Category Archives: Economics

Delving Into Bitcoins And The Deep Web

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ragged-flagon-skyrim

Several days ago, the USD/BTC exchange rate soared to dizzying heights, reaching almost $250 for one unit of the virtual, decentralized currency. Then it crashed to $55. But since then, it has gone back up to $100.

I’d heard of them before, but I had assumed it was some sort of pyramid, and that the train had already passed. Pyramids are only good for those at the top. It’s the creators of currencies who get rich, not their users. In short, I was skeptical.

Still, as someone on a perpetual lookout for lazy and socially unproductive ways of making money, I knew I had to check it out.

And I discovered some rather interesting things.

First, Bitcoins can’t be just created out of thin air. Just like gold or other minerals, they have to be “mined” by solving complex cryptographic puzzles. In practice, some users pool their computing power for this task. There is a theoretical limit to the total amount of Bitcoins that can enter circulation: 21 million. So you can’t inflate it like you can with any fiat currency.

Second, they offer real advantages over conventional currencies. There are no banking or transfer charges, because you are your own bank. Your Bitcoins are held in an encrypted file on your hard drive, and can easily be transferred between your own accounts, or “wallets,” and other accounts. These transactions can be completely anonymous, because your wallet isn’t linked to your “true name” (paging Vernor Vinge).

This anonymity means that you can, in relative ease and safety, avail yourself of online black markets selling all kinds of cool shit of dubious legality.

For instance, on April 15th 2011 – since known as “Black Friday” in certain circles – the DoJ flunky Preet Bharara shut down the three biggest online poker companies operating in the US. In the ensuing panic, dozens of others left of their own accord, voluntarily restricting access to US players to avoid any legal ramifications. But a few continue to operate here. Perhaps the most interesting case is that of Seals with Clubs, a site where you gamble with Bitcoins. This is an example of an innovative and dynamic enterprise that has bypassed real life problems to create a product that people enjoy and that is likely to continue to grow, especially if governments start taking a harder line against online poker. (Incidentally, the games at Seals seem to be very soft, even at high stakes – or at least that is the impression I got from observing them for 15 minutes or so. Definitely something to look into if you get some portion of your income from poker).

But this is just the tip of the iceberg.

Investigating Bitcoins led me, of course, to the “deep web,” the Silk Road, and even weirder places. I will retrace the journey, should you wish to undertake it yourself.

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Alexander Mercouris – Last Word On Chavez

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When I said this post would be “the last post” on the matter, I meant posts written by myself. :) Alexander Mercouris’ was too good to pass up, so it is reprinted here:

Any discussion of Chavez must explain why he was (to his detractors) such a terrible man. He was a terrible man because he did a terrible thing. This terrible thing was to distribute Venezuela’s oil wealth to the majority of its people by funding ambitious health, education and social security programmes.

To understand why doing this was so terrible one must understand something about the historic situation not just in Venezuela but throughout Latin America (Costa Rica being the exception). Briefly, political and social power in Latin America since before independence from Spain has been concentrated in a small group of wealthy families who conduct bitter and even violent political feuds with each other using labels such as “Liberal” and “Conservative” but who unite when faced by a challenge to their power. This oligarchy sustains itself through the support of a middle class that sees its social and economic interests as bound up with those of the oligarchy. Concepts of a wider social contract underpinned by shared patriotism and by a sense of social responsibility do not exist. The mass of the population are excluded and typecast as lazy, shiftless, dishonest and violent. This justifies denying them a share in the country’s economic profits, which supposedly neither belong to them or are deserved by them, and which makes any attempt to share these economic profits with them a theft from those to whom these profits supposedly actually belong. All this is underpinned by an ugly strain of racism with the middle class and the oligarchy priding themselves on their whiteness whilst often concealing their mixed origin whilst emphasising or exaggerating the colour of the poor.

The result is that governments in Latin America have historically failed to provide even the most basic services at even a remotely satisfactory level. The only institutions in Latin American that have historically been reasonably funded have been the very highest echelons of the state bureaucracy and the judiciary (which is usually recruited directly from the oligarchy) and the army and police whose main function is not to defend the nation from foreign aggression to keep the poor in order.

In such a system requiring the oligarchy and the middle class to pay taxes to fund say a good system of universal secondary education from which the poor might benefit is an idea so outrageous that it is guaranteed to provoke passionate and often violent anger and resistance. Americans, Europeans, East Asians and indeed Russians find all this very difficult to understand. As a Greek I am better able to understand it not only because it resembles the historic situation in my own society but because a section of my family emigrated to Argentina where they are today members of what was once the country’s oligarchy.

Not surprisingly in a Continent where basic education and health care for the bulk of the population was scarcely provided (though the means to do so was always there) economic development has been disappointing to say the least. However since this is a system that is deeply embedded and which is sustained by often extreme violence all previous attempts to change it have been largely unsuccessful with reformers likely to end up either in exile or dead. I am not going to discuss the role of the US in sustaining this system since it is so well known. I would say that I do think people who blame the US for Latin America’s problems overlook the many internal reasons why Latin American societies have historically been as dysfunctional as they are.

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A Few Myths About Chavez’s Venezuela

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Okay, I promise this will be the last post on the matter. But some of the tropes that come up time and time again in coverage of Chavez’s legacy, from neocons and faux-leftists alike, just have to be addressed for me to rest easy. Note that this is NOT meant to be comprehensive; just some things that continuously get slipped in on the side and tend to get taken for granted.

Chavez rigged elections. Look, I like to think I’m objective here. Some politicians I like rule countries where electoral fraud is widespread. But Venezuela isn’t Russia in this respect. Not only are election results consistent with pre-elections, unbiased polls, but Venezuela’s voting technology makes fraud extremely difficult. See Mark Weisbrot:

In Venezuela, voters touch a computer screen to cast their vote and then receive a paper receipt, which they verify and deposit in a ballot box. Most of the paper ballots are compared with the electronic tally. This system makes vote-rigging nearly impossible: to steal the vote would require hacking the computers and then stuffing the ballot boxes to match the rigged vote.

Unlike in the US, where in a close vote we really have no idea who won (see Bush v Gore), Venezuelans can be sure that their vote counts. And also unlike the US, where as many as 90 million eligible voters will not vote in November, the government in Venezuela has done everything to increase voter registration (now at a record of about 97%) and participation.

Chavez closed down critical TV stations. And yet the old case of the failure to prolong RCTV’s broadcasting license continues to be cited as the main evidence of this media “suppression.” E.g. from the faux-liberal Daily Beast:

And yet Latin America’s new democratic leaders rarely spoke against the excesses of Chávismo, turning a blind eye when he canceled the operating license of independent broadcaster RCTV in 2007…

What typically goes studiously unmentioned is that RCTV gleefully and one-sidedly supported the foreign-backed coup attempt against the legitimately elected Chavez administration in 2002. In many other countries, this would have been considered treason, with the attendant penalties of long-term imprisonment or even execution. In humane Venezuela, however, you just lose your broadcasting license.

Electricity blackouts. Guardianista presstite Rory Carroll, who clearly has an agenda:

He leaves Venezuela a ruin, and his death plunges its roughly 30 million citizens into profound uncertainty.

Because that exactly describes an increase in GDP per capita from $4,105 in 1999 to $10,810 in 2011 (according to his own newspaper). As Craig Willy says:

But particularly hilarious is this statement:

Underinvestment and ineptitude hit hydropower stations and the electricity grid, causing weekly blackouts that continue to darken cities, fry electrical equipment, silence machinery and require de facto rationing.

Because of course they never happen in pro-Western, investor-friendly countries.

Chavez stole $2 billion. These are rumors that keep slithering about in the comments from various neocons, although they rarely pop up into mainstream media texts outright. Apparently this claim comes from some right-wing law firm in Miami that claims the Castro brothers of Cuba are billionaires too. I find it about as credible as claims about Putin’s $40 billion fortune (or is it $70 billion now?), initially made by some non-entity Russian political scientist, and Gaddafi’s $200 billion fortune, probably spread by the CIA or somesuch in the course of NATO’s assault on the Libyan Arab Jamahiriya (very ironic, coming from thieves who had seized Libya’s foreign-based assets). Funny how it’s always those who dare stand up to Western imperialism who get accused by their flunkies of massive corruption, no? I wonder if one causes the other?

Oil dependence. A lot of the presstitutes have accused Chavez of increasing Venezuela’s oil dependence, e.g.:

Former minister Gerver Torres points out that in 1998 oil represented 77 percent of Venezuela’s exports but by 2011 oil represented 96 percent of exports. That means today only around 4 percent of the goods that Venezuela exports are non-oil products! The Venezuelan economy relies almost exclusively on the price of oil and the ability of the government to spend oil revenues.

That’s kind of what happens when the oil price goes from being $11.91 per barrel (in 1998) to $87.04 (in 2011)! Funny how they harp on about how rising oil prices “unfairly” helped Chavez but then instantly shut up about it when making THIS particular point.

Higher violent crime. Not a myth. In fact, as I made clear, it’s one of the Chavez administration’s very biggest failings. Then ago, we also have many of the presstitutes claiming he was a dictator – even though the precise opposite happens with real dictators (they don’t tolerate alternate sources of violence, and they don’t bother with legal niceties; they just put all the suspected mafiosi up against a wall – put the two together, and violent crime almost always plummets under the rule of real dictators. The Sicilian Mafia actually provided help to Allied troops against the Mussolini regime).

He was friends with Ahmadinejad. Plenty of Western politicians are friends with Saudi prices. Drop the double standards.

He was anti-American. Well, what can you expect if you plot a coup against someone and then incessantly demonize him for not respecting democracy? Like Castro, incidentally, he actually started out fairly pro-American. It didn’t have to be this way.

He didn’t build skyscrapers. This has to be read to be believed. From AP’s Pamela Sampson:

Chavez invested Venezuela’s oil wealth into social programs including state-run food markets, cash benefits for poor families, free health clinics and education programs. But those gains were meager compared with the spectacular construction projects that oil riches spurred in glittering Middle Eastern cities, including the world’s tallest building in Dubai and plans for branches of the Louvre and Guggenheim museums in Abu Dhabi.

The author’s agenda speaks for itself. (Not to mention her ignorance – while Venezuela remains fiscally sound, Dubai’s big tower remains 80% unoccupied and needed a $10 billion bailout. Had Chavez listened to people like these then Venezuela would have gone bankrupt for real, not just in their sordid, bitter like imaginations).

Hugo Chávez Shuffles Off This Mortal Coil, But The Light Of The Bolivarian Revolution He Ignited Will Endure Forever

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We all suspected this would come sooner or later. As it happens, Chavez struggled heroically against his cancer, confounding the intensive Schadenfreude and concerted death wishes of his loathsome detractors month after arduous month.

But this is what you can expect to get when you look out for your own countrymen and stand up to imperialism. Probably no other modern national leader apart from Putin has been quite as consistently and caustically vilified by the Western media.

They say that he managed to squander Venezuela’s oil wealth. I suppose he is guilty as charged, if by “squander” you mean spending it on ordinary Venezuelans as opposed to funneling it away to foreign bankster rats. During his rule, real GDP increased by 50%, poverty has halved, inequality was reduced to a very low level at least by Latin American oligarchic standards, infant mortality was greatly reduced, and virtually the whole array of other socio-economic indicators that states care to track, from access to clean drinking water to enrollment in higher education (which increased by a stunning 138%), saw great improvements. At the same time, contrary to the claims of the neoliberal propagandists, debt hasn’t increased; it was a modest 45% of GDP as of 2011 (IMF), which reduces to 25% if only central government debt is accounted for. The national accounts have on average been balanced.

venezuela-gdp

This was all achieved despite the real negative impacts of the 2002-2003 oil industry strikes, which occurred in tandem with an abortive CIA-backed coup, and the global Great Recession; not to mention Venezuela’s own legacy of corruption and backwardness inherited from previous regimes.

The traitorous cockroaches, including on my very blog, claimed Chavez “oppressed” them and stole the elections. They said he was a dictator for refusing to extend the license of their opposition RCTV channel. The irony is that in any actually democratic country it would have been instantly shut down and they’d have been locked away for decades for treason, if not lined up against the wall like the rabid scum they are. They materially supported a foreign backed coup against a legitimately elected national leader and then had the gall, the temerity, the sheer chutzpah to complain that one of their talking shops was taken away from them! Even though much of the media in Venezuela remains in oligarch pockets and continues to tell lies about pro-Chavez electoral fraud, when all the polls indicate that that is indeed the will of the people. Of course there’s nothing contradictory about that. The seditious vermin despise the Venezuelan people and would much rather dissolve them and elect another (as opposed to emigrating and parasiting off some other country).

The incorrigibly thievish liberals, no doubt full of projection, claim that Venezuela under Chavez has become one of the most corrupt countries in the world. They cite the loathsome Corruption Perceptions Index in support of this view – i.e. the perceptions of the same internationalist banksters and “experts” who have such a withering hatred for those countries that dare to stand up against Western imperialism. Asking ordinary people reveals quite a different picture: Fewer ordinary Venezuelans (some 20% of them) said that had to pay a bribe in the past year than in Colombia (24%), the Western puppet state next door.

latin-america-homicide-rates

Perhaps the only real failing of the Chavez administration is its inability to control violent crime. Venezuela now has one of the highest homicide rates in the world. But this was part of a general Latin American trend, and what’s more, could just as easily be attributable to a regrettable if admirable surfeit of humaneness in the Venezuelan criminal justice system (it has not had the death penalty since 1863).

Hugo Rafael Chávez Frías brought hope and a credible promise of a better tomorrow to a benighted country, and was the bane of the rootless cosmopolitans and comprador elites that hypocritically shrilled about his supposed corruption and selling out to Cuba even as they frantically shuffled their ill-gotten billions into Swiss vaults and dialed their CIA handlers for advice. Yes, he was loathed by the Latin American offshore aristocracy, the neocons, and the Guardianista-type, “humanitarian bomber” Pro War Left and Western chauvinists in liberal clothing. But he was also beloved of the millions of Venezuelans, who resisted oligarch media pressure and mafia-like “international community” and continued to give El Comandante - in some of the world’s cleanest and most transparent elections - term after term to implement his vision of a just and sovereign Latin America.

If it is true that one gets to know a man by his friends and enemies, then he qualifies as one of the very greatest national leaders of modern history. He now shuffles off this mortal coil, leaving behind his struggles and haters, and ascending to the realm of God, where he can contemplate the crystalline tranquility of the cosmos; but the light of the Bolivarian Revolution that he ignited on this lower plane of existence will endure – and continue shining hope into the hearts of men all over the world unto the ages of ages.

PS. For more statistics and objective assessments of Chavez’ achievements, consult Mark Weisbrot’s classic, ”The Chávez Administration at 10 Years: The Economy and Social Indicators.“

Flynn Effect DOES Apply To South Korea

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Regular readers of this blog may remember my comments regarding Ron Unz’s theory that East Asians have high IQ’s independent of time/nutrition/urbanization whatever it is that causes the Flynn Effect. Here is his original article on his theory of the “East Asian Exception” and my two responses are here and here.

Anyway a new paper (well, July 2012) I think finally puts this theory to rest: The Flynn effect in Korea: large gains by Jan te Nijenhuis et al. Here is the abstract:

Secular gains in IQ test scores have been reported for many Western countries. This is the first study of secular IQ gains in South Korea, using various datasets. The first question is what the size of the Flynn effect in South Korea is. The gains per decade are 7.7 points for persons born between 1970 and 1990. These gains on broad intelligence batteries are much larger than the gains in Western countries of about 3 IQ points per decade. The second question is whether the Korean IQ gains are comparable to the Japanese IQ gains with a lag of a few decades. The gains in Japan of 7.7 IQ points per decade for those born approximately 1940 1965 are identical to the gains per decade for Koreans born 1970 1990. The third question is whether the Korean gains in height and education lag a few decades behind the Japanese gains. The Koreans reach the educational levels the Japanese reached 25 30 years before, and the gains in height for Koreans born 1970 1990 are very similar to gains in height for Japanese born 1940 1960, so three decades earlier. These findings combined strongly support the hypothesis of similar developmental patterns in the two countries.

So, similar processes (height is of course strongly associated with nutritional quality) leading to the same pattern of steady IQ gains that have been observed for all Western societies.

Incidentally, back during my discussion with Unz, I wrote: “Anyhow, I wish we could do tests on North Koreans. Their meat consumption is at less than 10kg a year and they have periodic famines. They are also directly comparable to South Koreans. They would conclusively prove your theory right or wrong!” The study authors concur on the benefits of testing the Norks:

Theoretically, it would be very interesting to do a study of secular score gains in IQ in North Korea. It appears that height has not increased in North Korea since the end of the Korean war. However, it may be that the quality and number of years of education has improved. This experiment of nature could throw some light on the question to what degree nutrition/hygiene and education influence score gains.

Antisocial Punishment: Why China Will Defeat Corruption, But Russia And The Arabs Won’t

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The “resurrection” of this blog isn’t coming along as fast as I want to. Partly it’s because the bulk of my attention is going to Da Russophile and RossPress right now, but partly it’s just plain bad luck. Not the best year for me health-wise. Just as I was getting back into the grove of things, my skis decided to give way on a large jump and planted my face onto icy snow. I’d say that on balance (something I haven’t had a lot of since then HAR-HAR) concussions are better than panic attacks, but not by much.

Anyway the flip side is that I’ve been doing a lot of reading out of lack of anything better to do while resting, and one of the books I’ve been reading is Steven Pinker’s massive door-stopper The Better Angels of Our Nature. Incidentally, I found it a very interesting read with tons of cool factoids, although it could have done with a third of its text and a tiny fraction of its liberal sanctimonious. But that’s for the forthcoming review; in this post, I will focus instead on a reference I found there to a very fascinating and revealing paper about Antisocial Punishment Across Cultures (Herrmann et al.) – and by extension, its implications for social cohesion.

Power summary: The shrinks got a bunch of university students, divided them into teams of four, and got them to play a “public goods game.” They were given 20 tokens at the start of each of ten rounds, and they were told they could invest any number of them into a pot, with a return of 0.4 tokens to each player – regardless of whether or not he participates – to each token invested in the pot. So if everyone was to contribute all 20 of their tokens, each player would walk away with 32 tokens; on the other hand, if only two players were to contribute all their tokens while the other two got a free ride, the altruists would walk away with only 16 tokens, whereas the free riders would get their 16 tokens plus their original 20 which they had kept back.

no-punishment-contributions

In this version of the game, there were no interesting patterns; across all cultures, contributions plummeted as free riders enjoying impunity undermined the morale of productive contributors. However, that’s not how the game works in real societies, which actively punish many forms of free riding: Tax evasion, benefit fraud, dodging fares on public transport, etc. The game was then modified to include a punishment option, in which any player could choose to spend one token to remove three tokens from any other player of his choosing. The results changed drastically.

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UC Berkeley Is Liberal LOL

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From the rhetoric, you’d think the People’s Republic of Berkeley was a sickle short of Communism.

In reality however the university itself is fairly standard, probably no more radical than any other in the US. I sat in on a political economy class today (full of PE majors who are in general quite leftist) and the professor took a poll. 39% (!) said the banksters deserved a bailout. A stunning 82% would have bailed them out (though granted, not doing so is more of a libertarian – or far left – position than anything else). However, only 12% said that the banksters should have been given bonuses. The feeling against banker bonuses however is so near universal that I don’t think this is much out of the ordinary. (On this point, I have to disagree – the banksters DO deserve their bonuses. If politicians are going to bail you out, with no popular opposition to boot, it is not only justifiable but a moral obligation to take any bonuses you are offered and give the finger to those suckers!).

Also, in response to another question about the nature of the “state of nature”, 7% said man is inherently good and cooperative; 47% the former, but that society corrupts him; and 47% said he was selfish and competitive. Berkeley students are therefore surprisingly realistic. Even a cursory reading of non-politicized anthropology will reveal that – with a few exceptions – primitive societies are extremely violent, competitive, and hierarchical.

And those respondents were for the most part social science people. Engineers and techies at Cal are considerably further to the right. More general freshman opinion polls show that Berkeley students aren’t all that much more radical than the average American population (e.g. opinion on the death penalty is split 50/50). Actually just considering that Berkeley is associated with the likes of John Yoo (the pro-torture lawyer) or Arthur Jensen (the HBD’er) should prove it is no seething, uniformly liberal hotbed. A year ago, the College Republicans organized a “Diversity Bake Sale” in which discounts were given to Hispanics, blacks, and women to protest affirmative action; a liberal attempt to get the university to ban it failed.

The impression I think arises from Cal’s close association with the City of Berkeley which actually is full of politically far left citizens.

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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Disagree With Ron Unz’s Conclusions On Chinese IQ

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He writes:

These scores are indeed truly remarkable, and completely confirm the apparent pattern of Lynn’s IQ samples, in which desperately poor East Asians tend to score at or above the levels of the most successful and well-educated Western populations… But since the total population is at least well into the hundreds of millions, heavily rural as well as urban, the average PISA score of 520—corresponding to an IQ of 103—cannot be too dissimilar from the overall Chinese figure. And with China’s per capita GDP still only $3,700 and well over half the population still living in rural villages when the tests were conducted, these are absolutely astonishing results… Although opinions may certainly differ, I regard this new evidence as very strong support for my “East Asian Exception” hypothesis.

China isn’t anywhere near as backward as he portrays it.

(1) The urban-rural ratio was essentially 50/50 according to the 2010 Census. Furthermore, rural Chinese don’t really suffer from the absolute destitution common to peasants in Third World countries. They own their own land and it is almost impossible for them to lose it. Malnutrition is now close to non-existent. Slums are now very rare. According to a Gallup poll, Chinese now actually struggle less than Americans to buy food.

(2) Total Chinese meat consumption overtook US meat consumption in 1990, signifying a nutritionally adequate figure (as Americans eat a lot of and perhaps a bit too much meat anyway). Today Chinese meat consumption is half the US level. The PISA 2009 cohort would have been born in 1993, when Chinese nutrition had already essentially converged with the First World.

(3) He uses nominal GDP per capita which is quite meaningless. The PPP level of Chinese GDP per capita is $8,400 and that figure is probably underestimated.

Basically, if we adjust for the fact that in terms of basics (food, education, housing) China is now essentially equivalent to developed countries, it would make sense that its average IQ level is now only about 5 points from its potential maximum.

But really my fundamental problem with the “East Asia Exception” hypothesis is the huge paradox it exposes: Why was it Europe, and not China, that first underwent the Industrial Revolution? And the (initially unrelated) Scientific Revolution, for that matter? If as Ron Unz says the Flynn Effect barely applies to East Asian populations, then what you’d have had five centuries ago is 100mn Chinese, 20% of them urban – with an average IQ of maybe 95; and 100mn Europeans, only 5% of them urban – with an average IQ of 75. Sure Europe had various advantages (as chronicled by Jared Diamond, Kenneth Pomeranz, etc) but surely it couldn’t have trumped the effects of a 1 S.D. IQ advantage? That is why I believe the East Asia Exception to be historically implausible.

The World Economy’s Orbit

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The map below shows the shifting location of the world’s economic center of gravity. It was compiled by McKinsey and reproduced by The Economist.

All is broadly as one might expect. In pre-industrial times, the world’s economic center of gravity was always basically triangulated between India, China, and the Roman Empire (later North-West Europe). By 1913, the US had became a significant world power, and in mid century it had drawn the center of gravity out into the North Atlantic. Since then the rise of the USSR, Japan, and then China, SE Asia, and India, started shifting the ball east and south at an accelerating pace. Today the speed of this transition is 140km per year. So there you have it: A cartographic representation of The Rise of the Rest.

By 2025, as shown on the map, the ball will be located somewhere in the Altai Mountains of Siberia. After that it will probably take a small dip south as India starts becoming much more prominent. Eventually however it will start going north and west again as the Arctic opens up and countries like Russia and Canada start growing much more rapidly as the century draws to a close. The cycle will retrace its ancient path.

National Foresight, Or: Why Russia Needs A Strong Hand

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In a 2010 paper on time preferences*, the authors Mei Wang et al. conducted an experiment in which participants could choose either $3400 now or $3800 a month later. Now I would choose the latter option but maybe it’s just because I’m intelligent and have been living in the West for quite a while. In other countries this is not the obvious choice however.

We see the usual correlates. Countries that are richer; more Germanic; less corrupt; more intelligent – they all have more future time orientation. In countries that have a Communist legacy future time orientations are perhaps lower than we might expect them to be otherwise.

This all of not insubstantial relevance because time preference can have an impact on economic structure and social life. For instance, as the paper notes, societies with higher future time  orientation are likely to devote more attention to the environment. They are also likely to devote a greater share of their GDP to R&D.

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The Brave New World Of Dennō Coil

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In the Japanese TV series Dennō Coil, people wear Internet-connected augmented reality glasses and interact with a world that is now split between the real and the virtual. Citizens and netizens become one. The story is set in 2026, some eleven years after the introduction of this technology.

Considering that this series was first conceived of in 1997, the dates are remarkable accurate. Recently it was revealed that Google is working on a “Project Glass” that will become available to consumers for a cool $1,500 from late 2013 or early 2014.

Needless to say the usual cynics and technophobes have been making fun of the idea, going on about the ethical problems of facial recognition, announcing they will boycott the technology (yeah right), etc. I am unconcerned with all this. As with other mega-trends like global demography or climate change, contrary opinions are like a flimsy shack against an advancing tide, in other words, irrelevant. Fortunately, for the most part, technological revolutions increase wellbeing and are useful anyway.

In my opinion, the decisive technological development of the 2000′s was the mass proliferation of cell phones. In the late 1990′s, only a small percentage of people in developed countries had access to them, as well as a handful of businesspeople and high officials in the developing world. Today they are ubiquitous with global penetration at over 70%. Apart from making people much more connected – I can barely remember the days when one actually had to make strict appointments in advance – the sector also powered a mini-economic boom for both designers (Nokia, Samsung, etc), their manufacturing contractors in China, and the ecosystem of app developers they spawned in places like the Silicon Valley.

The augmented reality eyeglass revolution will be of similar or even greater scope. What is now almost unheard of outside the techosphere will begin to break out into the public consciousness by the mid-2010′s; substantial numbers of the global middle class will start wearing them by the late 2010′s; and by the mid-2020′s, this will be a thriving global industry with tons of spinoffs and applications. So much so that a proper name will surely have to be found for these glasses. Intelligent glasses? AReyes? Thinking goggles? Denno glasses? I like the sound of the last one so I’ll be using it until the term catches on or another replaces it.

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On Defending The Soviet Union

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scylla-charybdis-and-meContrary to what some might try to take from my post on the longterm failure of the Soviet economy, I am not an anti-Soviet ideologue. I loathe lies about its achievements and the blanket condemnations directed its way by moralistic poseurs every bit as much or more than I detest reality-challenged attempts to paint it off as some kind of utopia or at least superior to alternative paths of development.

After communists, most of all I hate anti-communists. - Sergei Dovlatov, Soviet dissident.

On the latter point, I especially notice a tendency to ignore wider historical and comparative context. In the crudest cases, Russian literacy rates and GDP are compared with those of the Tsarist era: Yes, of course the average Soviet citizen c.1980 lived far better than the average Russian citizen in 1913, but then again, so did the average citizen of EVERY OTHER European country. The more important question to ask: Would the average Russian have been better off had the Russian Empire continued on its natural development trajectory without the distortions of Stalinist central planning? Yes, he almost certainly would have, as per comparison with, say, Finland (the sole part of the Empire that didn’t go Communist), or even the Mediterranean periphery nations.

Alternatively, they say that the USSR nonetheless managed to be richer than the “Third World”, as if that was some kind of achievement. Of course it was not, as (1) they were much less advanced than the Russian Empire even in 1913, and (2) their low national IQ’s would have precluded, and continue to do so, convergence with the rich world anyway; a weakness that Russia *doesn’t* suffer from. But the evidence is simply too overwhelming to be deniable: China; North Korea; Cuba; to a lesser extent, the ex-Soviet countries and Eastern Europe – all these nations, which have little in common except insofar as they suffered from the scourge of Communist economics, are ALL glaring and consistent downwards exceptions to the otherwise remarkably tight correlation between levels of national IQ/human capital and GDP per capita. (Of course a further problem here is that hardcore Soviet apologists tend to be cultural Marxists and deny Human Biodiversity and intelligence theory).

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Mexico Makes The Right Choice

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Two days ago, Mexicans returned the PRI to power after 12 years in the political wilderness, with Enrique Peña Nieto becoming President. The leftist Obrador as well as PAN’s Mota lost. I don’t know much about Mexico but this is how I interpret things.

(1) The PAN seem to be full of neoliberals, who serve foreign and corporate interests and don’t care much for ordinary Mexicans. They favor a hyper-militarized approach to the War on Drugs, but this hasn’t yielded successes, as the Mexican homicide rate doubled in the past 5 years. The socialist Obrador is a poseur, who does not much like democracy (as per his Orange Revolution-like attempts to overturn the results of the 2006 elections). In general, the opposition to the PRI is quite thuggish while attempting to paint itself as transparent and democratic; much like the Russian opposition to United Russia. See the impudence of the Yo Soy 132 student protesters, rich self-entitled thugs who think it cool to physically threaten their political enemies.

(2) The PAN hasn’t had much success in the past 12 years. While north-bound migration has fallen, this was due to economic difficulties in the US as opposed to Mexican success. It doesn’t seem to have become noticeably less corrupt nor did it achieve significant economic growth relative to the developed world (see right).

I don’t think this was mostly the PAN’s fault. After all, Mexico is pretty much where it should be as dictated by its (very modest) level of human capital or national IQ; its position relative to the US hasn’t budged over the past century. That said the PRI is still the better choice. It is the party of the majority, respectably corporatist but also nationalist and mindful of workers’ interests. The same cannot be said of the PAN, who pander to the interests of foreigners and Mexican elites; their electorate are oligarchs and emigres. As for Obrador he is a dangerous demagogue. Mexico made the right choice.

The Soviet Economy – Charting Failure

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Many Communists, leftists, and even patriots (I’m sorry to say) have a pronounced tendency to make out the Soviet economy as not quite the resounding failure it really was – or even to paint it as a success story that was only brought down by perestroika and liberal reforms.

The above chart – based on historical GDP per capita (Geary-Khamis 1990 Int$) by Angus Maddison, compiled by liberal economist Illarionov, popularized online by Lopatnikov, and Starikov – purports to destroy two “myths”: That of (1) Prosperous Tsarism, and (2) The ineffectiveness of the Soviet economy. After all, the average Russian went from being 40% as rich as the average American in 1885, to only 23% by 1917; whereas during the Soviet period, despite the turmoil of two major wars, Russian incomes reaches a relative peak at 40% of American levels during Brezhnev’s “stagnation” period.

These is however a glaring hole in this logic, namely that (1) relatively slow growth under late Tsarism reflected a permanent state of affairs, as opposed to the heavy but temporary burden of a large rural, illiterate population; and (2) that a level of per capita GDP that is a mere 40% of what Americans enjoy was in any way a fulfillment of Russia’s potential during the 20th century. In fact, graphical comparison with other countries shows this to be almost certainly false.

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Actually China Is Probably Already Bigger

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Despite the generally loathsome nature of The Economist, it does have its advantages most of which can be reduced to its Daily Charts blog which focuses on statistics as opposed to rhetoric.

According to the chart above, as of 2012 ever more people, especially in the developed world, are starting to believe that the China is the world’s leading economic power. In terms of nominal GDP, and even conventional measures of GDP (PPP), the Krauts are wrong at least for now. However, as per the chart below, China is fast overtaking the US on increasing numbers of metrics by physical volume – steel (1999), CO2 emissions (2006), exports (2007), and manufacturing output, energy consumption, and car sales (2010). Indeed, according to Arvind Subramanian, in PPP terms China already overtook the US back in 2010, and I think this is plausible given that it ties in perfectly with China overtaking the US in so many key categories in that year. Regardless, by 2015 it will become increasingly hard to deny that China has the bigger economy in PPP terms, and soon after in nominal terms too as the yuan massively appreciates against an increasingly devalued dollar.

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The Collapse Of Britain In A Few Headlines

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Here’s a sampling of recent headlines from the country that loves to lecture others on freedom of speech and rule of law.

Racist Tube rant woman Jacqueline Woodhouse jailed: A London Underground passenger has been jailed for 21 weeks after she admitted hurling racist abuse at fellow passengers. – BBC

Girl gang who kicked woman in the head while yelling ‘kill the white slag’ freed after judge hears ‘they weren’t used to drinking because they’re Muslims’. – Daily Mail

Police misused powers during royal wedding, protesters claim. (AK: on preemptive arrests of republicans) - The Independent

The hijab has liberated me from society’s expectations of women: Wearing the hijab doesn’t have to be about religious dedication. For me, it is political, feminist and empowering. (AK: What’s worse than a feminist, and a radical Islamist? A feminist Islamist) – The Guardian

No 10 guide to changing nappies and baby talk: New parents will be given government advice on changing nappies, breastfeeding and “baby talk” under a multi-million pound initiative to support family life. – The Telegraph

UK economy’s fall into recession deeper than expected: Contraction of 0.3%, coupled with more bad news from the eurozone, increases pressure on government to intervene to boost economic growth. – The Guardian

Is there any reason, any reason whatsoever, for other countries to listen to Britain on absolutely anything? Flee as quickly as you can possibly can! :shock:

“Cycle of Poverty” Is Just Another Way of Saying “Idiot’s Limbo”

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Case in point: This article (“Caught in the cycle of poverty”, Anna Gorman) from the LAT, which is a microcosm of everything that is wrong in US demographic and social policy. It is a story about the “challenges” facing a poverty-stricken African American woman clearly intended to evoke sympathy for her. That didn’t go over well in the readers’ comments section even though the LAT is basically the West Coast equivalent of the liberal/lefty NYT.

Indeed, at first glance, it is difficult to find sympathy for her. Our heroine, Natalie Cole, is a high school dropout who’d popped out two kids by the age of 17 (!). She then popped out another two with her Latino boyfriend. She was asked to write a resume for her job application but never did so. She does not take her medications or turn up for appointed check-ups despite already by the age of 27 being ”heavyset” (read: Obese) and suffering from a variety of health ailments. She shoplifts. According to the author, “She wants to provide a better life for her children but seems not to know how.”

On the other hand however we have to bear in mind that LAT readers are fairly intelligent, whereas there is cause to doubt Ms. Cole is even functionally literate. She has most of the correlates of a dull person: Single motherhood; inability to follow simple instructions; obesity; etc. Despite wanting to, she seems unable to get a GED certificate. From the portrait given by the LAT it is hard to imagine her having an IQ of more than 75. No amount of further education or counseling can bestow her with the tools to escape idiot’s limbo. As such, it is obviously unfair to judge Ms. Cole so harshly for her welfare dependency.

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In Which I Appear On The Stark Report

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You can listen to the 56 minutes of my interview on The Stark Truth about race realism, IQ / human capital, and economic development here. (That, or read the posts linked to therein if you haven’t already. I didn’t say much new).

Many thanks to Robert Stark, and the Voice of Reason Broadcast Network which does sterling work in publicizing alternate viewpoints.

The Hunger Games: Food For Thought

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Recently I went to watch the movie adaptation of the first book in Suzanne Collins’ dystopian trilogy. (The image left is h/t Natalie). Centuries into the post-apocalyptic future, the US – now known as the nation of Panem (or “bread”, in Latin; presumably an allusion to the interplay of panem et circenses that is its dominant theme), is ruled over by a privileged elite based in the Capitol, a hi-tech, glitzy metropolis situated in the Rockies. Surrounding it are twelve Districts, places of poverty and squalor that are obliged to send tributes to the Capitol as the blood price for a rebellion 74 years in the past. These tributes are both material in-kind (individual Districts specialize in fishing, agriculture, coal, electronics, luxury goods, etc) – and human. Every year, the subjected Districts have to send a male and female child, drawn by lot or a volunteer, to compete in national televised blood games.

Katniss Everdeen, the heroine of the trilogy, is a teenage girl living in District 12, one of the poorest and most underprivileged. They specialize in mining coal, which is burnt in another district to produce power for the Capitol. While some reviewers see the books as a critique of capitalist exploitation, it is pretty clear that the dominant economic system is command economy geared to the goals of extracting superprofits from the peripheries and funneling them towards the citizens of the Capitol to buy their quiescence. (As Eric Kain points out, “Arbitrarily picking Districts to supply only one type of good to the Capitol means that human capital is badly mismanaged… a flourishing market economy likely would have meant a far more wealthy populace in the Capitol as well.”)

WARNING: The rest of this review will contain major spoilers.

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