It's fitting that Nick Clegg should have announced an increase in the state subsidy for childcare, because the policy is a sanctimonious front for something that is inegalitarian and economically illiterate.

Let's start from the fact that this subsidy must be paid for by other tax-payers. It's therefore not just a subsidy to parents, but a tax on singletons.

This is inegalitarian not just because it means that a single person on the minimum wage is subsidizing the lifestyle choice of couples on six-figure incomes. It's inegalitarian in two other ways.

First, the costs of a family don't rise proportionately with household numbers. The cliche "two can live as cheaply as one" isn't literally true, but it is partly so. This is captured by the notion of equivalence scales, which adjust household incomes for family size. Such scales tell us that a household with two adults and a young child needs an income of 1.8 times that of a singleton. But this in turn means that if two people in a couple have similar incomes - and given assortative mating many do - then the couple is better off than the singleton. Subsidizing childcare is thus regressive in many cases.

Secondly, there's reasonable evidence that marriage improves people's mental and physical well-being. This means a tax on singletons to help couples is welfare-regressive; it gives to those who have.

Why, then, do it? Simple. Couples with children have political power; politicians defer to Mumsnet, and yet many people sneer at "spinsters with cats". All we're seeing here is another example of politicians trying to give money to the powerful. Clegg's claim that this is about a "fairer society" is mere blather.

The policy is also economically illterate because it ignores two important economic ideas: fungibility and incidence.

A childcare subsidy is fungible; if parents are spending less on childcare, they've more money for something else. A lot of child benefit is spent on alcohol. The same might well be true of the childcare subsidy.

There's one sense, though, in which this isn't entirely true. Not all of the subsidy will benefit parents. This is where the concept of incidence comes in. Let's say the policy works as some hope it will, and encourages mothers (or dads) to look for work. Two things will then happen: the extra labour supply will bid down wages; and insofar as parents find work there'll be extra demand for childcare, which will tend to bid up prices of it.

Insofar as this is the case, the childcare subsidy doesn't just benefit parents, but employers and nurseries.

There is, though, another sense in which the policy is economically illiterate. The opportunity cost of subsidizing childcare is that money could be spent on genuinely giving children the best possible start in life, by more investment in early years education, especially for kids from poor homes. Clegg has foregone this opportunity, and would rather give yummy mummies another bottle of Chardonnay.