad reality is that humans are highly skilled at selectively ignoring bad news. So the OECD’s ideas seem unlikely to work without another ingredient: bond market pressure. After all, voters and politicians in Portugal, for example, only embraced radical debt-cutting measures after a market crisis."}],[{"start":294.44999999999993,"text":"So perhaps investors should now pray that something like a “goldilocks” crunch emerges — a wave of bond market turmoil that is just big enough to show voters why fiscal consolidation is needed, but not so big that it craters the financial system and economy. With long-term rates now rising, it might yet arrive."}],[{"start":314.79999999999995,"text":"Is it cynical to wish for such a jolt? Yes. But unless initiatives like Economía para la Pipol are widely replicated, it will be the only way to concentrate minds — ideally before we face a truly devastating debt explosion."}],[{"start":336.84999999999997,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780706047_6514.mp3"}