Nick Clegg's economic philosophy switched from Keynesian to deficit hawk in early May. He completed the conversion today by using Thatcher's flawed household debt metaphor.
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.
UPDATE 21/9:
The theme of this blog post was picked by a couple of commentators today. Matthew Engel in the Financial Times called Clegg’s metaphor, “the usual simplistic nonsense of comparing a governmental deficit with household debt”. Polly Toynbee in the Guardian calls it “that disreputable old populist fallacy”.
82 Responses to “Clegg completes Thatcherite conversion with Maggie metaphor”
Dilwyn’s Daily Digest – Tuesday 21st September 2010 « Aled-Dilwyn Fisher
[…] also used a classic Thatcherite metaphor, as highlighted by Will Straw at Left Foot […]
Kieron Merrett
RT @wdjstraw: Nick Clegg is absolutely brazen claiming that he has always been consistent on the deficit reduction timetable. http://bit.ly/a4RLKv
Joe Fortune
RT @wdjstraw: Nick Clegg is absolutely brazen claiming that he has always been consistent on the deficit reduction timetable. http://bit.ly/a4RLKv
Will Straw
Guido,
Surely we judge the Lib Dems on what they campaigned on. Clegg’s “savage cuts” rhetoric ahead of last year’s party conference disappeared as soon as it started while the Lib Dem manifesto only set out £10 billion of new savings / tax rises. Critically, the IFS said that the Lib Dem plans were “no more or less ambitious than the [Labour] Government”. Little wonder when Clegg was so dismissive of the Tory position.
Will
Guido Fawkes
Well you seem to be switching your evidential basis, complaining about rhetoric here now and deriding the importance of rhetoric in the past. Make your mind up.
Fact is you and many on the wonkish left were fantasising about some kind of progressive coalition, it was delusional. Clegg-Cable-Laws and the rest were never going to sign up with deficit deniers.