Albion's Seedlings

Productivity and National Economic Scale

Peter's post below reminds me of some parallel conversations I had on these points with James on my visit up in Calgary last week. Without wanting to go too far down this path without actually reading the book, there are two factors worth considering -- one, that when you factor in national size, most of the other countries above five or ten million with any kind of higher productivity are still Anglosphere (looking at the graphs in James's post.) This suggests that the Scandinavian-Dutch-Swiss model of strong civil society is good for productivity at a smaller scale but scales upward with difficulty. The second is wondering whether again the gap between the USA and the rest of the core Anglosphere isn't one of economies of national scale, as the USA's three hundred fifty is way bigger than any of the rest (or all of them combined.) That the second-highest is Canada (despite the fact that Canada is substantially smaller than the UK) suggests perhaps that the increased integration following NAFTA is helping Canada overcome its scale issues. Comparing Canadian productivity in the decade before NAFTA versus the decade following might be a useful indication of whether this is a factor. So perhaps the conclusions of what we are seeing here is that it helps to have a strong civil society, it helps to be Anglosphere, and it helps to be part of a large-scale economy. Perhaps the political conclusion is not that the other Anglosphere nations need to become clones of the USA, but merely that they need substantially closer economic integration with the USA. And if an Anglosphere nation of 350 million, organized on a federal basis to decentralize decison-making, gives such good results, maybe an Anglosphere economic area of 450 million, organizaed as a highly decentralized network commonwealth, might be even more effective.

Certainly productivity is an enormously underrated factor in looking at history. I had my nosed rubbed in this reading N.A.M. Rodger's Command of the Ocean last year -- time after time, you could see how England just couldn't afford to do some perfectly obvious thing in past centuries, just because social productivity was so low that they couldn't afford to do it.

UPDATE:

James McCormick adds these observations:

An excellent post. Economies of Scale plus Anglosphere Culture equals Something Altogether Unique.

 

FYI, some current population stats:

 

USA: 300m
UK: 61m
Cdn: 33m
Oz: 20m
NZ: 4m
Eire: 4m

 

As Jim notes, Canada is the only nation over 10m that comes close to US productivity (@ 78%!). Some of that no doubt comes from pre-NAFTA sharing of a multitude of industrial and technical standards ... there's a reason the Canucks share the "country code" of 01. And no doubt it's accelerated with the retailing/wholesaling restructuring in Canadian industry post-NAFTA. The question is whether the Anglosphere *already* gets a hidden boost from so much sharing of IP, education, and general know-how. Would the rest be even at 70-ish% without that bond of language and culture?

 

BTW, at this opportune time, don't miss reading "India: the Growth Imperative" (2001) by the McKinsey team that Lewis mentions. Available free here:

 

http://www.mckinsey.com/mgi/publications/india.asp

 
[Personally, I think the 300 million figure substantially undercounts the actual US population. -- JB]

From America With Love

Wow.

Thanks to the essay-review posted 10 days ago by James McCormick, over the weekend I read William Lewis's book The Power of Productivity. What an eye-opener! The insights that are carefully laid out in this book are of the first importance to anyone who cares about the Anglosphere -- or, for that matter, the future of our little planet.

My summary of James's summary is this: what matters most for the people of any nation is productivity, which results in ever-increasing wealth (i.e., GDP per capita adjusted for purchasing power parity) -- and by far the most productive (and therefore wealthy) people on earth are the Americans.

This insight represents a challenge to the Anglosphere and to every other sphere. It is also, in its own way, more than a bit unnerving and disturbing.

In reading The Power of Productivity, I was struck by the fact that the Anglosphere essentially does not make an appearance. Along the dimensions Lewis measures, the Anglosphere countries other than America are mixed in with Switzerland, Iceland, Denmark, Austria, Belgium, the Netherlands, Japan, Finland, France, Germany, Sweden, etc. Although 3 of the 4 countries that Lewis calls out as having cut the size of government in the last quarter-century are Anglospherean (New Zealand, Canada, and Ireland), the great outlier, over and over, is America. Why? The reasons are legion, but they lead me back to the notion of American exceptionalism as opposed to a strict Anglospheric exceptionalism. Thus the challenge to the very notion of the Anglosphere (at least when it comes to productivity and wealth-creation).

Why is America such an outlier? As I discussed with James via email, America has exerted a kind of magnetic attraction for dynamic immigrants over the last 200+ years. The great thing for America -- and the bad thing for everyone else -- is that these crazy Americans have been pulling in the most entrepreneurial, ambitious, innovative, wealth-creating individuals for 200+ years now. So if you are such an individual in, say Brazil, what are you going to do? You could struggle against the system (or try to work within it) in Brazil, or you could emigrate to America. Same thing for people who want to start software companies in France or Germany (there are loads of them in the States). And we have seen over the years that people like this tend to come to America. This has been going on for so long that we consider it natural. Indeed, even Canada has in many ways been merely a launching point for movement from the rest of the world to America -- over time, some large percentage (I don't recall the exact number, perhaps even 80% in some periods) of people who have immigrated into Canada from other countries have eventually emigrated from Canada to America.

Now, I don't say this in a jingoistic or chauvinistic sense ("America is the greatest nation on the planet" and all that), because I love Canada and the Netherlands and the Czech Republic and many other places I have lived and visited. In a way I find it unfortunate that over the last 200+ years so many dynamic people have come to to America rather than staying in their own countries. It's been great for America and I can't blame them individually, but it may not be good for other countries. (Though one wonders how much progress people like that would have made in their home countries -- perhaps their dynamism would have been wasted and it has been better for the world that they came to America.)

It's tempting to think that "we're all Anglosphereans, therefore we're all alike". And we are alike in many, many important ways, which Jim Bennett has documented at length in his book (high radius of trust, openness, jury trials, decentralization, and all the rest). But at least from the perspective of economic dynamism (resulting in long-term growth of PPP-adjusted GDP per capita), we need to attend to this huge difference between America and the rest of the world -- even the rest of the Anglosphere.

An aspect of Lewis's book that disturbs me a bit is that he is essentially calling for cultural imperialism -- the spreading of the American socio-economic model (not, pointedly, the Anglosphere socio-economic model) across the planet as the best way yet discovered to bring about high productivity and therefore great wealth. So there is a new kind of Anglosphere challenge here: a challenge from America to the rest of the Anglosphere. Lewis quotes anthropologist Marvin Harris to the effect that productivity is what matters most in the long run of human societies (see his book Our Kind, which I have not read yet), because throughout human history it is the high-productivity societies that have swamped the low-productivity societies. And if that is so, then even folks in the Anglosphere have a lot of hard thinking and hard work to do if they want to be an important part of the future. Do they want to adopt some of the more American features of Anglospheric societies, such as more open competition, a larger market sector, and more flexible labor markets? Will they have much of a choice? Can they do so without being perceived as selling out to the damn Americans?

There is a great deal to absorb here.

(Cross-posted at one small voice.)

Beginning of a new age

This is so exciting I can't stand it!

Quote of the Day

For all the resemblances of British society in the eighteenth century in manners and morals to that of France, there was in the British system of society and government a greater unity and openness that was eventually to make possible reform instead of revolution. … In England the army counted for less than it did in France, Spain, Prussia, Austria or Russia; and in England the soldier has less and the merchant more prestige than their counterparts in these countries. There was in eighteenth-century England an absence of legal privilege, a closer connection between the gentry and the businessmen, an equality before the law, a national unity, a freedom from irksome economic restrictions, a sensitivity of the government to commercial interests and business methods, which were making English society the most firmly grounded and most progressive in Europe. And for all the deference in England to nobility and rank, it was plain to everyone that the most decisive element in government was already the House of Commons, to which some at least of the members were actually elected by voters who included relatively humble folk. Though there was to be severe controversy in the process, it was possible for Britain to move without revolution into the world of nineteenth-century liberalism.

A.R. Myers, .

Forget Voltaire! I will not defend your right to say it!

In fact, I'll fight for the right to gag you if I don't agree with your opinions. The lofty notion of defending to the death the right of someone to say something with which we disagree is officially dead through much of the Anglosphere. Today, the primary right that takes precedence over every other right, especially the right of free speech, is the right not to have hurt feelings.

Today, we got the news that London’s communist mayor, Ken Livingstone, has been suspended from his post for four weeks for causing offence to a journalist, who he accused of being a Nazi. When the journalist said he found this slur offensive, as he is Jewish, Livingstone, leaving an evening function and none too steady on his feet, then accused the reporter of being a guard in a concentration camp.

Now this is most unpleasant and – at the time it was said - was intended to cause offence. And it did. The reporter hied himself off in a huff and reported Livingstone and now a three-man adjudication panel has decided Red Ken was “unnecessarily insensitive and offensive” and suspended him from office. So now you know. No “unnecessary insensitivity” or you will be hauled up by the Manners Police. I thought I would gnaw my own leg off before I would ever have a sympathetic word to say regarding terrorist sympathizer Red Ken Livingstone, but this is garbage. Muslims don’t have a right to go on lunatic rampages when someone offends them, and newspaper reporters, Jewish or otherwise, need to toughen up their hides.

This thought control and speech control is getting out of control and needs to be clipped back. If Livingstone says offensive things about Jews, even while in his cups, the large number of Jewish voters in London will not vote him back in. This is how the world works. Not "three-man adjudication panels".

Hitch organises pro-Danish demo

For Americans living in the DC area, writer Christopher Hitchens has organised a peaceful demonstration outside the Danish Embassy at 32 Whitehaven St (off Massachusetts Avenue) to support the Danish people tomorrow (Friday) between noon and 1 p.m. He asks that people behave peacefully and have cheerful conversations among themselves. In other words, for an hour of your life, act like a Dane!

Apparently the response at christopher.hitchens@yahoo.com has been overwhelming. Just now, the tiny country of Denmark is holding the ramparts for freedom of the press - without the help of the pusillanimous British, American and Australian press or governments - alone. If you can't be there, go out and buy a pack of LurPak, Havarti or Danish blue! Let's hope this is the start of a wave of peaceful demonstrations of support for the Danes at their embassies and consulates in civilised countries. There must be a Danish consulate in Chicago or San Francisco. LA? Houston? (Cross posted at Samizdata.)

Quote of the Day

There are good reasons why every Tory leader since Margaret Thatcher has started by proclaiming the party's transformation into something kinder, gentler and more left-wing—and then conducted a sharp rightward turn. Core issues alone cannot deliver a majority, admittedly, but they have held together the party's base support. Without that, the Tory party under a succession of poor leaders would have been bypassed in the popular vote by the Lib Dems. The current assumption—that the base will remain secure whatever policies are adopted—is potentially disastrous.

Abandoning one's base rather than building out from it involves huge risks. When the Canadian Conservative party swung sharply leftwards in search of a new identity in the 1990s, it was reduced to two seats in the 1993 election. Now, 13 years later, the Canadian right has formed the government once again—by doing precisely the opposite. That is also the moral to be drawn from the successes of unashamedly conservative John Howard in Australia.

Robin Harris (From "Spoiling the Party: The Thatcherite who gave David Cameron his first job says he is not impressed".) (And speaking of Howard, he has been very good on the cartoon/riots issue, as described here.)

Quote of the Day

…all of western Europe was very similar in the seventh to eleventh centuries. England was no exception, though it did have unusual centralization and a unity of economy and law which was different in degree to most areas.

It was really only after the eleventh century that England began to become different. This was not really so much because England changed rapidly, but rather because it remained the same in its basic structure, while on the Continent very large changes were taking place. The normal tendency of agricultural civilizations, can be seen repeated several times in Chinese and Japanese history, as well as continental Europe. This is for the centre to become more powerful, reflected in more absolute and uniform bureaucratic, administrative, legal and political systems. In the west, for example, these only began to collapse again in the late eighteenth century. Yet England had never followed this tendency. It was unified and integrated, but had not moved towards absolute monarchy.

Alan Macfarlane, introduction to the 2005 Chinese edition of The Origins of English Individualism.

Separated by a common language - and lashings of venom

British journalist Stephen Pollard has some excellent musings on the BAFTA (British Academy of Film and Television Arts) awards last night in which the British were totally trounced by American products. The British “luvvies” – the kissy-poo, social-conscience-of-the-world and “aren’t British actors just so bloody superior to those crass Americans,darling!” coterie – are not just devastated, but incensed! How dare the Americans win not just all the Oscars, but our awards, too!

Here is Pollard’s piece in The Times that he ran on his own blog: Bunch of provincial upstarts!

Quote of the Day

Regular soldiering with its grumbling rhythm of fatigues and leaves, its alternation of activity and inertia was not up his street, but the war was different. How it was different must be precisely stated; there are few slights more cruel than the careless condescension of posterity. It is too easy to imagine that the war came just in time to give meaning to the lives of a generation of misfits. This was exactly the stereotype from which my father and his generation tried so hard to escape. They hated the prospect of bloodshed; they hated the reality; above all they hated the glorification of it. Their anti-heroism was not just a modish pose, like that of schoolboys pretending to have done no work for an exam; it went down deep. They were wary to the bottom of their boots; they searched out bombast and cant with the professional mistrust of a customs officer; they touched patriotism only with a bargepole; nor did they expect to find personal redemption in battle. Even now most of them do not speak of their experiences, except glancingly as of something it would be affected to avoid speaking of; they are whippet-quick to forestall the boredom of the young by changing the subject. Ordinary veterans of the last war do not go in for pushing pepper pots around to illustrate the dispositions at Alamein; that is for the generals.

Ferdinand Mount, The Man Who Rode Ampersand

Summit Season

There's talk of a three-way summit between Bush, new Canadian PM Stephen Harper, and outgoing Mexican President Vicente Fox. One of the agenda items reportedly will be the economic impact of the rising economies of China and India.

This is good. It's also interesting that this will be the first time all three North American countries are under right-wing rule, more or less. However, if they want to discuss the impact of China and India, they should follow this up with a three-way summit between Harper, Bush, and Australian PM John Howard. Of course they could always invite Indian PM Manmohan Singh to drop in as well.

Allah in the family

According to reports, Yahoo has banned allah – standing on its own or as part of a family name, like Callahan, say – as an email address. God, Jesus, Jehova, Messiah, Buddha and a truckload unpleasantries – no probs. This came to light when someone with the family name of Callahan couldn’t get Yahoo to accept the email address she wanted and wrote to Yahoo’s helpdesk, only to receive bland, canned instructions for opening an email account. Not, needless to say, addressing the question. Dirty Harry Callahan

However, someone with the name Kallahar in his family history who had used the name as an internet pseudonym for a long time, was also told by Yahoo that this name was unavailable. He thought he might have opened an account some time in the past and forgotten it, so he tried kallahar385753984753. For the 38th trillionth time - no!

Yahoo will, however, accept Islam.

The Anglosphere and the European Trading Republics: A Love Story

In the course of recently reading:

• Hanson on the Athenian grudge match that was the Peloponnesian War,
  
• Crosby on the shift by the Northern Italian republics to widespread visualization and quantification,
  
• McNeill on the history of Venice, and
  
• Rodger on the naval history of England (2 vols.) during the Anglo-Dutch and English Civil Wars,

I began seeing a pattern in situations where sea-going merchants get their hands on a strategically safe city and start getting creative with their politics.

In the spirit of amateur insanity that inspired my blog posts on “ the Secret Weapon of the Anglosphere” and “ World War Zero” let me offer a new adventure in linking the unlinkable.

Herewith:

Arrogant Nasty republican Merchants In Boats

The historical pattern appears to be the following:

1. A city-state isolated in some way from the great empires of the day.
   
2. An economy based on trade from far-flung regions.
   
3. A civic structure that accommodated the liquidity and portability of its sea-going citizens’ equity by minimizing arbitrary confiscation.
   
4. A willingness to colonize, primarily for trading purposes.
   
5. An enthusiasm for the skills required for navigation, shipping and finance, i.e., literacy, artisanry, and innovation.
   
6. Maritime operation, ideally, at the margins of larger political entities, where one or more quadrants of the compass were free from significant enemies.
   
7. The use of creative ways in which the owners, captains, and crew of merchant vessels were able to share in the proceeds of trade, and by which authority for both ship and cargo were divested for long periods of time to the “people on the ground.”
   
8. Grudging but effective acceptance of successful merchants into the civic power structure.
   
9. Notable innovation in the military side of seagoing power in order to protect merchant shipping, whether in ship design, manning or weaponry.
   
10. A willingness for merchants to invest in the elaborate glorification of their mother-city once they’d made their non-portable equity safe.
    
11. A considerable moral flexibility in the pursuit of profit such that the line between friend and foe, piracy and trade was repeatedly and enthusiastically blurred … maintaining a fierce hypocritical conviction about one’s own superiority and virtue.
    
12. A propensity for violence and cruelty matched only by their capacity to find ways to establish bonds of trust between strangers.
    

For the sake of argument, if we can apply this pattern to Athens, early Rome (maybe), the late medieval northern Italian city-republics, and 17th century Holland and England, we find ourselves with another pattern:

1. The use of Athens, republican Rome, and English civic/legal/religious history to create an new vision of the trading republic -- the wealthiest trading republic in human history, in fact – the United States of America.

Here we can turn for illumination to the works of Surowiecki on the “ wisdom of crowds” effect, Lipson on the how democracies (and therefore trading republics) resolve differences, and Nisbett on the distinctions between East Asian and Western perceptual biases (which he sources in Greek history).

Somewhere along the line, despite many contributions of technology and genius from continental powers to the prosperity and development of the Anglosphere, it is the heritage drawn from the old trading republics that provides models for running the Anglosphere. Our philosophical sources are Plato and Aristotle. Our history begins with Herodotus. Our art, music, textual organization, optics, navigation, shipbuilding, and bookkeeping are Venetian, or Genoan, or Florentine. Our political models are Greek and Roman with English parliamentary elaboration.

And I dare say that if we proclaim the values of the Anglosphere, they are far more in tune with the rambunctious, individualistic, and self-regarding postures of those trading republics than they are with any dream or masterwork of continental despots or imperial bureaucrats around the world. Not to say that such strains are absent from modern political discourse in the Anglosphere … but the tale we tell ourselves, about what it means to be an Anglosphere citizen, seem to draw most deeply on those handful of republics (most of whom lasted only a century or two at best) that had both geography and political culture on their side.

Isn’t it one of the great mysteries of world history that the last century has been strongly influenced by a continental trading republic … remote from its authoritarian enemies yet drawn again and again into global commerce and geopolitics?

Perhaps America is simply the most recent and most enduring of the economic and political experiments which began on the Aegean some 2400 years ago.

From an Anglosphere perspective, it would be useful to determine whether the nature of European trading republics through the centuries (their unique geography, civic pride, independent citizenry, and notable vulnerability) was central to shaping the Anglosphere, or was an incidental similarity to what developed in England.

Lewis – The Power of Productivity

Lewis, William, The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability, U of Chicago Press, 2004. 339 pp.

Amidst the headlines of the “cartoon war,” the last few weeks have also offered a small surge of news on the difficulties that European countries face in boosting their economic performance: reducing unemployment and increasing economic growth. Fareed Zakaria’ s recent article in Newsweek entitled the Decline and Fall of Europe is a quick and readable summary.

Zakaria quotes a particularly interesting OECD report, just released, called “Going for Growth” that points out that Europe, rather than catching up to America in per capita GDP has in fact been falling behind over the last 15 years. Efforts to catch up, while noteworthy and politically difficult, have essentially failed. When the GDP figures are adjusted by purchasing power parity (PPP), from country to country and around the world, we end up with shocking tables like the following:

Source: CIA World Factbook

and this:

Source: Adapted from Lewis, The Power of Productivity, 2004.

The United States doesn’t simply lead the world in GDP per capita (PPP adjusted). It is in a class (fully acknowledging its size) entirely by itself. Adding 1 million net citizens every nine months (one every 13 seconds), America is extending its lead in prosperity over not only poor and moderately wealthy nations, but over virtually all of its erstwhile companions on the “heights” of Mount Prosperity. Next-door neighbour Canada is the only eight digit population close to the US, coming in at 78% of US per capita GDP (PPP adjusted).

Most disconcertingly for those of us interested in history, the distribution of per capita wealth across the globe in the last century has barely budged. The only sizeable nation to make the jump from poor to rich in that period was Japan. Grimmer yet, after a half-century of international efforts at economic development, less than 5% of the world’s population has made it into the “middle-income” nations – ranked between 25 and 70% of US per capita GDP. That means we cannot expect any “new” wealthy nations (on a per capita basis) within most of our lifetimes.

Despite China’s massive growth in GDP, its per capita GDP remains very modest. As a recent commentator noted, China will get old long before it gets rich. And at current rates, both it and India would take centuries of per capita GDP growth to reach the levels currently held by the 300 million Americans living today.

The OECD responded to this disturbing pattern with a common European solution: redefine the problem out of existence. As described in a generally laudatory article in the Economist, the OECD decided that social values such as the desire for leisure, and the desire for greater income equality within a nation should permit the adjustment of the rankings of relative prosperity between nations. Well, money isn’t everything, we might grant, while still clinging to the idea that 82 million Germans earning 71 cents for every dollar 300 million Americans earn might just be a long term problem. Who pays for the old-age homes in 2025, for example?

Fifteen years ago, the folks at McKinsey Global Institute under the direction of William W. Lewis began studying globalization from a more anthropological perspective. This led them to focus on relative national productivity (the ratio of the value of goods and services provided consumers to the amount of time worked and capital used to produce the goods and services) at a microeconomic level. More specifically, they began examining countries, industry sector by sector, to identify the patterns of productivity within national economies.

To their surprise, their national productivity information tracked GDP per capita information (adjusted for purchasing power parity) very, very closely. Those nations that were most productive on average were also those that generated the most per capita wealth. To quote a summary of their work:

Fifty years of focus on the macroeconomic policies of developing nations didn't lift their income levels substantially: 80 percent of the world's people still get by on less than a quarter of the average income in rich countries, much as they did a half century ago. The McKinsey Global Institute’s research in 13 countries suggests that the productivity of the large industries where most people work—"old economy" sectors like retailing, wholesaling, and construction—has the most influence on a country's gross domestic product. To improve the economic welfare of individuals, countries must increase their productivity, primarily by encouraging economic competition.

Their conclusion:

Global economic agencies underestimate the significance of a level playing field. Competition is more important than education or greater access to capital markets in lifting a country's gross domestic product. To reduce barriers to competition, policy makers must stand up to business special interests and focus more on the welfare of consumers.

In The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability, William Lewis takes the results of over a decade of research, and the country case studies, and assembles a compelling and very readable review of what productivity is, where it resides (within different countries) and how difficult it is to achieve in all but a handful of nations. He looks at both “best practice” and “bad practice.”

In the course of doing this research, he claims to have constantly tried to avoid using the United States as a benchmark but both his clients, and the productivity statistics, demanded otherwise. Apart from the steel, automotive and electronic industries in Japan, and retail banking in the Netherlands, virtually no other nation on earth has more productive agricultural, industrial, and service sectors than America. It is in the breadth of its economic productivity that the United States finds its great advantage over the rest of the world.

For Lewis, the absolute central issue is the competitiveness of product markets … responding directly to consumer need. The flexibility of labour and capital markets are important, but to him, they are secondary.

Nominal US competitors such as the EU leading industrial nations have some narrow productive manufacturing sectors but much of the rest of their economies (agriculture, housing, services) is quite unproductive. EU total GDP may well approach US levels but the EU now includes 170 million more people than the US. Per capita GDP, especially adjusted for PPP, still places the leading EU countries at little more than 70% of the US. The United Kingdom is a tiny bit more successful than its continental brethren, and Canada a touch still more productive. But the gap with the US is still astonishing, and still growing.

Japan leads the world in the productivity of several sectors of its economy. Its techniques (such as the Toyota Production System) are adopted with great success by American plants, so we know that great productivity is not culture-specific in some ethereal way. But much of the rest of the Japanese economy reaches productivity levels barely 40% of the US in areas such as food processing, housing construction, retailing and wholesaling. When averaged across the economy, Japan fairs little better than Europe in average productivity and GDP stats. And its growth in productivity, like the Europeans, seems stalled in comparison to America since the early 90s. The tremendous post-WW2 global injection of capital and labour, which offers medium-term increases in productivity as an economy industrializes, has come to an end. The Japanese public is still willing to put up with dismal returns on its savings in order to subsidize the inefficiencies of the Japanese economy. For how long is anyone’s guess. Vast portions of the populace in the Japanese economy are working at very low levels of productivity. Housing, for example, operates less productively than the United States did in the 1930s.

Korea, a dweller on the “foothills” of the GDP wealth curve, is trying to follow Japan’s approach to productivity growth but it shares the same narrowness of high-productivity sectors across its economy. And it shares its same vulnerability to stagnation and economic crisis when the ability to improve productivity by working longer or adding cash reaches a limit. A protectionist economic system ensures that only a select few sectors of the economy actually face international competition and exposure to methods of improved productivity.

When Lewis turns to Brazil or Russia or India, virtually no portions of their economies reach 50% of the level of productivity of the United States, unless they are small industrial enterprises run according to Japanese or Western management principles as fully-controlled branch operations. For much of the agricultural sector, per capita productivity in these nations can run as low as the single digits, in some cases, merely one or two percent as productive as the United States. In light of the fact that 65 million Indians are in the dairy farming industry alone (the largest group of people in the world in one business), it’s little wonder that Indian per capita GDP will remain very low for a very long time. The much vaunted Indian IT industry, operating at 50% of the productivity of the United States, yet represents 0.1% of the Indian workforce. Islands of productivity as small as this can’t make a dent in the average stats of a nation where 60% of the workforce is still in agriculture.

Lewis admits that his research surprised him a number of times over the decade or so that information was assembled. In the early part of the 20th century, when the United States had a per capita GDP somewhat similar to the middle-income nations of the modern world, the portion of GDP represented by the American government was about 8%. Today, for countries such as Brazil and Russia, struggling their way toward increased productivity, the percentage is closer to 40%. Thus the relative amounts of per capita capital available for private commercial economic expansion in these countries are a fraction of what was available to the American economy before the First World War!

So what about that American economy? Apart from a few industries where Japan and the Netherlands have something substantial to teach it, why does America keeping growing wealthier than everyone else? Was it the computer boom of the 90s?

According to Lewis, no. The industries (large enough to make a real dent in the productivity stats, remember) that made the greatest gains in the 80s, 90s and 00s weren’t high-tech. They were the massive retail and wholesale businesses who employ millions and sell to tens of millions more. Those businesses, typified by Wal-Mart, were able to rationalize, consolidate and optimize in ways unmatched by the companies of any other nation in the world. The disruption to local businesses, mid-sized wholesalers and retailers is well-known. Sears and K-Mart and a huge number of small paper-pushing wholesalers entered very troubled water and many did not survive. In their place, new giants appeared … much as standardization and automation had struck the agriculture, manufacturing, and housing businesses in America decades before. More importantly, Wal-Mart’s methods were matched by a new generation of retail stores … the Targets, Office Depots, etc. that applied the new information technology to improve their businesses. Silicon Valley itself may only have had a modest impact on the productivity stats of America but the spinoff benefits of its products, especially once AMD began to compete with Intel, were applied to vast sectors of the economy with tremendous success.

In a brief review for a focused blog, it’s impossible to do justice to the broader microeconomic argument which Lewis provides across hundreds of pages. One could do worse however than read the interview with Lewis in TCS Daily which was so striking that I purchased his book for further study. There is also additional information at the McKinsey website on the title.

I can summarize his arguments briefly and then turn to some implications for the Anglosphere:

1. Poor national economic performance can be better understood by analysis at the level of individual industries rather than macroeconomics alone.

2. Differences in capital and labour markets are overstated as determinants of national economic performance. Differences in competition in product markets are much more important.

3. While attention to exchange rates, inflation and government solvency were emphasized to developing nations, the importance of a level playing field for competition in a country was vastly underestimated.

4. The importance of the education of a workforce has been taken way too far. Education is not the way out of the poverty trap. Workers around the world are successfully trained on the job for high productivity. In a favourite Lewis anecdote, illiterate Spanish-speaking unskilled labourers in Houston have some of the highest construction productivity levels in the world because of the system they work in and how they are trained.

5. The solution for developing countries does not start with more capital … it starts with the way that it organizes and deploys the capital and labour it has. Balanced budgets and better productivity would allow most countries to access all the capital they need from both domestic and foreign sources.

6. “Social objectives” which distort markets severely and limit productivity growth also slow economic growth and cause unemployment. Creating a level playing field and then managing distribution of a bigger pie through taxes on individuals is the better sequence.

7. Big governments demand big taxation. The more informal the economy, the more legitimate and productive businesses are held back by such taxation. Western countries did not have this problem in the late 19th and early 20th centuries.

8. Salvation does not come from elites. Elites are responsible for big government and reward themselves richly. They are in the business of the un-level playing field.

9. Protectionism of national industries keeps highly productive companies out of a country. Poor countries have the ability to grow much faster than people think but subsidizing low productivity is self-defeating.

10. Production unlinked to consumer desire misunderstands the real nature of “value.” Production is only worth what people will pay. Only one force can stand up to producer special interests – consumer interests. Most poor countries are a long way from a consumption mindset and consumer rights. As a result, they are poor.

Again, I encourage anyone interested in the global economy and in evaluating how nations differ in their economic attitudes and success to read this book. It’s very well written, lucidly argued, and offers up some very useful information (and fascinating anecdotes) on the national economies discussed above. The chapter on India, particularly, is a sobering balance for those considering India’s role in the “Third Anglosphere.”

Anglosphere Implications

The Power of Productivity offers us yet another way of examining economies, both modern and historical. On the one hand, the Anglosphere economies enjoy a position of affluence on the global ranking of per capita GDP, yet that troubling 20-25% gap in productivity between the United States and virtually everyone else needs explaining and examination.

For myself, I think Lewis’ book is yet another strong argument for suggesting that America is a unique data point, even within the Anglosphere. To have reached such a size, and such an economic and demographic growth rate over the last hundred years is unprecedented. More importantly, since 1990, there is every indication that other industrialized nations have stalled in keeping up. Other Anglosphere nations suffer perhaps a little less than Japan or continental Europe, but still … there is something about Lewis’ point on consumer focus … and the broad competitiveness of the product markets (goods and services) that places the United States out by itself on the charts. It’s an outlier nation yet again, as it is on so many surveys and assessments. Neither fish nor fowl.

What is clear is that the remaining Big Five in the Anglosphere (UK, Canada, Australia, NZ, Eire) will struggle with their cultural predisposition to “fix” the product markets and penalize their overall economic productivity growth. The US market is huge and fiercely competitive … and manages to constantly find new areas where technology, technique and economies of scale can be applied. One look at eBay and Amazon.com confirms it. In many ways, the next largest economy (the UK) is very aware of these trends and routes to increased productivity but the political culture of Great Britain does not allow the nation’s government to extract itself from the product marketplace to the same degree.

As for India’s role in the Anglosphere, as mentioned above, I found Lewis’s book very sobering. India, short of some new kind of mathematics, simply cannot reach even middle-income per capita GDP within a century or two. Whether the intervening years bring a great exodus of Indian talent to the other Anglosphere countries … or some epidemiological catastrophe shrinks the population such that new economic rules can be instituted … it’s hard to read Lewis and come to the conclusion that India as we know it will fulfill any national role as broadly wealthy country in the near- or medium-term. Indian individuals and cohorts may be tremendously influential. The nation however, as it is currently organized, falls behind the rest of the Anglosphere (let alone the US) minute-by-minute.

It should be emphasized that Lewis himself is very cognizant of the importance of raising productivity levels around the world, if only from the perspective of global stability, while admitting that he was overwhelmed by the great practical divide that separates the Anglosphere, Europeans and Japan from the rest of the world. His research really suggests (as the ten points above indicate) that institutions such as the World Bank and IMF are still not grasping the cultural nettle in the developing world that inhibits productivity growth and therefore the accumulation of national per capita wealth.

As he notes, decades of international development efforts (let alone Christian missionary efforts) have created Third World cadres with explicit rationales for behaviour that intrinsically inhibits economic productivity. And we can see the same behaviour replicated across the Anglosphere itself to greater or lesser degrees. Have we reached a situation where nations are their own worst enemies? Big government and educated elites are hitting developing economies at the very point in time when they need the unusually high levels of productivity growth that can only come from unimpeded foreign direct participation in national economies. By and large, it ain’t going to happen. Which in turn suggests that some 22nd century William W. Lewis may well write a book on how little has changed on the per capita GDP curve during the 21st century. One hopes not, but the data in this book on 20th century progress is hard to deny.

--==--
Table of Contents

1 Findings: The Global Economic Landscape [1]

Part 1 Rich and Middle-Income Countries

2 Japan: A Dual Economy [23]
3 Europe: Falling Behind [50]
4 The United States: Consumer is King [80]
5 Korea: Following Japan’s Path [105]

Part 2 Poor Countries

6 Brazil: Big Government is a Big Problem [135]
7 Russia: Distorted Market Economy [166]
8 India: Bad Economic Management from a Democratic Government [197]

Part 3 Causes and Implications

9 Patterns: Clear and Strong [229]
10 Why Bad Economics Policy around the World? [257]
11 New Approaches [285]
12 So What? [312]

Review of Robert Conquest's Most Recent Book

A good review By Christopher Hitchens of Robert Conquest's most recent book contains this passage:

What Conquest appears to be offering, in place of ideological enthusiasm, is the kind of “English liberty” that was admired by Voltaire and others before 1789 began to spoil things. Indeed, he closes the book with a detailed blueprint for an “Anglosphere” alliance, that would formalize relations between the USA, the UK, Canada, Australia, New Zealand, Ireland, and the associated Caribbean and Pacific islands.

The sort of people who would be quickest to sneer at this are exactly the sort of people who see nothing incongruous in the maintenance by the Elysée of “La Francophonie”, but it is useful to note that Conquest himself – an Anglo-American of partly French provenance – is not immune from the desire to put a slightly Utopian scheme before a wondering world.

This last passage refers to Conquests proposal for a sort of grand union of the English speaking peoples. As we have seen on this blog, thanks to James McCormick's posts, there were a lot of proposals for such a political union in the decades around 1900. I think Jim Bennett's proposal for a more loose-jointed Network Commonwealth is much more practical and requires less radical change in existing political arrangements, and hence is far more likely to happen. The Network Commonwealth will be based not on ideological enthusiasm, but on English (Anglospheric) liberty and good old American (Anglospheric) common sense and practicality.

The Consequences of History

I admit it: I'm a recovering Randian and libertarian. Starting in my early teens I was deeply enamored of the intellectual purity of Ayn Rand's philosophy of Objectivism and the libertarian vision of a fully voluntary society. Then a funny thing happened on the way to utopia: I started to read history. In particular, spurred by Jim Bennett's Anglosphere Primer (this was several years before his book was published), I read everything in his bibliography and many of the works referred to in those books as well. Soon I began to see significant patterns among the multi-colored details of history where previously I had viewed the world in black and white. In particular, I began to question Randian and libertarian premises about the nature of American society. Where the libertarians see America as radically different from all other societies, the Anglosphere perspective enables one to see deep continuities between the American experience and the earlier British experience (as well as the other plantings of Anglospheric culture in the "Second Anglosphere" of Canada, Australia, and New Zealand, and the emerging "Third Anglosphere" of India, Singapore, etc.).

In an essay entitled Ayn Rand and American Culture (published by the UK's Libertarian Alliance in 2004), I summarized my findings as follows:

Rand thought that America was profoundly different from all other nations. While she did not explicate her reasons for thinking so, they seem to be connected with her view that America is the only nation in history to have been founded on the basis of ideas (specifically, an Aristotelian philosophical base) rather than to have evolved through the accidents of history. Yet America was not founded as an Aristotelian experiment: the original 13 states were founded as English colonies, usually by religious dissenters seeking freedom for their beliefs (but no one else's). In broad brush, there were four main emigrations from England to America before the Revolution:

1. Dissenting Puritans from East Anglia to New England (1629-1641)
2. Low-Church Anglican Cavaliers and indentured servants from Wessex and Sussex to Virginia and the Carolinas (1642-1675)
3. Quakers from the North Midlands to the Delaware Valley (1675-1725)
4. Presbyterians from Ulster and the Scottish-English Borderland to the Appalachian backcountry (1717-1775)

In Albion's Seed, David Hackett Fischer argues persuasively that these four comprise the founding cultures of America, and that American culture did not emerge full-grown from the head of Zeus or develop without precedent through the "frontier experience", but instead that American culture can best be explained through reference to the cultures of its founding residents (Fischer 1989). Part of what makes his exploration so persuasive is the detailed information he provides regarding each culture's social and regional origins, religious beliefs and behaviors, speech patterns, architectural styles, family ways, marriage customs, gender relations, attitudes toward elders and toward death, educational approaches, food and dress customs, ways of working and of recreation, use of time, attitudes toward wealth, division of labor, societal orders and social rankings, patterns of settlement, and relations of power -- culminating in each culture's ideas about freedom and liberty. These details are fascinating and telling, providing connections both back to the cultures of four distinct English regions (which in turn had deeper roots in the migrations to the British Isles of the Angles, Saxons, Scandanavian Vikings, and Celts, respectively), and forward to our own times and to the regional and cultural tensions evident throughout American history.

Consider, for example, child-rearing. The intent in Puritan New England was to break the child's will for the sake of social and religious conformity in small-town democracies; the intent in Cavalier Virginia was to bend the child's will back upon itself for the sake of a kind of Stoical leadership in the "Squirearchy" of the coastal plantations; the intent in Quaker Delaware was to enlighten the will for the sake of personal and familial fulfillment in strong meetinghouse communities; the intent in the mainly Presbyterian backcountry was to build up the will for the sake of a fierce, stubborn independence in the shifting, warlike culture on the frontier between civilization and chaos.

These founding folkways, and much else besides, led to quite distinct, and often diametrically opposed, ideas about liberty. Fischer calls the New England idea "ordered liberty" (freedom to determine the course of one's own society), at worst exemplified in the stifling, moralistic conformism that we still associate with the word "Puritan", at best in the strong town-based democracies (and suspicion of anything but local power) still evident in parts of northern New England. The Virginia idea was that of "hegemonic liberty" (freedom to rule and not be ruled), at worst exemplified in the hierarchical "Slaveocracy" that valued freedom for those at the top but not for poor white trash or black slaves, at best in the aristocratic excellence of men such as George Washington. The Quaker idea was that of "reciprocal liberty" (freedom for me and for thou), at worst exemplified in the pacifistic pursuit of commerce without regard for nation or principle, at best in a quite modern-sounding respect for all human beings to pursue their own fulfillment. The frontier idea was that of "natural liberty" (a freedom without restraints of law or custom), at worst exemplified in the violent and often-emotionalistic chaos of life beyond the reach of civilized norms, at best in eternal vigilance with regard to the sovereignty of the individual.

These ideas about liberty, which find their roots in their respective cultures in England, live on to this day in American life -- even in so small and seemingly monolithic a subculture as the libertarian movement. Most economic libertarians seem to be inheritors of the East Anglian commercial culture that took root in New England: respectful of the rule of law, acknowledging a need for some forms of social order deriving from custom and community consensus, relatively unconcerned about the absolute liberty of the individual. Other libertarians, often especially those of a Randian persuasion, value liberty mainly for the sake of those at the top of the "pyramid of ability"; while none of them today would attempt to justify slavery or indentured servitude, they seem not to care about the effects of freedom on those with lower levels of talent, intelligence, or attainment. Then there is a certain kind of pacifistic libertarian, who values a studied neutrality in all wordly concerns (quite similar to that of the early Quakers). Finally, the anarchist edge of the libertarian movement often cleaves to the frontier concept of natural liberty, and proudly chafes at any least restriction on the right of the individual to do as he (or she) pleases.

The Objectivist and libertarian movements, if such they can even be called at this point, provided much of the fuel for the turn away from ever-greater statism in the late twentieth century. Yet they are mostly spent forces now. Part of the reason is that they are hopelessly abstract and philosophical, divorced from the reality of human cultures. Both Objectivism and libertarian cleave to a kind of intellectual determinism, which holds that a dedicated movement can change the world by spreading the right ideas. Those movements have failed in practice because one can't "change the culture" or help move the world in a more positive direction if one does not understand the true basis of culture. This is where the Anglospherist perspective comes in, by helping those who value freedom and liberty understand how the values and practices that are bound up with those ideas emerged historically and manifest themselves today in the culture we happen to know best: that of the English-speaking peoples (there never was a libertarian movement in China or Russia or the Islamic world or even continental Europe -- it was almost exclusively an American phenomenon with offshoots in other parts of the Anglosphere). While I don't doubt that "ideas have consequences", the challenge for those of a libertarian persuasion is to figure out the "cash value" of ideas once they pull back from the precipice of intellectual determinism and realize that history, too, has consequences. I don't claim to have all the answers (that's another benefit of studying history), but I do think that in many ways the Anglospherist approach will be the most productive vein for practical libertarians to mine in the coming years.

(Cross-posted at one small voice.)

The Western Standard

The latest victim of those who would destroy the Anglosphere's tradition of freedom of expression and a free press is Canada's The Western Standard, published by a brave man by the name of Ezra Levant. His is the only publication in Canada that has run those rather drab and humourless cartoons - in an article discussing freedom.

Needless to say, the camel dung has hit the fan and he is being picked to death by the angry crows of Islamofascism. I sent him an email of support and received this in return. Obviously, it is a form email being sent to supportive correspondents, but it illuminates the extent of Islamo-bullying and the depths of viciousness and determination in those who wish to destroy our tradition of freedom of expression. Here is part of Mr Levant's email:

"I've never been more proud of our magazine.

"Not everyone is happy with us, of course. A Calgary Muslim leader has reported us to the police, trying to get them to charge me with hate crimes. He has also filed a complaint against us with the human rights commission on the same grounds. Ironically, he has called our freedom of the press 'intellectual
terrorism'.

"Those are nuisance suits, of course. But the idea is to cost us money and time, break our spirit, erode our freedom of speech, and teach a lesson to all other media: that anyone who doesn't censor themselves will be made to wish they did.

"The threats are working. Already, many Canadian magazine retailers who normally carry the Western Standard have caved in, announcing -- even before they see our new issue -- that they won't put us on their shelves. Again, the purpose of the censors is obvious: hurt our magazine economically, and make an example of us as a warning to all other media."

The contemptible attempts to silence an entity practising its legal right of freedom of expression point to an agenda many of us have long suspected. Canada has already had a tussle with shariah law in Ontario. Thankfully, the proposal didn't go through. But there is an attempt by Muslim immigrants to bring their primitive, authoritarian culture along with them in their luggage. There is an increasingly bold determination to impose their religion and their desert tribal standards on advanced and enlightened Western societies and I believe it is time that we publically recognised this agenda and said "No. Take a hike. The airport's that way."

Mr Levant, as a publisher, has asked Canadians to subscribe to the Western Standard to help fund the legal fight to preserve freedom of speech in the Anglosphere that now lies ahead. It is a fight he will win in the courts, but it will nevertheless be painful financially, which is what the Islamic malice mongers intend. His magazine is excellent, by the way, and worth subscribing to. How could it not be? He runs a regular column by the sainted Mark Steyn!

We need more like Mr Levant in this fight. Danish prime minister Anders Rasmussen refuses to apologise or condemn the Jyllands-Posten. He simply says what a Danish newspaper publishes is none of the government's business in a free society. But to see how isolated Mr Rasmussen is among fellow European heads of government, read this chilling account in British conservative journalist Melanie Phillips's Diary. In Melanie Phillips' diary, go to entry Dhimmi Europe.

Like Mr Rasmussen and the Jyllands-Posten in Denmark, Mr Levant and The Western Standard are holding the fort alone in Canada.

Kotkin on Immigration

Joel Kotkin offers some fact-based analysis of the The Multiculturalism of the Streets now ongoing in America. Kotkin details how, below the radar, immigrant America is integrating itself into the American economy, and American life more generally. He also notes that the idea that our Southwestern states will become "Spanish Quebecs" is not supported by the evidence:

Linguistic trends show a similar trajectory. Despite fears of an emerging Babel, Latinos and Asians are becoming ever more English-dominant. Ninety percent of Latino high school graduates prefer to speak English over Spanish. This is largely a matter of generational change. The Spanish-dominant first generation is becoming a progressively smaller percentage of the Latino population. By 2040 the second generation is expected to double while the third generation, the vast majority of whom speak no Spanish at all, will expand threefold. As a result, English-dominant Hispanics, who already account for some three-fifths of Latino spending power, will become the prime “ethnic” market.

Though some people won't like to hear it, the prognosis is for America remaining "the young, dynamic world-nation of the 21st Century", as I previously predicted.

To be sure, this culture fusion will not please some conservative intellectuals, who will not look kindly on the incorporation of Spanishisms into our daily language any more than the rising popularity of Yiddish words appealed to Henry James a century ago. For the most part, however, this informal, undirected and mostly market-driven form of integration bodes very well for the continued dynamism of both American culture and economy. It guarantees that America will remain youthful, changeable and, very likely, strongly family-oriented. And it points to a major difference within the civilizational West—for most European countries have yet to figure out how to blend and thrive as has the United States.

Contrary to the concerns of some conservative critics, or the hopes of P.C. campus radicals, the emerging American national reality will not be shaped by the pronouncements of either left-wing academics or conservative political warlords. The new America will be more the product of the street-level trends that operate below the radar of intellectuals—just as it always has. If we’re smart, we’ll let what comes most naturally to American society take its course.

Sounds good to me. (RTWT)

UPDATE: Peter St. Andre offers some thoughts in response to the Kotkin article.

(Cross-posted at ChicagoBoyz)

Two Cheers for Neo-Realism

I have been reading Carles Boix's much-talked-about article The Roots of Democracy in Policy Review. Boix lays out a case for a "neo-realist" foreign policy position -- kind of a "yes, but..." to the idea of democratic transformation as a foreign-policy strategy.  I have both quibbles with and further supporting evidence to his argument, but on the whole I think a logical Anglospherist foreign policy could fall within the broad parameters of neo-realism as Boix defines it.  He is good on the cultural roots of democracy. Passages such as the following could have come from any of the gang on Seedlings, and indeed will be familiar ground to any regular reader of this blog:

Although coming in sundry forms and with different degrees of intensity, this political and economic landscape of stagnation dominated the whole world until the modern period. Its transformation and the progressive democratization of previously illiberal societies took place through two different paths. The first one developed in the long haul, caused by economic modernization. The second path was short and abrupt, triggered by war and occupation.

Democratization resulted, on the one hand, from modern development. Commercial capitalism, then followed by an industrial take-off, led to the spread of wealth, the erosion of the relative value of immobile assets and natural resources, and more economic equality. These new conditions then made the transition to liberal democracy possible. This economic and political transformation proceeded in waves. It first happened in an almost self-generating fashion in a few places located in the North Atlantic area — Britain, Belgium and the Netherlands, the Rhine area of Germany, Switzerland, and the Northern states of the United States — where no monarch was able to suffocate pre-existing medieval and pluralistic institutions in the name of modern absolutism. The parliamentary institutions of those nonabsolutist states protected the interests of merchants and investors and hence allowed the latter to take advantage of the scientific revolution of the seventeenth and eighteenth centuries. As capital accumulated in the already developed core, it gradually spilled over to the near periphery — particularly when the latter had either stable political institutions or foreign military pacts (generally with the United States) that credibly protected capital against the threat of expropriation. This is the story behind the boom of Southern Europe and, to some extent, of East Asia in the postwar period. Once those countries grew in the 1960s and 1970s, they went through very peaceful transitions to democracy in the last quarter of the twentieth century.

In those countries that had neither an equal agrarian economy, like Norway or some Swiss cantons, nor equalization through economic development, democratization rarely came peacefully from within. Even enlightened tyrants do not pass economic and institutional reforms to equalize conditions, since doing so would jeopardize their grip on power. It is true that authoritarian states sometimes push for economic reforms to industrialize their countries, as Meiji Japan did in the late nineteenth century. But their reforms, mostly implemented in response to foreign military competition, rely on the heavy intervention of the state and the creation of big industrial conglomerates tightly linked to the governing elite, hence avoiding a distribution of assets conducive to democracy.

Without society-centered economic development, the destruction of the old authoritarian elite (and of the institutions that blocked growth) comes about only as a result of war, defeat, and foreign occupation. This is the case of Central and Eastern Europe and of East Asia. It took World War ii and the Allies’ victory to destroy the ancien régime’s social coalitions and political institutions hindering democracy and economic development. The story of political instability and authoritarian governments that burdened Germany and Italy in the first half of the twentieth century ended only with American occupation. Similarly, the United States democratized Japan and imposed key agrarian reforms in Korea and Taiwan that would then sow the seeds for growth and liberal institutions. Although its consequences were otherwise catastrophic, the Soviet occupation of Eastern Europe made tabula rasa of the past quasi-feudal structures of that area. Once the ussr collapsed, Eastern Europeans could easily transit to democracy in a way they were unable to before World War II.

Boix also recognises that democracy has successfully been imposed by military force a number of times, particularly when the military power also imposes some of the pther preconditions of democracy.  As he points out, India fits none of the usual prerequisites for democracy, but they have made the institutions the British forced on them work for fifty years now.

In fact, the Anglosphere's experiences offer evidence to support both the point that democracy is a complex phenomenon and stems from a very specific and not easily replicable set of conditions and circumstances (British and American history, for example) and the point that, nevertheless, Anglosphere democratic institutions have taken root reasonably well in a wide variety of nations with quite different civilizational backgrounds (most importantly, in India). It also offers the cautionary examples of places like Zimbabwe, where the forms of democracy are maintained, although just barely, but the essence is being strained to the vanishing point.

I will probably post more on this topic in the near future.  The whole idea of
neo-realism is appealing.  Anglospherist analysis makes me uncomfortable with the idea that democracy is a simple toolkit that can just be dropped in on peoples (I have said that over and over again) but it clearly can be introduced into seemingly unlikely societies. I just can't buy hard-core realist theory, and I think it's frequently been a failure over the last 30 years where it has been tried.

So, for the moment, two cheers for neo-realism. Democracy is not a fashion or style that can just be parachuted into a society and expected to flower. On the other hand, there are by now quite a few examples of societies in which democratic seeds have been nurtured and tended, and have flowered on previously barren soil. (East Asia, for instance, was once thought to be inherently hostile to democracy -- yet Japan, South Korea, Taiwan, and at least sporadically several other areas have managed to establish functioning multiparty democracies.) If neo-realism helps us focus on exactly what must be done to make democracy take root (and Boix makes several intelligent suggestions) it could be more useful than either being blind cheerleaders for democracy-by-parachute, or always settling for the "he's a bastard, but at least he's our bastard" school of foreign policy.

You Can't Beat Something with Nothing

Fareed Zakaria reports in his essay The Decline and Fall of Europe, that the EU is in big trouble. Buried in the bureaucratic twaddle of a lengthy report called, pathetically, "Going for Growth" are acknowledgements that Europe is sputtering and staggering.

If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the U.S.) ...

The OECD report goes through the status of reforms country by country, and all the major continental economies get a B-minus. Whenever some politician makes tiny, halting efforts at reform, strikes and protests paralyze the country. In recent months, reformers like Nicolas Sarkozy in France, Jose Manuel Barroso in Brussels and Angela Merkel in Germany have been backtracking on their proposals and instead mouthing pious rhetoric about the need to "manage" globalization.

Zakaria's conclusion:

The decline of Europe means a world with a greater diffusion of power and a lessened ability to create international norms and rules of the road. It also means that America's superpower status will linger. Think of the dollar. For years people have argued that it is due for a massive drop as countries around the world diversify their savings. But as people looked at the alternatives, they decided that the chief rivals, the euro and the yen, represented economies that were structurally weak. So they have reluctantly stuck with the dollar. It's a similar dynamic in other arenas. You can't beat something with nothing.

We won't even get into the demographic trends.

The USA is ahead by default, and it is going to stay that way for a while, probably until China and India reach their full development potential. But that is at least a generation ahead, and might take up most of this century.

Britain, "lying somewhere between Continental Europe and the U.S." needs an Anglospheric option, so it does not continue to be dragged down by a Europe which is headed for the ash-heap of history.

I have no schadenfreude. I wish it were otherwise. But the European model is one of economic and political and demographic suicide. The sooner it discredited the sooner our own leftists will be unable to use it as a stick to beat us with. They will have to come up with some other utopian fantasy as their next jar of snake oil.

Via Secular-Right India

(Cross-posted at ChicagoBoyz.)

Daniel Pipes Channels Verity

Mideast scholar Daniel Pipes has come to the same conclusion as our co-blogger Verity. He wonders why

"The Anglosphere quivers

Strangely, as "Old Europe" finds its backbone, the Anglosphere quivers. So awful was the U.S. government reaction, it actually won the endorsement of the country's leading Islamist organization, the Council on American-Islamic Relations. This should come as no great surprise, however, for Washington has a history of treating Islam preferentially; and on two earlier occasions it also faltered in cases of insults concerning Muhammad.

In 1989, Salman Rushdie came under a death edict from Ayatollah Khomeini for satirizing Muhammad in his magical-realism novel, The Satanic Verses. Rather than stand up for the novelist's life, President George H.W. Bush equated The Satanic Verses and the death edict, calling both "offensive." Secretary of State James A. Baker III termed the edict merely "regrettable."

Even worse, in 1997 when an Israeli woman distributed a poster of Muhammad as a pig, the U.S. government shamefully abandoned its protection of free speech. On behalf of President Bill Clinton, State Department spokesman Nicholas Burns called the woman in question "either sick or . . . evil" and stated that "She deserves to be put on trial for these outrageous attacks on Islam." The State Department endorses a criminal trial for protected speech? Stranger yet was the context of this outburst; as I noted at the time, having combed through weeks of State Department briefings, I "found nothing approaching this vituperative language in reference to the horrors that took place in Rwanda, where hundreds of thousands lost their lives. To the contrary, Mr. Burns was throughout cautious and diplomatic."

We noticed that too. Back on january 27th, Verity asked Where Is the Anger? In that post she pointed out

Why are our cowardly leaders letting the steadfast Mr Rasmussen and the newspaper’s editors take the heat alone? Why has not one American Congressman raised the issue in Congress? No one would expect an unequivocal response from the British prime minister, but is there not one British MP brave enough to support Mr Rasmussen and the Danish people who are, after all, defending the liberty of all of us? Is there not one newspaper editor – even a tabloid – with the strength of conviction to support the Danes? Now Danish livelihoods are being threatened for failing to condemn this infraction against Islamic law, with boycotts of their products.

Is there not one damn’ politician in the entire Anglosphere who will take a stand with Mr Rasmussen? What about John Howard, then? The newly elected Harper? God help us, where is Jesse Jackson?

So far, the sole support has come from Norway – another Viking nation, let us note – one of whose papers printed the original article translated into Norwegian and ran the cartoons. Will not one elected member of an Anglosphere government stand shoulder to shoulder with Mr Rasmussen, who is single-handedly defending Western values and freedom?

Anglosphere values and the good things that came from trying to live up to them did not come from the Good Values Fairy. They are not something that come in our DNA. Rather, they came from centuries of finding out all the bad things that come from ignoring or contravening them. Freedom of speech and freedom of conscience came from absorbing the lessons of the decades of religious and political turmoil following the Reformation, the English Civil War, and the Revolution of 1688. The English and American Bills of Rights were the fruits of these lessons. But rights are a "use it or lose it" sort of phenomenon. Are we in danger of losing them?

This cowardice and confusion in the wake of this assault on free speech is not a good sign.

The Gradual Revolution

Historians like to talk about revolutions. They're exciting. Life was going along in its usual humdrum fashion and then -- boom! -- everything changed. The Commercial Revolution of the late middle ages. The Scientific Revolution of the seventeenth century. The Industrial Revolution of the late eighteenth and early nineteenth centuries. The Information Revolution of the late twentieth century. The upcoming Singularity Revolutions.

But have the changes in (and wrought by) Western civilization really been so revolutionary? Has the West grown through the punctuated equilibrium of periodic revolutions or through an ever-quickening, cumulative evolution? John Adams is famous for having said this about another revolution:

The Revolution was effected before the war commenced. The Revolution was in the minds and hearts of the people; a change in their religious sentiments, of their duties and obligations...This radical change in the principles, opinions, sentiments, and affections of the people was the real American Revolution.

And those of us who have studied the history of the Anglosphere know that there were deep continuities between the "minds and hearts" of Revolution-era Americans and pre-Revolutionary Britons. And that those continuities have even deeper roots in the culture of the offshore islanders, going back even to the times of the Roman occupation.

So: what caused the Industrial Revolution? Well, first of all, was there even a revolution? Things changed fast in England during the late eighteenth and early nineteenth centuries, and that needs to be accounted for. But that seeming inflection point was preceded by much laying of groundwork. So did the true inflection point occur during the Scientific Revolution? During the Commercial Revolution? Was the critical period 1275-1325, as Alfred Crosby argues in The Measure of Reality (recently reviewed by James McCormick)? Or, as Lex argued in the comments to that review, was there in fact no one inflection point?

The latter view seems closer to the truth. Most everyone wants to find one cause for the rise of the West and of the Anglosphere, but there is no one cause. Consider:

• The philosophers want to say it was the rediscovery of Aristotle. But Aristotle's works were not rediscovered until the 1100s and not mainlined into Western culture until Aquinas in the 1200s. Yet commerce, trade, and technological innovation had been growing and spreading as early as the 900s.
• The classicists want to say it was the heritage of Greece and Rome. But in large measure Europe began to take off only once it had forgotten the ancient legacy, forced by hard experience to seek another path.
• The geographers want to say it was the jagged coastline of Europe. But that didn't seem to help southeast Asia.
• The climatologists want to say it was the relatively warm years of the middle ages that enabled new agricultural approaches to take root. But then things turned cold and nasty with the little ice ages of the late medieval and early renaissance periods.
• The technologists want to say it was the application of new methods of power generation, agriculture, and mechanical ingenuity.
• The economists want to say it was the invention of insurance, credit, and double-entry bookkeeping.
• The biologists want to say it was the European resistance to certain diseases.
• And so on.

Don't get me wrong, these all played a part. But the key word here is part.

As Lex said:

I think part of the problem of looking for a "take-off point" is that is no take off point. There are just different trajectories, and some have a slightly higher average slope, and over time that allows very major disparities in outcome.

Or as Aristotle said: small differences in the beginning lead to large differences in the end.

Europeans were experimenting with new power technologies and agricultural techniques as early as the 900s, perhaps even earlier. In some ways they had to: they didn't have slaves around to do all the work (unlike their classical ancestors). Christian ideas of human dominion likely played a part. Seriously applying new tools led to a greater interest in machines, and an increasingly mechanical outlook on life. Not that Europeans invented all these tools -- water mills and wind mills were known to the Chinese, Persians, and Romans; the Romans had heavier plows but didn't use them much; the Chinese invented paper, printing, gunpowder, etc. But the Europeans applied and perfected the technologies that they didn't invent, were uncommonly good at borrowing ideas and technologies from other cultures, were flexible and diverse at a time when the other major cultures on the planet were becoming inflexible and monolithic, and eventually became pre-eminent in just about every scientific, cultural, technological, military, and economic endeavor you can think of.

Many commentators have pointed to the fact that Europe contained not one culture or nation, but many. That didn't hurt. Competition and decentralization forced innovation. When one nation closed down or became less innovative, creative people on the forefront of commerce, science, or technology moved on. When northern Italy slowly lost its edge after 1350, innovation moved north, especially to Flanders, Holland, and England. This, again, is a kind of flexibility.

I am reminded of Claudio Veliz's image of the Anglospheric fox, who knows many things. Europe in general knew many things -- early on it was simultaneously innovating in agriculture, commerce, technology, and navigation; later it added science to that list. Let us not forget the rise of independent towns, cities, and city-states, which resulted in competition and innovation in the realm of law. So we have a veritable brew of reinforcing areas of innovation, each growing at different rates, but growing (slowly at first, but then more and more quickly).

The more I read, the more I see a consistent pattern of growth and change starting around 900 and continuing up to the present, rather than one inflection point or transformative revolution. The baton of primary (but not sole) change was passed on to whichever area of Western civilization was most open and flexible at the time -- originally northern Italy, then Flanders and Holland, then England, then America. The Anglosphere has retained primacy in these changes over the last 250 years because it has been the most open, flexible, resilient, forward-driving sub-civilization within the West with regard to technology, law, corporate structures, business processes, scientific methods, military techniques, philanthropic ventures, and more.

That doesn't mean the Anglosphere is inherently better, faster, or more innovative than other sub-civilizations within the West, or civilizations in general. But inherence is not what matters here. The Anglosphere was not always the most open, flexible civilization, and there's no guarantee that its lead in that regard will be maintained. Yet the Anglosphere has been in the forefront of change for most all of the last 250 years, and that shows no signs of stopping. Given that ever-more radical changes are coming soon to a planet near you, the key will be to maintain the open, pragmatic, rational, individualist, flexible, resilient, innovative, market-oriented, fox-like ways that have gotten us this far. It won't necessarily be easy, but understanding the reasons behind the rise of the West over the last 1000+ years should help.

(Cross-posted at one small voice.)

Crosby - The Measure of Reality - Quantification and Western Society 1250-1600

Crosby, Alfred W., The Measure of Reality: Quantification and Western Society, 1250-1600 (Cambridge Univ. Press), 1997. 245pp. (Issued in the US as The Measure of Reality: Quantification in Western Europe, 1250-1600)

Recently, I reviewed a book (Nisbett's Geography of Thought) that describes the social psychological research on thinking styles in East Asia and the West. Nisbett traces the origins of the Western predisposition to thinking with Platonic properties, objects and “actors” to Greek philosophy and culture. In an earlier review of a book about the Peloponnesian War by VD Hanson, certainly demonstrated the unusual economic nature of a 5th cent. BC Athenian democracy, harnessing extraordinary financial and physical resources, even in causes that were tragic, despicable, or ultimately misguided. But did the Greeks of that era, ordinary men and women, actually see the world as we modern Westerners do ... in ways that Nisbett and his colleagues now claim to distinguish in the lab?

I have my doubts.

The history of Athenian or Greek democracy is very important to the Anglo-American civic tradition but it forms only small portion of Mediterranean history, covering a modest geographical area. Are we correct to source Western modes of perception exclusively on Greek innovation and culture of that era alone? ... despite centuries of subsequent Macedonian, Roman (republican & imperial), Byzantine, Norman, and Ottoman occupation of the region? How much of classical Platonic philosophy really informed the perceptual styles of Mediterranean and European cultures? Would the Greeks of intervening eras, for example, have seen the world as we do – have drawn so much on the mathematical sophistication of Euclid, Claudius Ptolemy, and their other ancient colleagues?

Grant that underlying cultural or perceptual differences in East and West might have a significant effect on how technological innovations were embraced and extended in both hemispheres over the last millennium. The social psychologists seem to think so. The economic historians of recent decades have many explanations for why technology surged ahead in the West after 1500AD yet stagnated during the same period in China. Can we push such East/West distinctions back 2500 years? In earlier posts reviewing books on glass and gunpowder, there was plenty of evidence that the West made profoundly different use of basic materials and technology than Eastern or Asian cultures. Both hemispheres adopted these materials (and associated technologies) roughly at the same time … but generally long after the seminal period in Greek philosophy which Nisbett emphasizes. Nisbett certainly believes that the Western style of logic and rhetoric is particularly suited to science but it is a mighty leap from Plato to Newton. And historians of the European periods between classical Greece and the Scientific Revolution would be skeptical about tying modern Western perception to the era of Plato and Aristotle.

For the last half-century at least, there's been a dramatic rewriting of English-language histories to more fully and accurately record the origins of many technologies ... whether gunpowder, compasses, algebra, paper, block printing, Hindu-Arabic numerals, ocean exploration, etc. etc. Much of this rewriting is a thinly veiled quest for retroactive cultural "bonus points" to ameliorate the humiliation of Asia making no substantial cultural contribution to modern technology between 1500AD and 1900AD. But it serves the useful purpose of clarifying exactly what Europeans brought to the mix when they began surging out of the Mediterranean in the late 13th century. Swapping the Whiggisms of Victorian historians for the feeble "everyone gets a ribbon" standards of modern academic historiography doesn't explain why the Westerners simply "did" so much more with the ideas and technologies they bumped into, borrowed or stole on the Western margins of Asia.

So we're back where we started. The annals of Greek history and philosophy certain inspire the West and have done so for centuries ... but they don't fully explain why ordinary Westerners (and even moreso, those of us on this blog would claim, Anglosphere citizens) appear to view the world in distinctive ways that can now be repeatedly measured by social scientists. We have both the results of social psychology research and the distinctive history of European technological innovation (let alone the subsequent scientific and industrial revolutions) to explain.

Some intermediate step between Plato and Newton is required, between Claudius Ptolemy and Sir Francis Drake, and between Aristotle and Darwin.

U Texas/Austin history professor emeritus Alfred Crosby's book "The Measure of Reality" provides both an historical and a psychological bridge between the world of the Greeks and the full-flowered Renaissance that underlay the industrial and scientific revolutions of western Europe. According to Crosby, changes in "mentalité" in northern Italy between 1275 and 1325 set the firm foundation for the worldview that we now absorb from our mothers as toddlers.

Disdained by the Muslims and Byzantines in the 800s,

“Six centuries later the Franks were at least equal to, and even ahead of, the Muslims and everyone else in the world in certain kinds of mathematics and mechanical innovation. They were in the first stage of developing science-cum-technology that would be the glory of the civilization and the edged weapon of their imperialistic expansion. How, between the ninth and the sixteenth centuries, had these bumpkins managed all that?”

Known widely for his writings on the biological and cultural impact of Europe on North America (decades before Jared Diamond’s Guns, Germs and Steel), Professor Crosby has extended his interest into what he calls mentalité, in this case, the European attitudes toward the natural world (shared by elite and commoner alike) that provided the context for specific technological discoveries or borrowings. It was the change in mentalité, Crosby would hold, that drove technological development forward in a way unmatched by other civilizations.

Crosby believes that the period between 1275 and 1325 (and shortly thereafter) in northern Italy saw the radical realignment of social attitudes toward the nature and management of time and space. This dramatic change in perspective (literal and figurative) was in turn to influence navigation, mapmaking, timekeeping, mathematics, art, writing, music, optics, mechanical devices, and financial management. This wasn’t the Renaissance; it was the Renaissance’s foundation. Before this critical 50 years, the world was still as Aristotle and Plato conceived it. And as most of the world’s civilizations perceived it. Afterward, the view that humans could both predict the world and re-create it as they wished gained irreversible credibility. Crosby further believes that the dramatic changes in attitude toward the natural world were still insufficient to explain the explosive leap ahead which European cultures made in the late medieval period.

The final “striking of the match,” according to the professor, was the linking of quantification techniques (n.b., echoes of Nisbett’s cognitive research) with the aggressive development of visualization methods: maps, perspective drawing, clock faces, plotted cannonball trajectories, musical notation, algebraic notation, alphabetization, book indexing and tables of contents, etc. etc. At every turn, the properties of objects were being measured, recorded, and evaluated from the perspective of literally a new vision of “reality” … simpler, universal, and graspable by ordinary people.

"The choice of the Renaissance West was to perceive as much of reality as possible visually and all at once, a trait then and for centuries after the most distinctive of its culture."

Unlike every other culture on the planet, mathematics was enthusiastically merged with measurement. And the vision of what was measurable expanded accordingly. In contrast to Pomeranz’s Great Divergence, then, Crosby would hold that the first inflection point of significant divergence of East and West occurred in the waning years of the 13th century in northern Italy. The inherent dynamism, and instability, of Europe springs from that date. Explosive (literally) military and economic changes were to come in the following centuries and the revolutionary blend of visualization and quantification was in place by the end of the 16th century in readiness for the awe-inspiring European Century of Genius in the 17th century. It was only the appearance of the Black Death in 1346 that halted the demographic and economic expansion of Europe. It may be that this social catastrophe has masked Europe’s early and profound shift, it’s almost-Exit (in the phrase of Ernst Gellner) from the economic limitations of Malthus, Hobbes, and Adam Smith. The change in mental attitude of this period, however, was irrevocable and was pushed to the farthest reaches of Europe when the Genoese successfully breeched the Straits of Gibraltar in 1291, traveling by the new-fangled cog directly and immediately to the shores of Britain, the Lowlands and the Baltic.

When the da Gama rounded the Cape of Good Hope in 1497, he did so with a kit of intellectual tools unavailable to any peoples on the Indian and Pacific Ocean. It was not just the fortuitous blend of guns, germs, and steel … or of compass, spectacles, ship construction, clocks, printing press, and double-entry accounting. It was a Neo-Platonic vision of the world as a stable, static, measurable entity … subject to investigation, understanding, and practical control. The voyagers of the era were driven by a culture deeply yearning for order, in a Europe that had wracked by the Black Death, the Hundred Years War, the Reformation and a burgeoning Ottoman Empire. And it already had 200 years of familiarity with mapping, with seeing, the world in a very new way.

Crosby makes an elegant structured argument for the reader, opening his book with the cultural enthusiasms of the late 16th century … just before the 17th “century of genius” … and then tracing the roots of that appetite for time and space measurement, for writing, printing and perspective drawing back to their origins in Europe. When he examines those origins, they all centre in the republics of northern Italy in a surprisingly narrow timeframe.

The author sets the stage with a chapter on what he calls the Venerable Model, the world view familiar to the Greeks and Romans, to Plato and Aristotle, that bears little resemblance to how modern Westerners view the world. He makes two points about this Venerable Model:

1. The ancients applied quantificational measurement more narrowly than we do, and often rejected it for some more broadly applicable techniques.

“We would claim that weight, hardness, temperature `and other sensible contrarities’ are quantifiable, but that is not implicit either in these qualities or in the nature of the human mind.”

For example, children count objects but weight and hardness are not intuitively seen by them as quantities. Spatial extension lends itself to measurement in every culture. It’s not so for hardness, heat, speed, or acceleration. Crosby believes it is very difficult to make the mental leap to quantification at early stage of history. There is a tendency instead to overdo it and go from physical properties to quantifying emotional/moral/spiritual properties, as the early Scholastics of Europe did.

2.

“Unlike Plato and Aristotle, we, with few exceptions, embrace the assumption that mathematics and the material world are immediately and intimately related. We accept as self-explanatory the fact that physics, the science of palpable reality, should be intensely mathematical. But that proposition is not self-explanatory; it is a miracle about which many sages have had their doubts.”

Whether it’s Plato’s ideal forms or Aristotle’s “sounds reasonable” natural philosophy, both traditions suffered from the view that events in the natural world were only approachable through reason, and even if sense data could be trusted, the senses were feeble (and not particularly useful) instruments for examining the world. One-legged men and places where Time stopped, were logical extrapolations of a worldview that held that the senses were only suitable for local and limited knowledge-gathering.

For Crosby, the classical past’s disregard for quantification is key. When the northern Italians began applying measurement to their world with hitherto unseen enthusiasm, something changed. Suddenly Time could be apportioned and brought to heel with elaborate town clocks. And the social organization of time kept pace. In the small Europeans towns of the era, to live amongst townsfolk meant surrendering to the pacing of the town’s clock, by law. Space could not only be captured with the careful maps and “portolano” (marine charts) of the late 13th century, but with the new tools of perspective drawings. At some point during this period in Italy, the compass was placed in a protected box and given a “wind rose” of 360 degrees (c.f., Aczel, A., Riddle of the Compass), allowing a massive increase in the safety and volume of sea-borne trade. Ancient mathematics and geometry were suddenly merged with measurement, and the rediscoveries of the ancient world (carried through Islamic and Byzantine texts) created an intellectual ferment that required careful discussion and organization.

The Venetians, Genoese, and Florentines of the time were gatekeepers between western Europe, the Byzantines and the Muslim world. We now know that many European inventions had their roots in the Orient but it was the Europeans who seemed to take such initial discoveries and push them much, much further. Whether gunpowder, algebra, glass, printing, box compasses (with 360 degree headings), or stern rudders, Europeans seemed to elaborate and expand the uses of such discoveries, and permit cross-fertilization between them in unprecedented ways. Indeed, in addition to Marco Polo’s accounts of his Silk Road travels to China, its worth knowing that Europeans were traveling (as Muslims) to southeast Asia by the late 14th century and returning to published their discoveries (e.g. Niccolo da Conti). Good ideas, often overlooked as amusements in the Orient, were making their way back to Europe with some regularity.

Crosby is “describ[ing] an acceleration after 1250 or so in the West's shift from qualitative perception to, or at least toward, quantificational perception." Much was happening at the time … an expansion of population, an improvement in agricultural technique and the harnessing of wind and