Tony Curzon Price (London, oD): I've had my complaints about the Today show (here and here), but listening to Evan Davis these past few days has been a pleasure. I was first startled out of my tooth-brushing about a week ago, when he had Alisdair Darling on the line. A long drone of irrelevant and tendencious facts about the health of the British economy was allowing me to give full attention to my molars when Evan said:
Hang on. We do _not_ have the lowest debt levels for 25 years. I have the numbers. Households are more indebted now than they have ever been in that period. That is no state to be entering turbulent times in.
Darling hardly paused: "... I meant government indebtedness ...:" Evan should have stuck to the attack a bit longer on this, but it was great to have the admission brought out. The room that a government has for accommodating recessionary shocks is not really hugely dependent on the total level of government debt. But the likelihood of recession is very dependent on the financial indebtedness of households.
Similarly again on Saturday. John Humphreys had just failed to seriously rattle the chief executive of the British Bankers Association by letting her be vague about the exact nature Bank of England transaction we are about to see - his moral outrage was out-gunned by her not-very-deep air of expertise. Public Relations, 3, UK Public, 0. My molars got full, if irritated, attention. But then came Evan talking to Pascal Lamy, head of the World Trade Organisation, on soaring food prices. Lamy calmly explained that the world needed to provide emergency relief immediately, and that signing up to the Doha round would help supply in the long term. Then came Evan: "But if the short term measures, like restricting exports, lead food prices to fall, doesn't that dampen incentives to increase food production next year." What a great point: things are not so technocratically neat as Lamy would have it. The way we deal with the short term will affect the long term. Molar ignored.
By the way, what it means for food aid is that it should come in the form of cash transfers to those in worst affected regions. If you're living on $1 per day or less, these food price hikes are catastrophic. Give people the means to buy, and you don't destroy the incentive to produce.
