Snappy comebacks to stupid questions: the eternal undeath of the credit-card analogy

How to respond when the prime minister says something simplistic and wrong.

One of the most pernicious simplifications in mainstream politics is the "credit card" analogy. You know the one: the British economy is like a maxed-out credit card, and we have a responsibility to pay it off.

It's pernicious because the British economy is nothing like a credit card, maxed-out or not. Britain has control of the very currency in which it owes debt; it can print money to pay bills. On top of that, its effect on the economy which is its revenue source is so large that if it scrimps and saves in order to pay down its debt, there's a very real chance its income will drop by even more.

But the analogy is unkillable, and even if politicians don't cite it directly, they apply its lessons nonetheless—as Cameron did last Thursday:

Labour’s central argument is exactly that. They say that by borrowing more they would miraculously end up borrowing less. Let me just say that again: they think borrowing more money would mean borrowing less. Yes, it really is as incredible as that.

He may not have said the magic words "credit card" (or similar analogies involving "household spending" or "Britain plc"), but the same implication is made: the national debt, and macroeconomics in general, is no more complex than a family budget.

That's not true. But the thing is, even if you apply the same analogy, Cameron's claim is still over-simplistic. Here are just some ways borrowing more money can mean borrowing less:

  • You are unemployed. You have great ability, but few qualifications. You take out a career development loan to pay for post-secondary education. You get a well-paid job as a result.
  • You are unemployed. You have ample qualifications, but no smart clothes. Before the first of a string of job interviews, you borrow enough to buy a suit, ensuring that you win gainful employment and don't have to borrow money to eat.
  • You live in a 1950s prefab. With no real protection against the elements, an uncomfortable proportion of your monthly income goes on heating. You borrow money to pay for insulation, your expenditures drop, and you use the extra to pay off credit-card bills.
  • Annual income six pounds; annual expenditure six pounds sixpence. Result: misery. You borrow some money to put solar panels on the south-facing roof of you Guernsey house, reducing your spending on electricity. Annual income six pounds; annual expenditure five pounds, nineteen shillings and sixpence. Result: happiness.

I could write some detailed sophistry about how each of those analogies apply to Britain. The first is broadly equivalent to "upskilling"; the second to spending money on promoting Britain overseas; the third to fixing our much-vaunted "crumbling infrastructure"; and the fourth to investing in the Green Economy.

But I won't. Because the way to discuss the macroeconomy isn't through trite analogies and dumbed-down explanations; it's through discussions of the macroeconomy. If you want the best discussion of whether Cameron's claims are true, I recommend you turn to Jonathan Portes' exhaustive examination, or Duncan Weldon's blow-by-blow account of the squabble between the PM and OBR. You won't find many comparisons to your own financial situation, but that just means you're getting the good stuff.

Credit cards. Photograph: Getty Images

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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How the Oval regained its shape: the famous cricket ground hosts its 100th Test

The challenge for Surrey is to ensure that the new fans drawn to the stadium in recent years keep coming.

Few stadiums have as rich a sporting history as the Oval. After opening its gates in 1845, it hosted England’s first home football international, the first FA Cup final, and Ireland’s inaugural rugby Test.

Though it took 35 years before a cricket Test match – the first ever in England – was played at the ground in Kennington, south London, it was worth waiting for. WG Grace scored 152 runs, setting the tone for many memorable performances  at the Oval. Among the highlights: Len Hutton’s 364 in 1938, still the highest Test score by an England batsman; Viv Richards’s double century and Michael Holding’s 14 wickets for the West Indies before an ecstatic crowd in 1976; England’s Ashes-clinching match in 2005, when a skunk-haired Kevin Pietersen thrashed the Australian attack.

But just five years later, in 2010, the Oval and its host club Surrey were in a bad way. For the first time since 1986, the first day of the annual Oval Test was not a sell-out, and attendances for county games were down. Finances were so stretched that Surrey made a dozen administrative staff redundant, and there was talk of insolvency. The club, which is owned by its 10,000 members and is a tenant of the Duchy of Cornwall, was “very close to a substantial crisis”, Paul Sheldon, then chief executive, said at the time.

Today that seems far away. On 27 July, the Oval hosted its 100th Test, the third match of the series between England and South Africa. The first day was sold out. And Surrey are now the richest first-class county, with £12m of reserves. In 2019, work will begin on a redevelopment scheme that will increase the Oval’s capacity from 25,000 to 40,000, making it the biggest cricket ground in England. (Lord’s, the Oval’s more illustrious rival, can seat 28,000 people.)

“We are in a good place,” said Richard Gould, the current chief executive, one recent afternoon in his grandstand office overlooking the pitch, where a big group of local schoolchildren ran around in the sun.

How did the Oval regain its shape? Gould, whose father Bobby played football for Arsenal and was manager of Wimbledon when the team won the FA Cup in 1988, lists several factors. The first is a greater focus on non-cricketing revenue, taking advantage of the club’s historic facilities. In 2011, when Gould joined Surrey after stints at Bristol City football and Somerset cricket clubs, revenue from corporate events and conferences was £1.3m. This year the projected income is £4.6m.

The second factor is the surge in popularity of the T20 competition played by the 18 first class counties in England and Wales. Unlike Tests, which last for five days, a T20 Blast match takes just three hours. The frenetic format has attracted many people to games who have never previously followed cricket. Surrey, which like Lord’s-based Middlesex have the advantage of being in London, have been especially successful in marketing its home games. Advance sell-outs are common. Surrey reckon they will account for one in six T20 tickets bought in the UK this season, with gate receipts of £4m, four times more than in 2010.

Whereas Test and even one-day international spectators tend to be regulars – and male – Gould estimates that up to 70 per cent of those who attend T20 games at the Oval are first-timers. Women, and children under 16, typically constitute a quarter of the crowd, a higher percentage than at football and rugby matches and a healthy trend for the game and the club.

The strong domestic T20 sales encouraged the Oval’s management to focus more on the county than on the national team. Until a few years ago, Surrey never seriously marketed its own merchandise, unlike professional football clubs, which have done so successfully for decades.

“When I came here, everything around the ground was focused on England,” Gould said. “We needed to put our team first. In the past, county cricket did not make you money. With T20, there’s a commercial business case.”

To raise its profile and pull in the crowds, Surrey have signed some of the biggest international stars in recent years, including Australia’s Ricky Ponting, South Africa’s Hashim Amla, Sri Lanka’s Kumar Sangakkara and Kevin Pietersen, who is now mainly a T20 franchise player. For the players, as with the counties, it’s where the money is.

The challenge for Surrey is to ensure that the new fans drawn to the Oval in recent years keep coming. In common with many businesses today, customer data is crucial. The club has 375,000 names on its marketing database, of which 160,000 are Surrey supporters. But since the average T20 purchaser buys six tickets, many people who attend games at the Oval remain unknown to the club. One way Surrey are trying to identify them is through a service that allows one person to book tickets for a group of friends, who then each pay the club directly. Another method is through offering free, fast Wi-Fi at the ground, which anyone can use as long as they register their email address.

For all the focus on T20, Gould is keen to stress that England internationals, especially Test matches, are a crucial part of the Oval’s future – even if the business model may have to be tweaked.

“We always want to be one of the main Test venues. The problem we have is: will countries still put aside enough time to come to play Tests here? In many countries domestic T20 now takes precedence over international cricket. It may be that we may have to start to pay countries to play at the Oval.” 

Xan Rice is Features Editor at the New Statesman.

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue