How do you campaign against austerity?

It's not the economics, stupid.

For something which affects so many people, economic policy is frequently far from popular discussion. The outcomes of economic decisions are what win and lose elections; but even though it's "the economy, stupid", politicians are forced to run on their record, not their plans. It's easy to hold someone accountable for failing to "fix the economy", but it's much harder for your average voter to tell whether a politician will be able to fix the economy in the future.

Earlier today, I spoke to Ricken Patel, the executive director of, about the difficulty of campaigning for progressive economic policy. He told me that the organisation, which does traditional "clicktivism" campaigns, but also more nuanced activism involving identifying and winning over key policymakers. The key problem for carrying out a similar strategy in economic policy is that people tend to view it as a technocratic area. They are concerned that campaigning about a specific economic policy is like campaigning for your doctor to do a specific surgery—you should just leave it to the experts to do what they think is best.

On top of that, when Avaaz has campaigned on specific areas, like austerity, they've had trouble taking on the credit card analogy, which makes intuitive sense to people. The problem, he said, was that the left needs a credible response to the issue of public sector debt, and pointing out that the public sector isn't like a household because you can print money just doesn't sound realistic.

It's true that the credit card analogy is difficult to counter—though I did try just that earlier this week. But my concern is that, even though it's actually surprisingly easy to subvert and make the case for specific borrowing, there are too many basic truths in macroeconomics which simply have no analogy to a situation which people are familiar with. Perhaps the most obvious of those is the paradox of thrift: Keynes' famous explanation of how the individually rational response to a recession—to scrimp and save, reducing your personal expenditure in order to make it through a tricky time—would lead to a greater dip in output than if people were individually irrational.

Any time the economy is simplified down to terms which make it seem equivalent to personal finances, it makes it harder to convince people of the ways in which it isn't equivalent to them, which makes the entire quality of debate worse-off. That's the reason the analogy is so pernicious, and why it's dangerous for people to use it even if in the short-term it helps them—whether they're left or right.

Avaaz does have experience of carrying out campaigns aimed at more nebulous, long-term goals—a good example being their attempt to change the conversation around the War on Drugs, which was never going to win overnight—but even for them, a worldwide attempt to tell people "economic policy is not easily reducible to explanations which work in analogy with personal finance" might be a bit much.

Luckily, Avaaz has another suggestion. Alice Jay, a Campaign Director for the organisation, says that one area of economic policy it has had success in is, bluntly, banker-bashing.

Campaigning against high bonuses in the financial sector, and campaigning for "bankers behind bars"—personal responsibility for financial wrongdoing—has been, generally, successful.

Is this one way out of the bind? If tricky economic problems can be rephrased to be about questions of personal responsibility, that may be a more successful angle of attack. If they can be rephrased to be about questions of bankers responsibility, that's even better.

It suggests to me that the way to win the economic argument—and it pains me to say this, because it's so completely against what I feel comfortable with—is to downplay the economics entirely. Use and abuse of terrible, "common sense" arguments has rendered public discussion of economics intellectually vacuous. Instead, focus on whose fault austerity is, and who is taking the hit for its implementation. In other words, maybe the argument that "we're paying for their mistakes" is the one most likely to promote a popular, worldwide campaign against austerity.

It has always rankled that, even if one accepts that the debt needs to be brought down, the people whose actions caused it to rise in the first place are back in profit, still in their jobs, and being rewarded with a cut in their income tax. If Avaaz's experience is generalisable, then Krugmanite arguments about the self-defeating nature of austerity may be surplus to requirements. Not that I'm going to stop making them.

A campaign on

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.