no third solution

Blogging about liberty, anarchy, economics and politics

Category Archives: World Politics

Dictatorships: Because Unfreedom is Better

June 15th, 2007

Kevin Hassett’s conclusion in the current issue of TheAmerican suggests that democracy and economic prosperity do not go hand-in-hand, but instead, that dictatorships are better at fostering economic growth. (h/t: Brussels Journal) Now, I’m no defender of democracy. I see it as the flip-side of the dictatorship coin, but the historical record is enough to convince me that it is leaps and bounds better at fostering growth and prosperity than dictatorships of any sort – one need only look at the 1,000 year period of abject economic stagnation, between the fall of Rome and the Renaissance, and compare any of those monarchies to any of the lesser forms of filth that would follow in the 16th through 20th centuries. That said, Hasset’s assertion is strikingly idiotic:

So the future may look something like the 20th century in reverse. The unfree nations will grow so quickly that they will overwhelm free nations with their economic might. The unfree will see no reason to transition to democracy.

Meanwhile, democracies may copy many of the market-friendly policies of the dictatorships, but it seems unlikely that free citizens will choose to reduce their own political freedoms.

That sounds vaguely reminiscent of Kruschev’s “WE WILL CRUSH YOU!” outburst. I do not deny that these countries are growing. But I categorically reject the proposition that they can continue to grow at such a pace, and that they will “overwhelm” the already developed world with their might – economic or otherwise – if not for any other reasons than trade begets interdependency and creates wealth.

These economies that have an aggregate 250% over 15 years simply cannot continue to grow at such a pace indefinitely (the United States experienced similar growth – 235% during the post-WWII era, via EH.net). It is also important to note that the economies in question, particularly China, have seen vast trade liberalization in the last two decades. Some amount of real economc growth is to be expected – unlike the figures put out by the Soviets in the 1950s, which were mostly lies – although it is likely to be in the form of State- or crony-capitalism. Eventually these nations, too, will reach diminishing returns. What growth they are experiencing now is like slamming that RedBull in the morning, when you wake up sweating tequila. About five minutes of relief.

It is important to note that China’s economy is 21 times larger than either Singapore’s or Malaysia’s, 8 times larger than Saudi Arabia’s and 3 times larger than Russia’s. Korea (D.P.R.) is not even ranked. Look it up yourself. My best five-second guesstimate for the weighting scheme used would something like this:

pie.JPG
(source: data from World Bank, Excel wizardry: myself)

If China had leveled out at say, 3%, even if the other countries continued at 10% or so, the weighted average growth rate for these countries would be about 3.5% – still robust, but hardly spectacular. Clearly, as goes China, so goes the aggregate. Now, a good deal of China’s growth is real, if nonetheless fascist. And to some extent, her appetite for crude oil weighs significantly on Saudi Arabia’s growth. A further consideration is where these countries might be, and how fast they’d be growing if it were not for previously industrialized nations investing heavily within their borders. China’s growth is not endogeneous.

More importantly, China is not in the midst of a golden age that will never end.

China: Still Oppressing People by the Millions

June 5th, 2007

A Stitch in Haste has a running thread of posts entitled “China is Still a Dictatorship…” which brings to light many grievances we ought to have with the world’s largest totalitarian regime. As of September, 2005, Kip noted that nearly 300,000 Chinese had been evicted in order to make room for Olympic Village.

The news today, according to Geneva-based Center on Housing Rights & Evictions, ups the ante, to a staggering 1.5 Million.

Not to worry, though. China’s version of Big Brother maintains that they’ve all been compensated, and that no one was forced to move – a statement qualified with “out of Beijing.” Which simply means, “we’ve forced you to move, but you get to choose where you want to go.” What else could it mean to the person whose homesite is now a long-jump pit or luxury box?

To be sure, a million and a half of Chinese undoubtedly have been forced to surrender their homes, and move to new ones, the prices of which have been inflated by the looming Olympics, bound to bring peace and prosperity to the country for a glorious two-and-a-half weeks. After which time, the value of the properties they’ve recently bought will begin to collapse, leaving them up shit creek, sans paddle.

Never you mind all the spurious economics behind the “public welfare” arguments – most studies indicate that publicly funded venues are not the boon to the local economy that their proponents maintain. These arguments aren’t even generally true in the USA – let alone a pseudo-communist regime like China. The more controlled is the economy, the less free the people, the more likely it is that whatever profits rents accrue due to the Olympics will fall disproportionately into the hands of politically-well-connected individuals and firms, i.e., those who are already very wealthy, at the expense of everyone else.

On Immigration: The Good Stuff

May 31st, 2007

The video I watched last night says that the 1990s saw the biggest population boom in U.S. History. This is undoubtedly true. What NumbersUSA does not tell us, is that this is in strictly nominal terms. Sure, the country’s population grew by more persons during that decade than in any other decade in history. But is this the relevant metric? I submit that it is not. Furthermore, does NumbersUSA present that information in a useful format? Again, the answer is no.

The relevant metric, first and foremost, would be population growth as a percentage of population. To the latter point of contention, the numbers are not readily comparable unless they are measured over standard intervals. The video that razorgator submitted for my viewing pleasure presented population growth – as a raw mean over the following intervals: 40 years, 25 years, and approximately 10 years. The first interval includes the Great War, and the Great Depression. The second interval includes the Second World War, and although the third interval does include the Vietnam conflict, it is free of any major, worldwide catastrophe that even approaches the same significance. It is meaningless data presented in useless context. I will present the data in 25 year intervals, from 1900 through 1999. I also include the growth as a percentage of the population over 25-year, 50-year, and 100-year intervals.

First, the theory:

Immigration is a human action aimed at alleviating a perceived discomfort, a disequilibrium. Labor (people) may be abundant and capital (land) scarce in one area, and labor relatively scarce and land abundant in another. Basic economics tells us that, when free to choose and left to their own devises, labor will immigrate from an area where it is relatively abundant to an area where it is relatively scarce, bringing the two factors into (or closer to) equilibrium.

It cannot and it will not go unchecked. Immigration is severely constrained by numerous factors, not the least of which is the financial inability for a great number of the world’s population to leave wherever they are, and go to wherever they’d rather be. But those people whose transaction costs are the least – the industrious and those in close geographic proximity – will be able to migrate elsewhere. A second serious constraint is scarcity: each new wave of immigrants reduces the opportunities available to those who have not yet immigrated. The marginal immigrant will no longer move, his opportunity cost being greater than his potential gain. Concomitantly, land becomes increasingly scarce: each new piece put to use is of less value than the previous. These factors must naturally stem the flow of immigration. But I do not believe that we’re even close to maxing out our capacity. Take a drive through Northern Michigan. Oklahoma. Idaho. Wyoming. Texas. Land – as far as the eye can see is uninhabited.

Moreover, immigration is a form of prohibition. And like any form of prohibition, it distorts incentives. It artificially increases the potential gain, by artificially reducing the number of people allowed to benefit thereby. These incentives do not go unnoticed by the potential immigrants: their potential income is artificially propped up by legislation, so the number of people who want to immigrate is higher than it otherwise would be. Another unintended consequence is the rise of black markets to exploit the higher-margin opportunities, financed and operated by bad people – good people are either able to make an honest living another way, or unwilling to risk the penalties they may incur.

Now, the numbers (Spreadsheet in .xls):

According to the census bureau, immigration as a percentage of population peaked in the decade preceding 1910, at 10.4%. Since then, it has never been over 6% for any 10 year period, whereas most of the 19th century saw population growth between 6 and 9%. But let’s look at overall population growth.

Population growth
1900-1924 ………………49.96%
1925-1949 ……………….28.80%
1950-1974 ……………….40.44%
1975-1999 ……………….26.17%

1900-1950 ……………..196.06%
1950-1999 …………….178.96%

1800-1900 …………….1,433%
1850-1950 …………….656.57%
1900-2000 …………….358.11%

From 1800 through 2000, the population of the United States increased 51-fold! During that period, for all intervals measured except 1950-1974 (the baby-boom generation) population growth was generally declining. The population is only 3.6 times bigger than it was 100 years ago, at which point it was over 14 times larger than it was a century earlier. Clearly, population growth appears to be slowing, which is nice, because theory indicates that it will do just that. It is also important to consider that the population was growing at its fastest 100 years ago, when people were even dumber and poorer than we are today – and they had far less technology with which to work. Had NumbersUSA commissioned their study in the middle of the 19th Century, they would’ve predicted we’d never make it to the eve of the 20th; just as now they are telling us we can’t sustain the growth we have.


And as testament to the effects of immigration – which is only a part of population growth as a whole, we live much better lives now than we ever have in the past. The poorest among us have luxuries unattainable to the middle classes a generation ago, and to the wealthiest two or three generations ago. Immigration and population growth have not made us poorer in any appreciable sense, quite the contrary, we now enjoy lifestyles that were until very recently, unimaginable.


More people – to a point – equals more work, which gives rise to more productivity, which is the sole creator of wealth. Immigrants are only a handy scapegoat for the fact that we will never reach Eden, a world of superabundance. There will always be scarcity, but if it were possible to create a localized superabundance, any decent man, genuinely concerned with the plight of the poorest among us, would wait a little bit longer to get there, so that others could feast at that table, too.

no third solution

Blogging about liberty, anarchy, economics and politics