Inflation dips slightly

I may have been asleep at the switches lately but I read the other day and for the first time the remark of a distinguished scientist, as I understand it, a medical expert, attached to the space programme. He said that not only is human or superhuman life possible on some still-unvisited planet but almost certain a race, a breed, he said, as I recall, that could be behind us genetically, intellectually, but the chances are that they would be far ahead of us, both in genetic and intellectual development.

I wish Robert Benchley were alive to go into this. Forty – more – years ago, he did some powerful speculation not on the kind of developed people who may be living and sneering there in outer space, but on the development of our own species. If you don't recall this important scientific paper, let me remind you that Benchley had just read an article written by a specialist in Minnesota, an eye specialist, who reported the alarming prediction – and, since then, I believe it's been confirmed as a fact – that our eyes are growing gradually closer together.

So that, at some time, there will be just one big eye in the middle of our face. The selfish consolation for people now alive who might be beginning to get alarmed was that all this would take some time. Countless ages was the way the eye specialist put it, but as Benchley shrewdly observed – and I quote the text of his famous paper – 'Before the actual change from two eyes to one occurs and that'll be a morning when a man wakes up and finds himself with only one, large eye, there will have to be all that disagreeable period of preliminary narrowing of the bridge of the nose, with the eyes getting closer and closer together, and that might very well come within our day. My eyes are so close together as they are, I bet I win. I bet I'm the first one-eyed man in the world.'

Well, this... this morbid thought occurred to me because after reading the statement of the medical space man, I dreamt of a being who had conquered time and space sufficiently to be able to see 270 television stations and the front pages of a couple of thousand newspapers at one glance. That should make us content to remain simple, stupid humans for the time being.

When I woke up, I wondered what he would think when he saw this week as the first item on evening television everywhere and as a front-page headline on every paper in America, '0.7 Per Cent Rise in Index'. It sounds like space talk. But it's the figure of increase in the monthly consumer price index and it's been a cause for rejoicing around the country, because it's a vital figure, by which I mean a figure we live by.

This is the first time since August, since Ronald Reagan was nominated in Detroit, that the growth rate of inflation has increased by so little. If this went on, we should have an increase this year of only 9.1per cent advance on last year – the first time we've not gone into the teens or what we call double-digit inflation.

Well, prices going up by only 9.1 per cent a year may not seem much of a drop from 11, but it compares very favourably with Britain, I think, and sensationally with Israel, now whizzing onwards and upwards at an annual rate of increase of 135 per cent. No wonder a parallel headline in the New York Times the other morning reported the administration's intention of selling Israel 15 more fighter planes on easy terms.

Well, maybe the rejoicing is a little premature. While ordinary people, you and I, might get excited about it, the economists were noticeably unimpressed. It comes out that the government department survey – it's the Labor Department that does it – the survey was made too early to take into account the first big economic move that President Reagan made after he'd been in office only a week, namely, lifting price controls on petrol and heating oil. That sent the oil prices up at once and the winter's not over yet. About two-thirds of this continent has to have all the oil heaters going at full blast whenever the temperature dips not below freezing.

For most of the winter, in most places, freezing would be cosy. The people in the Midwest and across the plains states and the mountain states and on through New England think of zero, or well below zero, as genuine winter weather.

Now I mention this seemingly small matter because people who know something about the economy of Britain as well as the United States, and they were swarming all over the White House this weekend to rub minds with their opposite numbers, they've been warning us that Mr Reagan's lifting of the price controls on petrol and oil might be the equivalent of Mrs Thatcher's jumping VAT up to 15 per cent shortly after she came in. The result there was a jump in inflation and today the chief economist of a famous New York bank looked at that 0.7 per cent rise and said, 'There's no comfort in it'.

The Reagan people were saying so, too, the director of the budget going so far as to warn us that the nation remains in a dangerous, double-digit inflation environment. In other words, he was saying to Congress which is now looking over Mr Reagan's proposed cuts in the budget and not liking many of them, 'Don't think this little breather in the inflation rate is any reason to pause in making deep cuts in federal spending.'

I'd like to quote to you from what I might call A Letter From the Caribbean, from a good friend of mine whose interest in the consumer price index is so consumer – sorry – that when he went off for a two weeks' holiday, he took along with him as holiday reading Mr Carter's 1982 budget. That's right – Mr Carter's 1982 budget. Before I say why, I ought to tell you that this man is not interested in these things only as a hobby. He has a deep concern to see that this nation stays free and he said a few years ago that he couldn't recall a country with unstoppable inflation which didn't, sooner or later, succumb to a dictatorship.

Well, in the letter he points out several shivery things. First, as a simple fact we all tend to forget when there's a new administration, the new man is always saddled with the last man's budget. The budget for fiscal 1982 is nothing whipped up by the Reagan transition team. I'll bet 90 Americans in a hundred think it is. Presidents start compiling the budget for any given year about two years ahead. Mr Carter, in 1979, figured all the expenses of government that are impossible to change – what they call entitlement items – then he went over the needs of every department, labour, agriculture, welfare, cities, poverty, crime and so on, and totted it all up. And for this year, Mr Carter's best estimate came to $740 billions, little more. If Mr Reagan has his way, he would reduce this to just under $700 billions, but it's Carter's budget he has to work with.

Just to show you the way things have been going, and to give some justification to my friend's concern for liberty, let me remind you that Kennedy, only 20 years ago, was the first president to announce a 100 billion budget. In the next 17 years, which included Vietnam, in the next 17 years, the budget went up by 300 billion dollars and in only four years Carter sent it up by another 300 billions. So we are stuck with about 700 billions spend a year, at best and Mr Carter estimated that, with all due economy, federal spending in 1986 would be one trillion – a thousand billion dollars. And this, as my friend correctly remarks, should scare the pants off the country, for you can imagine the inflation and the social problems that would be generated by such an increase in so short a time.

All these runaway figures I'm sure President Reagan and Mrs Thatcher have been discussing and, I hope, fretting over for, as I said at length last time, for the first time in history, we have an American president and a British prime minister of the precisely same political colour, of identical convictions held with similar passion and with programmes for the economic recovery of their countries which are carbon copies of each other.

My friend ends his letter from the sands of the Caribbean with this salutary passage. I quote it because I fear it's just as true of the British and the Israeli and the Swedish publics as of the American public. He says, 'I doubt that the public generally understands the cause-and-effect relationship inherent in our present economic situation. I believe people just object to the effect, high prices. They still seem overwhelmingly committed to higher wages, greater social security benefits, more help to the disadvantaged, to the arts and the humanities, almost desirable and human objectives, but in amounts far beyond the present productive capacity of the nation.

'The test is always, is it desirable – never, can we afford it? Perhaps I am too pessimistic but having read in the past 30 years or so the economic history of Germany, France, Austria, Italy, Turkey, not to mention living through the past 25 years of American, British, Brazilian, Argentinian and Israeli economic history, I regret to say that history supports this pessimism. I would add a point, combine galloping government spending with his partner, galloping inflation, yoke them to the success of violence in our societies and it seems to me you have the main threat to self-governing nations.'

Well, this is no way to leave you when romantics have had their first decent break in years with the announcement of the engagement of the Prince of Wales. Apart from the general well-wishing of Americans, there's an American touch that should delight all lovers of Cinderella stories.

A young American woman with a Scottish name had delivered to her publishers a novel about the wooing and winning of Prince Charles. It's due in May. However, in this fanciful version, the Prince married a simple Scot, a commoner named Rose. The publisher decided that this was now a ridiculous ending but the author had anticipated him. She'd had her ear to the ground and had written an alternative ending in which the simple Scottish girl, in an act of splendid renunciation, jilts the Prince because – and I hope this sentence is the last one in the published novel – because 'it was Rose who showed Charles the kind of woman he ought to marry'.

It was a near thing.

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

Letter from America audio recordings of broadcasts ©BBC

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