Economic nonsense about France

Yet again. Here’s what the BBC has to say in its updated-for-the-upcoming-elections online background article about France:

But France’s economy has grown more slowly than any other developed country in the world. In 2006, its 2% growth was the worst in Europe.

Well, sorry to beat a late parrot, but one year does not a trend make: if we look at, say, the 5-years period between 2002 and 2006, the average annual rate of growth of France was a meagre 1.6%*, but that is equal to the euro area average and higher than what the Netherlands (1,4%) and Germany (0,9%) and Italy (0,7%) and Portugal (0,6%) managed over the same period. I’ll spare you the 10-years period (1997-2006) which is even more favorable to France.

But even if we grant the Beeb’s dubious premise that 2006 growth is the ultimate yardstick to measure the strength of an economy (and in that case I have an old “US has grown more slowly than nearly every other developed country in the world” headline from 2001 to sell you), their claim isn’t even true. Or, if it is, we can safely conclude that Italy (1,9% growth in 2006 according to Eurostat) and Portugal (1,3%) are neither European nor developed countries.
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Easter Egg Vlogging: statistics and swords

Well, sort of. But don’t be scared, gentle readers, I’m not torturing you with a video of myself watching Edward Hugh watching Alex Harrowell watching me watching Edward, thus entirely disregarding the possible value of such a video for media theorists and social psychologists as well as the fact that all the cool kids are apparently engaging in such technically mediated low level chain-voyeurism these days

Last December, I saw the Swedish demographer Hans Rosling’s presentation about his project gapminder at the LeWeb3 conference in Paris. Professor Rosling and his team have developed the “Gapminder Trendalyzer”, recently purchased by Google (and now available on http://tools.google.com/gapminder/), a truly stunning tool to flexibly visualize and break down statistical time series, currently particularly relating to UN world development data.

Rosling’s presentation, in which he demonstrated beyond doubt that top Swedish students statistically know far less about the developing world than chimpanzees (who are on par with Nobel laureates), was one of the most interesting parts of the conference, and, as Loic LeMeur mentioned then, eye opening. Professor Rosling’s statistically derived world view is very different from the gloomy preconceptions most people are often mistaking for reality when talking about the state of the world’s development and demographic situation, particularly with respect to Africa, as Bruno Guissani remarks on Lunch Over IP

My experience in Africa, he says, is that the seemingly impossible is possible. Even bad governments have gone in the last 50 years from pre-medieval situation to sometimes decent infrastructure and conditions. … “You can believe statistics when you can relate them to your grandmother”, he says. By which he means that he has mapped his family history comparing the situation of Sweden in the different years in which his family members lived to that of different nations of the world today. His great-great mother born in the early 1800 lived in a country similar to today’s Sierra Leone; his g-g-mother in one that looked like Mozambique; his g-mother’s living conditions were close to that of Ghana today; his mother lived in the equivalent of Egypt. “And I am a Mexican”, he says, while his kids were born when Sweden was similar to today’s Chile and, in the case of the youngest one, like Singapore.

Luckily, for your Easter Vlogging pleasure, the TED blog has a video of Professor Rosling’s speech at the TED conference 2006, which is basically the one I saw in Paris. Unfortunately, there seems to be no video of his appearance at the TED conference 2007, where he demonstrated that demography and sword swallowing are two rather compatible activities. But there is a picture

Italy’s Supply Constraint

The OECD estimates the current potential capacity growth rate of the Italian economy at 1.25% a year. Actually I suspect even this very low number is over-optimistic. Growth since 2002 has been as follows: 2003 – 0.1%: 2004 – 0.9%: 2005 – 0.1%. To be sure forecast growth for this year is somewhat higher, at 1.4%, and optimists are expecting this to be more or less repeated next year. But I suspect this outcome is unlikely simply because the global economy now seems to be slowing (and in particular the ever important US economy),so the strongly advantageous situation of 2006 is unlikely to be repeated, while next year the Italian government has promised to introduce an important package of spending reductions which are bound to negatively affect growth, at least in the short term..

But why is potential growth capacity in Italy so low?
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The Booming Czech Republic

The Czech Republic is booming apparently. Both per-capita GDP and fertility are definitely on an upswing, although surprisingly perhaps, for once I am not going to try and suggest that these are connected:

The Czech republic has joined Slovenia among new member states with higher levels of wealth per capita than old member Portugal, according to European Commission statistics.

This raises interesting questions which I just touch on in this AFEM post here. (Incidentally, you can find a one-page set of economic statistics for the Czech Republic from the OECD here).

What is perhaps most interesting about the Prague Post article is the way they explicitly link the increase in preganancy to a recent reform in maternity provision (due to come into effect in April), and to the fact that the ‘postponement phenomenon‘ often leads to a spike in births as women who have postponed reach the new ‘childbearing age’.

“The Labor and Social Affairs Ministry recently launched its own reforms aimed at encouraging couples to have children. The reforms provide generous benefit packages and require companies to hold the jobs of employees on leave for up to four years, and, as of April, women will begin receiving a state subsidy of 17,500 Kč ($725) for each newborn child — more than double the current amount.”
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China Trade With EU

I’m not very happy with the ‘US Trade Figures‘ post I put up last Friday. I think it’s a glorious mess. The key to the problem is that I tried to deal with two – interrelated but disinct – topics at once: the euro and China trade. So today lets ignore the euro (which has once more resumed the downwards drift, even as I write) and take a bit of a closer look at where we are – in trade terms – with China. (Btw: the planet has finally returned to its orbit, and Brad Setser has an analysis of the US trade data here).

The big item in this weekend’s news is, of course, the agreement reached with Beijing on textiles. The EU textile industry will now have three years to adapt, but since textile manufacturers don’t appear to have taken too much advantage of the ten previous years, it is hard to know whether this will serve any useful purpose. Doubly so, since it is not yet clear how the calculations will be made, and I have the distinct impression that much of the recent surge in imports will now, in effect, be consolidated.

Be that as it may, what about the broader issue?
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The Last Foreign Correspondent

This is really a case of two stories in search of a common theme: a theme, that is, which goes beyond the rather random unifying factor of the work of Shanghai based ‘foreign correspondent’ Fons Tuinstra. In fact both points emerged from browsing his blog.

In the first place we have the problem with the uses and abuses of statistics – an issue which surfaced once more this week with the outrageous use of the carefully crafted 7% Japanese GDP growth number (those looking for a rather more jaundiced – not to say realistic – view on this, could do worse than consult Bloomberg’s ever intelligent William Pesek).

But Fons target this week is not the investor-seeking financial press, but rather his own compatriots, the Dutch politicians, and how they have turned the creative use of statistics into an art form, for, as he says:”Dealing with figures is an art: the Dutch call themselves the Chinese of Europe, for a good reason.”
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Book Review: “European Integration 1950-2003: Superstate or New Market Economy?”

Once upon a time, there was a large, intellectually hegemonic, somewhat totalising ideology rooted in a heterodox school of economics. Its advocates proposed to make massive changes to the structure of society and claimed that only such a revolutionary realignment could alleviate the contradictions and failures of the existing order and save the world from stagnation and misery. They claimed that their programme would produce immediate results, and that the only reason it wasn’t immediately implemented was because entrenched interests were manipulating the public against them.

Ultimately, advocates of these principles did gain power in many places and were able to implement elements of their programme. Some came to power through revolutions of various kinds that granted them the near-dictatorial powers they needed to make the changes they believed necessary. Others were able to convince electorates and even elites that theirs was the way of the future. They turned public dissatisfaction to their advantage, especially during economic downturns when people were willing to turn to new solutions and elites feared that the masses would turn against them.

And, they had some arguable successes, but no unambiguous ones. In some places, particularly those where effectively unlimited power had shifted to them, they often maintained highly inequitable regimes which grew harder and harder to justify, faced ever growing public disaffection, and turned to more oppressive and manipulative means to sustain control. This undermined their movement, but despite the best efforts of their enemies was not quite able to kill it off.

In states where more democratic methods had been used, the need to compromise with established interests and to sustain public consent forced them to accept measures often contrary to their initial programme. Their ideological identity tended to shift over time as winning elections grew more important than ideological purity and as the drawbacks of real power became apparent. Actually being held responsible for results forced many members of this tradition to accept their enemies’ interests as at least partially legitimate, and compelled them to less radical legislative programmes.

In some of those nations, these radical parties became increasingly manipulative and difficult to distinguish from their former enemies. But, in a few places, the necessary dilution of their programme brought about an ideological synthesis that appeared successful, and this success in turn showed that the radical programmes they had once advocated were perhaps unnecessary. In the end, ideology had no real hold on them, and the models and methods that seemed to work became the political and economic programme that they were identified with. Their former allies who operated more dictatorial regimes were easily repudiated.

But others were unable to accept that option. They included dissidents who had been burned by the growing authoritarianism of their own failed revolutions, or who were simply unable to accept that their early ideological purity had become superfluous. They were isolated and powerless, only able to function in the states where their former allies had become moderates, leaving them without meaningful public support. They fumed at the world’s unwillingness to go the way they wanted, and increasingly recast the history of the world in terms of their own ideological predispositions. The past became, in their minds, an unending conflict between an ideologically pure vanguard and scheming established interests, a story of their courageous champions betrayed by back-sliding traitors. Ultimately, the world moved on and these radicals virtually disappeared outside of intellectually protected milieux like privately-funded think tanks and universities.

Of course, by the now the astute reader will have recognised that I am talking about the history of neoliberalism.
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