A grand economic experiment? (WS)

Summary

More or Less – "A Grand Economic Experiment?" (BBC World Service, May 4, 2012)

Host: Tim Harford
Guests: Anatol Koletsky (The Times), Stephanie Flanders (BBC Economics Editor), Professor Daniel Schwekendiek (Sungkyunkwan University, Seoul), Martin Bloem (World Food Programme)

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Episode Overview

This episode of More or Less delves into two major topics:

1. The competing approaches to economic recovery post-2008: Is the world conducting a "grand experiment" in austerity (Europe) versus stimulus (United States)?
2. Statistical scrutiny of North/South Korean height differences: What does the height gap between North and South Koreans reveal about nutrition and economic conditions?

Tim Harford and guests provide clarity (and some myth-busting) on political rhetoric around government debt and deficit, then pivot to examine a much-cited statistic about North and South Korean height differences, using rigorous evidence to explore underlying causes.

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Main Discussion Points and Insights

1. Are Europe and the US Conducting an Economic "Experiment"?

(Main discussion: 00:13–04:19)

• Framing the Debate
  • Host Tim Harford introduces the question: Is there a "grand economic experiment" underway, with Europe pursuing austerity and the US opting for stimulus? (00:13)
  • Anatol Koletsky (The Times) provides context:

    “What's been going on, although it's been very uncomfortable for many people and economies, has been one of the most fascinating periods in history because there's been a sort of controlled experiment going on.” (00:37)

• Common Misunderstandings: Debt vs. Deficit
  • Stephanie Flanders (BBC Economics Editor) addresses prevalent confusion between debt and deficit, following a misleading political exchange:

    "I hear often, and it pains me ... That classic mistake that everyone makes ... the difference between the deficit and the debt." (01:48)

    • Debt: Accumulated total borrowings (e.g., your mortgage principal).
    • Deficit: The amount borrowed in a specific period to cover the gap between government spending and revenues.

    “There is no country that's cutting its debt at the moment … not the US, Britain, Germany. They're not on course to lower their debt as a share of their economy for years.” (02:30)

• Who Is Cutting Faster?
  • The narrative that "the US is cutting harder and faster than the UK" is challenged. In fact, the UK and Eurozone are making larger efforts to reduce their borrowing (structural deficit) than the US. (03:11)
  • Flanders explains:

    “If you look at the structural deficit [i.e., long-term, recession-adjusted deficit] ... the British have made more of an effort to cut their borrowing than America has. America's not got very far at all, but America overall has been able to borrow less because it's been growing faster.” (03:19)

• Eurozone’s Approach
  • On the Eurozone:

    "They have been trying even harder than we have to cut their structural borrowing, and it wasn't that big to begin with." (04:08)

Memorable Quotes

• Stephanie Flanders:

  “There is no country that's cutting its debt at the moment ... not the US, Britain, Germany ... they're not on course to lower their debt as a share of their economy for years.” (02:30)

• Tim Harford:

  "So the most useful figures show that Britain and the Eurozone have been trying to cut faster than the Americans." (04:19)

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2. The North/South Korea Height Gap – Fact or Fiction?

(Main discussion: 04:19–08:34)

• Recurring Statistic in Media:
  • Popular claims suggest North Koreans are 3-6 inches (7.5–15 cm) shorter than their southern neighbors. Tim Harford questions the validity of these numbers and investigates the true scale. (04:25–05:25)
• The Evidence
  • Prof. Daniel Schwekendiek conducted statistical analysis of North Korean refugees in South Korea:

    “…the height gap is approximately 4 cm among preschool boys and 3 cm among preschool girls … for 20- to 49-year-old men, I find height gaps of 3–8 cm and 1–6 cm among women. Again, the South Koreans were taller.” (05:25)

  • Notably, evidence from North Korean and international agencies supports these findings.
  • Genetics do not explain the difference—the populations were historically the same.
• Consequences for Refugees
  • Height stunting from famine cannot be reversed, even after moving to South Korea:

    “…height doesn't really recover if you were extremely exposed to famine. …Now we face a situation where the average South Korean woman is approaching the height level of the average North Korean man. This is, to my knowledge, a unique situation.” (06:18)

• Context from the World Food Programme
  • Martin Bloem draws wider lessons:

    “What happens in the first two years of life is actually critical for people's height. ... In the period of about 70, 80 years, [the Dutch] became 20 centimeters taller. ... Stunting is actually happening very early in life, but has long term consequences.” (07:25–08:32)

  • As of the 2010s, one in three North Korean children is chronically malnourished or stunted.

Memorable Quotes

• Prof. Daniel Schwekendiek:

  “…the average South Korean woman [is] approaching the height level of the average North Korean man. ... Women become taller than men.” (06:40)

• Martin Bloem:

  “…stunting is actually happening very early in life, but has long term consequences.” (08:32)

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Key Segment Timestamps

| Segment & Topic | Timestamps | |--------------------------------------------------------------------------------|-------------| | Introduction to the economic “grand experiment” | 00:13–00:58 | | Debt vs. deficit explanation (Stephanie Flanders) | 01:48–02:53 | | UK and Eurozone austerity vs. US stimulus—structural deficit discussion | 03:11–04:19 | | North/South Korea height gap–origins of the statistic | 04:19–05:25 | | Prof. Schwekendiek’s findings: actual height differences | 05:25–06:13 | | Consequences for North Korean refugees | 06:13–06:56 | | Martin Bloem (WFP): Nutrition, economic growth, and height over time | 07:25–08:34 |

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Notable Quotes (with Attribution & Timestamps)

• Stephanie Flanders (BBC):

  “…both the interviewer and the interviewee have made that classic mistake that everyone makes ... the difference between the deficit and the debt.” (01:48)

• Prof. Daniel Schwekendiek (Sungkyunkwan University):

  “According to the results from the refugee surveys, the height gap is approximately 4 cm among preschool boys and 3 cm among preschool girls. ... For 20 to 49 year old North Korean men ... I find height gaps of 3–8 cm and 1–6 cm among women.” (05:25)

• Martin Bloem (World Food Programme):

  “Stunting is actually happening very early in life, but has long term consequences.” (08:32)

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Tone

The episode maintains More or Less’s trademark analytic, myth-busting, and slightly wry tone. Tim Harford and guests focus on clear statistical explanation, challenging political rhetoric, and translating research into real-world implications.

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Summary

This episode of More or Less explores the reality behind ostensibly simple statistics shaping global debates. The economic "grand experiment" is more nuanced than political soundbites suggest; no nation is truly reducing its debt, only its rate of new borrowing—and Europe’s "austerity" is, in fact, more aggressive than America’s approach. The North/South Korea height gap, often exaggerated, is nonetheless a real and somber reflection of decades of malnutrition and its lifelong impact on individuals, illustrating how social statistics can reveal much about human experience and tragedy.

This is an essential listen for anyone who wants to cut through economic and social myth-making with facts and careful analysis.

Transcript

[A]

Thank you for downloading from the BBC. For details of our complete range of podcasts and our terms of use, go to bbcworldservice.com podcasts

[B]

this is more or less on the BBC World Service. This week we ask whether the world is conducting a controlled experiment in economic austerity. Hello and welcome to More or Less on the BBC World Service. This week are we witnessing a grand economic experiment being played out between Europe trying to cut its way out of trouble and the United States trying to spend its way to redemption?

[C]

What's been going on, although it's been very uncomfortable for many people and economies, has been one of the most fascinating periods in history because there's been a sort of controlled experiment going on.

[B]

That's the economic commentator Anatol Koletsky of the Times of London, who's enjoying the spectacle. Ruth, you've been thinking about this.

[D]

We're so used to hearing this idea that while Europe cuts, America spends our ears pricked up. When we heard an exchange on BBC Radio earlier in the week, said A. Varsi, who co chairs Britain's governing Conservative Party, seemed to be suggesting that in fact America was cutting faster than Britain. The first voice you'll hear is the

[E]

interviewers, because you're so keen on keeping interest rates low and cutting the debt that you're actually forgetting about growth and you know, that's what's important. And we're seeing much higher levels of growth in the United States, for example, which hasn't cared so much about cutting its debt.

[F]

Well, if you look at the figures from the us, they've actually cut debt deeper and they've cut it faster. So it's a myth to say that they haven't.

[B]

I'm not sure they can actually say that. I think it's time to summon Stephanie Flanders, the BBC's economics editor. Stephanie, that didn't sound right to me.

[G]

Well, this is one of those exchanges that I hear often and it pains me every time I hear it because I'm afraid, afraid to say both the interviewer and the interviewee have made that classic mistake that everyone makes, some of the best politicians, some of the best journalists make, which is the difference between the deficit and the debt. If we think about it very carefully, maybe we'll remember it finally. The debt is the accumulated amount of debt, borrowings that you've had in your lifetime. So it may be the size of your mortgage, for example, is your debt. That's how much you owe. And then there's the borrowing you do on a day to day or A week to week or a year to year basis, that's the deficit. So how much the government has borrowed this year to meet the gap between its spending and its tax revenues is the deficit. And at the end of the year, in effect, that amount has been added to its stock of debt, which is always, almost always a much, much bigger number. And there is no country that's cutting its debt at the moment. If you look at the figures, there's no the us, Britain, Germany, even, they're not on course to lower their debt as a share of their economy for years.

[B]

So Baroness Varsity presumably meant to say the US was cutting its deficit harder and faster than the uk. But if that's the case, it's surprising news because it goes against the popular view that the UK and the Eurozone are following an austerity plan while the US is spend, spend, spending. Is this grand experiment off?

[G]

If you look at the structural deficit, which is an estimate of what the deficit would look like once the economy's recovered, so you're getting away from all the sort of short term impact of a recession where you have higher unemployment benefits and your tax revenues have gone down and just say, what's the long term hole in the budget that you've got to fill? Well, there maybe not something that Baroness Varsi wants to know. The British have made more of an effort to cut their borrowing than America has. America's not got very far at all, but America overall has been able to borrow less because it's been growing faster.

[B]

And what do these numbers look like if you look at the Eurozone?

[G]

Well, the Eurozone is another interesting story. We think of the Eurozone as having put itself in a sort of fiscal straitjacket, that it's been hurting its growth by cutting its deficits, cutting the deficits as far and fast as they have. In fact, it's overall borrowing and its structural borrowing is more or less the same story. They've more or less halved what they had in 2009. What that tells you is that they have been trying even harder than we have to cut their structural borrowing and it wasn't that big to begin with.

[B]

Stephanie Flanders so the most useful figures show that Britain and the Eurozone have been trying to cut faster than the Americans. Now, a few weeks ago, the world's most reclusive nation, North Korea, was in the news thanks to its failure to launch a long range rocket. An embarrassment for the country's new leader, Kim Jong Un. What was supposed to be a symbol of power became a symbol of impotence But a statistic has been doing the rounds, which is as resonant as any misfiring missile that North Koreans are several inches shorter than their South Korean neighbours. Versions of this claim come up again and again. In 2010, the late Christopher Hitchens put the difference at 6 inches in an article titled A Nation of Racist dwarves in the US, Senator John McCain referred to a three inch gap in a 2008 presidential debate against Barack Obama. Three inches is about seven and a half centimeters. By the way, for those of you listening, in metric, 6 inches is more than 15 centimeters. So what's the truth? 7 and a half centimeters. 15 centimeters. Professor Daniel Schreckendiek from Sunkenkwan University in Seoul has the answer.

[H]

I conducted statistical analysis with data from North Korean refugees measured upon their arrival here in South Korea. There are several 10 thousands of refugees by now here in Seoul. And according to the results from the refugee surveys, the height GAP is approximately 4 cm among preschool boys and 3 cm among preschool girls. The South Koreans would be taller than the North Koreans. In addition to this, I also conducted statistical comparisons with adults and we look at 20 to 49 year old north Korean men and compare them to their South Korean counterparts. I find height gaps of 3-8 cm and 1-6 cm among women. And again, of course, the South Koreans were taller.

[B]

What are the consequences for North Korean refugees living today in South Korea?

[H]

Yeah, that's a big problem, because height doesn't really recover if you were extremely exposed to famine. Which means that the North Koreans that enter South Korea, even though they are living in a very healthy and wealthy environment here, their height doesn't recover much. The weight recovers, but not the height. And if you look at older Koreans, we now face a situation where the average South Korean woman approaching the height level of the average North Korean man. This is, to my knowledge, a unique situation where women become taller than men.

[B]

Professor Schwecendiek says data from inside North Korea, collected both by the North Korean government and by international organizations working there, appear to support his findings. He also told me the height difference can't be attributed to genetics because the two populations are the same. Martin Blum is head of nutrition at the World Food Programme, which has been providing food aid to North Korea since 1995. He says it's clear that poor diet in the early years of life leads to stunted growth.

[I]

Of course, the food and what happens in the first two years of life is actually critical for people's height. Later, economic growth is one of the main determinants of height improvement. A good example is the Dutch height. If you think about just before the war, 1938 or so, the height of the Dutch man was about 1 meter 65. It was about 10 centimeters less tall than the U.S. in 1955 we were about 10 centimeters taller, about 175, the average man. And nowadays we are the tallest in the world, which is about 186. So in the period of about, I would say 70 years or so, 70, 80 years, we became 20 centimeters taller. And that of course had a lot to do with the type of food people were consuming, particularly in the first two years. We know that that's actually because what we call stunting is actually happening very early in life, but has long term consequences.

[B]

Martin Bloom, a strapping fellow from the Netherlands in the 1990s, North Korea suffered a terrible famine. Even today, according to the World Food Programme, one in every three children remains chronically malnourished or stunted, meaning they're too short for their age. So it seems that this statistic reveals a tragedy that as South Koreans are getting taller and richer, North Korean children have been stunted by malnutrition. Well, that's all we have time for this week. Please do write in with your statistical suggestions to more or lessbc.co.uk or subscribe to our [e-mail] moreorless whether you're splashing out or cutting back, we look forward to hearing from you. Until next week, goodbye. More or Less was presented by me, Tim Harford, the undercover economist at the Financial Times. The producer was Richard Knight and the editor, Richard Varden.

[A]

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