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.

Photo: Getty
Show Hide image

Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.