I’ve known about the relative poverty of Western Europe compared to the United States for quite some time now, but it’s always nice to see this little tidbit get some love in the national and international press. Fraser Nelson, a journalist at the Spectator (in the UK) gives us the run-down on the numbers. According to Nelson, the UK is poorer than any US state save for Mississippi. Over at Forbes, Tim Worstall points out that the UK is actually poorer than Mississippi, too. Poor Mississippi!
Both men are calculating wealth with GDP (PPP) per capita, which is what I use as well. GDP (PPP) per capita means Gross Domestic Product (Purchasing Power Parity) per capita. Worstall explains how and why social scientists like using GDP (PPP) per capita to gauge a society’s standard of living:
Just to explain PPP for you. Prices vary across places. In the US food is generally cheaper than it is in Europe, medical care generally more expensive. So what we try to do with PPP is work out what exchange rates would need to be in order to make prices of all of these different things the same in the different places. It’s not an exact science, more of an art. But if what you’re trying to measure is living standards then it’s somewhere between useful and essential as a part of your workings.
It isn’t just the UK that is poorer than the poorest US state, either. Economist Mark Perry did these same calculations using 2010 data back in 2011 and pointed out that only Luxembourg and Norway would be in the Top 30 states were Western Europe and the United States to meld into one federal republic. The rest of Western Europe is on par with the living standards of the American South (which is considered to be the poor, culturally backwards region of the US). Be sure to check out Perry’s 2010 data and compare it to Worstall’s and Nelson’s 2013 data, too.
Careful readers will notice extremely small differences in the calculated purchasing power parity of all three authors (the IMF’s is also a little different), but each data gives us a similar approximation for standards of living in each country and each US state. Suffice it to say here a political union between the United States and the wealthy countries of Western Europe would significantly diminish the GDP (PPP) per capita of the US overall. A political merger with Japan, South Korea, and Mexico would also diminish the overall purchasing power parity of the average US citizen. Canada might (might) make the Top 40 for US states (somewhere between Michigan and Ohio – states of the Rust Belt).
Now, if I had my way, the calculation standards for non-US countries would be the same as they are for US states. That is to say, I think a better way of measuring standards of living would be to break up the countries I’ve mentioned and measure the GDP (PPP) per capita of the administrative units that operate just below the national governments of these states. So, for example, instead of measuring the GDP (PPP) per capita of the Netherlands, I’d measure the GDP (PPP) per capita of the 12 provinces that make up the Netherlands.
Then, in my libertarian utopia, the 50 US states would join together politically with the various administrative units of Western Europe, Canada, Mexico, Japan, and South Korea. Instead of 50 administrative units (the US states) there would be hundreds, maybe even thousands, of them. Talk about decentralization!
Given that a political (and therefore economic and social) merger between Western Europe, the NAFTA states, and Japan-South Korea would diminish my PPP, why should I support such a proposal?
Update 8/30: Some commentators on Facebook have been clamoring for a map, and I found a great website that has devoted lots of time to creating maps based solely on administrative units. The name of the site is Kelso’s Corner and they have a great blog post on the “Natural Earth Vector,” which is the project that maps out administrative units.
It doesn’t have detailed maps of the Anglo-Saxon world or Mexico (presumably because these are so well known), but I found a couple of great maps of Western Europe and Southeast Asia.
Imagine if all of these units were to send representatives and senators to Washington (or a new geographic equivalent): Decentralized political power and integrated markets and cultures would be the new norm for much of the world in a political system based on Madison’s federal republic. I reckon that, in a libertarian utopia, the world would look like this map and be united under Madison’s minarchist federal government:
I understand that my utopia is not much of a utopia (people will still die and there will be plenty of conflict), but I think this is actually a strength rather than a weakness.
Notes On Liberty 
What’s your thinking on the level [for lack of a better term] of administrative unit? Why break the Netherlands into 12 and keep California as 1?
The more administrative units the merrier! This could also work the other way, too. So, for example, California and Oregon could merge into one state, although the tendency to “merge” within federations is usually balked at because of the representative power that is lost from such mergers (I am less certain of this tendency on the traditional state level – i.e. Syria and Egypt and the Arab Republic of the 1970s – although if I had to bet on it I would say that this tendency, too, is much less popular than devolution, for the same reason it is less popular within federations: less representative power).
The US federation already has an “in-house” secession/merger mechanism, so this is why my utopia has all of these administrative units federating with the original 50 rather than creating some new one out of thin air.
Foldvary and I wrote on the recent ballot initiative in California to break it up into six states, if you’re interested.
Actually it was the initiative in California [and related posts] that provoked the question 🙂
Aw schucks. I wasn’t sure because I thought you might have been lounging around France or smoking pot in Amsterdam around the time those posts came out.
Just to be clear: I’d be ecstatic if the administrative units of Asia, Africa, Latin America, Russia, the Middle East, etc. joined too. For some strange reason, I have it my head that my utopia would be more likely (!) if it started out as a federation of the richest regions in the world and then branched out in a piecemeal fashion.
If the United States of Brandonia began picking off administrative units from post-colonial states (such a Baluchistan or Kurdistan) I think it would be much more likely to happen. Or so my logic goes…
I posted some maps in an update, too. Be sure to check them out.
Why would you prefer a world in which the US and its allies formed a political union?
A great question, Michelangelo.
Just to be clear, I don’t think a political union between the US and it allies is the best option. I favor a worldwide federation (see my comment above to Dr Amburgey for more details).
The major reason I favor stronger political bonds between administrative units (rather than states) is because this is the best way to ensure peace and prosperity (see my comment to Dr van de Haar’s excellent post on the myth of “free trade equals peace” for more details) and it would significantly decentralize political power while still giving everybody representation.
A second, though no less major, reason to initiate a worldwide federation, beginning with the US and its allies is two-fold: 1) the military’s presence in these regions, and 2) the genius of Madison’s federal system.
A political union between the US and the allied countries that it protects would pay for the ongoing defense subsidization that US taxpayers are currently on the hook for (I dealt with this in “Imperialism or Federalism: The Occupation of South Korea“).
A political union between the world’s administrative units, and based on Madison’s federal republic rather than, say, the British model or the French model, would also be more likely to keep the new units in the system while still giving them the opportunity to exit (or further fragment, or merge together; see “A California Crack-Up?” for more details on how Madison’s federalism works in this regard).
There is also a third major reason, though it is more controversial: the states of the post-colonial world are largely illegitimate, and having a polity in the international state system that recognizes this, and acts on this peacefully by offering membership and protection to administrative units that would like to leave a post-colonial state, would serve as a catalyst for positive change – whether or not administrative units choose to leave. The competition between states for the loyalty of administrative units would force many of them to behave better (though this would not be the case with regional hegemons like China, India, and Russia; see my comment regarding Russia to Dr Stocker’s critique of my musings on secession within the EU for more details).
Does this make sense?
Yes, but I must admit I am skeptical about the desirability of a world federation.
To an extent I view the United States and its allies as already being in a decentralized political union with one another through NATO, the United Nations, and other international organizations. For convenience let’s refer to this political union as simply the ‘west’ (although Japan, South Korea, and a few other geographic outliers are members).
The institutions that make up this political union are not formally in a political union, but then again it was only recently that the institutions that made up the European Union were better formalized and it is still unclear whether the EU should be thought of as a new state or as an extremely close alliance between its constituent members. As such I don’t think it far fetched to consider the ‘west’ as an informal political union, with the United States as the dominant constituent member.
There are many benefits to this union in regards to promoting trade and peace. I would personally prefer to see it formalized in certain respects. For example I would love a presumptive right of free movement for goods, capital, and people within this union.
As you bring up, it would be beneficial for NATO’s funding system to be reformed in order to ensure that costs were more equally spread across members. As things currently stand the United States pays a dis proportionally high part of defense costs. I would not be in favor of making poorer members of the union paying more, but certainly South Korea, Japan and the richer European members should be expected to pay more now that they’ve developed.
A more formal political union might help avoid future incidents like the current Ukraine-Russia spat. Ukraine was not clearly part of the ‘western’ political union, and so Russia is acting in order to ensure that it doesn’t become a formal member. If Ukraine had clearly been part of the ‘western’ political union it would have been easier to have defended it.
I am wholly in favor of maintaining the current informal political union that exists between the United States and its allies. I am even in favor of formalizing and reforming it.
I am not however in favor of it, or any other similar union, spreading to envelope the entire world. Namely because I desire there to be competition between these unions and have a strong aversion to monopoly in the production of any good or service. In a world federation we can expect there to be competition between constituent administration units in things like roads, regional growth, or even policing. We cannot expect for a world federation to have competition in those goods that require economics of scale though, i.e. national defense, federal laws, etc.
I could only support a world federation if humanity colonized space and new polities formed there. If Earth and Mars both had planet wide political unions, both would be in competition to produce government goods and things would be fine so long as people and goods could freely vote with their feet between the two.
An excellent analysis, Michelangelo.
I agree with you about an already loose coalition between rich states, although the West cannot be complete without Latin America, which is basically an underdeveloped Latin Europe.
There is not much else I disagree with you on (including space colonization and I’ve touched on your excellent point about loose decentralization in the West before), so I have just two more thoughts.
1) National defense would still be a prevalent part of a larger federation of administrative units, and if the whole world were to be united under a Madisonian system then the need for national defense would simply melt away, wouldn’t it? You’d probably have militias and the like, but if the entire would were united politically, national defense would go the way of the dodo.
On your point about federal laws/courts, I think it is important to note that while a Madisonian court system would have a monopoly, there would still be plenty of competition (think about the way in which circuit courts compete, for example), and there would still be plenty of room for private courts and the like.
2) Adopting an approach to political integration that welcomes frustrated administrative units into the Madisonian constitutional system (or forces free-riders to participate in the system or get the hell out) is the answer to (very good) critiques of the libertarian non-interventionist approach to foreign policy.
It’s more libertarian than non-intervention as well, I think. There are two major factors that go into this argument of mine. One, the world is filled with bad governments and if you think individual liberty is the best prescription for bad government you must become an enemy of these bad governments. This doesn’t mean you should advocate bombing or invading other places, of course, but only that it is silly to put Moscow and Washington in the same category.
Two, an inclusive Madisonian republic would be a great alternative to the glaring contradictions of non-intervention. It would be peaceful yet firm, and it would be done legally yet creatively.
Again, does this make sense or am I just sounding like a crackpot?
[…] What Mises and other interwar liberals missed in regards to establishing a supranational state is the very nature of the US constitution. Interwar liberals were more interested in pointing out the blatant inconsistencies of the multilateral institutions being erected after the war than they were with elaborating upon the idea of a world state. My guess is that they viewed the world state as too far out of reach for their goals at the time, and thus fell back on the ‘balance of power’ option (pdf) that was still popular among liberals at the time. The US constitution is, at its core, a pact between sovereign states to join together politically for the mutual self-interests of foreign affairs and legal standardization (a standardization that is very minimal, as it allows for plenty of flexibility and competition). […]
[…] government Brandon Christensen implicitly discusses world citizenship. I have previously aired my disagreement with Christensen on the issue of world government, but feel obliged to point out that the matter of […]
[…] Conspiracy arguing against world government. Somin’s argument echoed Michelangelo’s here at the consortium, and in particular one aspect of their argument stands out for being especially short-sighted: That […]
[…] I think legal pluralism does work in systems like the one found in the US (where circuit courts compete with each other, for example, or state and federal courts […]
[…] I think it gives a much more stark picture of life around the world. I have pointed out before that the UK is now poorer than Mississippi, but breaking down the UK in the same manner as we do the US reveals that not only is the UK […]
[…] Check out this chart of GDP per capita (I couldn’t find a chart for GDP [PPP] per capita, my preferred method for looking at comparative wealth) from the Nobel Prize-winning economist Robert E […]
Let’s just make sure that our zeal for “libertarian” solutions is not confined to shrinking the centralized power of gov’ts but includes the conversion of globalized, corporation/banking dominated capitalism into a more socialistic, locally-responsive economic associationism.
Thanks Jay.
“Conversion” is an interesting word to use. In a more libertarian world, the “corporation/banking” cartel – which currently enjoys its monopoly thanks to its successful capture of rent associated with government privileges – would most likely disappear, but there is no guarantee that large corporations could not operate in such a world.
In a more libertarian polity, it would simply be harder for such factions to capture any sort of rent associated with government favors because government would be restricted to a few functions (if any!).
I am curious, though, about your use of the word “conversion.” I am curious because it is such an ambiguous word, and one often associated with religious groups. A more libertarian polity would simply eliminate the protections currently given to many markets by repealing the laws erected to protect them in the first place.
What would neo-socialists do? And why do neo-socialists argue that local economies are superior to global ones?
[…] I think the dialogue in the ‘comments’ thread of this 2014 piece is also worth reading in tandem with my thoughts on Michelangelo’s comment […]
Note the differences between first-level units, such as the United States, Canada, Mexico, Japan…, second level units, such as Virginia, Nova Scotia, Sonora, Hokkaido,…, third-level units such as Spotsylvania county, Lunenburg county, Municipio San Luis Rio Colorado, …
.
The difference is most marked when comparing PRChina with (RoChina) Taiwan. If Peking got its way and reabsorbed Taiwan, then Taiwan would become a second-level unit of China, and the second-level units in Taiwan would become third-level units. (Also worth noting that, formally, the RoChina is a little larger than the historic Chinese province of Taiwan, including Quemoy, and Matsu (?and?) which formerly belonged to Fukien province.)
Thanks David.
It’s definitely cool to think about.
[…] the UK is a big deal, and so is leaving the EU. However, the UK is not exactly Sweden or Germany. The United Kingdom is poorer than Mississippi, the poorest administrative unit in the United States. It’s possible, if a bit unlikely, that […]
[…] The UK would be the poorest state in the union (as measured by GDP PPP per capita), if it were admitted as one state. […]
[…] What if the OECD did the same? Or simply the US and it’s closest allies? […]