Thu 11 Nov 2010
God, I really hate articles like this:
NEW YORK (CNNMoney.com) — Changes in the global pecking order are coming.
As western nations face stunted economic growth and years of painful budget-slashing ahead, developing nations like China, Brazil, India and Russia are slowly moving up on the world stage.
Look, people, “pecking order” implies that the person with the #1 world GDP “wins” and gets some special benefit because of that ranking. That’s simply not how this works. Do we really need more pointless status contests between nations? The only thing that matters is the absolute numbers, not the relative ones. If China is going up, that is good for everyone. If the US is going down (it isn’t) that is bad for everyone.
The United States is struggling to hit 2.7% growth for the year, while emerging economies, which also include smaller countries mostly in Asia and Latin America, are collectively on track for 7.1% growth for the year.
Jesus, how can you state these numbers without the real figures? Smaller percentages of bigger numbers can be larger in real terms for the citizens of those countries. And, more importantly, you simply can’t make these kind of comparisons and say “well that means the US is screwing up.” Or things like this:
So where did these countries get it right while western superpowers got it so wrong?
God damn. The reason developing economies grow faster than developed economies is because they’re catching up. You can’t compare the two. If you compare two nations with similar conditions, and one’s growth rate is higher, then we can talk. Comparing China and the US on percentage GDP growth is pointless.
And while we’re on the topic of pointless comparisons, there’s no point to comparing GDP without talking per capita, which apparently at least someone the article author interviewed was willing to say:
Even if China does become the world’s largest economy, its population is roughly 4.5 times bigger than that of the U.S., making it difficult for China to catch up to the American standard of living, said Jay Bryson, global economist with Wells Fargo.
This undermines the whole “pecking order” comment — and the entire tone of the article. There is no meaningful information to be gained from knowing who has the highest GDP. It’s pointless, and just talking about it puts it in the frame that somehow China would be “beating us” if they had a higher GDP, as if that would be bad for us.
Higher per capita growth, in any country, is good for every other country. If somehow, every other country got to be higher than us (without US growth being negative), and we were dead last on the rankings — it would still be good for us. In fact, it would be incredibly good — because it would mean that billions of people around the world had exited poverty and would now have immense resources to develop new technologies that we would benefit from, or buy our stuff, or sell us their stuff. To slightly rework a great quote:
There is a single light of [economic progress], and to brighten it anywhere is to brighten it everywhere.