Keeping America’s Edge, Yet Again
Paul Krugman has weighed in to an ongoing debate sparked by Jonathan Chait’s criticism of a passage in my essay Keeping America’s Edge. I believe that I have responded to Mr. Chait’s assertions comprehensively. Unlike Mr. Chait, Professor Krugman has argued that I have presented incorrect data.
Professor Krugman says this:
But I went back to Manzi’s source of data, and it turns out that it’s even worse than that. If you use the broad definition of Europe, which includes the USSR, it did indeed have 40 percent of world output in the early 1970s. But that share has not fallen to 25 percent — it’s still above 30 percent.
His assertion is flatly false.
First, Professor Krugman has incorrectly identified my source of data.
I have never corresponded with Professor Krugman concerning data sources and analysis for the passage in question (unlike Mr. Chait, who was careful to contact me prior to publishing his blog post, and to whom I sent data sources and calculation details), so I can not know on what basis Professor Krugman asserts that the dataset to which he links is my “source of data.” It is not. As per the blog post in which I reviewed multiple data sources for the analysis in question, I averaged multiple sources of data. Professor Krugman has selected only one of these sources, presented it as if it were my sole source, and therefore (obviously) failed to replicate the published result. The error is his.
Second, Professor Krugman incorrectly interpreted the economic dataset that he did identify.
According to the dataset in question, that part of Europe excluding any part of the USSR had about 40% share of global GDP in 1973 [Cell H59 in the spreadsheet]. According to this dataset, if you add the USSR to this definition [Cell H59 + Cell H102], then such a constructed entity would have had global GDP share of about 44%, not the 40% that Professor Krugman asserts. Not that such a constructed entity is precisely relevant to the argument anyway – Professor Krugman is also incorrect that my “definition of Europe included the Soviet bloc (!)”. I was very careful to try to identify only economic output of those sub-components of the USSR that were West of the Urals, as per the dictionary definition of Europe. Therefore, the estimate from this dataset for Europe was about 43%. Averaged with the other dataset available to me for that year (also cited and linked in my blog post), you will find an estimated global GDP share of 39.8%, or as I said in my article, “a little less than 40%.”
Professor Krugman graciously extended to me the courtesy of saying that my analysis was “probably not a deliberate case of data falsification,” but instead assumed that I “glanced at some numbers, thought [I] saw [my] assumptions confirmed, and never checked.” I will extend to him the same courtesy.
zing & zing
— razib · Jan 11, 03:20 AM · #
ahahaha
west of the ural mountains, seriously? i mean really… well, i’ll put it in simple terms. Are you making a point about the continent of europe or social democracy? If it’s the latter, then who gives a fuck about the textbook definition of the geographical boundaries of europe.
— Derek · Jan 11, 05:32 AM · #
Well, but that would include portions of the Soviet Bloc, which has been the objection, and you continue to side-step it with this plaintive cry of “but that’s the definition of Europe!” Well, no – in the context of your article, if your claim is to have any meaning – you’re not, after all, comparing Europe vs. the US but rather more social democracy as represented by Europe vs less social democracy as represented by the US – then the portions of Europe that weren’t social democracies need to be factored out. But you’ve misleadingly included them. What “Europe” means in the dictionary is irrelevant in the context of your article; a proper comparison would include only those portions of Europe which were social democracies. You’ve yet to supply a convincing response to this objection – 5 threads later, even.
— Chet · Jan 11, 05:33 AM · #
Derek, et al:
Let me get this straight. Paul Krugman publishes a post at the New York Times in which he accuses me publicly of either gross negligence or (myabe, but not probably) data falsification, and I point out that he both misidentifies my data source and misunderstands the data in the table that he does identify in making this charge, and this is your response?
Do I have it right?
— Jim Manzi · Jan 11, 06:29 AM · #
Not even close. 5 threads ago, it was pointed out that you were using flawed data for “Europe”, data that when corrected completely undercut your premise that America’s reduced social democracy represented an “edge” that should be “kept.” You’ve argued several times now that you’re using the “dictionary definition” of Europe, but you’ve not defended why that definition is appropriate, especially in the light of the fact that you’re making a claim about social democracy and economic growth.
Now you’re being snooty, and pretending that you’ve somehow defended yourself against Krugman, even though it’s quite obvious that:
1) despite claiming that Krugman misidentified your source, you’ve not identified it, and
2) nowhere in your post do you actually prove that Krugman made an incorrect interpretation. Like so:
You:
Krugman:
There’s no difference between these two statements. How therefore can yours be interpreted to contradict or disprove his? Here’s the crux of Krugman’s disagreement with you:
You didn’t even reply to or address this statement. Is Krugman wrong? If not, you must be.
You completely ignored the actual points of Krugman’s attack on your statistics. Were you hoping we simply wouldn’t notice?
I don’t think I’ve ever seen you behave so dishonestly.
— Chet · Jan 11, 06:44 AM · #
Chet:
A. I have identified the relevant sources, and linked to them in the posts cited in this one. B. Krugman asserted that he had reviewed my source, and I was in error in reporting the data. It is his repsonsibility to know that he has idenitfied my source before making such a claim.
Other than when he said that Europe’s share of GDP (including the USSR) according the cited dataset was 40% when it was really 44%.
There is an enormous difference between these two statements. Krugman is claiming that the USDA data source, (which he erroneously asserts shows a 40% GDP share for Europe including all of the USSR) is my source for my assetion that European GDP share was 40 % in 1973. Therefore, he says, I have simply misread this same data source when claiming that European market share is about a quarter today. Becuase he assumes, incorrectly, that this is my data source, he claims that by my data source, Europe’s sgare of GDP today is above 30%,a nd I have just gotten it worng. Because he doesn’t undestand either the definition of Europe and USSR in the one dataset that he cites, and, further, doesn’t undertand that I have averaged multiple datasets, he therefore doesn’t undertsand how I have calculated current GDP share.
Sorry, I thought this was obvious. He doesn’t understand that I am averagring multiple datasets, and therefore assumes that the USDA estimate of 30%+ must be the correct one. He is not correct.
I don’t think so.
— Jim Manzi · Jan 11, 07:09 AM · #
In the post you refer to, you link to the USDA’s Economic Research Service… and so does Krugman. You additionally link to a publication by the OECD, but your post quite clearly contains two separate analyses on those two data sets, not a single “averaged” analysis, and its to this first analysis that Krugman has clearly replied.
Look, I’m not an economist, so I don’t know what the tolerances are in your field. But to me, a layperson, the difference between 40% and 44% looks like nothing but conversational rounding. If there’s a significant difference between 40% and 44% – I mean, I can read numbers, it was plainly obvious to me that Krugman said 40 and you said 44 – then you need to explain the significance. Because as it is, it doesn’t strike me as a sufficient peg on which to hang your crowing conclusion that Krugman is wrong and you’re not. He doesn’t seem to think it’s a big difference, and he’s the one with the Nobel Prize. (In economics, admittedly.)
You still haven’t addressed the claim that it’s you who doesn’t understand the appropriate definition of Europe. You’ve not grappled with the claim that the dictionary definition simply isn’t appropriate to an argument about the effect of social democracy on economic growth. You’ve simply ignored that argument every time it’s been raised – by Chait, by Krugman, by me, by everybody else.
No one seems to understand how you’ve calculated current or past GDP share, because you won’t justify your inclusion or exclusion of nations in “Europe” except to hide behind the dictionary.
Why is he not correct? If the USDA estimate is not reliable or indicative, why did you use it?
— Chet · Jan 11, 06:00 PM · #
Jim Manzi,
You article was obviously successful in that it got a lot of people talking, but I see it as a starting point. As I’ve said over and over again, you made two big ideologically-based assumptions. To go forward (as you seem to be doing in a book?) I really, really think you have to prove or disprove your assumptions (to the level that they can be proved or disproved) and go from there. You wrote a post criticizing the field of economics for not being rigorous enough, but in my opinion, you haven’t been rigorous enough in your current article to do more than start a conversation.
— cw · Jan 11, 07:04 PM · #
If someone wants to compare Euro-style social democracy with American-style capitalism over several decades, the only fair basis is to use the EU-6 (ie. the six founding nations of the EEC). You’ll get 51 years worth of statistics (albeit with the problem of accounting for Germany).
Going farther east is pointless. If the former Comecon (Eastern Bloc) nations now make up a smaller share of the global economic pie, does that mean a generation of free market reforms failed? Is anyone willing to go there? These nations weren’t akin to the EU-6 before and after the fall of the Berlin Wall.
— Kevin Douglas · Jan 11, 09:01 PM · #
Let me see if I can summarize the gist of the debate here:
Manzi: “Policies cannot simultaneously maximize national economic dynamism, growth, productivity, etc… while also seeking to prevent the real human pain inherent in the constant flux, change, and rapid adaptation which are characteristic of such dynamism. In other words, we face a real trade-off between expanding the scope and power of the welfare-state and improving aggregate national economic performance, especially insofar as the status of our relative power in the evolving global environment is concerned. Comparisons of the economic performance in the last few decades between the United States and Europe constitute a valid empirical demonstration of this phenomenon.”
Critics: “We face no such trade-off and/or such a comparison is insufficient to demonstrate one. It is merely a conservative mythology that the extensive social-democratic / welfare-state policies of European countries have caused them to lag the US economically.”
Whether or not the data in “Keeping America’s Edge” provide an intellectually or objectively sufficient proof of the concept, it seems clear that it has been inadequate at forestalling disbelief in the liberal blogosphere. For Dr. Manzi’s book to succeed as a political document – that is, one that is persuasive even to those initially inclined to disagree with its premises and conclusions – it seems that he will need to brew up a much stronger tea of logic and evidence to address these adamant objections.
The best course of action would be to ask his critics for their standard of proof in advance, “What combination of data and argument would satisfy your concerns and convince you of the correctness of my premise?” If the burden of proof is reasonable and feasible, then it should be altogether straightforward to demonstrate, if, in fact, the premise is a true one.
— Indy · Jan 11, 09:22 PM · #
I don’t think Mr. Manzi has truly addressed his critics. Basically he claims that the European economy has grown more slowly than the US because of their relatively socialized economy. He then provides GDP data reflecting faster population growth in the US as evidence that US-style economic management works better than European style management.
If GDP doubles because population doubles, is this “economic growth”? Of course not. By economic growth we mean changes in per capita output. Manzi even acknowledges this when he says:
Economic output per person is now 20 to 25% higher in the U.S. than in Japan and the major European economies, and America’s economy dominates the world in size and prestige.
The way this is written implies that American output per person has risen relative to that of Europe in recent decades. Here are the corresponding ratios:
1970 1.26
1980 1.21
1990 1.23
2000 1.26
2009 1.24
Manzi is right that the ratio is now between 1.2 and 1.25, but he doesn’t mention that it has at these same values for forty years. That is, economic output per person has grown at the same rate in the US as in Europe. That is, from a growth perspective, the US economy has not signficantly outperformed that of Europe.
If he actually went through these data he must know this, which is why he wrote the statement above in such a way as to be literally correct and yet imply something that is not shown by the data.
— Mike Alexander · Jan 11, 09:31 PM · #
Dr. Manzi, your unfailing courtesy is astonishing and a credit to you. You’re a better man than I. Krugman embarrassed himself on this one. Which is too bad, since I often agree with him on economic matters and would like for him to maintain his credibility with interested laypeople.
Anyway, a thought occurs to me for how to clear up this European definition problem. Cherry pick the growth rates of countries in Europe generally regarded as “social democracies” and that have been for the entire time period in question. Is that possible?
Your argument is with the growth rates inherent with social democracy as a system of government, not with the growth rates of the geographic continent of Europe, so limit your data set to that group of countries and see what happens.
France, the UK, Spain, Portugal, all of Scandinavia, etc. would be included. Comparatively fast growers like Ireland need to be included or the term “cherry picking” would have a different meaning. Germany wouldn’t be included since, I assume, you can’t eliminate East Germany. Nor would the Czech Republic, Hungary, etc.
I’m a bit out of my depth with the calculations here or I’d do it myself and post the results. But I’m curious…
— Troy · Jan 11, 10:53 PM · #
Gosh, we’ve only been asking him to do that for 6 threads, now. Each time he responds with “but that’s not how Europe is defined in the dictionary.” If anybody can explain to me how that’s a salient response, I’d be grateful.
— Chet · Jan 11, 10:55 PM · #
@ Mike Alexander, read through the previous several posts on this, the per capita vs. total size of the economy argument is well traveled territory. You’ll find it interesting, I think.
— Troy · Jan 11, 11:08 PM · #
Sorry, Chet, I’ve been reading the posts but not the comment threads. Will do that now.
— Troy · Jan 11, 11:09 PM · #
Now I’m sorry. My intent was to rip on Manzi, not on you. It’s a good point that you made, it’s just too bad Manzi doesn’t seem to be able to respond to it.
— Chet · Jan 11, 11:18 PM · #
Mr. Manzi, It may feel good to give some back (re Krugman) but the point remains that you started this sh*t storm with a really silly wheeze of an argument. That you were so “careful” in the assembly of your straw man only makes the whole thing more hilarious. Kind of reminds me of an Ed Wood movie.
You are in a hole. Stop digging.
— tvd · Jan 12, 12:47 AM · #
Thank you very much for your response, Dr. Manzi. I have to admit though that you are confusing me.
I do not understand why we have to read about “datasets in question.” Isn’t this the Internet? Would you mind linking them so that your readers can verify the competing claims for themselves, please?
If those data sources are not available then they should be. After all, this is an argument about public policy.
— Hellmut · Jan 12, 03:18 AM · #
Aren’t you comparing apples and oranges? The United States is a country. Europe is a continent.
If you want to compare the continent of Europe then you should match it with the continent of North America, which ought to include Canada and Mexico.
Wouldn’t it be bizarre to analyze averages or totals of US American and Mexican indicators?
Likewise, it is bizarre to lump Western and former Soviet bloc economies together.
As you know, the iron curtain demarcated two fundamentally opposed systems. In terms of public policy, in many regards East Germany had more in common with Vietnam or Cuba than with West Germany.
It would seem to me that your self-interest would be best served if you retracted your essay and reran your analysis without former Comecon countries.
I for one would be very much interested in the results.
— Hellmut · Jan 12, 03:35 AM · #
The problem with this discussion is no one is really interested in being convinced. You obviously chose data, and a definition of Europe, that fits your pre-conceived ideas. Krugman took the opening to make the point, repeated elsewhere, that Europe is far from the economic basket case it is sometimes portrayed. Neither one of you expects to persuade your ideological foe.
The real problem is the whole construct is ideological. There is no evidence economic growth is closely tied to any system of government, whether social democratic or any other. China’s explosive growth is not a result of its communist system nor India’s the result of its largely socialist system. What is clear is that countries that invest in their people and infrastructure thrive. Those, as in Africa, that spend money on foreign luxuries at the expense of local investment do not thrive.
Moreover, the United States GDP since the mid-90’s has been grossly distorted by the dot com and real estate bubbles. Its not at all clear how much real wealth was created, no matter what the numbers are.
— Ross Williams · Jan 12, 04:09 AM · #
Ross,
It is astonishing to me that you can have read Mr. Manzi’s initial article, and argue that he doesn’t expect to persuade everyone. I’ve seen nothing but good faith attempts to persuade — and more than that, the attempt is mostly trying to persuade his own ideological fellows of something they’re prone to dismiss for ideological reasons!
— Conor Friedersdorf · Jan 12, 06:00 AM · #
Now, my only question about this debate:
Is the US of the last 30 years an example of the potential of free markets? I mean, with Social Security, medicare, minimum wage laws, protectionist agriculture, etc… it seems to me that America has been steadily moving toward a social democracy. It is more dynamic than France alright, particularly because of France’s draconian labor laws/unions, but it seems to me that there are a lot of similarities.
I do believe that had the US adopted a truly free-market approach, with less government intervention in trade and monetary policies, it would be better off, but that’s simply not what happened.
I am not an Economist, so I might be misunderstanding something.
Regardless of economic comparisons though, America exerts a greater influence in the European youth than the opposite. While American teenagers have their “ritual of passage” trip to Europe for fun, young Europeans flood American universities and tech companies and in many cases prefer to live in America (and have better economic prospects) than going back home.
— Paul · Jan 12, 12:31 PM · #
Chet, you are a precise, powerhouse commenter. I’ve nothing to add to what you’ve already written.
— Dwight · Jan 12, 07:13 PM · #
TY Dwight!
— Chet · Jan 13, 12:48 AM · #
I will spell this out very carefully for everyone so that I can be perfectly clear. Manzi is being dishonest here because he writes “I was very careful to try to identify only economic output of those sub-components of the USSR that were West of the Urals, as per the dictionary definition of Europe.”
I will point out his dishonesty for you. It is the phrase “dictionary definition of Europe”. This is dishonest because that was not his original claim.
Manzi originally stated “Opting for social democracy instead of innovative capitalism, Europe has ceded this share”.
Think about this for a moment. He claims that Europe opted for social democracy, and saw a reduction in GDP growth. But not all of Europe opted for social democracy at the same time. The region in question, the Soviet bloc, did not opt for social democracy until 1989 to 1991. Even then, you are very hard pressed to make the case the Russia is a social democracy. You are very hard pressed to make the case that Russia is even a democracy. So by including any Russian numbers pre 1991 is dishonest. Including any post 1991 Russian numbers is debatable, but dubious. Claiming that it is a dictionary definition is a red herring to this debate; that is not the same definition you used before and you know it.
Manzi claims that Europe opted for social democracy and saw lower growth, but then fails to produce evidence for this. By including Russian Europe in this equation his numbers are skewed. It is invalid evidence. When did Germany adopt social democracy? Or France? Shouldn’t you be looking at growth rates from when they adopted social democracy and seeing if it is higher or lower than the previous time frame? Wouldn’t that be an apt comparison, rather than make the argument you made?
I don’t even have time to tackle the Regan claptrap. That fraud has been debunked before.
http://yglesias.thinkprogress.org/archives/2009/04/presidents_and_growth.php
— Benny Lava · Jan 13, 06:52 PM · #