Category Archives: BRICS

ARCS Of Progress – The Arctic World In 2050

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Editorial note: This article was first published at Arctic Progress in February 2011. In the next few weeks I will be reposting the best material from there.

The Arctic to become a pole of global economic growth? Image credit – Scenic Reflections.

Behold! Far north along the shores of the Arctic a quiver of upspringing settlements fringes the coast. Boats swarm around canning factories, smoke flutters above smelters, herds of reindeer dot the prairies… And here or there, on every street-corner, glimmer out the lights of theaters where moving-pictures entertain white people through the sunless weeks of the midwinter dancing-time, the singing-time, the laughing-time of Eskimo Land.

- Northward ho!: An account of the far North and its people.

In 2003, Goldman Sachs economist Jim O’Neill wrote the now famous paper Dreaming with BRIC’s, predicting that Brazil, Russia, India and China would overtake the developed G8 nations within a few decades and make astounding returns for faithful investors. The BRIC’s concept entered the conventional wisdom, spawning a host of related acronyms (BASIC, BRICSA, etc) – and if anything, realizing its promise well ahead of schedule. Last year, China’s real GDP possibly overtook America’s, and Russia’s approached Germany’s.

Yet for all their successes, the BRIC’s may not fulfill their expected roles as the stars of the global economy in the 21st century. The level of education is horrid in Brazil and atrocious in India; without the requisite human capital, these two countries will find it difficult to rapidly “converge” to developed world standards. China is much better off in this respect, but its high growth trajectory may in turn be disturbed by energy shortages and environmental degradation. China produces half the world’s coal, which is patently unsustainable given its limited reserves. But since coal accounts for 75% of China’s primary energy consumption and fuels the factories that keep its workforce employed, there is little it can do to mitigate this dependence. Meanwhile, China’s overpopulation, pollution and climate change predicament is so well known as to not require elaboration. Many other countries flirting around the edges of BRIC status – Indonesia, South Africa, Vietnam, etc. – face serious challenges in the form of low human capital, uncertain energy and food supplies and a rising incidence of AGW-induced droughts, floods and heatwaves.

There is one global region that may hold the key to resolving these intertwined problems – and even to become a major pole of global growth in its own right. For the most part, it is now an empty wilderness, but climate change is opening it up as potential living space. Its exploitation has the potential to halve the length of global freight transport routes while increasing their security, uncover sizable to gigantic new sources of hydrocarbons and minerals, and stabilize global food prices through the expansion of arable land. Its experience of management and conflict resolution may inspire a global model of cooperation – or it may degenerate into an economic, legal, or even military battlefield over shipping routes and sub-sea resources.

This global region is the Arctic Rim, and its adjoining ARCS: Alaska, Russia, Canada, and Scandinavia. The ARCS of Progress in the 21st century.

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Through A Glass Ceiling Darkly: Racial IQ Disparities And The Wealth Of Nations

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Now that I’m done with the Necessary Caveats, it’s time we had a look at why exactly HBD/IQ theories are both valid, and relevant to the real world. As I see it, their main import (as interpreted by me) can be distilled into a few logically consecutive, falsifiable statements:

  1. IQ tests are a valid, culturally fair measure of cognitive ability.
  2. It is hereditary.
  3. Race is real.
  4. There are racial/ethnic differences in average IQ that cannot be explained merely by reference to socio-economic or cultural factors.
  5. The US is an excellent “laboratory” to ascertain the average genetic IQ ceiling of different races and ethnicities.
  6. Average IQ influences prosperity, and general living standards.
  7. Consequently, knowing the racial constraints on average IQ’s – i.e., the IQ ceilings – we can estimate the relative development potential of different countries and regions.

All of them have have acquired a great deal of supporting evidence, even though they – or in particular, their linkage – remains taboo for the media and wider public discussion. By the numbers:

1. There is typically a large degree of correlation between various IQ tests, and academic achievement scores (1, 2). Nobody has yet discovered a test which has a negative correlation with a battery of other tests. This implies that there is a common “g factor” behind all types of cognitive ability.

Obviously this allows for very big variations within a single person. But within a group, someone who does well in one test will most likely also do well in another.

The argument that IQ tests are culturally biased is frequently made on the basis that they show differences in performance between racial/ethnic groups. This is a fallacy. In any case, there are IQ tests designed to be culturally fair insofar as they eschew words and test pattern recognition, such as Cattell Culture Fair III and Raven’s Progressive Matrices. These tests have a high correlation with the battery of other tests, i.e. they are valid reflections of g.

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The Endgame Begins

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A year ago I predicted that there will be a “decoupling from the unwinding“, as “emerging markets” by and large ride out the temporary shocks of declining Western demand for their exports (China) and the interruption of Western credit intermediation (Russia) before resuming growth. This is one aspect of the trends leading to the imminent demise of Pax Americana, which will be replaced by “the age of scarcity industrialism” / “a world without the West“. We are now entering this Empire’s endgame.

After briefly stalling in early 2009, China’s economy roared back to life on the back of massive credit loosening to build (or overbuild) infrastructure and industrial capacity. Though not the most efficient use of resources, it did have the advantage of 1) maintaining growth, 2) forestalling the social unrest that would rise up if it wasn’t, and 3) at least Chinese investments went into building up their real economy (amongst other things, it became the world’s largest producer of wind turbines and photovoltaic panels in 2009), instead of the pork and oligarch welfare programs more characteristic of the US “stimulus”. And though Russia’s GDP contracted by 7.9% in 2009 – far higher than expected by most commentators, largely thanks to the dependence its big corporations acquired on continuous flows of intermediated Western credit – it began to slowly recover from mid-2009, industrial output is now rising at a fast clip, and investment banks are predicting growth of 4-6% for 2010. The other two BRIC’s, Brazil and India, didn’t have too many problems at all since they had neither a big credit nor trade dependence on the submerging Western markets.

In the long-term, I argued that the brunt of the crisis would fall on the “submerging” Anglo-Saxon markets, thanks to their “charades over “quantitative easing” (translation: printing money), transfer of toxic “assets” onto the public account”, and unsustainable fiscal stimuli. Today, the American political system is for all practical purposes broken. Republicans won’t agree to tax increases, Democrats won’t agree to cutting entitlement programs. The legislative process is reverting to that of the 17th century Polish-Lithuanian Commonwealth, when a single veto could (and did) prevent anything being agreed on in their Sejm, or parliament. (Hint: the ultimate consequences weren’t good for Poland).

The inflated hopes and expectations accompanying Obama’s accession to power were indeed, just as I suggested on his election, “greatly constrained by financial and institutional realities”. He is a weakling President, alternating between meaningless populist rhetoric and pandering to the Wall Street oligarchs; scorned by the left as Bush II with gloss, and condemned by the right as a foreign Marxist Islamofascist: his policies and outreaches failing at home and abroad, rejected in his own heartlands, these outcomes are engendered by and in large part made inevitable by his hopelessly pollyannish belief in his own messianic powers of compromise and persuasion.

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The Struggle between Europe and Mankind

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Though Nikolai Trubetzkoy (1890-1938) remains more famous for his contributions to the field of linguistics, his other great achievement was as one of the founding fathers of the Eurasian movement. Riding on the dark wave of disillusionment sweeping the world in the wake of the First World War, he penned the seminal essay Europe and Man in 1920 while teaching at the University of Sofia. You can read Европа и человечество in Russian at the given site (unfortunately I could not find an online English translation).

Which is a pity, because much of what he predicted really did transpire during the 20th C and remains as relevant as ever today. In my opinion, every Kremlinologist, every “Russia-watcher” and indeed every Russian should read it. This was one of the first modern works to seriously question whether Western civilization, or “Europe”, is the culmination of “historical progress” (the other major contemporary challenge was Oswald Spengler’s The Decline of the West). In this post I will present his arguments and draw on historical hindsight to confirm the historical validity of his theory.

First, Trubetzkoy asks, “Is it possible to prove objectively that the culture of the contemporary Germano-Romans is more advanced than all other cultures that exist or have existed on earth?”

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Education as the Elixir of Growth

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What are the reasons behind the wealth and poverty of nations? Since this question has exercised the minds of thinkers from Adam Smith to David Landes, Jared Diamond and Richard Lynn, I decided to take a look at it myself. I came to the conclusion that while geography, macroeconomic policies, resource windfalls and the microeconomic environment do play important roles, by far the most important factor is the state of a country’s human capital – things like literacy rates, school life expectancy and performance on international student assessments.

This is not a new idea. A Goldman Sachs report, Dreaming with BRICs, noted that:

Many cross-country studies have found positive and statistically significant correlations between schooling and growth rates of per capita GDP—on the order of 0.3% faster annual growth over a 30-year period from an additional one year of schooling.

However, I think education is much more central to this. The problem with using years of schooling as a yardstick is that in many middle-income countries, like Argentina, Turkey or Brazil, the amount of schooling is converging to that of the developed world, but the quality isn’t. This is attested to by their performance on international student assessments like PISA. For instance, in the 2006 PISA Science assessment, only 15.2% of Brazilians were at Level 3 or higher (the threshold for moving beyond purely linear problem-solving), compared with 47.6% of Russian, 51.3% of American and 66.9% of Australian students. Is it really then surprising to discover that from 1997 to 2007 purchasing power GDP per capita in Brazil and Russia, both medium-income countries, has grown at 1.3% and 6.0%, respectively, i.e., that Russia is playing the game of economic catch-up much more successfully?

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