by Tyler Cowen
on March 5, 2014 at 10:10 am
in Current Affairs, Data Source, Economics, History |
From C.W. at Free Exchange, there is more here.
As Barry Ritholtz wrote a few days ago, Ukraine , like Greece, is an economic weakling. That’s why the market brushed it off.
Barry Ritholtz is a weakling who just tells you which way the wind blows, no foresight. Him and Peter Schiff and John Maudlin and indeed anybody who makes a prediction, including me (I thought Greece would drop out of the Euro). Truth is, economics is non-linear and at best you can hope to predict the steady state condition, as Keynes dryly noted, long after the storm has passed (not that his short term solution is a panacea either).
Most predictions are crap but Barry has been on the money for awhile. He was right that the shutdown woudn’t hurt the economy or that the USA wouldn’t default. A much better track record than the doom and gloom peddlers like Schiff and Taleb
I guessed the result of a coin flip three times in a row. Does that mean my next prediction will be right?
not quite the same thing
An economic event has many possible outcomes where more knowledge could lead to a better prediction where with the coin you know unequivocally it’s either heads or tails and there is no possible skill factor.
Since I can’t reply to ummm, I’ll just say Z has a point. How many total predictions has Ritholtz publicly made? What’s his win-loss ratio on that? And ideally, what casual mechanisms was he attributing to the predictions he did get right and were those mechanisms responsible as far as can be determined?
For the record, here’s Ritholtz’s predictions for 2014:
Dow Jones Industrials: No idea
S&P500: WTF are you asking me for?
10 Year Bond: Could not fathom a guess
Emerging Markets: Who knows?
Fed Fund Rates: Haven’t a clue
US Housing Market: That’s a really good question
He does make forecasts and those have been spot-on. If having to choose between optimism and pessimism, optimism wins out most of the time
ummm, I haven’t followed Ritholz, but I think this is far and away the best comment I’ve ever seen from you.
Pessimism is ever fashionable, particularly in academia. It has it own built-in gravitas.
Pessimism sounds smart. Optimists get called pollyannas, even though they are usually right.
Yes, but what was its relative economic position before 1992?
Based on some quick google comparisons: Ukraine was comparable to Belarus, Romania, and Bulgaria, around 2,000 per capita. Ukraine was worse hit in the 90s than any of the above, and experienced slower growth in the 2000s-recovery that benefited all the above. that Bulgaria and Romania are performing better is not surprising. That Belarus is outperforming Ukraine makes me wonder who is screwing up the stats. If the GDP stats do not include Ukraine’s substantial shadow economy, then Ukraine is perhaps 10-15% poorer, not 50%.
That was exactly my thinking. Comparisons of growth rates are meaningless without looking at the initial level. Growth rates are expected to slow as an economy grows.
The time span of the comparison might seem to offset this deficiency, but as you suggest, Ukraine may have been fairly well-developed before 1992, particularly relative to the other countries.
No doubt a kernel of truth, but it’s worth bearing in mind that constructing a good PPP Is hard at the best of times, this is massively compounded by the fact that, as of 1992, the former USSR was emerging from a totally centrally-planned economy; without even a partial market economy, you can’t calculate GDP — as I recall, there were hugely varying estimates of the size of the Soviet economy in the 1980s (some put per capita incomes at almost southern European levels, others far lower), and even in the 1990s economists were using (very) rough proxies for economic growth such as electricity consumption. So graphs like this may show a slightly spurious accuracy. Nonetheless, Ukraine has clearly performed a lot worse than its peers (although, to be fair, it hasn’t benefitted from the same natural resource wealth that has flowed to Central Asia and the Caspian basin).
Turkmenistan change = gas and some oil. I wouldn’t be surprised if it had actually declined on many measures of standard of living and health since 1992.
Yes, I was looking at Turkmenistan and the first thing I wondered was how much of that had been simply siphoned to Niyazov and cronies, and not to the population as a whole?
The answer would be all of it. That’s why GDP numbers are fairly worthless. A small class of billionaires ruling over a population of serfs is not what we’re looking for, I think.
The Ukraine, (like Egypt) was a ZMC, Zero Marginal Country, and when the US financial hit they were one of the weakest countries hardest hit by slowdown of global demand? I wonder if Ukraine is pulling a modern version of “The Mouse That Roars” (1959 Peter Sellers movie) in which the best way to get foreign government investment is to have an international crisis? Then everybody will pay attention to you.
“The Ukraine, (like Egypt) was a ZMC, Zero Marginal Country”
That statement doesn’t really make any sense to me. From a World point of view, the Ukraine has contributed more to trade than they’ve cost the world, so it’s a net contributor.
Perhaps, if you adjusted the lower rate they are paying for natural gas to the level that western Europe is paying this might change the calculation. But it’s hard to see where else Russian would have sold that natural gas if not to the Ukraine and not utilizing the Ukraine’s pipelines.
Sure, the State Department has dumped $5 billion into the development of “democratic institutions” in Ukraine and now the wise John Kerry is going to commit even more. The Ukes and Russians make faces at each other and the dupes in the West immediately do what they do best, spend other people’s money schemes that produce negligible results or none at all. The Ukes are in a perfect position to dangle their allegiance between East and West and get gifts from both sides. The Greeks could have done a similar thing if they’d stayed out of the EU and then thrown rocks at Turkey.
It would have been interesting if the chart had included all of the former Soviet Republics, including Estonia, Georgia, Latvia, Lithuania. Frankly, even former East Block neighbors like Poland seem more relevant to evaluating Ukraine than Central Asian petro-ocracies.
In the 1990s people I know (who were worth over $100 Million at the time and a lot more now) went to the Ukraine wanting to set up a factory. Their ancestors had come from the Ukraine. They have several similar facilities in North America. They had the money and skills to build their factory. Their factory would have employed, directly and indirectly, about five hundred people. At every turn they encountered corruption. It was made clear that it would be impossible to get reliable supplies and that they would have to pay bribes to get any supplies. After several weeks of investigating business conditions they simply went home.
If Ukraine is poor it is because its leaders have decided that it should remain poor and the ordinary people have tolerated it.
On the corruption scale, Ukraine is down there with Nigeria. http://cpi.transparency.org/cpi2013/results/
Ditto…knew people who tried farming…Ukraine has lots of farmland…once the farm looked successful more and more bribes needed…they quit too…
Ah, yes Barry Ritholtz, the one who ran away with his panties in a twist when debating Steve Sailer?
The same! Indeed, the same coward PC propagandist who smeared Megan McArdle while running away from debate with Steve Sailer.
More links of Blusterin’ Barry
& the Sailer smackdown
I’d like to see that same chart with natural resource extraction removed from the GDP number.
Are you saying the income of pillage and plundering raiders can’t be counted as income in the gross national income? Aren’t good thieves productive, especially if they never pay any price?
I dont know what’s the problem here, but it’s hard to believe stats are accurate. Belarus is definitely not that much richer than Ukraine. Nor it was particularly poorer in 1992 to explain difference by starting positions. So something is screwed, either PPP comparisons or growth rates.
Most Russians I know who work in the region, who at least 6 months ago were fairly objective, seem to think that life in Belarus is much better than life in Ukraine, certainly for the average citizen. OTOH, remember that Belarus has a much smaller population than Ukraine and a lot of the Belarus manufacturing industry is propped up by exports to Russia, which you could argue is an indirect subsidy. It is also true that corruption is more efficient when there is one boss, as in Belarus or Kazakhstan and Russia to a lesser extent, than “democratic” chaos like in Ukraine.
The Dalai clique has been treated coldly frequently while it is still willing to be a pawn for the U.S, it said. Over the past 60 years, the Dalai clique has colluded, taken advantage of and supported each other and internationalized the “Tibetan issue,” the article said.
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