At some point in early May, Nick Clegg's economic philosophy switched from Keynesian to that of a deficit hawk. Today he completed the conversion by reiterating Margaret Thatcher's flawed household debt metaphor.
During his speech today, Nick Clegg said:
"It's the same as a family with earnings of £26,000 a year who are spending £32,000 a year. Even though they're already £40,000 in debt. Imagine if that was you. You'd be crippled by the interest payments. You'd set yourself a budget. And you'd try to spend less. That is what this government is doing."
The argument was first used by Margaret Thatcher in 1976 when she told Thames TV's 'This Week':
"I think you're tackling public expenditure from the wrong end, if I might say so. Why don't you look at it as any housewife has to look at it? She has to look at her expenditure every week or every month, according to what she can afford to spend, and if she overspends one week or month, she's got to economise the next.
"Now governments really ought to look at it from the viewpoint of 'What can we afford to spend?' They've already put up taxes, and yet the taxes they collect are not enough for the tremendous amount they're spending. They're having to borrow to a greater extent than ever before, and future generations will have to repay."
But this line has been thoroughly debunked in recent times by The Times' Anatole Kaletsky and New York Times' Paul Krugman as well as by Keynes himself. Of course, until his Damascene conversion, Nick Clegg knew this. On Saturday May 1, he told Reuters that:
"My eight-year-old ought to be able to work this out – you shouldn't start slamming on the brakes when the economy is barely growing. If you do that you create more joblessness, you create heavier costs on the state, the deficit goes up even further and the pain with dealing with it is even greater. So it is completely irrational."
Lib Dem members tend to share this older view. A YouGov poll today found that only 29% of party members fully agree with the government's policy of cutting spending to reduce government borrowing. An identical proportion of Lib Dem voters share Clegg's position.
At some unknown point after the Reuters statement but before he spoke to Mervyn King, Clegg changed his mind. With his conversion complete, the Liberal John Maynard Keynes will be turning in his grave.