Home > Economics - General > The national comparisons game

The national comparisons game

March 14th, 2005

Tim Blair points to this exercise asserting that the EU is twenty years behind the USA. As Tim subtly points out, it’s absurd to suggest that the EU today (home of Nokia and Airbus, and birthplace of Linux and the World Wide Web) is comparable to the US when Atari boxes were the state of the art. Unfortunately, Tim’s irony is lost on his commenters, who assume the report deserves to be taken seriously.

To ram the point home to his slower readers, Tim might do well to point to the fact that, in terms of output per hour, several European countries are ahead of the US. Of course, when hours worked are taken into account, the US regains the lead, but on that criterion, Britain during the Industrial Revolution was ahead of any modern country.

The real point is that productivity differences between modern economies are so small that, by selecting the right criterion, any developed country can be made to look better, or worse, than any other. The report is explicitly described by its promoters as a “wake-up call” designed to scare Europeans into adopting the policies favored by its promoters. Having seen this kind of thing going on since the 80s, when Australians were terrified with the prospect of becoming the “poor white trash of Asia”, I find such reports more soporific than alarming.

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  1. Rob Schaap
    March 14th, 2005 at 17:28 | #1

    They’re alarming because they’re still convincing to enough people for it to matter, Quiggers. Else we’d have been hitting the streets Froggie-style before now. Your signature distinction between genuine productivity gains and absolute expoitation ‘gains’ can’t be made often enough, for mine.

  2. March 14th, 2005 at 19:42 | #2

    Tony Judt is the master of US/EU comparison – see here for example, complete with stats actually from this century.

    As JQ suggests, there is certainly an imbalance, but it’s mostly in favour of the EU.

  3. Michael Burgess
    March 14th, 2005 at 22:14 | #3

    John, in relation to your poor white trash comment. It strikes me that both supporters of economic liberalisation such as Helen Hughes and industry policy activists such as Lester Thurow and Robert Reich were essentially playing the same unprofessional game. That is, arguing that nations would not be able to compete with the then rapidly growing economies if we did not introduce radical free market reforms or (Thurow, Reich, Robert Wade, etc) if we did not pursue a picking winners strategy etc. Both sides essentially diverted attention away from the real issues. I think Krugman was right to criticise industry policy activists for this but let some economists of the hook somewhat.

  4. March 14th, 2005 at 22:33 | #4

    My readers are “slow” and “lost”? I wouldn’t say so; in fact, most are so intelligent and discerning that they don’t bother reading John’s site. They are also capable of telling the difference between the EU and individual countries within the EU.

    Of course, being stupid, I visit every day. This is my burden. Incidentally, what was John saying about Australia’s economic prospects during the deregulate-and-privatise 1980s? Was he cheering on the market-driven Keating agenda, or warning of trouble ahead?

  5. March 14th, 2005 at 23:27 | #5

    Yeah john,
    what was your opinion on things when keating was pulling the levers and giving us beautiful numbers?

  6. March 15th, 2005 at 01:53 | #6

    According to the report, “Data clearly suggest that including the 10 new member countries in the comparison would further deteriorate Europe’s position compared to the US for all four major indicators.”

    Well, duh.

    If you add below-par countries to the sample, then the average decreases — but it makes absolutely no difference to the reality of the situation.

    I’d also suggest that Tim wasn’t really being particularly ironic (it’s “humour,” apparently), and that he thinks the report should be taken seriously.

  7. John Quiggin
    March 15th, 2005 at 05:45 | #7

    Michael, you’re right, and I pointed this out at the time. For anyone interested, the article was:

    Quiggin, J. (1987), ‘White trash of Asia?’, Current Affairs Bulletin 64(2), 18–25.

    Tim, I was warning of trouble ahead. You might be able to dig up

    Quiggin, J. (1986), ‘Deregulation and privatisation’, Lobby (Winter), 22–27.

    or read my 1990s book

    Quiggin, J. (1996), Great Expectations: Microeconomic Reform and Australia, Allen and Unwin, St. Leonards, NSW.

  8. March 15th, 2005 at 08:21 | #8

    See When academics attack for the layman’s view.

  9. dave
    March 15th, 2005 at 08:36 | #9

    Subtle indeed … nicely skewered, JQ

  10. anne
    March 15th, 2005 at 08:41 | #10

    You mean to say it really is possible to live well in Europe, let alone Australia :) ?

  11. Mork
    March 15th, 2005 at 09:28 | #11

    John, is your first paragraph meant “subtly point out” that Tim is not actually being at all ironic about the report, and in fact lacks the wit or knowledge to question is patently false premises, or the honesty to challenge his own indentikit prejudices?

    Did I just spoil the game?

  12. March 15th, 2005 at 09:43 | #12

    John writes, dismissively: “Having seen this kind of thing going on since the 80s, when Australians were terrified with the prospect of becoming the ‘poor white trash of Asia’, I find such reports more soporific than alarming.”

    Yet in the 80s he was one of those “warning of trouble ahead”. No wonder he finds these reports soporific; they remind him of his own.

    (Oh, and speaking of slow readers who require that points be rammed home, I offer you Mork and Robert.)

  13. March 15th, 2005 at 09:56 | #13

    Careful with Prof Q’s past work tim, you’re out of your depth.

  14. Katz
    March 15th, 2005 at 10:30 | #14

    Seems that young Tim (I assume he’s young and not merely immature) has developed a disco ball index for social development.

    There are endless ways in which to measure American superiority Tim. If the disco ball fails to fly, perhaps you could point to the enormous lead America has in coffee dripolator technology.

  15. Mork
    March 15th, 2005 at 10:42 | #15

    (Oh, and speaking of slow readers who require that points be rammed home, I offer you Mork and Robert.)

    Dude, at least we get to moronically echo a writer who knows what he’s talking about.

    Why don’t you learn some economics, some time, Timmy? Then at least when you preach free markets, you’ll be able to explain how they work. And, you know, maybe stop being a cartoon character.

  16. March 15th, 2005 at 10:48 | #16

    What would a comments thread be without Chris’s sad attempts at a put-down? Enjoyable, probably.

  17. March 15th, 2005 at 11:12 | #17

    Mork,

    You need someone to explain to you how free markets work? And cs thought I was out of my depth …

  18. R J Stove
    March 15th, 2005 at 11:28 | #18

    Tim Blair writes: “My readers are ‘slow’ and ‘lost’? I wouldn’t say so; in fact, most are … intelligent and discerning.”

    Inspired by the prospect of discovering what these “intelligent and discerning” readers might be like, I recently trawled at random through the threads they left on his site. A choice sampling of comments:

    “I’m now going to auto-erotically asphyxiate myself, because I just can’t stand the fact that this life is so gorgeous. … Still, at least I’ll die with a hard-on.”

    “We will surely feel like shit after that.”

    “You pretentious prick.”

    “He [Phillip Adams] does have much bigger boobs than Emma Peel.”

    “Barry Fucking Humphries!?!?? … Humpries [sic] is about as incisive as a butternut pumpkin up the arse.”

    Yep, this stuff is a really major contribution to economic analysis, isn’t it.

    Supposing these scribes to be among Mr Blair’s “intelligent and discerning readers”, heaven preserve us from the stupid and undiscriminating ones. Still, maybe Mr Blair can’t be bothered to read his own blog. If true, this would speak volumes for his literary taste; but it seems a bit self-defeating.

  19. March 15th, 2005 at 11:33 | #19

    tim — 14/3/2005 @ 10:33 pm chides Pr Q for backtracking on his previous gloom-doom mongering:

    in the 80s he was one of those “warning of trouble ahead�.

    .
    I believe that Pr Q was underrating the AUS doomsters “Cassandras” at the time. (I take it that Pr Q’s use of the “WTOA” scare headline was ironic.) He was also underrating the JAP Inc boosters “Pollyannas”. The common denomintator is that Pr Q loves to puncture hysteria, whether doom or boom.
    Much of the old debate between free-market v fair-statist ideological positions looks pretty tired and worn out. The major differences between the USE & USA relate to the way that individual culture conditions institutional structure, not vice-versa (although we are all getting more and more into the market game).
    National economic development depends on socio-biological, as well as politic-economic, factors. Europeans and Americans are broadly Caucasian/Christian, and there is mobility in ideas, goods & people within and between them. So their long run developments paths will tend to converge. Europeans will prefer more social security, economic equity and individual leisure than Americans. These goods cost money, but this is a legitimate tradeoff.
    The interesting issue is comparing the economic performance of regions with a different socio-biological inheritance eg the Asian/Folk Sage tradition. JAP & the Asian Tigers do not really fit the standard liberal ideologial institutional model. Nor does the PRC. Yet they account for about 20% of global GDP. It may be that these countries strong intellectual potential makes institutional constructions & ideological inflections of secondary importance.
    Quiggin, J. (1987), ‘White trash of Asia?’, Current Affairs Bulletin 64(2), 18-25.

  20. Mork
    March 15th, 2005 at 11:45 | #20

    You need someone to explain to you how free markets work? And cs thought I was out of my depth …

    You are. If you know the first thing about economics, you have not yet let your readers in on the secret.

    It is one thing to parrot the conclusions of others who have the training to examine the data and make reasoned arguments. It is another thing entirely to have the knowledge and wherewithal to understand the basis of those conclusions and challenge the reasoning.

    If you did have that, you’d be capable of seeing the flaws in the report you linked, instead of assuming that because it conforms to your prejudices, it must be true.

  21. snuh
    March 15th, 2005 at 12:01 | #21

    You need someone to explain to you how free markets work? And cs thought I was out of my depth

    no, mork said you need someone to explain how free markets work. and yes, you are out of your depth.

    boy-o, this is enjoyable.

  22. Katz
    March 15th, 2005 at 12:07 | #22

    Young Tim, my put-down was simply an emulation of your tried-and-true favourite: reductio ad absurdum. It was intended as the sincerest form of flatery.

  23. March 15th, 2005 at 12:26 | #23

    You know, if we created a web site with a picture of an orange funny-looking rock that stated that “This Orange Funny-Looking Rock proves that the sclerotic Euro-economy is underperforming the dynamic American economy”, Tim Blair would link and write “The OFLR says that Europe sucks and America rulez!” Blair’s Brains Trust would chime in with comments like “their middle-class barely lives as well as our poor” and “Michale Moore is really really fat.” Glenn Reynolds would link with “Heh” and so on.

  24. March 15th, 2005 at 13:06 | #24

    The “poor white trash” idea as applied to Australia goes back before the ’80s. In his 1979 book “Unemployment”, Keith Windschuttle actually indexes a reference to “poor white trash”.

  25. March 15th, 2005 at 13:15 | #25

    I sense a that the long-foretold war b/w Quiggin and Blair commenters is about to burst into flames. Quick, call the UN!

  26. Mork
    March 15th, 2005 at 13:25 | #26

    I sense a that the long-foretold war b/w Quiggin and Blair commenters is about to burst into flames.

    Unlikely, Jack. None of us are allowed to comment on Tim’s site, even were we inclined to visit. And I don’t imagine that many of Tim’s readers are interested in reading anything that doesn’t reflect their prejudices, which makes them unlikely visitors to Professor Quiggin’s.

  27. March 15th, 2005 at 13:49 | #27

    tim, that was no putdown … merely a friendly warning, alerting you to the fact that you know not where you go. It was Emerson who said that “People seem not to see that their opinion of the world is also a confession of character.”*

    *NB That was a ‘putdown’.

  28. March 15th, 2005 at 14:03 | #28

    I’ll take advice on “knowing where to go” from someone other than you, Chris. Weren’t you the guy who went all the way to Mississippi so he could be photographed at the crossroads where Robert Johnson didn’t sell his soul?

  29. March 15th, 2005 at 14:15 | #29

    Um, well, um, well … actually, I also went to the US for a couple of other reasons.

  30. snuh
    March 15th, 2005 at 14:28 | #30

    yeah, cause tim sez the only cool reason to go to the U.S. is to hang out with james lileks.

  31. Mork
    March 15th, 2005 at 14:48 | #31

    People seem not to see that their opinion of the world is also a confession of character

    I’m not sure I 100% agree with Emerson there. A fellow’s opinion of the world may be more or less guided by a diligent and honest study of the issues on which he opines, and the more that it is, the less the results will be dictated by his personal values and prejudices.

    For example, a compassionate and idealistic person may well, through their study of economics, come to the view that, empirically, for all their limitations, free markets are the best way to reduce poverty and promote general well-being. The fact that they then advocate policies that seem to directly disadvantage the poor should not be taken as an indication that they don’t care about others, because they have a reasoned belief that what they advocate actually benefits the poor in the long run.

    But what a person believes when he has no particular insight into a subject clearly is a window into their character.

    Hence, it’s usually safe to assume that the person who knows no economics at all, but nevertheless professes to be a rabid free-marketeer who condemns any form of assistance to the poor is an arsehole.

  32. March 15th, 2005 at 16:22 | #32

    I think it has wider applicaions Mork, basically kicking in whenever any sort of reasonable discretion is involved … but there are wider applications still, in some other senses.

  33. March 15th, 2005 at 20:30 | #33

    The original study was researched by Pavle Sicherl, Professor of Economics at the Lubljana University and Founder of SICENTER (Socio-economic Indicators Center, http://www.sicenter.si), on behalf of EUROCHAMBRES. Professor Sicherl specializes in time series comparisons as seen in the study.

    If professor Quiggin had taken the time to read the original study he would know it is not meant to “scare” and, in fact, makes sensible recommendations for consideration at the EU Spring Summit:

    1. FOCUS ON THE CORE PROBLEM – THE ECONOMY Reviving European economies must be the Summit’s overarching priority. Real sustainable development, preserving our social models and environmental development, requires the Lisbon Strategy to rebalance towards the economy.
    2. SUPPORT THE PRIORITIES OF GROWTH AND JOBS
    o Do not pass new legislation that puts our businesses at a competitive disadvantage.
    o Create an entrepreneurial environment – flexible and rewarding for risk-takers.
    o Implement, enforce and finalise the internal market.
    o Ring-fence money for R&D, education, competitiveness in the financial perspectives.
    o Increase the flexibility of the Stability Pact – but do not damage its foundations.
    o Make real progress towards concluding the WTO Doha Round.
    3. PRIME MINISTERS SHOULD TAKE RESPONSIBILITY Introduce national action plans, take personal responsibility for delivering real economic growth and strengthen the Competitiveness Council.
    4. COMMUNICATE THE URGENT NEED FOR CHANGE Finance a communication strategy to clarify the economic and demographic challenges facing us, and to instil a real sense of urgency and willingness for change among citizens, administrations and businesses.

    For all practical purposes Tim Blair, despite his obviously humourous take on Europe being stuck in 1978, gets it right while Professor Quiggin gets it wrong. Nothing new here, he was wrong about the US invasion, and wrong about Bush being voted out. Who’s the alarmist?

  34. James Farrell
    March 15th, 2005 at 21:07 | #34

    I encourage people to follow JFB’s advice and look at the press statement. It’s a hoot. The emptines of the four platitudes above is exceeded only by the meaninglessness of the four ‘results’ announced.

  35. March 15th, 2005 at 21:10 | #35

    Tim bliar is a curse on the blogosphere.
    Coments on his site are inane because bliar censors alternaive views.
    Him and I had an email exchange about this and his response was-if you want to publish your views,get your own blog!
    The dickhead just doesn’t get it.

  36. John Quiggin
    March 15th, 2005 at 21:24 | #36

    “See When academics attack for the layman’s view.”

    JFB, to respond here to your post , I suggest you consider the identity
    Output = Hours*Productivity

    (where Productivity = Output/Hour).

    This may clarify some of the points that puzzle you.

  37. Albatross
    March 15th, 2005 at 21:44 | #37

    . None of us are allowed to comment on Tim’s site, even were we inclined to visit.

    It’s not just Tim who gongs you. Andrea Harris who is the actual registrant of Tim’s domain (how lame is that?) and apparently runs his hosting out of Florida and who describes herself elsewhere as a webdominatrix (how lame is that?) gives you the chop if she espys anything likely to upset his karma.

  38. wpc
    March 15th, 2005 at 21:48 | #38

    I read both Tim Blair’s site and this one.

    I know it suits many people’s own prejudices to think that all conservative rednecks are close minded and would never read or consider a left winger’s opinions, but the reality is different.

    Tim Blair’s site is a fun read with a conservative viewpoint. I don’t think it is meant to have correct “economic analysis”.

    This site has interesting alternative viewpoints. Of course there are some good moments of humour here too. (Still chuckle about the comparison of blogging to crack cocaine)

  39. March 15th, 2005 at 22:49 | #39

    Who lifted the rock?

  40. Mork
    March 15th, 2005 at 23:21 | #40

    I know it suits many people’s own prejudices to think that all conservative rednecks are close minded and would never read or consider a left winger’s opinions, but the reality is different.

    Who’s making generalisations about right-wingers. Hell, by Australian standards, I am one myself. The criticism here has been directed at a specific individual, who has been discussed as a representative of no-one but himself.

  41. March 15th, 2005 at 23:48 | #41

    So, you stand by your claim that output per hour was greater in Industrial Revolution era Britain than it is in any modern country?

    Where did he say that? What he actually says is that when you multiply output per hour by the number of hours worked, old Britain was way ahead of any modern country.

    He was talking about total output, as opposed to the output per hour.

    You probably should go back and read it again.

  42. March 16th, 2005 at 00:14 | #42

    The phrase “when hours worked are taken into account” makes it clear that he has moved on to total output.

  43. March 16th, 2005 at 00:34 | #43

    OK, Tim Blair version 2 has open comments.

  44. March 16th, 2005 at 00:40 | #44








    Robert,

    Perhaps it was clear to someone with more than a passing interest in economics but it was not clear to me. If it had been clear to me I would not have asked.

    Regardless, JQ had an opportunity to clarify and instead chose to fob me. All he had to do was make a short post explaining the situation.

    Okay, lets assume JQ did mean total output. It would be nice to see him back that claim up as well. Do some economics 101, so to speak.

    There’s also the little matter of the article being intended to scare. Is JQ committed to that proposition?

  45. John Quiggin
    March 16th, 2005 at 09:44 | #45

    Actually, I was referring to the criterion “hours worked” by itself (an ambiguous use of ‘that’ I admit, but I thought the meaning should be clear). Britain in the Industrial Revolution did marvellously on this score, with nearly everyone over 10 employed in one way or another, and average hours of 60+ per week.

    Of course, it’s silly to make long working hours a test of progress, but this is implicit in the study, and explicit in the footnote to Tim Blair’s post, regarding French protests against longer hours.

  46. Ian Gould
    March 16th, 2005 at 18:30 | #46

    I find it kind of endearing how Tim Blair’s partisans (with notable exceptions like wpc) like to insist that they’re moderate reasonable polite people and that anyone who says different is a filthy degenerate scumbag who’ll be hung from the nearest lamp-post when the glorious revolution against the crypto-zionist international banking conspiracy finally comes.

  47. The Real JeffS
    March 17th, 2005 at 00:29 | #47

    Your use of hours worked per week is a misleading “productivity indicator”. So is the French approach to productivity.

    Producitivity is the output of any production process, per unit of input. To increase productivity means to produce more with less.

    To quote Mintzer, “In factories and corporations, productivity is a measure of the ability to create goods and services from a given amount of labor, capital, materials, land, resources, knowledge, time, or any combination of those. Since capital goods tend to decline in value and wear out, most economists distinguish between gross capital productivity (total yield) and net capital productivity, which discounts depreciation.”

    When the French workers complain about longer hours, one hopes that they will be become more productive in the current hours that they do work. Since the situation requires the the Government to increase work hours, I assume that productivity is low. this means that a government fiat to change the situation is a stupid idea. That’s probably a bureaucratic response to a real problem.

    But the point of the Blair Bloggers (of which I am one) is that the productivity of the French workers have to be regulated at all. That’s the economic fallacy here. On that basis, the EU is rapidly becoming a failure, especially when you read the press release posted by JF Beck. I hope the EU listens to their own people.

    And John, if it’s silly to make long working hours a test of progress, your response to JF Beck of “…you consider the identity Output = Hours*Productivity…” is also silly.

  48. Ian Gould
    March 17th, 2005 at 00:45 | #48

    JeffS

    I think most economists would agree that the French attempt to reduce the working week was a mistake and fails the empirical test: it was supposed to reduce unemployment, my understanding (which isn’t based on any detailed analysis) is that it failed to do so.

    However, it is a relatively minor matter and only affects one of the 23 (?) EU member states.

    Right wing ideologues seem to vastly exaggerate its signficance. Based, as I said, on my limited anlaysis of the policy, it hasn’t led to a significant decline in unemployment but neither has it led to a significant rise.

    Nor am I convinced that it a significant contributor to the slow growth of the French economy in recent years compared with factors such as the tax rises and spending cuts required by the Maastrict Treaty, the high level of interest rates set by the ECB, high oil prices and the increased competitiveness of US exports due to the low US dollar.

    If the French cut interest rates by around 2 percentage points; doubled their budget deficit and aggressively depreciated their currency I suspect their short-term growth rate would be a lot closer to that of the US regardless of whether their standard working week was 35 hours or 40.

  49. Robert Blair
    March 17th, 2005 at 10:27 | #49

    The Web is a European achievement ? Get real Quiggin. Absolute tosh. Berners-Lee might have had the inspiration of using an existing mark-up language (HTML) on an existing network but thats all he did. All the armies of Americans who did the rest are ignored in this pathetic attempt paint the EU a brighter pink.

    Linux ? So Linus Torvalds took the existing Unix operating system and ported it to PC’s. Big deal. What credit do the actual inventors of Linux, and the armies of Americans who contributed to Linux ?

    Both these things happened because of the US lead in new technologies, open technologies and open markets. Neither of those things would ever exist without the US.

  50. March 17th, 2005 at 16:12 | #50

    JeffS, productivity is not to produce more with less (though it includes that as one case). It also includes producing the same with less or less with even less.

    That is why Dunlap style cuts were good for productivity without being good in a larger sense. They made sense for individual firms by spreading the wider losses around, but not as a matter of public policy. People who approved them either made the same mistake or were counting their chickens before they hatched, expecting people to move rapidly into new and improved openings that would just appear.

  51. March 18th, 2005 at 03:32 | #51

    Robert: by “an existing mark-up language” I assume you mean SGML, not HTML, which Berners-Lee invented. As the “existing network” was in Europe, I believe that it was written in Europe by Europeans (the military protocols which formed the backbone of the net in the US weren’t public property).
    “What credit do the actual inventors of Linux, and the armies of Americans who contributed to Linux ?” I think you mean the inventors of Unix here, but it’s hard to tell.
    Nice to know that digital computing is an American invention, BTW. On this side of the pond, we always thought it was Alan Turing.

  52. junius ponds
    March 19th, 2005 at 18:05 | #52

    Uh, Robert Blair, Linux isn’t a port; Linux is a kernel that was written from scratch. What we know as the “Linux” operating system is the Linux kernel plus the GNU OS tools. Of course, the FSF’s Richard M. Stallman is American, but something tells me you’re not likely to credit someone pejoratively nicknamed “Richard M. Stalin.”

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