His name doesn’t have the ring of ‘Nelson Mandela’, but Thomas Friedman is right to say that the struggle over the fate of this Iranian “Islamic Protestant” is the most important trial going on in the world today.

Virginia Postrel stresses the public good nature of knowledge in an NYT piece headed When Knowledge Was Spread Around, So Was Prosperity. She doesn’t draw any implications regarding the desirable extent of ‘intellectual property’, but I assume she’s written on this topic. Can any readers point me to a good link on this.

Following the dispute with Zinsmeister, I thought I’d go back to a piece in the Economist (subscription only) I bookmarked a while ago. After pointing out a range of issues with productivity measures, the article says

Julian Callow at CSFB calculates that in the five years to 2001 productivity, measured by NDP per hour, rose by 1.8% a year in America and by 1.4% in the euro area-a much narrower gap [than on the most commonly-cited measures]

Whichever figures one uses, though, labour-productivity growth has risen over the past decade in America, but fallen in Europe (see chart). One reason is that American firms invested more heavily in IT equipment than European firms in the 1990s, boosting the capital stock per worker. This is why many economists prefer to focus on multifactor productivity, the increase in the efficiency with which firms use both capital and labour. But that is even harder to compare sensibly across countries.
On the flip-side

One explanation for why productivity growth in Europe has slowed is that reforms to make labour markets more flexible have deliberately made GDP growth more job-intensive. More flexible workplace arrangements, such as part-time jobs and fixed-term contracts, have allowed firms to get around job-protection laws and so encouraged more hiring; cuts in social-security contributions for the low-paid have priced some of the jobless back into the labour market. The flip-side is lower average productivity growth, as more unskilled and inexperienced workers enter the workforce.

Labour-market reforms in the euro area have been more successful than is often appreciated. Participation rates have risen, and unemployment has fallen. As a share of the population of working age, employment has risen from 59% in 1996 to 63% last year. Over the past five years, employment has increased at an annual rate of 1.4%, even faster than America’s 0.8% rate of expansion and a huge improvement over the previous five years, when jobs declined by 0.1% a year.

For completeness, it’s worth amplifying the Economist’s point that strong growth in employment and hours worked is often associated with weak growth in output per hour. The converse was observed in the early 90s, when Europe had lousy (in fact, negative) employment growth, but outperformed the US in terms of growth in output per hour worked (2.1 per cent vs 1.6 per cent by my reading of the Economist’s graph).

For readers who may not be familiar with it, The Economist is an English weekly, founded in the 19th century, which takes a broadly free-market line and is critical of many aspects of the EU.

Don Arthur has announced that he has ceased publication of his blog A Hail of Dead Cats until now one of the brightest stars in Australian blogdom. Looking at the length and erudition of his posts, I can imagine they must be taking a lot of time away from his PhD thesis. He will be sorely missed.

Karl Zinsmeister has written back to me as follows:

Eric Raymond kindly forwarded me your critique of my essay “Old and In The Way” (http://taemag.com/taedec02a.pdf).

You are too clever by half. The figures you multiply in your response to my essay cannot be so crudely treated. For one thing, you have considered only persons working, and ignored hours worked per person. Nor can overall labor productivity be treated so simply. Overall productivity figures capture a mix of factors: output per labor input (representing about a third of America’s present productivity advantage over the EU), as well as higher labor inputs and other factors.

Incidentally, I used a European source for these particular figures, precisely to insulate myself from sniping of the sort you have attempted in your blog. The data you refer to were first presented by the Dutch Secretary of State for Social Affairs and Employment, Hans Hoogervorst, in a Feb 1, 2002 speech at the Hague. His paper is reproduced in “Europe’s Welfare Burden,” published in 2002 by the Institute for the Study of Civil Society in London (link).

I would appreciate your posting this as a response on your blog.

I can only respond that Zinsmeister does not appear to have read the post carefully or to have thought too much about the response. Hours worked per person are a crucial part of the calculation and are, of course, included. And whether multiplying his figures is a ‘crude’ procedure or not, it’s the appropriate way to deal with a mathematical identity.

Output per person in population = Proportion of employed people in population*Hours worked per employed person*Output per hour worked.

As with Glenn Reynolds and the debate over Sweden a while back, Zinsmeister suggests that quoting a European critic of Europe’s performance ‘insulates’ him from any suggestion of error. I don’t suppose that either Reynolds or Zinsmeister would be impressed if I attacked the performance of the US and then said I must be right because I relied on, say, Noam Chomsky, or even Al Gore. Unfortunately, I can’t check the source as the link is to an a precis of a book with no relevant info. But what kind of procedure is it to rely on obscure secondary sources for data that is readily available from agencies like the OECD and BLS?

One attention-grabbing quote in Zinsmeister is

The unmistakable current in the U.S. over the last generation has been to reduce centralism and the size of government: When Ronald Reagan swept onto the scene in the early 1980s, U.S. federal spending was 24 percent of Gross Domestic Product. Today it is 19 percent. That is only half or two thirds the level in most E.U. states, where levels have been rising, not falling.

This is a nonsense comparison, since Zinsmeister is comparing Federal spending in the US with total spending in Europe. As CalPundit observes, government spending has been a fairly constant proportion of GDP in the US over the past thirty years – the same is true of most European countries. Of course the proportion in EU countries is higher, but that has been true for a long time, during which European countries have generally grown faster than the US

Interestingly, Calpundit prepared his graph to argue against the claim that “US federal spending is growing out of control”. How many of the people who accepted Zinsmeister’s dubious statistics without question in the context of a piece of US triumphalism would equally unthinkingly accept statistics showing uncontrolled spending growth in the context of domestic advocacy of a small government agenda? Not of course, that this kind of thing is peculiar to any given political viewpoint – there is ample supply of implausible and mutually inconsistent factoids routinely quoted by leftists. But I’ve noted before that purveyors of US triumphalism are increasingly losing contact with reality.

Update Responding to Calpundit, Mindles* Dreck (these American bloggers and their self-deprecating humour!) makes a number of variants on the point that the impact of government on the economy is not simply the ratio of public expenditure to GDP. Many of the apparent differences between the US and Europe reflect a US preference for quasi-private, but government-backed or government-guaranteed institutions to perform functions that would be undertaken directly by government elsewhere. Statistics should always be treated with care, but of course if you don’t get the statistics right in the first place, all the care in the world won’t help you.

Jack Strocchi sent me a link to this piece by Karl Zinsmeister on America and the EU a week or so ago. I read as far as this para:

America’s poorest sub-groups, like African Americans, now have higher average income levels than the typical European.

What’s behind this? For one thing, Americans work harder: 72 percent of the U.S. population is at work, compared to only 58 percent in the E.U. American workers also put in more hours. And U.S. workers are more productive–an E.U. worker currently produces 73 cents worth of output in the same period of time a U.S. worker creates a dollar’s worth.

and concluded that the piece wasn’t worthy of serious attention. As I pointed out, multiplying these figures out (including the hours difference) implies that income per capita in the EU is less than half that in the US which is nonsense.

Jack did the sums and got Y = a(0.73) X b(0.80) X c(0.80)

Y = EU/US pc income ratio
a = EU/US labour productivity ratio (EU .73/US 1.0)
b = EU/US labour participation rate ratio (EU 0.58/US 0.72)
c = EU/US labour hours ratio (EU 1600pa/US 2000pa)

So Y = 0.4672
The correct figure, as reported by the US Bureau of Labor Statistics is around 65 per cent for the EU as a whole and 75 per cent for the leading EU nations like France and Germany, as well as Canada (not usually claimed to be in a state of irreparable decline). The big error in Zinsmeister’s piece is the number on output per hour worked – the US actually lags a number of European countries on this measure.

I’m pointing this out now, because the Zinsmeister piece has been taken up by a number of US bloggers, notably Steven Den Beste and Eric Raymond. Before accepting a statistical claim that seems ‘too good to be true’, it’s always a good idea to do a ‘back-of-the-envelope’ credibility check.

Update I’ve been in a bit of a rush today, so apologies for not mentioning that these links are via Bargarz, who has also posted on this and on Kupchan.

I should also note that the big economic difference between the US and the other leading countries is in hours worked per employee (about 20 percentage points of the 25 per cent difference between the US and the other leaders). The US is above average in both employment/population ratios and output per hour, but not the leader on either measure. The Scandavians lead on E/P (all that child care) and the Belgians on output per hour (they don’t put in a lot of hours, which makes it easier.

I stopped reading the Zinsmeister piece when I reached the first major error, but writers in the comments thread point out other unbelievable claims. I’ll try to do a more complete statement later.

Quite a few bloggers have noticed a piece by Paul Sheehan, explicitly comparing Christianity in the Third World to radical Islamism and presented with the alarming headline Christian reactionaries leading a new crusade. This seems plausible in many ways, and is worth another reminder that ‘crusade’ and ‘jihad’ are exact synonyms in both their literal meaning and their metaphorical uses (favorable and hostile),

Numerically, though Sheehan’s argument relies heavily on the 480 million Catholics in Latin America (he doesn’t mention the rise of evalengical Protestantism there, which is notable, but not numerically important). With the exception of the ‘liberation theology’ associated with the radical left and now largely obsolete, he’s probably right that Latin American Catholicism is relatively tradtionalist and conservative. But I don’t get the impression that it’s characterised by crusading zeal. Are there any readers with first-hand experience who’d like to comment?

In a piece which mirrors a lot of the discussion on this board (use Freefind to search for Kyoto or just scroll down to last week), the NYT asks

The Monday message board has produced a discussion which I think deserves its own post, starting with Jack Strocchi’s observation that

My own guess is that the degree of party loyalty to the Labs is at an all time low. The true believer tribalism has gone the way of football club loyalty and church devotions.

No-one rose up to protest continuing devotion to a church or party, but a number of football fans were outraged. I’ve previously blogged on my own
defection from Geelong to Brisbane as part of my move to the world’s most livable city, but that was after 40 years.

As regards political parties, my view is that Labor left me, not vice versa. I haven’t changed my fundamental views in the thirty years since Gough Whitlam was elected, though I have, of course, adapted them in the light of new information about what works and doesn’t work and to deal with changing social and economic conditions.

There’s still interesting stuff on Iraq on the message board, and there must be something more to be said on merkins, so if you’d like to join these discussions, go to the comments thread.