Nor shall we ever do so, partly because of the inescapable delays and variable time-lags inherent in the system in the real world, and partly because of the irreducible unpredictability of human behaviour. There are also, of course, considerable time-lags in securing the beneficial results of fiscal consolidation. But in the conduct of economic policy, as in public policy more generally, impatience is the worst counsellor.

Second, the policies needed to eliminate the structural deficit are inevitably painful and thus unpopular. If a new government, for whatever reason, shrinks from introducing them at the outset, when its authority is greatest, the likelihood of its doing so on an adequate scale subsequently is greatly diminished. 

Third, the financial markets, from whom the government is obliged to borrow, are well aware of this, and will exact a higher price. (Experience also shows, incidentally, the tendency as time passes for spending ministers to go native, and put the departmental interest above the general good. That is one reason why regular cabinet reshuffles are necessary.)

And fourth, one of the problems of democracy is the tendency of public expenditure to rise faster than is consistent with maximising economic performance and living standards over the longer term. The more that budgetary discipline is eroded, the more this is likely to happen. It is not without interest, too, that of all the major economies it was the UK that recovered fastest from the slump of the 1930s, and that it did so on a policy of cheap money and balanced budgets. In short, Keynesian stabilisation policy does a great deal more harm than good, and so does not make sense.

Myth No.5

So to the last of my five myths, one which is causing considerable angst at the present time — as indeed it did when I was Chancellor in the 1980s — and was one of the preoccupations of November's meeting of the G20 finance ministers in Korea.

This is the view that the very substantial current account imbalances that exist in the world are both unnatural and a threat to global economic health. 

In the 1980s, the problem, agonised over at the IMF and wherever finance ministers and heads of government met, was the Japanese current-account surplus. Today, it is the even larger Chinese surplus — which, incidentally, although massive, appears already to be on a declining trend as a share of GDP. The first thing to be said is that, in a world in which there is, happily, freedom of capital movements, it would be extraordinary and wholly unnatural if there were not current account imbalances.