The infamous passage from Jim Manzi’s mercantilist essay on preventing America’s decline:
From 1980 through today, America’s share of global output has been constant at about 21%. Europe’s share, meanwhile, has been collapsing in the face of global competition â€” going from a little less than 40% of global production in the 1970s to about 25% today. Opting for social democracy instead of innovative capitalism, Europe has ceded this share to China (predominantly), India, and the rest of the developing world.
On the economics, I’ve nothing to add to the demolition jobs by Jonathan Chait and Paul Krugman on this passage.Â Manzi apparently forgot that in 1970 Eastern Europe was not in fact operating under social democracy. Ahem.
As an aside, both he, and less forgivably Krugman, seem to think that you can look up time series of GDP data from Belarus in the 70s and 80s from USDA or wherever and hopper them into a spreadsheet for comparisons. You really can’t. Soviet era economic statistics were a branch of Kremlinology. In the Red corner, you had Gosplan and clones, publishing data in a neo-Marxist conceptual framework incompatible with Keynesian national income accounts. The raw numbers were generated by managers and officials with very strong incentives at every level to fudge them. In the Blue corner, you had the CIA and its affiliates, trying to correct these numbers and shoehorn them into the Western framework for comparison.Â This involved exercises like guessing the market value of exploding Russian televisions and East German Trabants – junk valued by their governments at input prices -, of ICBMs and tanks which worked fine but were concealed as state secrets, and services ranging from the Bolshoi Ballet to the empty-shelved corner shop, which were treated as transfers. The margin of error here was closer to 50% than 5%. The Soviet system collapsed in 1989-1991. The new rÃ©gimes duly introduced Western national accounting, but in conditions of chaos. (Has Belarus done it at all?) Any numbers before say 1995 can only be accepted as guestimates.
My main point here is however Manzi’s use of the “dictionary definition” of Europe, which is de Gaulle’s l’Europe de l’Atlantique Ã l’Oural. This is wrong today and has been for 450 years.
Map of Europe from Sebastian MÃ¼nster’s Cosmographia Universalis (1544).
Manzi defends his use of aggregate instead of per capita GDP on political grounds:
I believe it [absolute GDP] is, rather, a measurement of long-run geopolitical power potential.
If that’s the line, you have to take some set of European states that could plausibly exercise such power together someday. That means the EU (now 27 states). I used to work for the Council of Europe, which now includes Russia, and it is powerless by design outside the European Convention on Human Rights. There is no prospect of Russia joining the EU: neither side is in the least interested.
More, the Urals are not a frontier. I have more news for Manzi: Siberia is part of Russia. De Gaulle’s definition of Europe ceased to be useful in 1552 when Ivan the Terrible destroyed the Tatar Khanate of Kazan. As a barrier, the Urals a litle further east are less impressive than the Appalachians, and presented only a trivial obstacle to Russian empire-builders. Small forces of Cossacks swept aside the shadowy Khanate of (Western) Siberia in 1582Â and pressed east along the three vast river systems, reaching the Pacific as early as 1639. Siberia has been in Russia ever since. There isn’t even a Siberian independence movement, as opposed to local demands for more autonomy from the bits that have the most natural resources.
In politics you can have a Europe without Russia, roughly the current EU and the Balkans, stopping on the Bug*; or a Europe with Russia, and it goes to the Bering Strait. Since Russia is currently in an Asian as opposed to a European cycle, the second looks a very unlikely prospect. But you’d be a fool to rule it out completely.
*Or a bit east. The Bug is the Polish frontier with Ukraine and Belarus, not Russia. But in the long run Belarus is unlikely to stay independent.