Tuesday, August 19, 2014

Relative Costs of Living

Thanks to Mike for identifying this for me.

Obviously states are big diverse places. Check out these figures showing the difference in cost of living in different urban places within the same state. There are differences in cost of living between urban, suburban and rural areas.

Estimates of cost of living are based on a "market basket" of goods and services thought to be purchased by the "average" consumer. Florida has a lot of retired people, and their purchases may well be different than those of a younger working person. Services like health care and schooling vary considerably from person to person. If you are rich, your market basket is likely to have more caviar and less rice and beans than if you are poor.

The quality of life is likely to be more due to the relationship between income and cost of living than on the cost of living per se. Indeed, the cost of living will be lower in places where wages and salaries are lower just because services can be provided at lower cost; the other side of that coin is that the dollar in the smaller paychecks in just those areas will go further.

Still if your working at home by Internet, and your income doesn't depend on where you live, you might want to live in a place with low cost of living. But then you may not have the cultural opportunities that you want in those places.

Monday, August 18, 2014

A thought about causality in history

I have been thinking about World War I, and just read The Sleepwalkers: How Europe Went to War in 1914 by Christopher Clark and the wonderful Introduction in The Long Shadow: The Legacies of the Great War in the Twentieth Century by David Reynolds. I have also been interested in the Civil War which the country has been commemorating since 2011. It occurs to me that the two offer a means to say something about causality in history that might be interesting.

Bombardment of Fort Sumter

The Civil War

The "original sin" of the United States was slavery. There was a world wide historical process of abolition of abolition of slavery. It had a variety of causes, including a broadening consensus that slavery was morally wrong, and an increasing consensus that free labor was more productive than slave labor and a better basis for building an economy. The eradication of America's original sin seems to have been part of this historical process.

Some countries abolished slavery in civil war or insurgency (e.g. the United States, Haiti, France) while some did so peacefully (e.g. the British Empire, the former Spanish colonies in the Americas, Brazil). Thus I conclude that the U.S. Civil War was partially caused by the desire to abolish slavery and partially by the failure to find a peaceful way to do so.

The proximate cause of the Civil War was the decision of state governments of southern states to secede from the Union and fire on a Union fort in Charleston harbor, followed by the decision of the Federal government to fight to preserve the Union. My reading of history indicates that the Union was intended from its first government to be perpetual, and that the Union was more populous, richer and more militarily powerful than the Confederacy and very likely to win the war.

I also conclude that the southern leaders made a disastrously bad decision to go to war. Four years later, slavery was abolished, the southern economy was in ruins, and hundreds of thousands of its young men had been killed or wounded. Thus the proximate cause of the Civil War seems to me to have been a disastrous mistake made by the leaders of South Carolina and other states that seceded from the Union. They surely could have found a peaceful path (as was done in other countries) that would have been better for their states, their people and themselves.

Let me suggest then that an intermediate cause was the way political power had been institutionalized in the south. It was the owners of large plantations with large numbers of slaves who were the richest people in the south. They had the time, resources and motivation to control the political institutions, and did so. However, they perhaps tended to put the interests of their class before that of the rest of the people of their states; moreover, the small population from which the leadership was drawn did not produce the quality of leaders needed to deal with the crisis presented by the results of the election of 1860.

Assassination of Arch Duke Franz Ferdinand and his Wife
World War I

World War I was a war between coalitions of empires -- Austria-Hungary, Germany and the Ottoman Empire versus Russia, the French, British and Italian Empires, and eventually the United States. Most of these were multi-ethnic empires, held together by a central authority that had monopoly control of naval and military power, transportation and communications within the empire.

The 20th century saw decolonization and destruction of these empires (even the United States gave up the Philippines). Thus there was a historical process which was tending to destroy the imperial institutions of empire. The institutional form appears to have been historically unstable.

Could the empires have been dissolved peacefully? While tzarist Russia was overthrown by revolution, the Soviet Union broke up relatively peacefully. While the German, Austro-Hungarian and Ottoman Empires were dismembered when the lost World War I, creation of the British Commonwealth after World War I and decolonization of British colonies in India and Africa after World War II were relatively peaceful. So yes, in principle, empires could have been broken up without the mass violence of two world wars.

The proximate cause of World War I was the declaration of war by Austria-Hungary on Serbia, the subsequent declaration of war by Russia on Austria-Hungary and Germany, which in turn triggered more declarations as countries honored treaty obligations. All of this was a response to the assassination of the Grand Duke and Duchess of Austria-Hungary.

Clearly the war was a disaster for the Habsburg government of Austria-Hungary, the Romanov government of Russia and the Hohenzollern government of Germany, and certainly the assassination did not require the world war, but could have been resolved by other means that would at least have allowed the prime mover governments to survive longer and have time to find a better path to accede to the historical trends of history. Thus, I suggest that the proximate cause of the war was the poor decision by these three governments to go to war rather than to find an alternative course that would have preserved them in power longer and allowed more time to find a solution to the problems cased by the decline of the Ottoman Empire and the radical restructuring of the governance in the Balkans.

An intermediate cause of the war may have been the way governance was institutionalized in these empires. Monarchy could and did put people at the head of state and government who were not able to manage the affairs of large empires well; narrow aristocratic classes from which policy leadership was drawn also proved unequal to the job of running empires and failed in the crisis of 1914.

Final comment

Perhaps it is useful to look for long term historical processes that underlie major events, as the abolition of slavery drove the Civil War and as the abolition of 19th century style multi-ethnic empires dominated by a metropolitan central power and monarchy drove the World Wars of the 20th century.

When a decision leads to major disaster for the people making the decisions (as the decision of South Carolina leaders to start the Civil War and the decision of the Austria-Hungary, Russian and German imperial governments to go to start World War II did), perhaps one should look at failures in decision making as proximate causes. Even these are complex, involving the institutionalization of the governmental decision making, the failure to predict the actions of others, and erroneous perception of the relative capabilities of one's own side and the difficulty of the task being considered.

In the two examples, I have suggested an intermediate cause -- an institution of power structures dominated by narrow elites that fail to recognize and foster the interests of the populations that they rule, and that failed to put leaders in place that could make good decisions in the face of existential crises.

I suppose that in both cases the evolution of the technological infrastructure led to a geographic expansion of the state, a growth in the population of the state, a change in the economic structure of the state and an increase in the pace of change. New economic and political institutions had to be developed to better manage the changed socio-economic environments.

Sunday, August 17, 2014

We are the Global One Percent

Generic Lorenz Curve
The Lorenz Curve is a simple way to show the way income (or wealth) is distributed in a population. The Gini Coefficient, derived from the Lorenz Curve, is the most widely used single figure denoting income (or wealth) distribution.
The Gini coefficient can then be thought of as the ratio of the area that lies between the line of equality and the Lorenz curve (marked A in the diagram) over the total area under the line of equality (marked A and B in the diagram); i.e., G = A / (A + B).
Thus the Gini coefficient in theory varies from zero to one. the larger the value, the more unequal the distribution over the population.

Here is how the Gini Coefficient has evolved in the United States since World War II:


As you can see, the distribution of income became more and more equal after the war, but reversed course and began a long process of becoming less equal from about 1975. As the One Percent appropriated more and more of the income in the United States to themselves, we have seen a rise of Occupy Wall Street and the Tea Party.

I suspect that Americans are upset that most Americans are not doing better economically as time goes on, and that their hopes for the next generation will not be fulfilled. On the other hand, there is some anger at the very rich who seem to be using their political and economic power to bias the playing field to further enrich themselves.

Now consider the evolution of the Gini coefficient for the world's entire population:
Global income distribution was relatively stable from 1960 to  1980, with greater inequality than now exists in the United States. It then rose until the beginning of this century, when it began to drop. Still, the current Global Gini coefficient of 0.52 is significantly higher than the U.S. Gini coefficient.

I suspect the wide spread envy and anger of the One Percent in the United States is mirrored by wide spread feelings for the affluent in the United States in the rest of the world.

GDP per capita World Map

Saturday, August 16, 2014

The Production of Goods and Services Has Grown Faster than Population for a Century

GDP per capita in the Year 1913
GDP per capita in the Year 1960
GDP per capita in the Year 2008

These maps are from the World Poverty Visualization on the "Our World in Data" website.  The website is produced by Max Roser of Oxford University.

The maps are pretty well self explanatory, and show that per capita GDP growth has happened on all continents, but that there remain wide disparities in the productivity among countries and regions.

Friday, August 15, 2014

Does Development Aid Speed Development?

New research suggests that development aid does foster growth—but at what cost?
An article in The Economist summarizes some of the recent research on the impact of development aid on development. As anyone who has worked in the field must suspect, the relationship is complex, and thus it has been hard for economists to understand. They are pretty good at measuring the amount of development aid (shown in the graph above left) and the GDP per capita in countries (in the graph above right). Separating out the impact of the one variable from the booming, buzzing confusion of the real world is much harder.

I quote from the article:
What the UN sees as a potent weapon against poverty, others consider money down a rat hole. Critics reckon aid hurts its recipients by fostering dependency, propping up oppressive or incompetent regimes and pushing up the value of poor countries’ currencies, thereby undermining the competitiveness of their exports. If aid helped, they say, the poorest countries would have been getting steadily richer for decades, which they have not (see right-hand chart). Those who favour giving aid argue that it could indeed lift people out of poverty, but rich countries simply do not give enough. It is like sending fire engines to combat a wildfire: it only works if you send a lot of them...... 
A study by the World Institute for Development Economics Research has reviewed all peer-reviewed papers on aid and growth published since 2008. It concludes that the evidence that aid boosts growth is itself growing rapidly. 
Whether that extra growth constitutes good value for money is another question. Unfortunately, there have been few studies of the cost-effectiveness of aid. A forthcoming analysis by Chris Doucouliagos of Deakin University and Martin Paldam of Aarhus University of 141 studies published between 1970 and 2011 finds that the average estimated effect of aid on growth is positive and statistically significant, but so small that it may not be terribly meaningful. Advocates of freer trade or more liberal immigration regimes contend that the economic benefits of such measures for poor countries far outweigh those of aid. Supporters of the 0.7% target can take comfort in the growing evidence that aid boosts growth; but they have more work to do to demonstrate that it boosts it by more, and at lower cost, than the alternatives.
Here are the original studies referenced by The Economist:

From the Our World In Data website

Here are two images relating to Africa:

The Our World in Data effort is seeking funding. Seems a worthy effort to support.

A History of Immigration to the USA in One Graph

The impact of the immigration probably depends on the size of the existing population, the size of the economy, who the immigrants are, and rates of change in population and economy. With falling birth rates and an aging population, more young immigrants are probably a good idea. Were the economy growing faster and the unemployment rate lower, we might be more accepting of poor and middle class immigrants; as it  is, we should be looking for more immigrants who can help grow our economy and create employment.

Painting as Art

Art is a culture specific concept, and while the idea of some kinds of painting being art is widely shared in western culture, it is not shared in all cultures. While we may see ancient cave paintings in Spain and Australia as art, the people in the cultures that made those cave paintings almost certainly did not perceive them as "works of art".

Note that American concepts related to the nature of painting and art are complex. We don't see painting a wall a uniform color as art, but perhaps most often as decoration, and sometimes as building maintenance. Some kinds of painting, such as the painting of designs on pottery is probably more often seen as "craft" than as "art", although when Picasso did it people might have accorded his works the status of fine art. For some kinds of paintings, such as those of the most avant garde painters, there is disagreement as to whether they are art. The paintings of nudes on velvet are prototypical of works that some people like very much and others condemn as schlock. We recognize that the painter whose works are hot on the art market may disappear from galleries and museums in a few years, while unknown artists might eventually be recognized as masters after death (as happened with Vincent van Gogh).

There is something strange when people from our culture apply our idea of art to paintings produced in other cultures that did not perceive those paintings as art. I suppose that much of what we now perceive as "religious art" from previous centuries was not in its own time; rather it was seen as an expression of devotion by the artists, a demonstration of affluence and power by the donor, and a means of promoting faith by religious officials. Certainly it seems that the idea of what represented a great religious painting changed over time. The icons of the medieval Orthodox church must surely have been judged by different standards than the religious paintings of the Italian Renaissance or of the Byzantine mosaics of Ravenna.

Ravenna - Mosaic in the Bishop's Palace
In Islam, figurative are is forbidden, but I can see Islamic calligraphy as art, as I believe some of the painting of geometric fields and designs based on nature to be art within the western concept.

On the other hand, there are many cultural aspects of painting that are useful to us as we look at painted objects in other cultures and times:
  • There is the aesthetic sense of a culture: What is seen as beautiful, what as ugly, what is legitimate as a subject of painting and what not?
  • There is a technology. What are paintings painted on, how is the surface prepared, what pigments are used, what binders stabilize them on the painted surface, what solvents are used?  What does the painter paint with, how does the painter clean up after himself.
  • There is a craft. What must a painter be able to do well to be regarded as a skillful painter in his culture and in his role in that culture?
  • How do painters learn to do what they do. How is the training and education of painters institutionalized.
  • There are economic concerns. Are inputs and outputs of painting processed through markets, and if so, how do those markets work. If they are not markets, how does the painter get input and place his outputs, and how are these processes institutionalized. How do painters get the resources to meet their needs for food and shelter?
  • There are political concerns. How do key institutions related to painting, how do they work, and who are the people who lead them?
If we wish to understand painting in our own and other cultures, these perspective seem important. So to, it seems important to try to understand what a painter is seeking to do, for that sets one standard for the evaluation of the painter's work. When Giotto painted his murals in the Church of San Francesco, in Assisi, he must have been trying to produce works that would help visitors to the church to learn stories about the religion of St. Francis and to strengthen their faith in that religion. I would suggest that we Americans today give more importance to the fact that his work helped spark the Italian Renaissance than he himself would have done. How well did he teach? How well did he inspire the faithful? How well did he exercise the skill of the painter? How well did he inspire later artists? Answering all these questions would be likely to deepen one's appreciation of his work.

These ideas suggest that the social scientists have a great deal to offer to help us understand art. If we understand better what painters were trying to do, how painting comes about, how society institutionalizes different aspects of making paintings, and what limitations are thus imposed on the painted surface, we better understand what we are looking at and how is might be perceived.

There is also a different way to use our cultural concept of art -- a more philosophical way to benefit from the insights of other cultures. Japanese widely share wabi-sabi, which is (in part) an aesthetic valuing nature, impermanence, and imperfection. While this aesthetic influences Japanese art, it also has deep relevance to Zen Buddhism. Perhaps through a study of Japanese art and wabi-sabi one might find insights into how some Japanese understand themselves, the world, and their place in the world. And perhaps we would learn something about ourselves in the process.

So too, the designs of Australian Aboriginal cave drawings with their abstractions from nature are aspects of that peoples Dreamtime mythology. Perhaps looking at and studying those paintings will give some intuition about an alternative way of understanding mankind and the world.

I only wish I could follow this advise of my own more fully!