When GDP is a Scam

Look, just… think about this for a moment. How does a group in which 65% are unemployed and can’t speak the language add anything to the economy?

You could do some sleight of hand where a few very productive workers, a random billionaire like Carlos Slim or Steve Jobs, get lumped in with a bunch of people they have nothing to do with on the grounds that they are all “Syrian,” and come up with numbers like this, but that would be a sleight of hand. It’s deceptive, and it’s obviously lumping together completely disparate groups in order to make one group look much better than it is.

How to tell if someone is lying to you with GDP:

  1. Consider splitting the population in two. Say, Germans and non-Germans. Would GDP for one group go down?If yes, then you’re being lied to. Simply “growing” the GDP by drawing a bigger circle on the map and adding up the GDP inside of it doesn’t mean the people inside the circle have more money. It just means you drew a bigger circle.
  2. Is this GDP “growth” entirely due to government spending to deal with the problems brought by the newcomers, like funding schools to teach them German?If yes, then it is not real spending. Everyone who was already in Germany was just taxed to provide service to non-Germans. You could do that without anyone immigrating to Germany.
  3.  

    Does this “growth” translate into a higher standard of living or happiness for the average or median German?

    If not, you are being lied to.

  4.  

    If you could magically replace every one of those migrants with a German of the same age and sex, would GDP go up or down?
    If Up, then these migrants are a bad investment.

  5. If these immigrants are so great for the German economy, why were they so bad for their home economies?

Let’s summarize these varieties of “GDP” abuse: 1. Not looking at Per Capita, 2. “Growth” that doesn’t help the locals, 3. Growth that goes to elites, 4. Opportunity cost, 5. Not making any sense.

GDP is one way to measure the economy, but it isn’t the only way–and it certainly isn’t the only thing that matters.

Let us consider the simplest possible economy:

Joe and Bob are sailors who have been marooned on a desert island. They have plenty of fish to eat and two coconuts, which they use as currency. When Joe wants something from Bob, he pays him one Coconut. When Bob wants something from Joe, he pays him one Coconut.

Bob and Joe are also economists, so they keep track of their local GDP, tallying up every Coconut exchange. After two months, they have a robust GDP of 4,000 Coconuts per month–and then the coconuts sprout. For the next two months, Bob and Joe abandon the Coconut and just do favors for each other. The economy crashes. The island has a GDP of 0 Coconuts–but oddly, Bob and Joe are doing just as well and eating just as much fish as before.

You might be objecting that the Coconut Economy is a bit contrived, but it is relevant to our real world.

Over in our economy, if I hire a maid to vacuum my carpet, this is “economic activity” and it counts toward the GDP–but If I vacuum it myself, it doesn’t count. If I am hired as a nanny to take care of someone else’s children, this is “economic activity,” but if I take care of my own children, it doesn’t count. Even hiring a prostitute is “economic activity” as far as GDP is concerned, but having sex for free is not.

It is easy to see how something like “women entering the workforce” might generate a substantial GDP boost–while not actually changing anything but the location where particular jobs are done. There is no more economic value to vacuuming my carpet or yours. It’s all carpet.

There are plenty of non-economic arguments relevant here. I might be happier hiring someone to vacuum my carpet so I can spend my time on other activities, or I might be happier tidying up my own home to get everything just the way I like it. I might provide more nurturing childcare to my own children, or a professional might be able to invest in expensive toys and games that can be enjoyed by the many children in their care. People may enjoy consensual sex with their spouses more than with prostitutes–or may hate people and just want to visit the occasional prostitute. Etc.

All of these nuances of life are missed in any simple argument about GDP.

Any argument that hinges solely on what immigrants add (or subtract) from GDP is misguided because ultimately, people don’t exist to make economies better–economies exist to make people better.

Would you try to “improve” the lives of the Amish by inviting a bunch of Silicon Valley executives to settle in their area and boost GDP?

Of course not. It wouldn’t even be a meaningful exercise–the Amish are perfectly happy the way they are. Different people want different things in life. Sometimes that’s more money. Sometimes it’s community, free time, health, or nature. The Silicon Valley folks wouldn’t be too happy having to deal with the Amish, either.

About 30 years ago, economists-on-TV and pundits became convinced that the key to the economy was “spending” and therefore we had to convince people to spend more. Tracking things like “how much people spend on Christmas shopping” became an annual theme.

Of course, spending comes at a cost (future saving), and future saving comes at a cost (current consumption).

Here is a good article on why GDP and CPI are Broken:

Imagine China is implementing a mercantilist policy. An American spends cash to buy goods exported from China. The Chinese recycle the money earned from exporting goods to America into buying mortgage backed securities. The American takes out a big mortgage to buy a house, mortgage bought by the Chinese. The American is effectively borrowing from the Chinese in order to fund current consumption. The net result is that America is a net seller of home equity and in return has recieved goods. The price of homes will be pushed up. In the GDP statistics this will actually show up as economic growth (since the cheap Chinese goods will push down the GDP deflator). But in reality, there has been no growth, the U.S. is simply selling off its own wealth and getting poorer.

Of course, this is what is actually happening.

Meanwhile:

The GDP numbers do not include depreciation. So if existing infrastructure is crumbling faster than it gets replaced, GDP might show the country as actually growing while in reality things are falling apart.

If the entire city of Detroit gets destroyed in riots, fires, crime waves, and ethnic cleansing, and is left in ruins, this catastrophe not show up in GDP numbers. In fact, GDP might actually increase since the destruction would spur the creation of new housing (which does show up in the numbers) and the average home price might actually fall (reducing the GDP deflator) due to violence making the neighborhoods unlivable.

GDP for GDP’s sake is burning houses down just so you can rebuild them–or importing foreigners just so you can spend money to teach them to speak your language.

Book Club: The Code Economy pt 1

I don’t think the publishers got their money’s worth on cover design

Welcome to EvX’s Book Club. Today we begin our exciting tour of Philip E. Auerswald’s The Code Eoconomy: A Forty-Thousand-Year History. with the introduction, Technology = Recipes, and Chapter one, Jobs: Divide and Coordinate if we get that far.

I’m not sure exactly how to run a book club, so just grab some coffee and let’s dive right in.

First, let’s note that Auerswald doesn’t mean code in the narrow sense of “commands fed into a computer” but in a much broader sense of all encoded processes humans have come up with. His go-to example is the cooking recipe.

The Code Economy describes the evolution of human productive activity from simplicity to complexity over the span of more than 40,000 years. I call this evolutionary process the advance of code.

I find the cooking example a bit cutesy, but otherwise it gets the job done.

How… have we humans managed to get where we are today despite our abundant failings, including wars, famine, and a demonstrably meager capacity for society-wide planning and coordination? … by developing productive activities that evolve into regular routines and standardized platforms–which is to say that we have survived, and thrived, by creating and advancing code.

There’s so much in this book that almost every sentence bears discussion. First, as I’ve noted before, social organization appears to be a spontaneous emergent feature of every human group. Without even really meaning to, humans just naturally seem compelled organize themselves. One day you’re hanging out with your friends, riding motorcycles, living like an outlaw, and the next thing you know you’re using the formal legal system to sue a toy store for infringement of your intellectual property.

Alexander Wienberger, Holodomor

At the same time, our ability to organize society at the national level is completely lacking. As one of my professors once put it, “God must hate communists, because every time a country goes communist, an “act of god” occurs and everyone dies.”

It’s a mystery why God hates communists so much, but hate ’em He does. Massive-scale social engineering is a total fail and we’ll still be suffering the results for a long time.

This creates a kind of conflict, because people can look at the small-scale organizing they do, and they look at large-scale disorganization, and struggle to understand why the small stuff can’t simply be scaled up.

And yet… society still kind of works. I can go to the grocery store and be reasonably certain that by some magical process, fresh produce has made its way from fields in California to the shelf in front of me. By some magical process, I can wave a piece of plastic around and use it to exchange enough other, unseen goods to pay for my groceries. I can climb into a car I didn’t build and cruise down a network of streets and intersections, reasonably confident that everyone else driving their own two-ton behemoth at 60 miles an hour a few feet away from me has internalized the same rules necessary for not crashing into me. Most of the time. And I can go to the gas station and pour a miracle liquid into my car and the whole system works, whether or not I have any clue how all of the parts manage to come together and do so.

The result is a miracle. Modern society is a miracle. If you don’t believe me, try using an outhouse for a few months. Try carrying all of your drinking water by hand from the local stream and chopping down all of the wood you need to boil it to make it potable. Try fighting off parasites, smallpox, or malaria without medicine or vaccinations. For all my complaints (and I know I complain a lot,) I love civilization. I love not worrying about cholera, crop failure, or dying from cavities. I love air conditioning, refrigerators, and flush toilets. I love books and the internet and domesticated strawberries. All of these are things I didn’t create and can’t take credit for, but get to enjoy nonetheless. I have been blessed.

But at the same time, “civilization” isn’t equally distributed. Millions (billions?) of the world’s peoples don’t have toilets, electricity, refrigerators, or even a decent road from their village to the next.

GDP per capita by country

Auerswald is a passionate champion of code. His answer to unemployment problems is probably “learn to code,” but in such a broad, metaphorical way that encompasses so many human activities that we can probably forgive him for it. One thing he doesn’t examine is why code takes off in some places but not others. Why is civilization more complex in Hong Kong than in Somalia? Why does France boast more Fields Medalists than the DRC?

In our next book (Niall Ferguson’s The Great Degeneration,) we’ll discuss whether specific structures like legal and tax codes can affect how well societies grow and thrive (spoiler alert: they do, just see communism,) and of course you are already familiar with the Jared Diamond environmentalist theory that folks in some parts of the world just had better natural resources to work than in other parts (also true, at least in some cases. I’m not expecting some great industry to get up and running on its own in the arctic.)

IQ by country

But laying these concerns aside, there are obviously other broad factors at work. A map of GDP per capita looks an awful lot like a map of average IQs, with obvious caveats about the accidentally oil-rich Saudis and economically depressed ex-communists.

Auerswald believes that the past 40,000 years of code have not been disasters for the human race, but rather a cascade of successes, as each new invention and expansion to our repertoir of “recipes” or “codes” has enabled a whole host of new developments. For example, the development of copper tools didn’t just put flint knappers out of business, it also opened up whole new industries because you can make more varieties of tools out of copper than flint. Now we had copper miners, copper smelters (a  new profession), copper workers. Copper tools could be sharpened and, unlike stone, resharpened, making copper tools more durable. Artists made jewelry; spools of copper wires became trade goods, traveling long distances and stimulating the prehistoric “economy.” New code bequeaths complexity and even more code, not mass flint-knapper unemployment.

Likewise, the increase in reliable food supply created by farming didn’t create mass hunter-gatherer unemployment, but stimulated the growth of cities and differentiation of humans into even more professions, like weavers, cobblers, haberdashers, writers, wheelwrights, and mathematicians.

It’s a hopeful view, and I appreciate it in these anxious times.

But it’s very easy to say that the advent of copper or bronze or agriculture was a success because we are descended from the people who succeeded. We’re not descended from the hunter-gatherers who got displaced or wiped out by agriculturalists. In recent cases where hunter-gatherer or herding societies were brought into the agriculturalist fold, the process has been rather painful.

Elizabeth Marshall Thomas’s The Harmless People, about the Bushmen of the Kalahari, might overplay the romance and downplay the violence, but the epilogue’s description of how the arrival of “civilization” resulted in the deaths and degradation of the Bushmen brought tears to my eyes. First they died of dehydration because new fences erected to protect “private property” cut them off from the only water. No longer free to pursue the lives they had lived for centuries, they were moved onto what are essentially reservations and taught to farm and herd. Alcoholism and violence became rampant.

Among the book’s many characters was a man who had lost most of his leg to snakebite. He suffered terribly as his leg rotted away, cared for by his wife and family who brought him food. Eventually, with help, he healed and obtained a pair of crutches, learned to walk again, and resumed hunting: providing for his family.

And then in “civilization” he was murdered by one of his fellow Bushmen.

It’s a sad story and there are no easy answers. Bushman life is hard. Most people, when given the choice, seem to pick civilization. But usually we aren’t given a choice. The Bushmen weren’t. Neither were factory workers who saw their jobs automated and outsourced. Some Bushmen will adapt and thrive. Nelson Mandela was part Bushman, and he did quite well for himself. But many will suffer.

What to do about the suffering of those left behind–those who cannot cope with change, who do not have the mental or physical capacity to “learn to code” or otherwise adapt remains an unanswered question. Humanity might move on without them, ignoring their suffering because we find them undeserving of compassion–or we might get bogged down trying to save them all. Perhaps we can find a third route: sympathy for the unfortunate without encouraging obsolete behavior?

In The Great Degeneration, Ferguson wonders why the systems (“code”) that supports our society appears to be degenerating. I have a crude but answer: people are getting stupider. It takes a certain amount of intelligence to run a piece of code. Even a simple task like transcribing numbers is better performed by a smarter person than a dumber person, who is more likely to accidentally write down the wrong number. Human systems are built and executed by humans, and if the humans in them are less intelligent than the ones who made them, then they will do a bad job of running the systems.

Unfortunately for those of us over in civilization, dysgenics is a real thing:

Source: Audacious Epigone

Whether you blame IQ itself or the number of years smart people spend in school, dumb people have more kids (especially the parents of the Baby Boomers.) Epigone here only looks at white data (I believe Jayman has the black data and it’s just as bad, if not worse.)

Of course we can debate about the Flynn effect and all that, but I suspect there two competing things going on: First, a rising 50’s economic tide lifted all boats, making everyone healthier and thus smarter and better at taking IQ tests and making babies, and second, declining infant mortality since the late 1800s and possibly the Welfare state made it easier for the children of the poorest and least capable parents to survive.

The effects of these two trends probably cancel out at first, but after a while you run out of Flynn effect (maybe) and then the other starts to show up. Eventually you get Greece: once the shining light of Civilization, now defaulting on its loans.

Well, we have made it a page in!

Termite City

What do you think of the book? Have you finished it yet? What do you think of the way Auersbach conceptualizes of “code” and its basis as the building block of pretty much all human activity? Do you think Auersbach is essentially correct to be hopeful about our increasingly code-driven future, or should we beware of the tradeoffs to individual autonomy and freedom inherent in becoming a glorified colony of ants?

Navigation and the Wealth of Nations

Global Determinants of Navigational Ability, by Coutrot et al:

Using a mobile-based virtual reality navigation task, we measured spatial navigation ability in more than 2.5 million people globally. Using a clustering approach, we find that navigation ability is not smoothly distributed globally but clustered into five distinct yet geographically related groups of countries. Furthermore, the economic wealth of a nation (Gross Domestic Product per capita) was predictive of the average navigation ability of its inhabitants and gender inequality (Gender Gap Index) was predictive of the size of performance difference between males and females. Thus, cognitive abilities, at least for spatial navigation, are clustered according to economic wealth and gender inequalities globally.

This is an incredible study. They got 2.5 million people from all over the world to participate.

If you’ve been following any of the myriad debates about intelligence, IQ, and education, you’re probably familiar with the concept of “multiple intelligences” and the fact that there’s rather little evidence that people actually have “different intelligences” that operate separately from each other. In general, it looks like people who have brains that are good at working out how to do one kind of task tend to be good at working out other sorts of tasks.

I’ve long held navigational ability as a possible exception to this: perhaps people in, say, Polynesian societies depended historically far more on navigational abilities than the rest of us, even though math and literacy were nearly absent.

Unfortunately, it doesn’t look like the authors got enough samples from Polynesia to include it in the study, but they did get data from Indonesia and the Philippines, which I’ll return to in a moment.

Frankly, I don’t see what the authors mean by “five distinct yet geographically related groups of countries.” South Korea is ranked between the UK and Belgium; Russia is next to Malaysia; Indonesia is next to Portugal and Hungary.

GDP per capita appears to be a stronger predictor than geography:

Some people will say these results merely reflect experience playing video games–people in wealthier countries have probably spent more time and money on computers and games. But assuming that the people who are participating in the study in the first place are people who have access to smartphones, computers, video games, etc., the results are not good for the multiple-intelligences hypothesis.

In the GDP per Capita vs. Conditional Modes (ie how well a nation scored overall, with low scores better than high scores) graph, countries above the trend line are under-performing relative to their GDPs, and countries below the line are over-performing relative to their GDPs.

South Africa, for example, significantly over-performs relative to its GDP, probably due to sampling bias: white South Africans with smartphones and computers were probably more likely to participate in the study than the nation’s 90% black population, but the GDP reflects the entire population. Finland and New Zealand are also under-performing economically, perhaps because Finland is really cold and NZ is isolated.

On the other side of the line, the UAE, Saudi Arabia, and Greece over-perform relative to GDP. Two of these are oil states that would be much poorer if not for geographic chance, and as far as I can tell, the whole Greek economy is being propped up by German loans. (There is also evidence that Greek IQ is falling, though this may be a near universal problem in developed nations.)

Three other nations stand out in the “scoring better than GDP predicts” category: Ukraine, (which suffered under Communism–Communism seems to do bad things to countries,) Indonesia and the Philippines. While we could be looking at selection bias similar to South Africa, these are island nations in which navigational ability surely had some historical effect on people’s ability to survive.

Indonesia and the Philippines still didn’t do as well as first-world nations like Norway and Canada, but they outperformed other nations with similar GDPs like Egypt, India, and Macedonia. This is the best evidence I know of for independent selection for navigational ability in some populations.

The study’s other interesting findings were that women performed consistently worse than men, both across countries and age groups (except for the post-90 cohort, but that might just be an error in the data.) Navigational ability declines steeply for everyone post-23 years old until about 75 years; the authors suggest the subsequent increase in abilities post-70s might be sampling error due to old people who are good at video games being disproportionately likely to seek out video game related challenges.

The authors note that people who drive more (eg, the US and Canada) might do better on navigational tasks than people who use public transportation more (eg, Europeans) but also that Finno-Scandians are among the world’s best navigators despite heavy use of public transport in those countries. The authors write:

We speculate that this specificity may be linked to Nordic countries sharing a culture of participating in a sport related to navigation: orienteering. Invented as an official sport in the late 19th century in Sweden, the first orienteering competition open to the public was held in Norway in 1897. Since then, it has been more popular in Nordic countries than anywhere else in the world, and is taught in many schools [26]. We found that ‘orienteering world championship’ country results significantly correlated with countries’ CM (Pearson’s correlation ρ = .55, p = .01), even after correcting for GDP per capita (see Extended Data Fig. 15). Future targeted research will be required to evaluate the impact of cultural activities on navigation skill.

I suggest a different causal relationship: people make hobbies out of things they’re already good at and enjoy doing, rather than things they’re bad at.

 

 

Please note that the study doesn’t look at a big chunk of countries, like most of Africa. Being at the bottom in navigational abilities in this study by no means indicates that a country is at the bottom globally–given the trends already present in the data, it is likely that the poorer countries that weren’t included in the study would do even worse.

Different interest groups don’t bargain over the budget, they just add to it

Source: Forbes
Source: Forbes

(Note that I am a little cautious of any graph labeled total gov’t spending, due to it being a pain in the butt to add up the budgets of every city, county, and other municipality in the entire country over many years, but I think the graph may be accurate.)

So this graph came from a Forbes article, “Lessons From the Decades Long Upward March of Government Spending,” which notes that:

For me, the most notable fact about this chart is that the growth of government spending has been remarkably steady. The trend over the last 83 years has been for government spending to rise by 0.24 percent of GDP per year, and the correlation is strong: a linear regression on this trend has an R-squared value of 0.72, meaning that time explains most of the movement in government spending.

In other words, mission creep. If you’re clever, you might start to wonder what will happen if this trend keeps going. If you’re really clever, you might figure out that in 1847, the US must have had negative government spending.

Or maybe there’s more than just mission creep going on.
Here’s a graph of federal spending vs. GDP since 1791:

outlays-GDP

Wow. Spending pre-WWI looks radically different than spending post-WWII, and I don’t think it’s just the difference between GNP and GDP.

The graph ends at 2011, but 2015’s total gov’t spending is estimated at 6.2 trillion dollars, or 35% of GDP. (Though I’m wondering if that shouldn’t be 39%; someone take a look and tell me why they aren’t adding the 3% for debt. For that matter, they don’t seem to have Social Security listed, and SS is like 24% of the budget so that’s kind of huge if they left it out.) Federal spending seems to be at 21 or 24% of GDP. Obviously these are all estimates.

Prior to WWI, non-wartime government spending was practically flat. Spending as percent of GDP did remain elevated after the Civil war and even after the small bump of the War of 1812, but in both cases it gradually fell back toward pre-war levels, perhaps as much due to gradual economic recovery/growth as budget cuts. Immediately after WWI, it looks like the same process has begun, but then it doesn’t.

Let’s explore some possible reasons why:

1. Cold War Spending

Maintaining a nuclear arsenal plus a lot of aircraft carriers, fighter jets, and tanks costs a lot more than just trusting your citizens to bring their own guns to the next skirmish.

(“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”)

Defense spending is about 13% of the Federal budget, and 5% of total GDP, which is a bigger % than the entire Federal budget for the entire 1800s except for the Civil War.

The Cold War acts a lot like previous wars, but takes a lot longer.

 

2. The Income Tax

While there were some, shall we say, mini-income taxes proposed or passed to fund wars in the 1800s, the system really got going with the passage of the 16th Amendment in 1913. Look back at the graph; other than the effects of wars ending, (including the Cold War,) spending as % of GDP has been steadily on the increase ever since.

Prior to 1913, the Federal government got most of its money from tariffs, customs, and certain sales taxes. The Income Tax obviously made it much, much easier to increase tax revenues, regardless of the reason. One may wonder about the wisdom behind such a move:

During the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.[6]

The Socialist Labor Party advocated a graduated income tax in 1887.[7] The Populist Party “demand[ed] a graduated income tax” in its 1892 platform.[8] The Democratic Party, led by William Jennings Bryan, advocated the income tax law passed in 1894,[9] and proposed an income tax in its 1908 platform.[10]

“The federal income tax was strongly favored in the South, and it was moderately supported in the eastern North Central states, but it was strongly opposed in the Far West and the Northeastern States (with the exception of New Jersey).[14] The tax was derided as “un-Democratic, inquisitorial, and wrong in principle.”[15]” source: Wikipedia 

Looks like poor farmers and laborers wanted to increase taxes on the wealthy and get rid of taxes that fell on themselves. The government decided to go along with the scheme because hey, free money. So you I guess you have the socialists to thank for your nukes.

Interestingly, William Jennings Bryan, one of the populist popularizers of the idea of the income tax as a means of freeing the people from the shackles of the gold standard, (“You shall not crucify mankind upon a cross of gold!“) was an anti-Darwinist who lobbied for (and got) state laws banning the teaching of evolution in public schools and represented the prosecution in the Scopes Trial in 1925. According to the Wikipedia, he opposed evolution not only on the regular religious grounds, but also because he feared its use as an weapon of war, ie the Social Darwinism being promoted by the Germans.

The US officially switched to fiat money in 1976, well into our long rise.

Anyway, here’s a graph showing the prominent role of income taxes in the Federal Budget:

Revenue pie

If the Federal government were still limited to customs and excise taxes, this would be a much smaller pie.

 

3. The Federal Reserve

Like the Income Tax, the Federal Reserve Bank of the US was founded in 1913–boy was Woodrow Wilson busy. It purpose was to stabilize the banking industry and prevent bank runs from wrecking the economy, and I believe it serves as one of the major lenders to the US government, letting them spend more than they take in.

I am basically  ambivalent on questions like, “Is the Fed a good thing?” or “Should we allow fractional reserve banking?” until I know more, but I am a little sympathetic toward the Fed just because QE is one of the few things anyone in government has actually done to try to fix the economy.

Here’s a graph for you, showing the growth of deficit spending:

federal-spending-percent-2

 

4. Suffrage

The percent of Americans who are legally allowed to vote and actually do so has increased from <5% in the late 1700s to almost 45% today. (Wikipedia)

U.S._Vote_for_President_as_Population_Share

Back in the 1700s/early 1800s, only free adult males who owned property were allowed to vote; the laws were set by state and so varied a bit–in some places property owning women could vote, for example; ethnicity was probably a concern here and there.

The first major expansion of the franchise occurred between 1792 and 1856, as the property requirements were repealed state-by-state. Looks like several states abolished theirs around 1820, including NY and AL. (Actually, looks like Alabama entered the Union around them with no property requirement to start with.)

I’m guessing the 1866 dip is due to disenfranchisement of Southerners due to the Civil War.

Racial restrictions on voting were removed in 1869. The black vote does not represent a very large expansion in suffrage just because black men were a relatively small % of the overall population at the time and the KKK and other groups were effectively preventing them, especially by the early 1900s, from voting.

The biggest single jump in the graph begins around 1920, when women were allowed to vote–an expansion that more than doubled the size of the voting population.

Since then, there have been a few small expansions–the elimination of poll taxes and other impediments to voting; the voting age switched from 21 to 18, etc.

Overall, I don’t think I’m going out on a limb to say that women seem to prefer spending on social welfare projects, and men prefer spending on armies.

You might think that different interest groups would argue over the budget until they come to a reasonable compromise, or that one year Democrats would pass all of their ideas, and then a Republican administration would come along, repeal it all, and pass their own agenda.

But this doesn’t happen; it’s been over 40 years since Roe vs. Wade, and Republicans still haven’t gotten rid of it.

Once one side passes a spending program, it’s virtually guaranteed to stay.

 

5. Modern Mass-Media

As I have discussed before, recent (ie, in the past 100 or so years) technological advances have created a completely novel memetic environment. For almost the entirety of human history, people got almost all of the information about the world around them from the people around them, principally their parents, grandparents, and tribal/village elders. Information passed vertically in this way I refer to as “meme mitochondria,” due to their similarity to the mitochondrial DNA passed down from mother to child.

Since the invention of the printing press, and increasingly since radio, TV, and the internet, people have gotten more and more of their information about the world from these sources. Information thus passed horizontally I call “meme viruses,” due to the similarity with the horizontal spread of conventional viruses. (I’d call them “viral memes,” but that name’s taken.)

I theorize that evolution selects for meme mitochondria that maximize the chances of their own reproduction, that is, since they are passed largely from parent to child, they are ideas that encourage high natality, personal survival, and loyalty to family and tribe. Meme mitochondria do not need to encourage any kind of loyalty to people outside one’s tribe or protect their lives in any way.

Meme viruses, being spread horizontally, succeed by promoting the common good of the group, but do not need to promote the welfare of the individual, nor natality.

Modern mass communication technologies, therefore, have created a completely evolutionarily novel selective environment in which horizontal meme transmission has become dominant over vertical transmission for the first time in all of human history, which may in turn cause people to demand radically different things of their governments, like social welfare spending or legalized gay marriage.

 

6. Longer Life Expectancies

The single biggest expense in the government budget is old people:

total-spending-2015

At the state and local level, pensions become a big deal.

Here’s a different graph:

Source: Policy Basics "Where tax dollars go"
Source: Policy Basics “Where tax dollars go

Anyway, Social Security is the single largest item in the Federal budget at 24%, and pensions and Medicare add quite a bit more–overall, I wouldn’t be surprised if old people received a full half of government budget dollars.

“But wait,” I hear you saying, “Social Security is totally special and not a real government expenditure because I paid into it and therefore it’s something I’m entitled to but totally not an entitlement.”

Well, no. Not really. Sorry, but Social Security is a ponzi scheme. You don’t pay into it and then get your own money back out. The money you put in now goes to pay retirees right now. When you retire in the future, future workers will pay for you.

The whole system was thought up during a time of expanding population growth, when there were plenty of new workers around to pay for old workers to retire. As growth has tapered off, this system has become less viable.

There was actually a Supreme Court case in which the court decided that Social Security is not, in fact, an entitlement.

By the way, “not an entitlement” means “there is no guarantee you will get this because you are not entitled to it.” If the government decides that it just can’t afford to fund Social Security anymore, well, then you just won’t get Social Security anymore.

(Yes, I have had some very annoying discussions with people who complain about the evils of “entitlements” while defending their right to never, ever have their Social Security cheques cut.)

Medicine and hygiene being what they were back in the 1800s, there were just fewer old people around. Even if they’d had Social Security back then, it would have been a much smaller program.

 

Changes in the composition of the budget over the past 50 years:

4_things_to_look_for_in_obama_budget_wessel_figure-_2_investing

Of course, there was a war going on in 1964, but it still shows just how much Social Security and related programs have expanded over the decades.

I have a two more graphs that might be of interest:

percent-of-GDP-federal-spending

Grey bars mark recessions

u.S. Spending And Revenue In Relation To GDP

Interesting how local spending crashed between 1933 and 1945 as Federal spending took off.

 

I always look at people funny when they complain that proposed government program X or Y is socialist. “We’re already socialist,” I tell them. When government spending is 25% of the entire nation’s GDP (and I’m not sure if that even includes Social Security,) you are already living in a socialist country. If the theory that politics is really just people arguing over the budget is correct, then as the budget becomes an increasingly large percent of GDP, then I expect the political discourse to only become more heated and nastier as people’s entire livelihoods become increasingly dependent on whether or not they qualify for a government handout or program of some sort.

Finally, the Forbes article also notes:

Most importantly, trends on entitlements look a lot more unfavorable than they did in 1992. Baby boom retirements will continue to push Social Security spending upward, by about a percentage point of GDP over the next 25 years. Medicare costs actually aren’t growing as fast as they did in the early 1990s, but they are starting off a larger base, making medical inflation a more significant fiscal problem than it used to be.

I don’t think the upward trend can continue forever.

 

The Recent Development of High European IQ

You know what’s kind of awesome? Understanding the economic development level of virtually every country on earth becomes much easier as soon as you realize the massive correlation between per capita and IQ–and it gets even better if you focus on verbal IQ or “smart fraction” vebal IQs:

Oh, there you are, correlation
Lifted gratefully from La Griffe du Lion‘s Smart Fraction II article
I do wonder why he made the graph so much bigger than the relevant part
Lifted gratefully from La Griffe du Lion‘s Smart Fraction II article

La Griffe du Lion has a lot of great articles explaining phenomena via math, so if you haven’t read them already, I strongly recommend that you do.

One wonders what this data would look like if we looked backwards, at per capita GDP in, say, the 15 to 1800s.

I really hope I can find a better graph
I really hope I can find a better graph (this one’s from Wikimedia)

 

Well, that's slightly better
Also from Wikimedia

According to the Guardian article about the paper British Economic Growth 1270-1870, “estimates that per capita income in England in the late middle ages was about $1,000 or £634 a year when compared with currency values in 1990.

“According to the World Bank, countries which had a per capita income of less than $1,000 last year included Ghana ($700), Cambodia ($650), Tanzania ($500), Ethiopia ($300) and Burundi ($150), while in India – one of the BRIC emerging economies – the gross income per capita stands only just above medieval levels at $1,180.”

Ah, here’s a decent graph:

I am so not digging the scale on this graph
From the Wikipedia page on India-EU relations

From the description of the graph:

“The %GDP of Western Europe in the chart is the region in Europe that includes the following modern countries – UK, France, Germany, Italy, Belgium, Switzerland, Denmark, Finland, Sweden, Norway, Netherlands, Portugal, Spain and other smaller states in the Western part of Europe.

The %GDP of Middle East in the chart is the region in West Asia and Northeast Africa that includes the following modern countries – Egypt, Israel, Palestinian Territories, Lebanon, Syria, Turkey, Jordan, Saudi Arabia, Qatar, Bahrain, Kuwait, UAE, Oman, Yemen, Iran, Iraq and other regions in the Arabian region.”

The problem with doing the graph this way is that it doesn’t control for population growth. Obviously the US expanded greatly in population between 1700 and 1950, crushing the rest of the world’s GDP by comparison, without anyone else necessarily getting any poorer. It would be nice if the graph included Africa, because I wonder how things like Mansa Musa’s gold mines would show up.

At any rate, here is my impression, which this graph basically seems to back up:

Around the time of the Romans, “Europe” and the Middle East had similar levels of development, integration into global economy, etc. The fall of the Roman Empire coincided with the Middle East pulling ahead in math, science, and nice-looking buildings.

Meanwhile, India and China were doing quite well for themselves, though it’s not clear from the graph how much of that is population. I would not be surprised to find similar numbers for per capita GDP at that time, though.

Then around 1000, Europe starts to improve while the Middle East falls behind and stays there. I suspect this is in part because cousin marriage became more common in the Middle East between 0 and 1000 while simultaneously becoming less common in Europe, and because the Middle East probably didn’t have much arable land left to expand into and so population couldn’t increase very much, whereas the Germans started their big eastward migration about then, (The Ostsiedlung–goodness, it took me a while to figure out how that’s spelled.) increasing the number of Europeans in our cohort and spurring growth.

(BTW…

One of my earlier theories was "I suspect Eastern Germany must was settled after western Germany, due to pesonalities," which turns out to be true
Click for the bigger version )

India, meanwhile, went downhill for a long time, for I have no idea why reasons. China was doing great until quite recently, when it apparently went capootie. Why? I don’t know, but I think part of the effect is just Europe (and the US) suddenly pulling ahead, making China look less significant by comparison.

So. Extrapolating backwards from what we know about the correlation between GDP and verbal IQ, I suspect Western Europe experienced a massive increase in IQ between 1000 and 1900.

A large chunk of this increase was probably driven by the German eastward expansion, a rather major migration you’ve probably never heard of. (As HBD Chick says, “from a sociobiological point-of-view, probably the most underappreciated event in recent western european history. that and the reconquest of spain.”) Another large chunk was probably driven by various cultural factors unique to manorialism and Christianity.

Windmills began popping up in Western Europe in the late 1100s (given that they seem to have started in France, England, and Flanders, rather than in areas geographically closer to the Middle East, it seems unlikely that the European windmills were inspired by earlier Middle Eastern windmills, but were instead a fairly independent invention.

Watermills were an earlier invention–the Classical Romans and Greeks had them. The Chinese and Middle Easterners had them, too, at that time. I don’t know how many mills they all had, but Europeans really took to them:

“At the time of the compilation of the Domesday Book (1086), there were 5,624 watermills in England alone, only 2% of which have not been located by modern archeological surveys. Later research estimates a less conservative number of 6,082, and it has been pointed out that this should be considered a minimum as the northern reaches of England were never properly recorded. In 1300, this number had risen to between 10,000 and 15,000. [Bold mine.]By the early 7th century, watermills were well established in Ireland, and began to spread from the former territory of the empire into the non-romanized parts of Germany a century later. Ship mills and tide mill were introduced in the 6th century.” (Wikipedia page on Watermills.)

In short, by the 1300s, Europe was well on its way toward industrialization.

IMO, these things combined to produce a land where the clever could get ahead and have more children than the non-clever, where those who could figure out a new use or more efficient milling design could profit.

Oh, look, here’s something relevant from HBD Chick, quoting Daniel Hannan’s article in the Telegraph:

“‘By 1200 Western Europe has a GDP per capita higher than most parts of the world, but (with two exceptions) by 1500 this number stops increasing. In both data sets the two exceptions are Netherlands and Great Britain. These North Sea economies experienced sustained GDP per capita growth for six straight centuries. The North Sea begins to diverge from the rest of Europe long before the “West” begins its more famous split from “the rest”. [W]e can pin point the beginning of this “little divergence” with greater detail. In 1348 Holland’s GDP per capita was $876. England’s was $777. In less than 60 years time Holland’s jumps to $1,245 and England’s to 1090. The North Sea’s revolutionary divergence started at this time.’

The result, I suspect, was an increase in average IQs of about 10 to 15 points–perhaps 20 points in specific sub-groups, eg Ashkenazi Jews–with an overall widening of the spread toward the top end.

Why do economists fail at basic math?

In “Open Borders and the Hive Mind Hypothesis,” economist Nathan Smith writes:

Open borders, in the sense of the abolition of policies restricting migration, would cause billions of people to migrate, and result in almost a doubling of world GDP. Based on a model that stresses human capital as a determinant of the wealth and poverty of nations… two openborders scenarios are constructed. In the first, “pure market clearing” scenario, world GDP rises 91% as 82% of the world’s population migrates, mostly to the West … In the second scenario, with several adjustments made to favor greater realism at the expense of some arbitrariness, world GDP rises 85% as 58% of the world’s population migrates…”

Jesus effin’ Christ. According to Google, there are 7.3 billion people on the planet. About 1 billion of them live in the West/1st world nations. About 6.3 billion of them live in “developing countries.” I’d calculate average population density of the West, but places like Australia (90+% desert) and Russia (Siberia) have big chunks of very difficult to live on land that would render the calculation meaningless. However, it is pretty easy to grok that the population density of Europe and Japan, especially relative to its arable land, is already pretty darn high:

They actually hire people to shove passengers into the trains to make them fit.
Rush hour on the Tokyo Subway

 

Seriously, where would you even put more people?
Shibuya Station, Japan

 

There goes the Oxygen
Somewhere near NYC, I believe

 

Paris has one of the highest poulation densities in Europe.
Parisian apartment complex

So forgive me if I think the idea of cramming 5.17 billion people into the first world actually sounds horrific. Where would you put everyone? How would you feed them? Surely not with crops grown by people on newly freed-up land back in Africa–folks with a TFR of 7 or 8 aren’t going to stop having babies just because they suddenly got the resources to feed more of them. Africa’s population will stay the same.

Even the more modest scenario implies the immigration of 3.65 billion people, resulting in a quadrupling of the West’s current population.

I don’t care what your model shows. This is a recipe for destroying the planet.

Of course, there are factors other than GDP to consider. Like total arable land, crime rates, or having a pleasant community full of people you like and trust–but these are not factors that economists consider valid. We must sacrifice all to the mighty GDP.

 

Later in the article, he admits that all of his models are based on total assumptions about the way wealth is generated (having dealt with humans, I suspect that assumption is “magic,” but I could be wrong,) and that other models actually show a 25% reduction in global GDP under open borders. This is fine, of course, because someone else might benefit. I mean, not you. You’ll probably starve to death in a smog-ridden hellscape.

For that matter, if you really want to alleviate poverty, you can just give 25% of your income directly to the third world, and then no one has to go through the expense and trauma of moving. I seem to remember a post on Slate Star Codex arguing that it was more effective to just build houses for people in Africa than to ship people to Sweden and then build houses for them there, but now I can’t find it. Maybe it was a different blog? Either way, the point stands: there are probably better ways to raise up the bottom end of society than crashing the whole system.