On getting the data right : price disparities before 1914

I am a weird bird. I get excited at weird things. I get excited at reading economics and history papers (and books). I get particularly excited when I read papers and books that “get the data right”. This is because I believe that most theoretical debates in economics stem from poor data forcing us to develop grandiose theories or very advanced models to explain simple things. One example of that is the work of Joshua Hendrickson who argued that monetary aggregates (M1, M2 etc.) are not necessarily perfect indicators of money. However, these aggregates were used in statistical tests and generated strange results inconsistent with theory. This issue has been the cause of many debates. Josh stepped in and said that we just had a variable that was not created to measure what the theory said. Using broader measures of money, he found the results consistent with theory. The debates were driven by poor data (as I think is the case in issues over fiscal multipliers, crowding-out and business cycles).

Thus, I am always excited to see data work that “get things right”. One recent example that adds to cases like that of Hendrickson is Peter Lindert’s working paper at the National Bureau of Economic Researcher. Now, before I proceed, I must state that I am very partial to Lindert as he has been a big supporter of my own research and has volunteered important quantities of his time to helping me move forward. Thus, I have a favorable bias towards Lindert (and his partner in crime, Jeffrey Williamson).  Nonetheless, his working paper requires a discussion because it “gets prices right”.

The essence of his new working paper is that our GDP per capita estimates prior to 1914 may overestimate divergence between countries over time.

Generally, when we measure GDP, we try to derive “volume indexes” that measure quantities produced at a fixed vector of prices. For example, when I measured Canadian economic growth from 1688 to 1790 (I am submitting it in a few weeks), I took the quantities of grain reported in censuses and weighed them by prices for a fixed year. This is a good approach for measuring productivity (changes in quantities). Nonetheless, there are issues when you try to move this method over a very long period in time. The prices may become unrepresentative.  So you get time-related distortions. Add to this that all the time-related distortions may be different over space. After all, should we believe the relative price of wheat to oats in 1910 was the same in Canada as it was in Russia?  Variations in relative prices over space will affect this issue. Basically, you juxtapose these two types of distortions when trying to measure GDP per capita over centuries and you may end up so far in the left field that you’re in fact in the right field.

In his working paper, Lindert tried to adjust for those problems by moving to prices that were more representative. The approach he used is basically the one used by Robert Allen in his work on the Great Divergence. You create a bundle of goods that capture the cost of living in different regions – a basic bundle of goods. This generates purchasing power parities. From there, he recomputed incomes per capita with these measures prior to 1914. The results are striking: there is much more divergence between Europe and Asia that commonly proposed and the United States are much richer than otherwise believed (and were more richer very early on – as far back as the colonial era).

Now, why does this matter?

Well, consider the debate on convergence. Many scholars have been unimpressed by the level of income convergence across countries (at least until the 1980s). However, Lindert’s estimates suggest that the starting point was well below what we think it was. In a way, what this is telling us is that many puzzles regarding the “catching-up” of poor countries may be simply related to poor data. Imagine, for a second, that we could redo what Lindert did with many more countries at a higher time frequency. What would this tell us? Imagine also that this new data would confirm Lindert’s point, what would that entail for those entangled in debates over development?

Basically, what I am saying is this: most of our debates often stem from poor data. If a simple (and theoretically sound) correction can eliminate the puzzles, maybe our task as economists should be to stop bickering over advanced theory and make sure the data is actually geared towards testing our theories!

Percentages that Fairly Scream and, “Catastrophe” is a Greek Word

The WSJ of 7/9/15 shows a comparative table for some European Union countries of spending on pensions as a share of GDP. This comparison denotes roughly the drag effect that payments to retirees has on the whole national economy. To no one’s surprise, Greece tops the list with 14.4%. Germany is at 9.1%. This may seem like a small difference but when it’s turned into actual, absolute figures, the difference becomes downright striking. They scream!

The 5.3 percentage points difference can be applied to both countries’ GDPs (or GDPs per capita, same thing in this case). The International Monetary Fund gives Germany’s GDP per capita for 2014 at about $46,000 and Greece’s at about $26,000*. Pensions cost Germany $4,150 annually for each man, woman and child. Pensions cost Greece $3,400 annually for each Greek. It does not look like the Greeks should be able to afford this kind of disproportionate burden.

Suppose Greece’s pensions took the same bite out of its GDP as Germany ‘s does out of its GDP, 9.1% . In this scenario, today, the Greek economy would have about $1,400 each year unspoken for for each man, woman and child. This money would still be available for spending, as it is through pensions. It would also, however, be available for both public and private investment.  That’s $1,400 each year; that’s a lot by any standard. That’s money needed to rejuvenate the Greek aging economic plant.

How realistic would such a change be, involving raising the legal age of retirement, I mean? The Germans’ and the Greeks’ life expectancies are virtually identical ( 80.44 vs 80.30, in CIA Handbook). There seems to be a little wiggle room to move there. Note that raising the age at which people can claim a pension is doubly beneficial: It reduces the number of pensioners while raising the number of workers who support the pensioners. Some will argue that raising the age of retirement is a pipe-dream in a country such as Greece where there is chronically high unemployment. I think this reasoning is wrong. Many Greeks don’t find a job because investment in Greece is insufficient. People need tools to work. What is certain is that the current dishonest Greek government policies, soundly supported by the exercise of a majority of Greeks’ votes cast, are not going to draw foreign investment. The money to improve both Greeks’ chances of employment and their productivity will have to come from within. One significant source is described above: Close the pension option for one or more years to healthy Greeks. It will provide both ready investment money and confidence abroad.

Note that raising the legal age of retirement is a purely political decision. The Greeks can do it any time they want. They can do it overnight. Perhaps, there will soon arise a political party in Greece that will proclaim the truth: It’s not the mean lenders, it’s us!

This is a fairly simplistic reasoning, I know. The general age of the population places constraints on the practicality of raising the age of legal retirement (but an older population also makes it more desirable; think it through). I have heard leftist demagogues on National Public Radio argue that the big bite that pensions take out of the Greek economy is not the Greeks’ fault, that it results more or less directly from the fact that Greece has an old population. Sounds good but the fact is that the Germans are, on the average, quite a bit older than the Greeks (Median age of 46.5 vs 43.5 according to Wikipedia.) Don’t believe experts on NPR, not even on simple facts!

Alternatively, the Greeks could begin collecting their moderate taxes like the Germans instead of like the Italians. They might also remember that “catastrophe” is a Greek word.

* The figures are “PPP” meaning that they take differences in buying power in the two countries into account.

Some Quick Facts About Nepal

Dr J suggested I post some thoughts on the recent, devastating earthquake in Nepal, but I don’t know if I have much to add. Over at Policy of Truth, one of Dr Khawaja’s friends was in Nepal when the quake happened and there are some photos that his friend was able to take. And a development economist has some good advice on giving to Nepal.

Instead, I’ll just break down some interesting tidbits about the country. I can’t do any better than Wikipedia (minus most of the links):

Nepal […] is a landlocked country located in South Asia. With an area of 147,181 square kilometres (56,827 sq mi) and a population of approximately 27 million, Nepal is the world’s 93rd largest country by land mass and the 41st most populous country. It is located in the Himalayas and bordered to the north by the People’s Republic of China, and to the south, east, and west by the Republic of India. Nepal is separated from Bangladesh by the narrow Indian Siliguri Corridor and from Bhutan by the Indian state of Sikkim. Kathmandu is the nation’s capital and largest metropolis.

The mountainous north of Nepal has eight of the world’s ten tallest mountains, including the highest point on Earth, Mount Everest, called Sagarmāthā (सगरमाथा) in the Nepali language. More than 240 peaks over 20,000 ft (6,096 m) above sea level are located in Nepal. The southern Terai region is fertile and humid.

Hinduism is practiced by about 81.3% of Nepalis, the highest percentage of any country. Buddhism is linked historically with Nepal and is practiced by 9% of its people, followed by Islam at 4.4%, Kiratism 3.1%, Christianity 1.4%, and animism 0.4%. A large portion of the population, especially in the hill region, may identify themselves as both Hindu and Buddhist, which can be attributed to the syncretic nature of both faiths in Nepal.

A monarchy throughout most of its history, Nepal was ruled by the Shah dynasty of kings from 1768—when Prithvi Narayan Shah unified its many small kingdoms —until 2008. A decade-long Civil War involving the Communist Party of Nepal (Maoist), followed by weeks of mass protests by all major political parties, led to the 12-point agreement of 22 November 2005. The ensuing elections for the 1st Nepalese Constituent Assembly on 28 May 2008 overwhelmingly favored the abolition of the monarchy and the establishment of a federal multiparty representative democratic republic. Despite continuing political challenges, this framework remains in place, with the 2nd Nepalese Constituent Assembly elected in 2013 in an effort to create a new constitution.

Nepal is a developing country with a low income economy, ranking 145th of 187 countries on the Human Development Index (HDI) in 2014. It continues to struggle with high levels of hunger and poverty. Despite these challenges, the country has been making steady progress, with the government making a commitment to graduate the nation from least developed country status by 2022.

Nepal’s GDP (PPP) per capita stands at about Intl$ 2,300 according to the World Bank, which is lower than Bangladesh and on par with Senegal (in west Africa), and Tanzania and South Sudan (both in east Africa). GDP (PPP) per capita is, of course, my favorite unit of measurement for comparing the health and wealth of societies.

I couldn’t find much information on ethnic groups, but the number of religions practiced, plus the number of languages spoken by significant portions of the population and coupled with the decade-long civil war between Maoists and monarchists, is enough to suggest – to me – that the country has no tradition of liberalism whatsoever, and will thus likely remain in poverty for a long, long time – despite the fact that a federal state has recently been implemented from the bottom up.

Ideas matter, though at the same time, the question of federalism versus liberalism seems a lot like the question about the chicken or the egg. If a Maoist insurgency and a reactionary monarchy can give way to a liberal federation in the middle of the Indian-Chinese border I’ll disavow learning altogether and take up the cloth in liberalism’s name!

I am hoping Dr Ranjan – a South Asian specialist – can jump in and provide us with some insight as well, but spring is a busy time for scholars.

Calls for harsh criticism: my first (of four) graduate school statement of purpose

Note: this is my statement of purpose (SOP) for a graduate program in anthropology at Emory University. I am also going to apply to Stanford, New Mexico, and Chicago. This is only a rough draft. I have given myself plenty of time to make these perfect, so I am posting this here in order to get harsh feedback and also in case anybody ever finds himself in my position (looking online for examples). The application process consists of five parts: grades, GRE score, Letters of Recommendation, SOP, and resume. My big weaknesses are the SOP and Letters of Recommendation. Any help I could get on my SOP would be great! UPDATE (4/14): Dr Khawaja has kindly provided a forum for my other weakness, the Letters of Recommendation, over at Policy of Truth and I have been learning a lot.

I am interested in land contestations, property rights in stateless regimes, and state formation. There are two main reasons for this. First, I spent three months in the Ghanaian village of Wiamoase, a remote outpost in the Ashanti region, with a medical anthropologist who was then doing graduate work on placebo effects and shamanism at Boston University. Ghana was on the threshold of a third consecutive, coup-free presidential and parliamentary election cycle and I was able to observe how these elections were interpreted by rural Ghanaians. Two major factions figured prominently in the electoral calculations of Ghanaians: the aid-lending Global North and rival, ethnic-based domestic factions. These calculations reminded of the work done by the historian Charles Tilly on the slow rise of democracy in France and the role played in this contestation by the landowning aristocracy. I then decided to conduct an informal survey where I asked villagers whether they had more trust in the politicians of Accra or in the land-holding chiefs who leased out farmland. The unanimous response to my unscientific survey was that the trust of the villagers was in the land-holding chiefs.

Second, at Cabrillo College – a community college in central California – I did Honors research on Javanese political strategies and the Dutch colonial practices that those strategies induced. I was particularly intrigued by the narrative of condescension that dominated Western scholarship up until the 1960s, when the Javanese finally began to be depicted by (some) historians as active, willing participants in the new relationships that were formed by the arrival of European settlers. I presented the results of this research at Stanford University in 2011 as part of a Bay Area Honors consortium, where challenging feedback from professors and participants allowed me to show how this research is relevant to understanding today’s examples of both large-scale organized violence and economic development (or lack thereof).

This research was also featured, in modified form, at RealClearHistory in February of 2014. RealClearHistory is part of the RealClear online series that features work from academics, policymakers, and journalists from around the world on issues ranging from science to history to international relations. RCH also featured my articles on the limits of Japanese imperial ambitions during the Shōwa era and on the European Union’s potential for avoiding the nationalisms of the 20th century by providing inclusive outlets for separatist aspirations. The research done for these features, coupled with my electoral experience in Ghana, produced two notions of democracy in my mind: democracy as a colonial project, and democracy as a power-sharing institution; both of these notions feature prominently in Somalia, my main area of interest, today.

Building upon the work of Peter Little, states are generally taken to be a necessity because of the benefits they provide in regards to public goods. In the postcolonial context, however, states are often wielded as a bludgeon and used as an ATM machine by those who attain its levers of power. When a faction – usually ethnic- or geography-based – wins out in a postcolonial state, the other factions lose power (this is in contrast to long-established, more-or-less democratic states, where “losers” still have institutional representation in a number of ways).

Given this situation, I am interested in both the process of state formation in the postcolonial context, and in the idea of taking seriously notions of informal sovereignty – as exemplified by non-state (indigenous) cooperation at the regional and local levels of borderlands – within current internationally-sanctioned boundaries. In the course of writing my article on nationalisms and the EU, for example, I discovered that three distinct cultural cores of the world – South Asia (India, Pakistan, Bangladesh, Nepal, Bhutan, and Sri Lanka), the Horn of Africa (Somalia, Eritrea, Ethiopia, Yemen, Sudan, Djibouti), and the European Union – have similar geographic spaces, ranging in size from 4.31 million km² to 4.482 million km². Yet within these similar geographies, the comparative number of states is stark: both the Horn of Africa and South Asia are comprised of six states each, while the European Union has nearly five times as many (twenty-eight since 2013). The GDP (PPP) per capita – a leading measurement tool used to gauge the economic health of a country – of these regions (based on 2012 IMF estimates) provides another stark insight: the EU’s GDP (PPP) per capita stands at $31,018, whereas South Asia’s stands at $3,805 and the Horn of Africa’s is $1,679. These are simple but profound economic and geographic quantitative rifts that have yet to be fully explained, especially in the context of the contestation over defining democracy. Can these macro-level data, in turn, be complemented by looking at informal, cross-border market cooperation, comparative interethnic & intraethnic trading strategies, and power-sharing political institutions? More theoretically: Do these informal economies form the basis of viable states?

The pastoralists in southern Somalia offer an avenue of exploration into these questions, especially the cross-border trade between pastoralists and cattle traders in Somalia and Kenya. I am unaware of research being done on how property rights are agreed upon by the parties involved in this sector of the economy, but the quasi-corporate organizational structure of the actors in the cattle supply chain identified by Dr. Little have ample potential. While much work has been done on the destination of Somali cattle products, and on the traders who act as intermediaries between herders, sellers, and producers, the perspective of Somali herders on the regional informal economy has not been studied in depth. How does both land – as an economic factor of production – and conceptions of property rights affect pastoralists’ economic decisions and political acumen? Ethnographic accounts of herder perspectives on informal economies in general and on the supply chain of their cattle in particular can also build upon the foundations necessary for understanding larger-scale social phenomena such as state formation and neocolonial institutions.

I spent most of my time at UCLA living in an outdoor track-and-field stadium and hauling around a cardboard box with all of my belongings in it, which taught me to be determined and I only mention this because it’s good evidence that I have the perseverance necessary to pursue a doctoral degree from your program. My experience in homelessness is not limited to my time at UCLA. I was born in the cultural center of the Mormon world and, when I left that world at a relatively young age, was exposed to the sometimes harsh realities of poverty in the United States. I mention this experience because it has taught me who to pay attention to depending on what I need and what I want. The work of Peter Little on the formal and informal economies of pastoralists in the Horn of Africa has, in particular, attracted my attention, and I hope to be able to learn directly from him. David Nugent’s work on comparative state formation methods is also an area of research I would learn much from, as is the work of Michael Peletz on Islamic law and its relationship with state formation in Southeast Asia.

Facts vs Narrative: American Peronismo

Anyone who has written anything other than an accident report, maybe even only three letters to his mother, knows or guesses the following: facts often interfere with the quality of a narrative. Only very great writers manage to incorporate all the relevant facts without damaging the beauty of their narratives. Or, they make up facts that will fit without damage into their narrative. I am thinking of Mark Twain among a few others. But that’s in mostly fiction writing, intended as fiction and perceived as such by the reader. The other option is to leave out all the hard facts to the benefit of narrative beauty and then, you have poetry!

Writers in genres other than fiction – old-school journalists, for example – face the same issue, the same dilemma. While they wish to communicate facts, they understand that an attractive narrative helps them in their task. If nothing else, an enthralling story, does keep the reader, and the listener awake; even merely a pleasantly told story Only the un-gifted who face what they think is a captive audience (no such thing, I think) abandon narrative altogether. They insist on bullet points of facts, a method that seldom achieves much of anything, or anything lasting, I believe.

There is thus another, more subtle reason to craft one’s narrative when transmitting facts, a reason to which I just alluded: Facts embedded in a good narrative are retained longer than facts thrown out at random.

Form really matters when you tell others things you believe they ought to know. But facts are often undisciplined, they often refuse to be choreographed into the opera you wish to stage.

Every writer of other than fiction faces the same issue although more or less frequently. The issue is this: what to do with facts that injure an attractive feature, or the whole integrity of the narrative to which it belongs, like this:

“Dear Mom and Dad: I really, really enjoy Camp Iroquois. In the morning, with have this huge breakfast outside with huge omelets and as much bacon as we can eat plus pancakes with syrup and jam. Then, we wash a little and sometimes the counselors make us brush our teeth and we throw wet towels at each other. After that we, play baseball or touch football until noon. (Don’t worry, Mom, I am wearing my cap and lots of sunscreen.) After games, we all have barbecued lunch with hot dogs and lots of relish and cold coke. And then, we rest under a big tree and a counselor reads us adventure stories. After the story, we go and bathe naked in the pond that’s very close. Just the other day, I went to the pond early by myself and I slipped into water that reached above my head. You couldn’t see anything underwater and there was lots of mud at the bottom. So, I forgot that I could swim a little and I swallowed some pond water. Fortunately, Counselor John, the tall one I told you about was just walking by the other side of the pond. He ran and he pulled me out just in time. I coughed a lot of brown water but I guess I am fine, now, so, don’t worry. And, Mom, don’t worry about the laundry either because we hardly wear any clothes most of the time. Plus, I have found a way to make my underwear last for more than one day by just turning it inside out. Oh, I almost forgot to tell you that right after diner, every night, the counselors make a big bonfire and we sing songs until we feel tired and we have to walk to our tents to sleep.

So, Mom, and Dad, you see, I am having a great time at camp so, don’t fret about me.

Your son, Peter.”

You see the problem? The narrative of a happy kid whose parents need not worry about a thing would be improved by the removal of the near-drowning episode. If the child were wise beyond his years, he would leave it out, right?

The same problem arises with every political narrative, including the long-flowing narratives that serve as action guides by default for political parties and for political currents:

Do you tell a good story on an ongoing basis or do you include the relevant facts even if they interfere with its flow?

It seems to me that there is a major difference between political left and right in their willingness to worsen the narrative with facts. I may be wrong. I will listen to criticism and to contradictions. If my perception is correct however this preference for the narrative explains a great deal. It explains the fact that the left everywhere is inured to its own failures and to the success of its adversaries. Curiously, it explains why there is such a preponderance of leftists in practically all the arts, from Hollywood to French singers.

This preference for form over fact even explains the continuing puzzle that is the country of Argentina. I explain: There is no reason why Argentina is not Canada, as prosperous as Canada or nearly so. In fact, three times in one hundred years, the Argentinean standard of living nearly equaled that of Canada. Each time, it was after an important conflict elsewhere. Each time, Argentinians squandered their wealth; each time, they allowed themselves to fall back into poverty instead of taking off and out of underdevelopment for good.

The current government in Buenos Aires is the third iteration of a populist movement called “Peronismo.” The movement is based on a good story: a benevolent, and originally elected dictator, distributes the unjustly acquired wealth of the insolent rich to the poor to the “descamisados,” to those who don’t even have a shirt on their back. Sure the process, is sometimes a little messy but it does not matter; it’s the intention and the goal that matter. And if you stop the clock at any time during the re-distribution process, you will easily find poor families that are better off this year than they were last year.

Peronismo promises to create social justice and a decent life without the rigors and the discipline of communism, for example. The first two times, Peronist regimes ended in economic disaster, the second time, also in a brutal, murderous military dictatorship that lasted for seven years. The current Peronist regime recently had to assassinate a prosecutor in his home because he was about to splash the presidency bloody with a precise, well documented tale of murder and corruption in high places. (Argentina is not a stereotypical Latin American dictatorship however; the current president, Cristina Fernández de Kirchner was properly elected .)

The thing, when you talk to Argentinians of the middle class is how civilized they are, how courteous, how well educated, how well informed, (much better informed that middle class Americans in general, if you ask me). And they speak a beautiful Spanish that bears lightly the faint echo of the millions of Italians that form the bulk of Argentina’s population. And their songsters and their singers are second to none. I am listening to Mercedes Sosa as I write, whose “Gracias a la vida” would make me shed tears if I could shed tears. Before her there was Atahualpa Yupánqui, a singer and poet of the poor much better than any country music singer I know (and I know many). Even Buenos Aires pimps invented the tango which is more than you can say about pimps anywhere else. And then, there is that gaucho sitting on his skinny horse sipping hierba mate from a silver tube in a gourd. He always looked to me like a more authentic version of Western movie cowboys because he is not that well groomed, if truth be told; he is just more manly.

In brief, Argentina, the nation, has an excellent narrative. It’s all the better because it is not spoiled, it does not contain disturbing facts: Destiny and history favored Argentinians from the beginning but they are poor most of the time. (Currently, the country has a GDP (PPP) per capita of $19,000, against Korea’s $33,000, a country that had nothing in 1955, and $53,000 for the US – CIA Fact Book) Argentines always dive into poverty for the same reason: They insist that dividing into twenty a pie intended for six will be just fine. They give no attention to the requisites for baking a bigger pie. They are quick to endorse concrete injustices committed in the name of abstract justice. (After all, the expressed wish of the sovereign people must take precedence over constitutional formalities.) If all these obvious historical facts were woven into it, the narrative would not be nearly as attractive; it would be disfigured. It might be disturbing enough to force them to pay attention and begin fixing what’s wrong with their society at last.

It seems to me that a preference for the flow, the coherence of a narrative over the inclusion of relevant facts is commonplace but I think it’s routine among the tribes of the left.* Communism killed at least 100 million people. Yes but it fought injustice. Cubans lead miserable lives in Cuba; those who fled with the shirts on their back are twice richer than those who stayed, after only a couple of years parking cars in Miami. Yes, but the Cuban revolution was deserving of a great movie and it ended by providing free medical care for everyone. That is justice.

Even worse, the US is an international bully variously attacking other, weaker countries for their oil or to force them to adopt institutions they don’t like. A sense of decency requires that Americans stop the bullying.

In the US, the Democratic Party, propelled by its energetic left wing, often garners the extra votes it needs to win – beyond the obligatory black votes, union votes and teachers’ votes – by telling a good story: It’s the party holding the fort against the “war on women,” it’s the party of the little guy; it’s the party of the perpetually racially oppressed, of those oppressed merely because of their sexual preference, even of the newly oppressed “middle class.” Its narrative tugs at your heart strings unless you are very critical and very well informed. It’s a narrative that is squarely opposed to facts. Here are some facts that would change the liberal American story’s face, if they were allowed into that story:

  • The War on Poverty may have been a good idea originally. Fifty years later later, we are allowed to take stock. There is no reason to believe it was a success. There are reasons to think it was a failure.
  • The death rate of young black Americans is stupendous. Few die at the hands of police however. Mostly, they kill one another and they succumb to drug overdoses.
  • At any one time, at least half of American adults are opposed to abortion on demand. A high proportion of these think it’s murder plain and simple.
  • There is no evidence that, on the average, women earn less money than comparably situated men. There is a law forbidding this and there is no evidence that it’s often violated.
  • Out-of-wedlock birth is highly correlated with poverty for all social and racial groups.
  • The thesis that human activities (industrial, cars) are causing a rapid rise in global temperature that will cause catastrophes for the environment and, eventually for humans, that thesis is not well established, if it is established at all. Evidence against as a well as evidence in support is amassing quickly.
  • When the US does not act as a world policeman, unspeakable horrors multiply.

I could go on and on, obviously. Liberals don’t want to include these basic facts in their narrative of injustice and of oppression, domestic and international because it would simply destroy it. Absent the narrative, they would lose almost all elections. That’s why it matters to contradict tirelessly with facts the fairy tale in reverse tirelessly propagated by the left and by media now mostly at its beck and call.

Under the guidance of the Democratic Party (today’s Democratic Party), America would become another Argentina. The Democratic Party is not “socialist” as old Republicans are fond to grumble. (“Socialism” is a word that has lost any fixed meaning. It may never have had one. Perhaps, it was always only an incantation.) The Democratic Party is Peronist. Peronism is a form of soft, self-indulgent fascism that drags everyone except the dictator’s buddies into poverty. (See my short essay on fascism on this blog: “Fascism Explained.”)

* Here is an example of a conservative narrative that would be spoiled by relevant facts. Conservative media heads keep repeating that the first thing to do to solve the problem of illegal immigration, is to “secure the border.” Let’s not kid ourselves, they mean the southern border of the US, the border with Mexico. Missing from this concise and manly, energetic-sounding narrative:

The fact that most illegal immigrants today do not come from Mexico, or from elsewhere in Latin America.

The fact that those who do come from south of the Rio Grande don’t actually swim across that river or trudge in the desert at night but that they drive in and fly in and then, overstay their visa.

The fact that arrests of illegal aliens where they are easy to catch, at places of work that concentrate them such as slaughter houses, the fact the number of such arrests is tiny, year after year. (I mean that this requires an explanation.)

The fact that illegal immigrants who are arrested and who, under the law, are supposed to be deported by priority, criminals, often get to stay, mysteriously.

All these facts who detract from the “secure the border” narrative for the simple reason that none of facts above would be altered if the National Guard stood right on the border with Mexico elbow to elbow, fingers on the trigger of their machine guns.

Eye Candy: the GDP (PPP) per capita of OECD Administrative Units (UPDATED)

Here is what I was able to patch together in my free time.

The countries I’ve filled in were about half of the OECD. The data is hard to get on administrative units elsewhere in the world (I got my data from the OECD website), but it was also hard to get for OECD states. The reason it was hard is because OECD data collectors divide up administrative units into two separate categories (TL2 and TL3) that sometimes correlate to traditional administrative units (such as California or New South Wales) and are sometimes arbitrary creations of EU or OECD bureaucrats designed specifically for data collection (rather than for understanding the historical trajectory of regions within a state).

Does this make sense?

To make matters worse, sometimes the TL2 category correlated with an actual administrative unit with political representation in a capital, and sometimes the TL3 category was the actual administrative unit with political representation. So I had to thumb through the nitty-gritty details of how OECD states send representatives to central parliaments and then match those real-life details to the data collectors TL2 and TL3 categories.

Does this make sense?

The map above highlights the US, Canada, Australia, Germany, France, the UK, Spain, Poland, Austria, Italy, Czech Republic, Chile, Denmark, and Mexico. These countries are all TL2 states.* I have no idea what that is supposed to mean for data collectors, but it means to dorks like me that their TL2 categories send political representatives to capital cities, whereas their TL3 categories likely send political representatives to regional capitals.

Does this make sense?

I have continued entering the data that the OECD has provided for the GDP (PPP) per capita of TL3 units (which send political representatives to capital cities), but the map I downloaded does not outline TL3 units (it only outlines TL2 units). So unless I want to spend time carving out TL3 units onto a TL2 map I am going to have to stop filling out the map. I’m all for collaboration on this, of course.

Here is the table I have (very slowly) been working on, but when I colored in the map above (the TL2 states), I divided them up into six groups based on highest GDP (PPP) per capita to lowest. The richest administrative units were purple, followed by blue, followed by green, followed by yellow, followed by orange, followed by red. So: purple is rich, red is poor. Got it? Because I started adding the TL3 states to the table, and because the map doesn’t allow for me to add the TL3 states to it, I forgot the range of the colored TL2 units. Dividing them up into six groups is a pretty easy task, though, so you should just trust my coloring scheme.

The map I created doesn’t have a very good zoom-in function, but what I found interesting is that Europe has a lot more economic inequality than the US, Canada, and Australia. Look at France. It’s mostly yellow, and the only purple (rich) administrative unit is Paris metro. This suggests, of course, that wealth in France is concentrated in the capital. The UK looks just like France (as does Spain). Germany is divided in half (as is Italy), and Austria and Denmark are cool, rich colors. Canada and Australia only have one yellow province each, and the US has none. Mexico looks just as Michelangelo described it, and Chile looks like Spain.

This is the OECD page I’ve been using. Here’s how I find regional GDP (PPP) per capita:

  • select “Regions and Cities”
  • select “Large (TL2) and Small (TL3) regions” – remember it’s either/or here: either TL2 or TL3 but not both
  • select “regional GDP per capita”
  • Then for measures (top of table) select “per head, current prices, current PPP”

I’ve been using 2011.

This pdf lists the “territorial grids” (TL2 and TL3 regions) of the OECD. The pdf didn’t help me figure out which regions send political representatives to capital cities and which are arbitrary, bureaucratic creations (I got to do that on my own!), but lists can definitely be helpful. In many cases I was able to figure out which units are politically viable and which are arbitrary for data collecting purposes just by looking at the list.

Finally, here is a map – courtesy of kelsocartography.com – of the world’s administrative units, at the TL2 level. Lots of work to do.

A good map of the world's administrative units
Here is a map of the world’s administrative units (courtesy of kelsocartography.com), but not necessarily the units that data collectors use to calculate GDP (PPP) per capita.

I like using the GDP (PPP) per capita of administrative units because 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 poorer than the poorest US state, the purchasing power parity of British citizens within the UK looks a lot more unequal than what we see in the United States. What is going on in the UK? The NHS can’t be that bad.

* – Oops, except for Denmark (it’s TL3)

UPDATED (3/11/2015): Continue reading

From the Footnotes: Ignorance of Islam and of the Decentralization of Power

There are widespread calls for an Islamic reformation such as Christianity experienced in the sixteenth century, but the Reformation cleaved Christianity into two major traditions and many splintered sects; each grew independently of the others, eroding any hope of a Christian center that could rein in extremes. After its early division into Sunni and Shi’a, Islam has come to suffer enough from this segmentation without a modern reformation. Indeed, Islam is a democratic religion, so thoroughly decentralized that even muftis are elected. Many Muslims are interested not in further schisms but rather in reconciliation among the competing doctrines and their extremist messengers, ultimately reducing the violence carried out against each other and other civilizations. As Gilles Kepel argues, though the rise of militant Islamism has been spectacular, its hyperviolence has proved to be a liability rather than an asset. (243)

This is from Parag Khanna’s 2008 book The Second World: Empires and Influence in the New Global Order. This footnote is in most respects a microcosm of the book as a whole: it’s on the cusp of providing theoretical insight into how the world works but just can’t seem to shake a certain type of dogma associated with the technocratic Left (I think he has done a better job of shaking this dogma post-2008).

This footnote is also in most respects why I’ll never be a Leftist again, even as a sleek, trade-friendly technocrat.

This footnote says to me that Khanna is arguing for a hands-off approach to Islam on the part of the West. Khanna is saying that Islam does not need a Christianity-style reformation. So far, so good. Khanna and I are in agreement. Then he goes off his rocker, though, by arguing that Christianity (and by implication European society) became a net loser because there was no Christian center to temper extremists.


Correct me if I am wrong, but doesn’t Christian Europe have higher standards of living/tolerance/pluralist values today than anywhere else in the Old World? And isn’t Christian Europe the one place in the Old World where it is awfully hard to find Christian religious extremists? Wouldn’t you have a better argument if you stated that is was the lack of a Christian center which has been responsible for the dramatic increase in standards of living/tolerance/pluralist values in the West?

Maybe Khanna is thinking of medieval Europe, with its devastating series of religiously-inspired wars, but somehow I don’t think this is the case.

The Muslim world is decentralized culturally (like Europe) and is trying to decentralize politically (again, like Europe). The political decentralization is being hastened by trade liberalization and global economic integration. This same decentralization is being resisted by the international order (including, especially, Russia and China) due to nefarious but understandable interests of state but also to the severe lack of understanding that Western intellectuals like Khanna have of social organization. A center of cultural or political or economic power does not guarantee a waning of extremes. In fact, in some cases (in most?) such a center of power actually contributes to extremes.

Khanna was so blinded (and, again, I think he’s changed his tune post-2008) by technocratic Left-wing theory that he could not see what he was arguing: that a decentralized Christianity gave rise to Europe as we know it, therefore the West should step back so that the Muslim religion can build a monolithic consensus in order to combat “extremes.” Am I mischaracterizing Khanna’s footnote? Am I knocking down a straw man?

Khanna’s latest stuff has been much better than what I found in his 2008 book. He still doesn’t go far enough, though. He needs to undertake Brandon-style libertarianism in order to really be a bad ass: let the process of decentralization happen, but (but) recognize new states where it is smart and safe to do so (Kurdistan? The Islamic State? Baluchistan?) and then integrate them into the imperfect but important international order that the West has slowly been building for the last hundred years or so.

Khanna’s incoherence on geopolitical matters is not limited to interesting footnotes. Check out what he wrote in the introduction (again, this is from 2008):

Many believe that the emerging world order is polycentric: China will remain primarily a regional power, Japan will assert itself more nationalistically, the EU will lack influence beyond its immediate region, India will rise to rival China, Russia will resurge, and an Islamic Caliphate will congeal as a geopolitical force. (xviii)

This is basically what has happened so far, and it largely falls in line of where I would bet my money (but not place my dreams) on future events (the Muslim world excepted; see above). Khanna has none of it though:

All these views ignore a much deeper reality: The United States, the European Union, and China already possess most of the total power in the world. (xviii)

I think this argument, if anything, reveals Khanna’s (and, by implication, the technocratic Left’s) authoritarian impulses and desires. The United States is the world’s sole hegemon, and it will be for a long, long time. The EU is a basketcase and China’s GDP (PPP) per capita stands at Intl$ 11,907 in 2013, just below the Dominican Republic, Serbia, the world average, and Iraq. Khanna’s inclusion of the EU – with the social democratic values that technocratic Leftists mistakenly believe Europe harbors – and China – an ode to both the condescending identity politics of the same technocratic Left and its fixation with centrally-planned but privately-run enterprises (“corporatism”) – in the troika of world powers illustrates nicely the weaknesses of the Left.

Khanna’s dogma gets him in more trouble (still on the same introductory page):

Russia, Japan, and India cannot assert themselves globally, militarily or otherwise […] In fact, they are being gradually outmaneuvered by the United States, the EU, and China in their own regions. (xviii)

Don’t cry for Khanna. Last time I checked, he was on the board of several prominent think tanks.

Khanna’s best chapter is on the Middle East (it starts with a useful map on p. 168 and ends on p. 253). His treatment of post-Soviet Europe is laughable (“Ukraine: From Border to Bridge”) and his treatment of China (“Asia”) is overly laudable. India gets just three dismissive pages.

Would I recommend reading it?

Yeah, sure. I like the concept of “second world” that Khanna tries (but fails) to convey. I like the way he thinks and his post-2008 work is especially good. There are a lot of facts that aren’t really facts in the book though, and he applies those facts to theories that I think are weak at explaining how the world works. Then again, when has reading a book ever hurt you?