A study of lights at night suggests dictators lie about economic growth
economist.com
economist.com
GDP estimates from nighttime light data are possible but often inaccurate. Before you even get into the larger issues, there are a lot of small things, such as cloud coverage, ground coverage changes, lunar illumination, &c... that have to be accounted for.
It's great when you're trying to track urban development. It's good when you need quick ground truth estimates (e.g., you're looking at an area impacted by war or lockdown and you want to get a rough guess of the actual impact), and it's ok when you are looking at a country with an economic model (manufacturing/export-led) where changes in nighttime light volumes can tell you something.
It's iffy if you're trying to compare a lot of different countries, with different economic models, across different time spans, and you don't have the time to accurately assess whether nighttime light data is a good proxy for GDP in each of the many regions/country <-> economic model combinations you're looking at.
With respect to this study, it more or less is. Go read Martinez original study from 2017 and lol at the methadology. It's rudimentary application of Henderson et. al. original work on predicting economic activity with nighttime light as proxy with all the caveates parent comment highlighted - not expert estimation. Martinez updated his study occasionally with newer data, for click bait articles like this (started with Washington Post in 2018), with no modification in methodology as far as I'm aware (have not tracked down latest revision to compare). As someone who follows PRC development closely, NBER released a paper using light data with more sophisticated analysis also from 2017 stating PRC growth being understated. NBER is one of the most influential economic think tanks. To compare credential wank as proxy for expertise, author of this paper Martinez, is assisant prof at Chicago Harris School of Public Policy. NBER paper was conducted by two current staff economists at the FED and a titled prof of economics prof at Columbia. But guess which study gets repeatedly posted in western MSM.
I used to live in Brazil for a while, and while there I met a girl who's last name was Mussolini. I was fascinated and asked where that name has come from, and apparently her grandfather had moved to Brazil from Italy sometime in the 40s.
I was very excited to be talking with what I imagined to be a relative of such an historical figure, but she didn't understand it at all: she had no idea who Mussolini was, what he did, or why it would be interesting at all.
Having grown up in Europe, and with some Italian ancestry(my grandad also left Italy in the 40s, but for Sweden instead of Brazil) it hasn't occurred to me that someone could be unaware of Benito Mussolini, much less someone who wears his last name! (God knows I'm reminded of the associations of my own Italian last name frequently enough!)
At the same time I can kinda understand why her parents wouldn't talk too much about it, if they were indeed related to Benito.
Always interesting to peer into the mind of someone with a background that is so different from my own, yet at the same time so very similar!
1. Ireland - has high GDP due to it being a tax haven, yet the light data is spot on.
2. Every developed country has correct light data, but none of the developing countries do. (doesn't matter how free)
(More seriously, this seems like an interesting approach for developing nations, but is less likely to give useful results for developed ones.)
But you'd expect that to make light-based growth estimates _worse_, really; most of the new lights will be coming on in the already-pretty-bright Greater Dublin Area, rather than the more even distribution you'd expect in a country less dominated by one city.
The lights -- nice source of data!
So, this claim is about "dictators" and "economic growth".
So, I think of a joke, although with maybe some truth:
Dictators are politicians. Economic growth is a political issue. Since politicians lie about political issues, as just a special case dictators lie about economic growth! Ha ha.
But the fraction of politicians I believe are lying is so large, I'm not laughing at my own joke.
I think people just can't handle the complexity of distributed decision making, so are consistently biased to believe that small, centralised & appointed authorities make better decisions than the hive mind. Similarly to how everyone knows how a kingdom works, but people get hazy really quickly on how the successes of the worlds many parliamentary or republican systems of government actually function.
Dictators cannot manage multiple constraints simultaneously. Democracy is just better at resource allocation. Insofar as somewhere like China remains ahead of somewhere like India, I think it depends on the ability of the CCP to simulate a typical democracy internally. Once groupthink takes hold, without a release valve to turn over the people, I don't see how a government recovers.
Organizations, be they states or businesses or any other institution, that have a greater ability to change their collective minds aren't guaranteed to always make better decisions at any given moment, but over time they're able to course correct in a way that less flexible approaches simply can't.
But what if we could create a super brain that can handle all the detail information collected at the lowest level and integrate it into one huge model of the state of the world? There would be no misaligned incentives inside of this brain, no communication bottleneck, no abstraction loss.
I'm sure that we won't "simply create" such a central instance and make it work in a single try. But I'm sure that it could work in some areas and produce very good results. Then it's up to our governments and society on how to use this power.
Humans are quite good at creating collective organisations that are delusional, even though some of those organisations have excellent information about the state of their environment, because the invented incentive structures for action favour simplistic short term "maximisation" of fetishised behaviours instead of optimisation for (even) the medium term healthy future. Resource allocation is still looking frighteningly suboptimal right now, and simply empowering that with a "smart" central AI bot following the same patterns probably won't improve much.
I'm skeptical about the human race getting past this. Humans want a lot of stuff, and are prepared to form huge organisations to get that stuff, without really thinking through whether they really need it, what the other impacts will be, or why they are even doing what they do.
What is the human race trying to be?
Why?
How does the pattern of incentives get aligned?
It seems like we only have the weakest responses to these questions right now.
My guess is that humans will be sidelined as AI is developing exponentially. There probably won't be a big war human vs machine instead we will probably see humans being turned into some kind of zoo animals as we already are if you look from far away. Then the AI will do its thing in space while we sit here happily staring into the stars.
What this graph shows is the reliability (or lack thereof) of the official statistics.
The data still shows a number of unfree countries showing significant GDP growth even if you look at the satellite based estimate. Many of them are still above many free countries. This is not surprising, because many of those unfree countries are early in their development curve and have had a lot of easy gains to make.
To support the hypothesis you present, you'd need to investigate how the growth rates of countries at a similar level of development, correcting for global trends, fare under different levels of authority.
That said, personally, my hypothesis is that sadly (because it's depressing in terms of how little impact changing government potentially has) regulatory and legal stability matters far more than specific government type. E.g. look up China's reported GDP growth before and after Deng got into power. China's growth after the revolution until Deng got into power was growth punctuated by massive crises that reset things whenever the rules changed under people. Once Deng got into power it stabilised even before his economic reforms, because while the system was still deeply authoritarian, people learn to play the game however rigged it is as long as the rules don't change all the time. Even deeply brutal dictatorships can see sustained growth - especially in developing countries growing from a small base with lots of easy wins - as long as they're consistent.
And that is exactly the primary danger of an authoritarian system for economic growth: It might well work fine for a while, and to stick to China they learned a lot from the stability Deng brought and have since been afraid to rock the boat, but with an autocratic system there's always a significant risk that the next leader will change the rules again.
Meanwhile, even really broken democratic governments rarely manages to more than slightly change the trajectory (there's a certain irony that I'm writing this from the UK after the last couple of weeks chaos, but even though I think our current UK government are idiots, I don't think they'll have much of a lasting effect) because they tend to tinker around the edges rather than fundamentally change the rules (e.g. consider the massive backlash the UK government faces over tinkering with tax rates)
That problem isn't entirely inescapable, though. There's a whole mathematical discipline on voting systems (social choice theory) - unfortunately the important results are mostly negative (google eg Arrow's impossibility theorem, Condorcet paradox,...), but the specific problem of the "dictatorship of the majority" has a solution in principle, namely quadratic voting. But yeah, we won't really ever get a perfect voting system.
so in your example, if the wolves have a 2/3 preference for sheep for dinner and 1/3 for apples, and the sheep has a 100% preference for apples, then with linear voting the group decision would be 5/3 vs 4/3 in favour of apples. with quadratic voting, the vote weights would be sqrt(1)+2sqrt(1/3) for apples and 2sqrt(2/3) for sheep, and apples would still win. so in this example, the sheep can push the group decision because its preference is stronger than the wolves', something it couldn't express by just ranking the options (if the wolves had a 100% for sheep, that would still win)
so as we just saw, there are different ways to implement cardinal preferences, and QV is one of them that has been shown to be optimal under some standard (but still debatable) utility assumptions.
that being said, if we were going to seriously consider implementing QV, I'd still have a lot of questions - I mentioned collusion, but also about manipulation resistance: what if the wolves anticipate this outcome and strategically misrepresent the relative strength of their preferences to make sure that their absolutely preferred option wins? they could still do that even without collusion. it's another common problem in voting mechanisms, I don't know how strong that problem is in QV (maybe the manipulation would be exponentially hard to compute, or very easy, Idk rn)
Majority rule does the same, no?
but I don't want to evangelize QV too much here, it has enough proponents already and I'm not fully convinced that's is resilient to problems like collusion
I don't think that situation is THAT common, given that usually the majority of people has the same problems, usually economic. Biggest exception would be immigration, since immigrants are generally in lower numbers, especially the ones that can actually vote.
So much the case that you don't even need a majority to get negative sum policies passed. The same dynamic happens with sufficiently determined minorities. Here's a few examples. Agricultural subsidies, carried interest loophole, local planning laws, lack of action on global warming.
The cases of majority rule leading to negative sum policies are probably more rare than the impact of determined minorities. Although I can think of Black voter disenfranchisement and immigration laws off the top of my head.
It's partly a money in politics issue, but it's also deeper than that. Farmers will actively vote out anyone who wants to take away their subsidies. Non-farmers don't care enough one way or the other, because the cost is dilute. You don't need direct money in politics for that mechanism to play out.
Example: When both Ukraine and Russia were in one federation called USSR (similar to USA, Yugoslavia or EU) then Crimea or some cities moving from Russia to Ukraine would have been regarded as an administrative change, requiring various adjustments to signs and flags. No one would even think of killing each other over which republic’s flag would fly over what territory, let alone escalating to a nuclear war that threatens to destroy human life on the planet. Think about how insane that is.
In a libertarian world, cities would simply vote for a free market of competing agencies providing police, road maintenance, etc. And the whole package of “services” from a state would be unbundled and not worth fighting over. The concept of “territorial integrity of a country” or “national armies” would not be something that would even matter. The people of Hong Kong or Catalonia or Kurdistan or Bangladesh would be pretty happy and not have to fight for their “independence”. Countries shouldn’t own people. People should self-organize to get their needs met in peaceful arrangements and that’s all.
All solutions that need everyone to "just" unfortunately have one thing in common: they fail.
It doesn't matter what could happen if everyone "just"—they won't. It doesn't matter that "but if they did"—they won't. It doesn't matter that "Ok, but if"—they won't.
"But if" is not a possibility, and operating like it is will only keep us from whatever progress toward that wonderful thing we could actually make, incomplete as it might be.
Only in certain ways.
Counter-examples: Americans waste almost 40% of all the food that is produced in America, and for all sorts of reasons. 108 billion pounds of food is wasted, which equates to 130 billion meals. $218B per year. 19% of all crop lands, and more water than Texas, California and Ohio combined. [1] Grown, then thrown out. Enough to feed all the world's hungry.
Free markets fail to price externalities all the time. Coal kills 25 people per TWh generated, and costs about $0.10/kWh. A human life is generally costed at $10M by actuaries for these purposes [2] so at 25 deaths per TWh, the human cost alone is $0.25/kWh. Coal power should cost $0.35/kWh, and yet, it's nowhere close. This leads to terrible resource allocation.
On the other hand, authoritarianism built China 24,000 miles of high-speed rail since the mid-2000s. That's good resource allocation. The US has 49.9mi total. Without the need to plan for a 2-4 year election cycle, the government can execute multi-decade initiatives effectively. Like HSR, and like OBOR. [3]
I'm of course not advocating for authoritarianism, however some introspection here is warranted, and the current situation isn't a 'pat ourselves on the back' moment. What we need isn't more freedom but just a little bit less, an approach where we staple the actual cost of the things we do onto them so that the market can then take over and do what it's good at.
A little respect for our rivals would go a long way IMO.
[1] https://www.nrdc.org/sites/default/files/wasted-2017-report....
[2] https://www.npr.org/2020/04/23/843310123/how-government-agen...
On the other hand, the second round of China's high speed rail investments are not expected to ever pay themselves off, and so the question as how "good" HSR is in China requires considering its positive economic and environmental externalities. There is a case to be made that given the distances and ridership involved, China would have been better off building airline capacity between cities connected by HSR (which seems to be the US solution).
The US certainly has a problem with decentralization making it harder to build large infrastructure, and the US path of infrastructure development has been corrupted by car companies, but I would argue the real vice of the US system is its failure to build maintainable infrastructure: roads are left to crumble quite simply because there are too many of them, serving too few people to make their maintenance affordable.
That would be terrible for the climate no? Also I think rail is very much undersold in most places. On one hand airtraffic is given an unfair advantage over other modes of transportation in that it's fuel is basically not taxed across the board by most countries. On the other hand for road traffic the cost of infrastructure is socialised too and unfairly so. Industrial truck transport does lots lots more damage to roads than cars or the like yet they rarely pay the price for that. (where a special vignette does exist it generally doesn't match the cost) Meanwhile the environmental cost of road and air traffic is appropriately applied.
- We wouldn’t understand the economics of externalities without freedom of thought and expression necessary to cultivate vibrant academic life. China is on a trajectory to become the #1 environmental polluter on a per capita basis. No, it’s not because America outsources industrial production to China. China also severely overfishes. Bad economic decisions and neglect of externalities are not exclusive to democracy.
- China’s capacity and political will to build infrastructure is impressive. (Though plenty of countries like Norway also do that.) The problem with the authoritarian style of unchecked decision making is that they built far, far too much HSR. Without any cost/benefit analysis, they’ve ended up with a huge maintenance burden and many lines that are rarely used money pits. https://youtu.be/ITvXlax4ZXk
American governance does suffer from a culture of adversarial legalism, and an excess of citizen voice. That includes NIMBYism, environmental review, multiple conflicting layers of government, and other features that give small groups the ability to mount challenges to or veto beneficial projects.
https://www.vox.com/22534714/rail-roads-infrastructure-costs...
Just a reminder that the average american still puts out about twice as much CO2 as the average EU citizen or Chinese and whilst China will or already did surpass the average European I'm not sure about them going up to the current average American output.
And no they won't take the 1# spot on a per capita basis. That spot will probably remain reserved for some among the petrostates for a good while still.
While it's a shame the US doesn't have a decent rail network, thousands of miles of high-speed rail in China are unsupported by ridership and is riddled with safety problems. Similar to their situation with unoccupied apartments: too expensive for most people, and riddled with safety problems (e.g. concrete made from sea sand). China is a great example of how authoritarian countries can produce stats that look good on paper (km of high-speed rail, number of houses), but when you look behind the curtain it's often crap. It's a house of cards to keep that 8% GDP growth on paper. But on the ground there are thousands of high-rise apartments with corroding rebar.
China is building 150 new nuclear power plants in the next 15 years (more than the entire rest of the world has built in the last 35 years) [1] and is adding solar capacity faster than anyone on earth, going from 0.1GW in 2007 to 307GW in 2021. [2]
> While it's a shame the US doesn't have a decent rail network, thousands of miles of high-speed rail in China are unsupported by ridership and is riddled with safety problems.
For now. Safety problems will be resolved and people will move to live alongside the rail lines, which is a chicken-egg problem the US refuses to solve. It starts to look a whole lot better 10 or 20 years down the line.
[edit] @elosius: They've more than tripled nuclear generation in China since 2014, going from 100TWh/yr to 350TWh/yr - from 1% of power to 5% of power. Also, they've made huge strides in terms of air quality. Stop looking backwards, and start looking forwards. Air quality improvements will follow. [3]
[1] https://www.bloomberg.com/news/features/2021-11-02/china-cli...
[2] https://en.wikipedia.org/wiki/Solar_power_in_China
[3] https://epic.uchicago.edu/news/from-airpocalypse-to-olympic-...
Put another way, free markets produce 67% more than required. When it comes to food, most populations that eat prefer a market that favors the buyer.
We could reduce the waste food production and reduce 'carbon' output from USA.
Presumably next someone will point at another country and say 'they're worse'. That may be true, but it doesn't make the free market efficient, not make externalised environment damage go away.
20% of farmland in the entire United States is doused in fertilizers, pesticides, herbicides, etc. Enough water for 3 states (which are running out, btw). Fossil fuels to for tractors, for fertilizers, for transportation, and logistics. All so you can throw it out.
So of course there are externalities: labor, land, water, environment, fossil fuels, fertilizers, pesticides, run-off, topsoil depletion and plenty more. All of which is not nearly as big a deal if it's done to achieve a goal rather than to appease the voters in Iowa. These are classic externalities that aren't priced in when you subsidize corn to below the cost of production.
The report I linked in the original post includes a breakdown of exactly where food is wasted on pages 14 to 30. [2]
There's a pie chart on page 10 which includes a breakdown by kind of food too, as a percentage of waste by weight.
- Dairy: 19.1%
- Vegetables: 19%
- Fruit: 13.9%
- Grain: 13.9%
- Added sugars and sweeteners: 12.6%
- Meat, fish and poultry: 11.5%
- Fats and oils: 7.5%
- Eggs: 2.1%
- Tree nuts and peanuts: 0.4%
[1] https://www.usda.gov/peoples-garden/food-access-food-waste/f...
[2] https://www.nrdc.org/sites/default/files/wasted-2017-report....
It also requires 3 pounds of grain and 4.5 gallons of water per gallon of milk and dairy is almost 20% of the waste.
The scale of this waste is mind-boggling.
If in the process you used practically finite fertilisers in the form of phosphorus from Morocco and nitrogen from fossil fuels, etc then you may wish to rethink that.
of all the things that are limited in this world, this seems like it ranks among the least concerning. Sure, it takes electricity, but that itself can be much more efficiently collected going into the future
But you are right that making nitrogen fertilizer doesn't require fossil fuels. It would be a major market for "green hydrogen", which would be a great dispatchable demand to help smooth variability in renewable power output and in other demand.
And coal usage in China has risen while it has fallen in the US.
Citation needed.
Long-term successful areas did not have authoritarian rule. Take Europe for example. There were all the many states, and even within them lots of struggle for power. Then there was the church (even after splits based on the same faith) as an additional layer parallel to the worldly powers. As far as I an tell it handily beat authoritarian competition.
Sure, there existed plenty of local authoritarian rulers, but how did those places do long-term and not just during there often short rule?
Maybe somebody knowledgeable could talk about China? They sure had plenty of strive and competition, but then they had dynasties and centralized rule. As far as I know, which is very little, European powers were quite successful in direct competition (when the two met) and also indirectly (overall results, not of direct encounters).
This is something for reddit's (heavily moderated) /r/AskHistorians, and I highly doubt the TL;DR of a historian's reply would support the assertion or would boil down to the above "gestures broadly at world history".
Genghis Khan or Alexander and other authoritarian rulers sure were great at conquering, but after that it was already over. And they accomplished it mostly by killing an incredible number of people, so instead of actually competing they just removed the competition altogether. Which only ever works temporarily.
> Human thinking naturally aligns towards authoritarianism
In addition, when we look at ape society and tribal humans, the statement is not true at all. Even the ape society is one of alliances, and brutal rulers are eliminated, for example "Scientists show that chimps will murder and eat their dictators" https://www.inverse.com/article/27141-chimp-murder-kill-cann...
Human monarchies often (usually?) had religious leaders with independent power rivaling that of the monarchs as far as I know (e.g. ancient Egypt)? For example: https://www.worldhistory.org/article/1026/clergy-priests--pr...
> Throughout Egypt's history, the priesthood would serve a vital role in maintaining religious belief and tradition while, at the same time, consistently challenge the authority of the king by amassing wealth and power which at times rivaled that of the crown.
Given that we don't live in a LitRPG or Xinaxia fantasy universe where individuals can gain world destroying god-like powers, and that humans naturally are all about equally powerful and not orders of magnitude different in the abilities of their bodies and brains, authority always is a question of the network and not of just that particular single individual appearing at "the top". Keeping that network in sync and focused seems to be very hard judging by the history of actual usually short-lived (by history standards, it may well last the lifetime of a person) authoritarian rule. So maybe the attempt may be natural, actual success not so much.
Have you not wondered why the Divine Right of Kings was so heavily promoted? Or why - until Henry VIII - the Pope could veto any aristocratic marriage he disapproved of?
The Church had an almost total lock on political power, moral authority of all kinds, class relationships, and intellectual enquiry. It was at the top of the feudal hierarchy - the biggest landowner, the biggest collector of feudal tribute (both voluntary and forced), the sole repository of all knowledge, and the biggest organiser of military campaigns (the Crusades.)
Which is why it maintained power across Europe for a millennium.
That is not what I wrote. I would appreciate responses to what I actually wrote.
Authoritarianism - there is one absolute power. I pointed out that this was far from true in Europe, church being just one of the things I mentioned.
> Kings and local war lords were its executives, not its competitors.
Of course they were competitors! They were both! That is the point! Of course they did not have only eternal war between them, that is the magic. They cooperated and were competitors. The Walk to Canossa only being the most famous example, it usually didn't end that spectacularly. Even within the church there was struggle, there even were two competing popes once (Western Schism).
Given that history is littered with monarchs, emperors, pharaohs, popes, with democracies being more of an exception than the rule until industrial times I'd say that's well established. Going back to pre-ancient times all tribes typically had one person in charge.
Even today we really can't help ourselves electing presidents, mayors, deans, CEOs, chancellors, etc. even in places that all have well established democratic decision making. There always has to be one person at the top or we apparently lose our collective shit.
This isn't true. All social animals have hierarchies, but leaders in pre-agricultural human societies aren't "in charge" in the way that monarchs or emperors are
Yes, and I responded to that, because of that.
> Even today we really can't help ourselves electing presidents, mayors, deans, CEOs, chancellors, etc.
Uhm... if this is what you cite as evidence for authoritarianism then I really don't know what to say. Choosing leaders is not authoritarianism.
All society in existence is authoritarian to some extent, otherwise you just have chaos since nobody enforces the rule of law. Some are just far more than others.
No it is not. This "argument" is getting a bit stupid.
Authoritarianism is defined as a form of government of a state, so calling any leadership that word is just plain wrong. A company with a CEO is not "authoritarian".
> Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.
https://winstonchurchill.org/resources/quotes/the-worst-form...
It ends by saying that, if authoritarian China has done better than democratic India, which is hard to argue with, it must be... because China is democratic!
The model must guide the data, you see! This should be roundly mocked, not upvoted.
- China and India have had quite different problems to solve over the last 80 years or so.
- China got ‘lucky’ recently with a few good leaders (in the sense that the country developed massively under them) in a row. But it seems that Xi isn’t such a good leader in that sense (he is in the sense of consolidating power and becoming leader for life). But the narrative in the west may not have caught up yet with the idea that China doesn’t have some magical super-competent government. It’s maybe harder to tell if they’ve been lying about population and gdp and suchlike.
- I think it’s more accurate to say that democracies allow bad leaders to be removed rather than that they allow good leaders to come to power.
And if you have any real insight at all into how the CCP internals function, do link a source. Because as far as I can tell nobody knows. It is very opaque. I have only been able to find low-quality guesses and what may be well intentioned but is functionally anti-China propaganda.
I wouldn't want to bet the farm on it, but for all I know they might be extremely democratic internally - similarly to how the UK is a model of democracy despite having an overt monarchy and system of nobility.
It’s not democracy that’s better at resource allocation, it’s the free market.
Authoritarian regimes can seldom allow the free market to operate, because if they do it accumulates too much wealth / economic power outside the authoritarian’s control.
But there are examples of non-democracies with free market economies, e.g. Hong Kong under British rule.
For example, it should be possible for a new entrant to compete in a market; but among other issues can fail with network effects (things tend to be cheaper in bulk), vendor lock-in (either literal or inertia), or credibility / quality concerns.
Competition can also be regulated out of a market with barriers to entry or a lack of (space for) alternatives. Regulations related to what type of housing can be built in an area, areas to build housing, transit options, etc.
An open, transparent, regulation and management of a market should strive to provide the best results for the people, and very clear to follow guidance about the needs of the people that can be fulfilled by offering more or better services. Resources those services utilize should also have clear and easy to comply with regulations. As an example; a location rated for use as a given type of building shouldn't need a complicated environmental impact assessment, rather the proposed use and construction methods should be compared to an already allowed impact with a pass / remediation / fail criteria.
There is no "free market". Most (probably all) markets, particularly at national and international level are heavily regulated. Subsidies, levees, trade agreements, tax breaks... all of those are counter-freedom in the market, and also rely on good governance to perform well.
Even with authoritarian leaders. Singapore being a good example.
It's just that authoritarian leaders rarely tolerate free markets.
Germany is basically an industrial powerhouse but they are optimizing things, not innovating.
Without the US the standard of living would be much lower for these countries and the rest of the world. No smartphones for a start.
But I think the distinction is still important. For example I think there’s a good case for limiting democratically elected politicians influence over the economy, by enshrining private property rights and the independence of the central bank in the constitution (as e.g. Sweden has). How would you come to that conclusion if you think it’s democracy itself that allocates resources efficiently?
Democracy acts as a circuit-breaker for entrenched inefficient resource allocation. For instance, if there was no usable legislative process, but only an executive and a precedent-based judicial system, markets would generally be free, but this would allow the intergenerational accumulation of capital/wealth until some people have almost total power, and some people are essentially serfs. But in democracy, the mere potential for the mass of people to vote themselves wealth limits the incentives to aggressively accumulate capital/wealth. For instance, if the rich want their property rights to be respected, they need to make sure that the mass of the country has enough property to also want protection. And if that potential doesn't work, it can actually be used and new taxes and rules can be introduced that distribute wealth more efficiently.
As you can see, some might not agree with your conclusion that "there's a good case for limiting democratically elected politicians['] influence over the economy, by enshrining private property rights and the independence of the central bank in the constitution". By asking the question you did, you first presumed that democracy was inefficient and on that basis drew a conclusion, but then asked how a person who thought democracy improves efficiency would argue for the conclusion whose premises they disagree with.
But in any case, I wonder if your example is not so strong - after all, the independent CB was only enabled by democractically-elected representatives voting for it.
Seems to me that market participants at many different levels needed a fair bit of help with their reaction to events recently. For example...
- vaccine designers were allocated additional resources to accelarate testing their designs - in many countries, employers were allocated funds to retain employees to do nothing long enough to weather a period of reduced production - currently in both US and Europe, the "free-market" price of energy is held down by a variety of centrally controlled measures
It's not like these measures are taken by "lefty" governments either. Taking the example of the UK because that's where I live, the last two cabinets have been full of the authors of Britainnia Unchained, a document that argues Britain needs to adopt a "far-reaching form of free market economics".
The questions I have lately (as an Economics graduate myself) are....
Would things would have turned out better if only those in power had held their nerve and let the market do it's thing? (e.g. allow vaccine development to continue unassisted by government grants, massive unemployment as people voluntarily changed behavior in response to the pandemic, energy bills that rise from taking up 1/12th to 1/3rd of a family's disposable income).
Or are that the events of the last few years are so unprecedented that they merited a market intervention whereas for "normal" events, the market will respond better than centrally planned decisions.
Will the next few years be full of unprecedented events? Or will we be back to "normal" if/when the war in Ukraine is over.
Is the free-market allocating enough resources to solving the problem of climate change?
It could be argued that where it has been used, it has been the most effective.
Yet most people that present themselves as "free marketeers" have ignored the economics consensus and the science consensus.
They're basically just paid by rich and powerful people to say or do anything that benefits rich and powerful people. This has always been true since the days of royalty. And it's true today when fossil fuels and corporate monopolies make you rich and powerful.
Their alledged support for free markets is just as much a lie as everything else they say.
Sometimes they'll accidentally end up on the correct side of issues but its easy to see the pattern isn't "doing what economists say is most efficient".
Look at how they desecrate the good name of Adam Smith for example.
Authoritarian systems can look clean and efficient because they are systematically hiding all their problems all the way up the chain of command. Often the leadership doesn’t even see the true state of things. Recent example: Putin’s lack of awareness of the true dismal state of Russia’s armed forces.
https://www.npr.org/sections/parallels/2014/04/02/297839429/...
But people don’t trust them to have free time with UBI or free consumer choice with vouchers
I absolutely agree with this. There is a natural process that occurs, where people are able to route around or resolve problems with no authority to "help". It is our natural state. In fact I see authority as a parasitical attempt to control and steer individuals at mass for the personal benefit of the parasites. Still, government has become an entrenched habit it seems, with many people still believing it is worth the ~40% of their income they pay for its wars, military, governance apparatus, etc.
Nb - we do not have democracy - we have representative democracy - we do not have a say on any of the thousands of decisions that government makes in our name, the person we elect chooses on our behalf, and can even do the exact opposite to what they promised with zero repurcussions! Hurrah, what a system!
> Dictators cannot manage multiple constraints simultaneously. Democracy is just better at resource allocation. Insofar as somewhere like China remains ahead of somewhere like India, I think it depends on the ability of the CCP to simulate a typical democracy internally.
I think you're dreaming that the CCP works on democracy! But, it is the chosen, future system. We will have (perhaps already have) citizen scores. We will be run (overtly, in future) by an unaccountable, technocratic elite.
from my experience, a government does most of its good work in its first term. then it slowly slides until its doing active harm. from a uk perspective the tories recent (not a) budget pouring the currency down the drain. or gordon brown announcing the end of boom and bust, are 2 nice examples. this kind of hubris only comes after a decade or so in power. then its time to vote the other lot in.
Post-war countries tend to be best served by a truly benevolent, uncorruptable, honest broker who can carry out the necessary plans, which should be fairly obvious if there is decent planning.
China was actually doing well when Xi came along, and there could be a very strong argument that as long as Xi stayed mostly at arms length that they would be doing just fine.
Xi is stepping in hard and it will likely hurt.
Singapore is a kind of authoritarian state and they're amazing in at least many ways.
That said, Putin was mostly hands off on the economy and Russia is not healthy economically, were it not for Gas and Oil they wouldn't be in great shape.
And still, corporations are mostly authoritarian, with top down decision making and big hierarchical structures. And worse, the majority of people are ok with this even if they champion democracy outside the workplace.
Most of us don't have a lot of influence in current democracies except by electing some representatives, but we do in the workplace, and there is where it's most restricted.
Public corporations are imperfect representative democracies, if you keep in mind that the citizens are the shareholders, not the workers. You can reconcile both if the employees have a controlling stake in the corporation, either because they collectively have most shares, or because their shares have more voting weight. This is more or less the European social-liberal model. This is being torn down following neo-liberal ideology because there seem to be more money to be made on short-term stock trading than developing a company over the long term, and that the interests of employees and shareholders are badly misaligned. Also, these employee-owned corporations are vulnerable to profit-oriented, corner-cutting companies willing to jeopardise long-term stability to race to the bottom. So this needs a specific regulation framework to work at scale.
Not really. This sort of model was an aim of many social-democratic (not social-liberal: those are the FDP in Germany, the Liberals/LibDems in the UK, etc.) parties before the neoliberal turn in the late 70s, but it was never actually achieved. Germany comes the closest: workers get 50%-1 board seats at large employers, but that's not the same as ownership.
There is a pretty big difference to an authoritarian state: Companies have to obey local laws that other people make, and they have to treat their employees good enough that they don't quit.
Once companies start making their own laws (by bribing officials) or when they treat employees like shit (because they don't have other options), then they are just as problematic as other autocracies.
Good, healthy corporations work together with the society, and while decisions are made top down, they are not made in a vacuum -- no corporation can decide that their employees need to work 7 days a week, when the local laws prevent that.
This would be true if one person quitting meant anything other than a job opening and search for a fill. Having worked under terrible conditions, I can tell you the person they hire will have no idea why the previous person left. It might not take long for the new person to figure it out. But market realities tend to make it take months to years for that new person to then turn around head to a new position. Meanwhile this is all enough for bad management to claim success.
Companies only obey local laws in so far as the threat of prosecution is real. This threat is undermined way too easily.
I don't think it is as clear cut as you say. I think for example, that there is some lobbyism that is justified, in that they communicate with politicians in a way that can enable, say, innovation. But there's also lobbyism which might as well be called corruption. It doesn't seem obvious where exactly to draw the line here, so it is hard to conclude if and how problematic a company is.
In my opinion it's pretty clear: Lobbyism is okay as long as it is public and doesn't involve bribes. It's bad when it happens behind closed doors and involves either direct or indirect payments (eg. awarding contracts to friends of lawmakers).
It’s also not restricted to corporations. Look at the Russian military. It is a textbook case study of how years of corruption and nepotism can lead to a culture of abject incompetence and equipment decay. They can’t even provide bandages for their conscripts!
Worker co-ops tend to do quite well once they're funded. They're not exactly prone to blowing up into unicorns (although there is e.g Mondragon) but their survival rate tends to be quite high. Suma wholefoods is an example of the resiliency of co-ops, they've basically totally discarded market based compensation rates in favour of a more ideologically driven, flatter model yet have been going strong for decades.
The problem is usually securing that funding in the first place. They seem to actually be more likely to pay off loans but less likely to get them. This is partly because banks generally want an individual to take responsibility for any loans and are uncomfortable with making a larger group collectively responsible. I suspect there's also a degree of prejudice against them because of the association with socialism even though they still operate in a market.
Equity is generally a difficult one as well as generally the members' control of a workers' co-op is derived from their ownership stakes. There are hybrid co-ops where some of the shares of the company are sold to external investors, but obviously this dilutes the model.
Worker co-ops have some success but require atypical financing to get off the ground which has limited the success of the sector.
Democracy is probably a better macro-level organizational system, but on smaller scales having a chain of command and an executive function is a godsend. Anyone who’s ever been on a consensus driven committee can tell you how well democracy works on smaller projects.
The whole liberty thing _needs_ to be enforced vigorously to stop someone perverting the system into a dictatorship. In corporate life employees have some liberties - often some degree of choice in their role, trying to get a job at a different company or switch career, etc. While in a role you may be relatively constrained but constraints are common with other commitments in life like marriage, raising children, leading a volunteer organisation in your spare time, etc.
... working on one particular problem.
We want corporations to be dictatorial. We're simulating dictatorships when we need single-minded focus. It just doesn't work for government because you get people who forget to grow food.
Think most telling thing to me is that democracies very clear extract value from non-democracies. Yes, economic dependencies are likely net positive, but it doesn’t change the fact that to my knowledge there are no “pure” democratic countries. While I am 100% sure the non-democracies would continue to exist without the democracies, unclear to me if the democracies would as is be able to exist without the non-democracies.
How are you defining democratic to rule out all countries we class as democratic?
Further this statement undermines the statement about democracies being unable to exist without non democracies. If there are no democracies the problem is hypothetical at best.
And I'm not even sure I agree with that idea. Democracies tend to be richer yes. That doesn't mean they're exploiting the non democracies.
SOURCE:
https://www.connexionfrance.com/article/French-news/Why-some...
I used to love the Economist but they appear to have gone downhill more recently and those graphs seem designed to make a specific point rather than present data objectively.
edit: after fighting my way past the paywall, this was poorer than I suspected:
> Assuming that the most democratic countries reported growth figures accurately, he then used the satellite data to estimate if other countries under- or over-stated theirs.
So they just graphed the assumption as if it was data, rather than an assumption.
Though now I'm wondering why Australia isn't considered democratic enough to have their GDP taken as correct.
What the data explicitly shows is that night light intensity increased faster than GDP increased in countries classed as "free" than countries classed as "non-free". (the model itself makes no assumptions that the most democratic countries report growth figures accurately. An alternative interpretation equally compatible with the data is that democratic countries deliberately underreport their GDP growth, but that's a lot sillier than assuming autocracies lie, or exaggerate more)
The obvious perturbing factor is that countries classed as "non-free" also tend to start off poorer and more inegalitarian (the link between the two is generally assumed causal, but both ways causal) so the oilfields raking in cash doesn't necessarily translate to more electricity for the average citizen, and the countries classed as non-free are on average growing faster (even after taking into account the estimated inflation of the GDP figure) and since it's not estimated on a per capita basis the GDP figure grows through population growth. Economists can try to control for this, but controls aren't perfect. The "free" countries are also a relatively homogenous group of countries which started relatively wealthy and experienced modest GDP growth with relatively little disruption or demographic change.
Satellite light data also isn't a particularly great proxy for citizen welfare. It's an indicator as it's broadly proportional to increased access to electricity (and its regional distribution) and light intensity growth correlates well with GDP growth. But those "free" countries tended to have affordable household lighting everywhere anyway; the extra light being pumped into mall car parks and advertising hoardings and bigger traffic jams are pretty loosely linked to the welfare improvements we've experienced since 1991.
And the answer is, yeah kind of, but with various caveats.
And looking at those that ask "can we measure human welfare with GDP?"
And the answer is, yeah kind of, but with various caveats.
This paper builds on both of those and somewhat sweeps the caveats under the rug to make a point about autocracies.
It feels like a PR pitch for "free markets", which I broadly agree with, but still don't want to see badly drawn graphs of.
I think it was the naming of only a few countries that really set of my "how to lie with graphs" alarm.
Many studies make an assumption and then explore the implications of that assumption. They are not claiming that democratic countries have accurate official GDP figures. They are simply saying: if democratic countries' GDP figures are accurate then the correlation factor between GDP and light output is X. If the correlation factor between GDP and light output is X for all countries (another assumption) then the discrepancy between expected GDP and official GDP is Y. That's all they are saying, they are not presenting made up data as facts.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3882062
It's likely your questions are answered therein.
EDIT: Skimming it briefly it seems like section 4, equation 4 is relevant to your criticism. It seems to be allowing for some level of independence in the internal relationship between a country's gdp growth and light, and trying to capture the parameter of interest in part fromm the within-country variation over time.
Electricity usage may not be all encompassing indicator; Ex. increase in cultivated area, or more production from same land parcel (by using fertilizers, pesticides, modern techniques) will not show up as corresponding increase in electricity usage at night.
Several parallels with the various reconstructions of earth's atmosphere via proxies like tree rings and ice cores and its later recalibration with satellite measures.
This has been my personal gripe for a long time now! Imagine that I needed to borrow £1000 from my mum, she lends me that money, and then I return that much back to her shortly after; therefore generating £2000 in GDP. It excludes the reason why I needed to borrow that money, ie it could be that I am in dire economic situation, and could not pay for essentials, therefore this GDP growth is due to poverty rather than growth!
Additionally, in the US, there is a thing called "imputed GDP", which is essentially GDP that is not realised due to an owned property being lived in and not being rented out. This generally accounts for around 15% of US's GDP https://www.bea.gov/help/faq/488 I guess companies such as Black Rock seem to be doing good for the GDP by buying people's properties and then renting it back to them.
tl;dr I am also not a fan of purely looking at GDP as an accurate metric for the economy.
Australia is clearly shown in the "Free Countries" graph.
There have to be a gazillion other caveats - something stinks about this study. This content sings to many of their readers who cant moss an opportunity to tell others that china’s books are cooked.
If I am a dictator sitting on an oil well, exporting more and more oil and keeping 100% of profits to myself, the GDP will still grow in line with the amount and price of oil exported.
There is little correlation between what the population is doing and what the countries economic and social potential is. Isn't that in-part the definition of a dictator?
https://www.wolframalpha.com/input/?i=colorado+gross+state+p...
https://www.wolframalpha.com/input?i=delaware+gross+state+pr...
Phone calls could be a better proxy? I saw a paper using them in Scientific Reports.
You can also use nighttime light data to learn about levels and patterns of urban growth. Compare VIIRS imagery for India in 2013 with 2022.
The issue is whether there's a strong correlation between GDP and nighttime light data in all regions. There's a weak correlation (a lot has been published on this) and it's a good tool if you want to identify sharp, short term changes one way or the other. It's arguable, though, whether it's an appropriate proxy for a lot of different regions/countries with different economic models.
The overview for the actual data product is at: https://ladsweb.modaps.eosdis.nasa.gov/missions-and-measurem...
There are a couple of different VNP46 products, but A2 is iirc usually the one used in academic research.
So, as a simple thinking, pure/applied math, computer, business guy, I think of our government as a democracy where (1) the Constitution's 1st Amendment free press provides "informed citizens" and (2) the rest of our Constitution says we citizens, INFORMED citizens, get to vote. And the free press is credible because there is a lot of competition in the press, and any mistakes will severely hurt the circulation and revenue.
Simple view.
Yup, too simple: It seems to me that somehow not much of the free press much wants to be credible -- at least I have a tough time finding sources I regard as credible for the information for an "informed electorate". That pair of words were from Jefferson, Franklin? So, instead, best I can guess, nearly all publishers believe that it is strongly in their financial interests to dump credibility, actual accurate information, etc. in the trash, pick a political faction, some one side in a big fight, and publish stuff that faction likes to read.
But, still, we have the 1st Amendment! And now with the Internet, publishers don't have to spend on ink, paper, or $10 million printing plants.
Hate to suck up, but, e.g., we have Hacker News -- there I'm generally pleased and impressed!
Okay, for the HN audience: With the 7+% per year inflation, why don't we have millions of US citizens demonstrating in the streets?
Multiple choice:
(1) They are not much bothered by the price of eggs or even gasoline in their daily activities.
(2) They like what the inflation is doing for their equity in their house, farm, business.
(3) So far the inflation seems to make it easier for them to get a job.
(4) They believe that after prices increase by 10% or so they will stabilize.
(5) They are quite busy with their own lives and see nothing much to do about the inflation, e.g., believe that demonstrations in the streets will make noise but do nothing about inflation, until the next election.
(6) See all the talk, hysteria, noise, etc. about inflation in the news as not worth listing to or paying much attention to.
(7) They accept the advice that in general they should concentrate on the problems they can solve and mostly forget about, or just somehow circumvent, the rest.
(8) Other.
Me, I don't know, would have to pick (8).
Besides, there really isn't that much "hysteria" in the media about it, ctrl-f on cnn, fox news, bbc, etc frontpages shows only 1 result for inflation and I literally can't see where it is amongst the headlines. Life goes on
Modern (semi)fascism is built on lying. What we are seeing is co-option of liberal democracies by a minority of wealthy oligarchs that have to lie to voters in those democracies.
By contrast, parties that embrace rule-of-law democracy lie much less than rightwing/fascist parties. Rule-of-law democracy is based on truthful public speech and an independent press -- to reduce lying.
Most dictatorships are left wing (socialist or communist). I think the truth is that the continuum between democracy and dictatorship is a circle, and if you go far enough left or right, you eventually end up at the opposite poll.
A slightly less superficial article might note how such lies "naturally" arise in autocratic systems - where local officials are both under pressure to report good economic results, and have enough power to lie. That is how tens of millions of Chinese starved to death in the Three Years of Great Famine ~1960. ( https://en.wikipedia.org/wiki/Great_Chinese_Famine ) Local officials reported excellent harvests of food crops, and Chairman Mao's central government generally tried to do the right things - but sustaining human life requires that the food "on the books" actually exists.
I suspect that this kind of lie is more than just a 'free' vs 'authoritarian' issue, but rather some kind of artifact of human nature. It seems a little bit too easy to attribute this to the 'other' when there's plenty of examples at home where it's happening right out in the open. John McCain wanted this sorted in 2008 - 14 years ago.
After all one would imagine that sustaining human life requires that the water "on the books" actually exists, too, no?
Oh yes, agree. Whether it's the value of real estate in Pompeii (evidently somebody failed to properly perform the rituals which ensured the favor of Vulcan), or the size of annual catches in the Atlantic northwest cod fishery (over-fishing lead to catastrophic collapse in the early 1990's), or the permanence of land in large river delta systems, or... Humans love to get together, agree on some ideas about the real world which they all like, and pressure any nay-sayers to shut up and stop hurting anyone's feelings/social standing/anticipated profits/etc.
From the article: "The explanation is probably simple: opportunity and motive. Part of what makes dictatorships dictatorships is that questioning the official line is dangerous. At the same time, autocratic regimes have a strong incentive to report healthy growth: its absence may be taken as a sign of incompetence or weakness, which dictators can ill afford.
Autocrats’ subordinates face similar incentives. In a related study Jeremy Wallace, a researcher, found misreporting by Chinese provinces, too. As he notes, a leaked American diplomatic cable from 2007 revealed the view of Li Keqiang, the prime minister, then a provincial party secretary. He had said, with a smile, that gdp figures were “for reference only”: he relied instead on proxies, such as electricity use."
I, perhaps naively, thought that trade numbers would betray any meaningful difference in GDP versus the reported figure. I am in the top 1% of news consumption. This is real news if the numbers are truly this different.
My main question on the graph relates to China. How much could pollution influence the makeup of this data?
I originally read about this in the Potemkin Village Gazette :)
That was my takeaway at least, and it's somehow more interesting in my opinion.
I'm not sure you can assume that/would like more detail on their assumptions, even though I have also heard that the trains running on time thing is a myth/momentum from previous administration.
I'm not convinced that we can meaningfully quantify the impact of each president on the country when the legislative branches are often not in sync enough to get anything done and everything is being sabotaged by the opposing team.
Although I will admit it was uncanny how much the stock market went up right after Donald Duck got elected.
Hes a president with conservative backing. Thats always good for business.
I said nothong about trickle down economics.
Only that an elected president with conservative backing will always be percieved as good for business hence the up tick in business confidence.