Response on the Chait-Manzi debate

My original post is here.  In the comments, "some guy" offered this perceptive comment/quotation:

1. For this debate, "levels" are more important than growth rates.
8. Countries have to start from where they're at.
Anybody else see a problem?

I'll add this:

1. Canada is big on the map but most of it is empty and the population is clustered on the border of you-know-where.  Canada also has no legacy of slavery and requires stronger educational and professional credentials from its immigrants.

2. Matt asks me to come right out and say that Manzi was wrong.  TC: "Manzi was wrong."  That said, many of the other debate contributors made false or misleading statements as well.  I deliberately tried to write my post to avoid remarks directed at raising or lowering the relative status of the commentators, a good overall habit (which I don't always follow and which hardly any commentators on other blogs seem to follow).  

3. I would genuinely like to know whether the U.S. or Europe has supported more beneficial immigration over the last twenty years.  The answer is not obvious to me, when you consider the Italians who move to Switzerland, the Greeks who move to Germany, and so on, not to mention the Algerians who move to France and the Turks who move to Germany. 

4. For this debate, "levels" are more important than growth rates.  I'm still not seeing that admission in the secondary commentary and note that "levels" provide an initial advantage to the United States, though Europe might fight back with security and leisure time.  If growth rates mattered more, that would mean China is the place to copy and it isn't.  By the way, in a lot of simple models, the poorer Europe should be enjoying "catch-up" growth and growing at rates higher than that of the United States, as many other countries are doing.

Levels, levels, levels.  Here is the Ducktales moon level song played backwards.

Addendum: If you do wish to look at growth rates, adjusted for the relevant variables, here is one place to start.  Overall it's consistent with my point about levels.

Comments

Levels are the cumulative effects of past growth rates.

Is anyone willing to conjecture what Europe's per-capita GDP growth rate will be when its per-capita GDP reaches current US per-capita GDP? Or what their current rate would be if the US were a third world country? It seems naive to assume that current growth rates will persist forever.

When using such a comparison to sell policy, levels and growth rates are very different.

The (long-term) higher growth deal sells the idea that people now should forgo social policy they might like, in order to get returns with interest in the future.

Levels on the other hand sell the idea that the current setup is the deal, and "longer working hours in return for more money" is attractive to some and not to others. It's not as obviously a good deal as the growth deal.

The not per capita, "share of global GDP" metric of Manzi works on an abstract level as a good thing to aim for, but it really only works to sell policies the audience was already in favor of. If soemone believes a policy will benefit them in the short and long turn, I doubt they care much whether it raises or lowers the future population of the US.

fwiw, for most of their history, algerians moving to France were literally moving w/in france. not dissimilar to puerto-ricans moving to New York. it's only after 1962 that you can say "foreigners" moving to france, and even still many were french residents of algeria moving back to france after Evian. just to sharpen your point a little

Here's an interesting social indicator that another commenter alluded to (though not related to Europe). The average life expectancy at birth for an Asian American female in the U.S. is 86.7 yrs. Keep in mind that figure is from 2001, and "Asian American" encompasses a lot of different ethnic groups.

In 2009, the life expectancy of a female in Singapore was 81.9 yrs. In Japan it was 86.1 yrs. Both countries have universal health care, and Singapore is also so small it probably has a huge density of hospitals and clinics.

Once you start attempting to normalize, the gap between the U.S. and more socially progressive countries does not seem that bad!

I am unclear about Krugman's arguments relating to unemployment. For instance, he says that the relatively high unemployment figures of France isn't that bad because more young people are being educated and older people are able to retire earlier. But I thought the official definition of unemployment (at least where I come from; Australia) is that you have to be looking for a job to be counted as unemployed. Is that not the case in France?

It's amazing to me how the debate has shifted from when I was an undergraduate (majoring in economics). It was generally assumed then that other countries would catch up to the U.S. in per capita GDP (though the reference back then would have been to GNP). Now we learn that European countries will be forever at a 25% lower level. When did this realization come about?

@ dolo: that's exactly right.

I don't really understand why this is such a big issue. Tell me, do you Americans really think we're living in caves over here, or what?

@ Andrew1: I think you're correct, and Krugman is somewhat vague on that point. Overall, Europeans seem to work less (I recall reading a paper by Stiglitz that actually praised this), and raising the activity rate is a major issue in most European countries (because of concerns of the budgetary impact of aging populations).

Apart from that, there's also the issue of youth unemployment, and unemployment in general, which is higher in Europe than in the US. (It hasn't always been like that, though: if I'm not mistaken, in the first decades after WO II, the situation was just the other way around).

But you're right that unemployment is not the same as going to school or being retired. In any case, I think it's safe to say both unemployment and "inactivity" (or how should we call it?) are higher in Europe.

Krugman's claim seems similar to me to saying "Hey, the New Jersey Nets are still an NBA team!"

What developed country without its head completely up its ass wouldn't be able to at least lag behind? Even Cuba kind of keeps up and we try not to trade with them.

Is it safe to say that highly progressive social democracy doesn't cause outsized growth, or is Europe not progressive enough?

Actually, I think we stopped being you when we escaped.

The really relevant question here is, how much has the US increased income at the margin for its citizens relative to Europe? My guess is that it is not really close...the US accepts more immigrants from poorer countries, thus obtaining income gains at the margin that are higher than Europe.

What is the increase of the expected value of the future income of a Non-US\Non-EU citizen accrued from the probability of immigration to the United States? What is this value for the EU? This seems like it would roughly approximate the selection bias to national income due to selective immigration.

Andrew, slavery is very important and its consequences still have an effect on black communities in the United States. Maybe if America incarcerated fewer of its young black men, the national unemployment rate would be closer to those of continental Europe.

But never mind the effect of policy choice on black communities. Important as it may be, that isn't the point. The point is that the cohort of Swedish-Americans are further up the income scale within their country, because non-whites make up much of the bottom third. The cohort of Swedes in Sweden, on the other hand, has to fill out the low-income groups in Sweden far more, due to far fewer people from ethnic minorities living there than in the USA.

Millian:

You have a Marxist fallacy, which is that having an underclass is good for the poor (presumably because the rich
exploit the work of the poor).

In the modern economy the opposite is true. The modern underclass doesn't even work. The rest of society has to subsidize the underclass, both through taxation and indirectly, for example through affirmative action.

Even before the recession the employment rate of Black Americans was only 55.2% (and those who work are disproportionally in low productive employment(, so the idea that the American whites are living off the other races is preposterous.

PS.

Serious research has shown that the effect of incarceration on employment would be negligible. For one thing it is a logical error to assume that all the people in prison would be unemployed, 35-50% of the incarcerated had jobs before they went to prison. Second (less important) not all of them are working age. Lastly the incarcerated are 2 million, the labor force is 150 million.

Krugman is the most dishonest economist that exists. He pretends to be a scientist, but when economic knowledge doesn't suit his ideology he knowingly misleads his non-economist readers.

People who have taken undergraduate growth know that one of the most salient relationships is conditional-convergence. If the economy functions countries with lower GDP per capita levels grow faster than those closer to the technology frontier (if for no other reason than it is easier to pick low hanging fruit). Indeed until the expansion of the welfare state in the 1970s Europe consistently grew faster than the US.

Yet Krugman ADMITS that the US grew faster than Europe, despite having 40% higher per capita income than for example France (50% higher than Italy, if you want to play that game).

This is in itself a remarkable fact, that the richer country still manages to grow faster than the other ones. But by ignoring the differences in levels the professor tries to deceive his readers.

Krugman pollutes the public conversion almost as much as crazies like Ann Coulter, only he does it with a Nobel Prize and with the professional courtesy of people like Tyler Cowen.
.

Tino, you get a cookie for using reputable data and logic in your posts. Well done!

'You think we're hyper-religious, uneducated, gun-toting haters of science who live in constant "fear" and thus respond to everything with violence, which is the "only thing we know." Sure you want to get into a pissing match over ignorant beliefs?'

No, I thought your summation of what other people think to be right on the mark. Actually, I do think your description of those beliefs is fairly accurate of a significant (and apparently growing) segment of American society.

But then, I'm American, so what do I know about America, where creationism has gone from a fading sign of laughably old fashioned ignorance of modern science a generation ago to a litmus test for any Republican candidate hoping to pass muster to run for national office. Or where gun violence is apparently a problem best dealt with by increasing the number of citizens carrying guns. Sort of like bombing for peace, another American belief that Europeans just don't seem to understand.

@ zz: "The really relevant question here is, how much has the US increased income at the margin for its citizens relative to Europe?"

I don't think that's the question at all. The question is whether there's a *serious* trade-off between having a good health care system (etc.) on the one hand, and prosperity on the other. Now of course you can argue about percentage points and immigration and PPP's and hours worked and whatnot, but in any case, the trade-off does not seem to be that much of a deal. As I said, most Europeans are very happy with their social security systems, and we're not living in caves or anything. So, the only relevant point here is: no, having a welfare state does not mean your prosperity will disappear, although ofcourse you will have some issues (incentives, moral hazard) that should be addressed. For Christ's sake, you're the United States: you rebuilt Europe, put a man on the moon and won a nuclear arms race, but for some reason you wouldn't be able to afford good health care?

'To understand a society, check the jails.'

And America's jails are Number 1, not only in the prisoner population housed, but in the profits they generate for private companies.

Unlike those wimpy European social democratic jails, which barely rate on the incarceration scale, particularly considering that those jails remain gripped in the mire of being run by a government agency, instead of allowing private enterprise to flourish. Even the striving communists in China can't match America's prowess at jailing its population, nor the profits to be earned from locking up a noticeable percentage of the entire population of a society which prizes freedom as much as it scorns socialism (except for the banks, of course - it's the American way, after all, to keep the real socialists from ever redistributing wealth into the wrong hands).

Actually, that might be a fine place for Manzi to focus on next - how Europe is falling behind the U.S. in throwing citizens into jail, and what this means in the long term for wealth and prosperity. After all, Europe is a glaring contrast to the American model, a model that the rest of the world seems unable to emulate.

USA Number 1, all the way.

I hope one day someone will collect all the anti-EU doom-saying by the economists who studied in the US. It would be hilarious.

The poster child for these economists has to be Feldstein. It's a riot reading his thoughts on the Euro before it was introduced. There's even a hint that the IVth Reich is coming.
Here it is: http://www.nber.org/feldstein/fa1197.html

Ok, the US has higher levels and higher growth rate.
This means that the gap is actually increasing.

I'm surprised that we're up to 100 comments on this subject (2 posts) and the Singularity hasn't come up once.

;)

Tyler,

In your earlier post you thought it would be interesting to compare Swedes in Sweden with Swedes in the U.S. Steve Sailer has a couple of posts that address this subject:

http://isteve.blogspot.com/2010/01/gdp-per-capita-for-american-ethnicities.html

thank you for your post!

yes I suggestion

well worth the read.I found it very informative as I have been researching a lot lately on practical matters such as you talk about...

MBT is the Madonna, California Governor Arnold Schwarzenegger and other big favorite, the

"world's smallest gym" of reputation. MBT want to help people around the world have a more

healthy, active and happy life. MBT believe that human fitness and health largely affected

by the walk way, this view has been confirmed by a number of scientific research. MBT MBT

therefore attempt to spread the ideas and concepts of fitness shoes, awaken and strengthen

the people's right foot consistent with physiological knowledge, and to direct, simple way,

to meet the physiological benefits of the right foot to leave you. It is our honor to MBT as

a professional sales shop, welcome to buy

I can say is that opinions are divided, but in principle it is best to do what is best for you, say that the article is well structured and it must congratulate you

Well killuyi i think you are wrong. This imitiations are not because of the immigration , they are beacause of stolen properties rights. I think this is another big discusion. And by the way, i am in for the free immigration but the countries aren`t because the peps leading em are for protecting their citizens rights and jobs. Just imagine 1 bilion chineese or indians or whatever you want , leaving their countries to work in US or Canada...What it will happen` ?
Have fun while wondering at it

Comments for this post are closed