Procrastinating: Taxation as Percent of GDP

Couldn't find a good data source for government expenditure as percent of GDP and don't have time to compile the statistics myself, World Bank only went back to 95 which doesn't show what I want to show and OECD only gave raw and not proportional expenditure.  So this is taxation data which is far messier.  Only thing I want to point out is that you can roughly eye-ball this to see that taxation becomes significantly flatter somewhere in the range of 30 - 50% of GDP but rises quite sharply before then.  It very rarely, and only briefly rises over 50% of GDP and that is in only a single case, Sweden.  There is no constant rise in government taxation as % of GDP as some would claim and the European countries flatten out without any sort of political movement comparable to the American right or the Tea Party.



Explanation for the graph since it didn't import well.  Taxation as percentage of GDP is on the Y axis and I couldn't get the labels to go on the X and don't have time to fiddle with it so the X axis is years past 1965.  Best I could do without spending too much time with it.

I couldn't get it to size well, your browser should be able to enlarge it easy enough.  Credit for data goes to OECD.

Comparing American Slavery to Russian Serfdom

Another excellent post on the NY Times' Disunion blog, this one on comparing aspects of the Russian emancipation of the serfs to American emancipation of the slaves.  While there are certainly differences, I spent a lot of time back in my American politics class comparing eastern European emancipation to that in the US (and also trying to contrast the two with Brazil and the Hapsburg emancipation in Austria-Hungary) to point out numerous similarities.  Understanding all three of these cases helps us to understand each one individually better.

This is a bit off topic for the normal thrust of this blog, there just aren't all that many tie ins to modern times, but it's something worth reading to understand our history as Americans and to put it into the context of world history so I thought I'd point it out.  Especially since it's a light easy read.  Take a few minutes to look at it.

America Compared

Charles Blow has an excellent chart up today comparing America to other advanced economies on a number of measures on the New York Times today.  I'd like to see per capita GDP, 10 year average growth rate, workforce participation, government spending as % of GDP, and dependency ratio (with separate entries for over 65 and under 18) added to it to capture what I feel are the most relevant variables, but it's still good.  I'd also like to see this done for 1960, 1970, and 1980 as well.  In those decades I believe America would score much higher.  The chart basically points out that on a number of measures we've fallen behind our peers (Canada and Australia serve as the best examples of where we should be at).  Obviously we're still tops on per capita GDP (barring micro states, which aren't good for comparison to territorial states), but other measures look bad and will likely translate into lower GDP growth in the future.

If I get really, really bored I may try to do this sometime, the work doesn't sound that hard (though some of the measures, such as Gallop Global Wellbeing probably aren't available).  One of the main themes I've been taking up is that we have been going from top dog and losing our relative spot since the 1980s.  This comparative historical data would be necessary to illustrate the point.  Without knowing when things started to go wrong, we can't identify with any certainty what changed here (or didn't change here but changed elsewhere) that has been causing our relative decline.  I've obviously got some ideas, but haven't yet gotten around to compiling hard historical data to prove the point.

American Success in Perspective

This is back to what I considered the original plan for these posts, start big and start narrowing down to particular issues.

While it is less frequently mentioned today than it was a decade ago, America remains far and away the most powerful country on Earth.  Superpower, or even hyperpower, are still used to refer to our relative power position.  This isn't inaccurate but, as I do sometimes see implied, this isn't a reason to believe that America's policies have been remarkably better than other countries, or even that it is our policies or institutions that have led us to this power position.

Let's put some perspective on America's rise.  The former European powers were all very small.  Some of them had large imperial territories but the form of imperialism used to control these far flung territories required substantial resource investments from the home territories to maintain.  While this investment often paid off, they were far more intrinsically brittle than societies that could rely on extensive home territories for their power.  What they had to rely on was a historically unique confluence of several factors, the modern state, the industrial revolution, nationalism, great demographics, democracy in some cases, and a few other factors I'm probably forgetting.  These factors weren't shared by other societies they were competing against, though in situations such as Japan's where some of these factors did arise a competitor was quick to arise, and they were able to exploit the superiority of these developments to gain a historically unique position.

During this phase, the US competed remarkably well.  We made mistakes, so did everyone else, but it is hard to say that our 18th and 19th century history isn't remarkable for the balance in favor of achievements over mistakes.  During this period, we also successfully expanded to have a land area and population that distinguished us from all the other western powers, though distance prevented this from being decisive in this period.  While getting into specifics would take far more time and space then I am prepared to give the subject, in this period I am perfectly willing to endorse the idea that relatively good policies and decisions gave the US a decisive lead over other societies.  This extends up till WWII.  It is important to remember of course that this success wasn't against some absolute sense of what makes societies successful, it was success against a set of particular competitors that simply made worse decisions than we did.

After WWII is where I think that some perspective on our achievements relative to our power is essential.  The European powers had been decisively humbled, the Soviet Union was our only competitor.  Let's be honest about this competition though. Only the US and the Soviet Union had the geographic expanse, population, economic development, and diplomatic position (in the form of the Soviet allied Eastern Bloc and US NATO, the presence of both of these organizations is owed to the first three factors however) to be in a competitive position.  No other state has been in truly competitive position in the second half of the 20th century.  Japan came close, but its limited geographic base is a severe restriction in long term power competition.  Other states don't even come close.

What we have to admit to ourselves though, is that we were competing with a state that was operating under a fundamentally flawed political and economic ideology.  It had the components it needed to compete but it wasn't using these components in a sensible fashion.  Winning the Cold War had two essential victory conditions for the US, not implode and not cause a nuclear war.  Only the second of these involved any difficulty, we don't deserve any awards for achieving the first.  The Soviet Union was doomed from its inception because it was a society based on a theory, rather than on reality.  These always fail given time.

Given this perspective, winning the Cold War has to be seen as not being in any way an endorsement of the American system, it's simply a condemnation of the Soviet one.  Our own achievements are harder to assess, we simply don't have any societies worth comparing ourselves to for the past 50 years.  I think we have some very good reasons to doubt that we've been making good decisions for the last 40 years or so, not that we didn't make some real doozies before that too, the WWII era decision to put so much of our health insurance benefits in the hands of employers was a bad call with very far reaching effects. 

I'll be getting into specific issues, both achievements and flaws in later posts.  But when assessing our modern record, it is important to keep in mind the basic disparity we have in natural resources relative to other states.  The only state comparable in its resource endowments was held back by an insane ideology, those that were on an equal playing field ideologically and institutionally had far less in the way of natural resources.  To say our successes are remarkable because of actions that we took as a state we have to think in terms of relative resource endowments.  For instance, the next closest developed nation to ourselves in terms of population is Japan, with about 125 million inhabitants to our close to 300 million.  Saying that we have more of the top Nobel prize winners than they do, or top medical specialists, or top universities, or biggest companies isn't at all impressive.  With more than twice the population I certainly hope we do.  Saying that we have more than 2 1/2 times the number of each of these things, well, that is something to be proud of.  But remember, in this large and wealthy of a country saying that we have more of anything isn't something to be proud of, it's to be expected simply by virtue of our size.  To say we've been a top performer in our position it takes more than just being the best at something, we have to be the best by quite a large margin.  Anything less not only fails the test of American exceptionalism, it fails to recognize the basic facts of our place in the world.

Of course, we also have to recognize this phase of our existence is coming to a close.  In a few short decades we won't be competing with countries that we out-compete by default simply by virtue of our size or their insanity.  We will be competing against several states that are comparable in size and in the basic components that make up modernity.  If we want to be a proud, successful country we need to stop patting ourselves on the back for defeating the feeble and realize we're going to have to work hard and make sacrifices to be competitive.   I believe we've been rather self-indulgent over the last 40 years.  We've taken the natural results of the size of our population, the richness of our natural resources, the security of our position, and the favorable diplomatic and political environment and mistaken this for a confirmation of the success of our actions and policies.  This pleasant environment is ending.  Our policies and decisions no longer are being made in a world where we win simply by being who we are, now we're going to have to prove to the world that what we do actually works and we'll have real competitors against which we can be compared.  The time where we can simply experiment with policies with little thought to long term consequences is ending, we're going to have to honestly face the results of our policy decisions and make course corrections when things don't play out right.  Results must trump ideology or the American superpower will rapidly become a footnote in history.  A world where we're competing against real powers in Europe, China, India, and regional power blocs that are likely to form in South America centered on Brazil and possibly in South-East Asia isn't one that we can ignore reality and survive in.  We have to pay our debts, do what works, and pay careful attention to adapting ourselves to paying careful attention to the world outside our borders.  There's a lot of potential in this world, and I believe it will be a better world, but it's a much more competitive one that won't allow us to be self-indulgent.

Brooks on the Genteel Nation Part 2

In addition to the thoughts in my earlier post, there are some other considerations linked to Brooks' column that are worth drawing out.  In many ways, Brooks is making an argument that I find very similar, if in less nationalistic tones, to the kind of argument I've been criticizing Beck for making. The essential parallel is that both see the US declining and wish to attribute this to what are essentially individual level shifts in ideas and values.

There are a few problems with this.  The first is that we are in relative not absolute decline.  This means that either others were doing something wrong and stopped, or they started doing something we're not.  Neither case requires that anything that we're doing is behind our relative decline.  Something we're not doing may be, but not anything that is changing within our own nation.

The second problem with this is that Brooks doesn't have any evidence that the US is failing to start new businesses or that people have stopped getting their hands dirty.  A few brief internet searches for evidence showed that new business start ups are continuing to rise (with noisy data, there remains an upward trend).  If we had become too genteel for business it seems unlikely that this would be the case.  Of course, I couldn't find any per capita data, which is what would be really relevant, but I think there is a lot of reason to doubt that a shift in values have led Americans to work less or to have less desire to get involved in the messy business of commerce.  I do believe more could be done to encourage these values and to make it easier for people to attempt risky new ventures but this would need a change from old thinking to achieve, not a return to it.

The third problem with this is that it is the most tired, and unproven, explanation for decline in history.  Every society gets a group of people who are saying that the reason their society is declining is because they are falling away from the ideals of a proud past.  The Chinese did it, the Romans did it, I doubt you can find any society that didn't fall because of a disaster that didn't use this excuse.

The problem with it is that the societies that end up replacing these cultures don't look like what these cultures did in their supposed golden age.  Instead, these cultures always had learned everything they could from the supposedly declining societies and then introduced innovations (the exception being nomadic cultures that overthrow earlier ones based on superior military technology, these cultures tend to get absorbed into the sedentary culture however so are an interesting exception rather than something immediately relevant).  So the key factor is not that the declining society has changed but that someone else has become something new.

This hints at how we should respond to decline.  The question is how to adapt ourselves to a changing world with new innovations and how are society must change to meet these challenges.  The problem is that old ways of managing the world break down in the face of social change, you get mass social disruption.  Trying to restore the old order is futile, the mass production society of the 50s required different social traits than the modern information and high tech economy of today.  We need to adapt ourselves to social institutions and ideas that will provide ideas, norms, and values for this world, not the old ideas that were so successful in the 50s.  Otherwise, our decline relative to other societies is inevitable because we will be hopelessly out of sync with the emerging world.  Facing the problem from a position of what would social and institutional structures look like that produce what we need to continue to be successful holds promise to answer the problems Brooks notes about social breakdown and skills mismatch, though not too many bankers*.

* Basically what do the successful entrepreneurs of today look like?  Well, successful people today generally marry late, are highly mobile, are well educated (not necessarily in school), have social support of some kind to fall back on, have an ability to work with people from very different backgrounds, etc.  So, what would the social institutions look like that promote this kind of lifestyle?  Those of the family from 1950, or something different?  Then we can get into institutional structures, such as how corporations are constituted, litigation, etc.  Might we have to change substantially, yes.  Might this be a bad thing from a human happiness perspective, yes.  But if we're worried about decline, it comes down to power.  If you're worried about human happiness or some sort of objectively defensible social order, worry about this and stop fretting about losing relative power.  Leave power to those that desire to make the changes to get it because from this perspective, the costs are too high.

[Brooks does have something with the role of finance.  While cases are too few to generalize from, the Dutch and British both had strong financial sectors after decline was inevitable.  However, they also had strong financial sectors while they grew.  This is a complicated topic beyond the scope of this post.  There is a problem however, if the financial sector is relied upon as a strength while other sectors decline.  It can become a parasite in the right conditions, I have no idea if that is descriptive of today.  If it gets, and stays, too influential in the political process however, than there might be a problem.]

Brooks on the Genteel Nation Part 1

David Brooks had a peculiar column today where he argued that America is declining in part because of a shift in values.  He starts by mentioning Mokyr's new book, "The Enlightened Economy," which is arguing that a crucial cultural shift was behind British development (I mention this solely because Mokyr is on my short list of next books to buy, if anyone has read both this book and The Lever of Riches, perhaps Gifts of Athena as well, could you let me know if they're all worth buying or is there enough repetition that only buying one is a better choice?).  He then goes on to argue that we need to look not just at material factors but also shifts in ideas and values.  I agree with this as far as it goes.

What I disagree with is that the shift in a nation's fortunes happens internally.  None of the histories, whether economic or on other topics, I've read has tried to argue that Britain decline was due to a shift in its internal values (Brooks mentions Barnett, who I haven't read).  This goes against most everything that I have read.  Historical, social, and economic change are explained by the intersection of ideas and values and material factors (though any theory will deal with one piece at a time, any decent writer, with the exception of Marxists anyway, will admit that they are examining only a piece in detail and that others are necessary to explain the whole).

The important thing is that you have the right ideas and values, with the right material factors, at the right point in time.  America took over from Britain not because the British changed who they were, everything I've read about Britain makes me think they were essentially the same, but because America had both superior material factors as well as ideas and values that allowed them to take the next step Britain couldn't.  We broke into mass production partially through having a different way of organizing the corporation and firm, we early on developed corporate structures that could handle tasks like building an transcontinental railroad and were able to apply these lessons to large scale manufacturing such as ship building and autos.  British firms, with the exception of trading companies, remained rather smaller.  They didn't make the same change in ideas and values and social structures that we did.

So the essential piece isn't that there is some inherently "right" mix of ideas and values that is under threat.  It's that you can change the ideas and values that animate your society to match the conditions you are currently living in.  If you have the ideas and values of the wrong time period, you decline.  If you have the right ones, and the other contributing factors, you rise.

[To plug for my favorite magazine, the Economist Free Exchange blog has a good post up on the decline of manufacturing as a percent of GDP in the US, which is what Brooks is lamenting the loss of, and why we shouldn't be worried about it.]

American Exceptionalism: What it is and Can it Survive?

I often take issue with the use of American exceptionalism to explain our peculiarities.  This isn't so much because I don't think there is anything to the concept; I just have a problem with how the concept is being used.  Most of the cases where I see it used involve using some aspect of American culture to explain either why we are dysfunctional, why we can't adopt a particular policy, or to explain why we shouldn't change something or why we should try to make ourselves more like some imagined past.

As exceptionalism, this is a bunch of bull manure.  This is being special in the everyone gets a trophy kind of special.  If you're a nation, you're exceptional in this fashion.  Everyone's got a culture they think made them great, there's nothing in American culture that doesn't have an analog elsewhere.  While these cultural traits can help define why we're not exactly like any other individual nation they don't explain any more for us than why France is different from Germany is different from China is different from South Africa.  This sort of cultural explanation explains why we get a UN membership card and aren't simply an administrative district; it tells us nothing about why we're great among nations.  It also doesn't tell us why we can or can't adopt a specific policy.  Tie any outcome back to American culture and you'll have an analogous situation elsewhere, there's nothing exceptional about particular policies.

Which isn't to say that American exceptionalism doesn't help explain why we're great among nations.  It's just an American exceptionalism that is hard to swallow for those wishing for a cultural explanation or nativism.

In my reading a few months ago I came across a good section on American exceptionalism, a way of defining it that I think does represent our actual history and explain our greatness, which the normal use of the term exceptionalism does not, on either count.  The section below is from John Gerard Ruggie's Constructing the World Polity, "Interests, Identity, and American Foreign Policy." 1998. p. 218.

America's form of nationalism differs from that of most other nations however.  Most nations claim an "organic" basis in either land or people, and these are the usual referents of a nation's foundational myths.  The American form of nationalism, in contrast, has no such organic basis.

...America traditionally has viewed itself as a willful community, or an elective community.  ... In principle, anyone can become an American.  But that fact is made possible, in turn, only because the American concept of political community rests on, not the exclusive organic specificities of traditional nations, but, in the words of political theorist Tracy Strong (1980: 50), "a universal or general foundation open in principle to everyone."

American nationalism, then, is a civic nationalism embodying a set of inclusive core values: intrinsic individual as opposed to group rights, equality of opportunity for all, anti-statism, the rule of law, and a revolutionary legacy which holds that human betterment can be achieved by means of deliberate human actions, especially when they are pursued in accordance with these foundational values.  Being an American is defined as believing and doing these things.

This definition of American nationalism I believe accurately represents America's history and culture.  I also think it clearly shows how our exceptionalism contributed to making us exceptional among all nations (though Ruggie is careful to state in a note that he sees this as distinctiveness, not exceptionalism; I'm more of a nationalist than he is).  This form of exceptionalism really does bring out how America is unique not in the sense that every national culture is unique but how we truly are unique among nations.

This is why some of the cultural forces waxing strong worry me.  The wish to precisely define who an American is and what being American means and to tie American identity more specifically to a codified set of myths and beliefs threatens the very heart of what makes us different from every other nation by making it clearer why individual Americans are distinct from individuals from any other nation.

Defining being American in cultural terms replaces American exceptionalism with the kind of organic myth of nation that every other nation has.  The exceptional thing about America is that we are a community based upon a set of enlightenment ideas rather than pre-modern traditions and myths, open to any individual that believes in them and will act upon them, rather than a people defined by shared myths, background, and territory.  We are defined by our inclusivity, not our exclusivity.  By who we are and the beliefs we share rather than by who we aren't and the beliefs we disagree on.  We are bound together by our shared beliefs in the founding ideals of our Republic, not in a national myth about our background or in strict adherence to a set of legal strictures.  Another exceptional aspect is that these ideas are so firmly grounded in the ideas behind the enlightenment, we don't represent ancient traditions such as religion or heredity but instead are a nation firmly grounded in the ideas that gave rise to modernity and that are open to all, whatever their traditions.  We may not see eye to eye in how to interpret and act upon these ideas in our modern world, or even how these ideas acted in our own history, but our shared identity is rooted in our mutual recognition that we are seeking to put these ideas into practice in the world as we find it.

None of this is to say that this modern trend to redefine being American in cultural terms is unique.  It isn't, the desire to redefine America in terms that draw from the same roots that other nations' nationalism draw from is a tendency that is visible throughout American history.  People throughout our history are made uncomfortable by our exceptionalism and desire to sacrifice our differences to be more like other nations and to enjoy the same kind of exclusionary certainties that are the privileges of those with more typical national myths.  I have faith in the resilience of our beliefs and do not think this will occur but I do think there is a significant enough threat that it is necessary for us to speak out against the possibility of us adopting a typical national identity, like that which the Tea Party is seeking to promote.  Go down this road and American exceptionalism is gone forever.

The One Reform America Needs

I feel particularly snarky today.  America needs just one reform to return to insure its greatness for all time and that is to regard something not working as an argument to end it in favor of a different tactic instead of an argument to do more of the same.

This is a bipartisan policy flaw.  On any number of policies such as immigration, the drug war, health reform, taxes, crime, home ownership, clean energy subsidies, some components of the stimulus plan, financial deregulation, and even oil production it seems that the abject failure of the popular policy to reach the objectives that led to it initially being adopted becomes not an argument to abandon the failed policy but instead an argument that we need to embrace more of it.

I don't have a strong explanation for this tendency.  Best I have is that proponents of a failed policy see the negative data coming in and early on seek to associate failed policies with the American way making the continuation of the policy an end rather than a means to whatever the original end was.

I'm open to other suggestions but I'm sincerely afraid that this dynamic has become the dominant one in American policy making.

America the Incomparable

I hear rather frequently that America is such a unique country that international comparisons are pointless. I disagree but am willing to test my convictions with data. I will be making a series of posts examining assertions about why America is incomparable to see if any of these objections stand up to analysis. My goal with this analysis will not be to advance highly wonky arguments, there are plenty of paid professionals doing that who are more expert than I am. My contribution will be to look at the objections to this type of analysis that seem so common on blogs, or in casual conversation, that are not being treated seriously by specialists.

Most of these posts will be a simple chart and regression testing hypotheses about why America is different in regards to particular issues. The first series of posts will examine issues related to health care. I have very frequently seen data on how the US stacks up so poorly in international comparisons. In most cases, I hear objections to these comparisons on various grounds that can be directly tested. Some of the more frequent objections I hear are that the US is too populous to be compared, that we are too ethnically diverse, or that our health habits are too bad. Over the next few weeks I will take up each of these topics to see if the data supports these objections or not.