Posts tagged with GDP

320 Plays

In other news, Art Laffer has become a parody of himself.

  • Deliberately misrepresenting the flat tax. Making it sound like 12% is a tax cut for most Americans, when in fact the effective tax rate for everyone making under $100k is already under 12%.
    The average effective tax rate on almost all Americans is already under 12%. 
  • If what you really want to do is raise taxes on the poor and cut taxes on the rich, why don’t you just come out and say it, Art?
  • Conflating simplicity of tax returns with elimination of tax brackets.
  • Poverty is caused by high tax rates and welfare. Quick, tell Somalia!
    Somalian GDP is $600 per person. Better tell them to stop paying out so much welfare because that is what's making them the #222 richest country. 
  • Brings up sin taxes as a distraction, like a magician’s trick.
  • No estimates of how much income is being “accelerated” from 2013 into 2012, only statements that the number is huge.
  • Of course when the tax rates rise on the rich, they’re all going to flee the US. Because ceteris paribus it’s in their interest to do so. All other things considered, the first thing I do every morning is ask what tax rates are on various activities I could engage in and various countries I could move to.
  • The sign is negative, therefore the magnitude is large.
  • Also austerity is equivalent to growth, although later on he contradicts that and says a lot of government spending is necessary. (Wonder whether he wants to cut health benefits, elderly benefits, military protection, or government jobs?)
  •  Some government spending is wasteful (again no discussion of magnitude—.00001% or 10%?) therefore austerity.
  • Ricardian Equivalence, because I say so.
  • Twisted reasoning like “Poor people are poor because of disincentives to work, but rich people would pay all of their tax if only you didn’t ask so much of them.” However not going to prove any of that, it’s just “common sense”.
  • This passes for argument: “Come on, you know that.” (I count four.)
  • Because, incentives. Because, markets.

If you laugh and squeal while you say it, you’re right.


I would love to have a less cynical view of the world than that any yahoo who claims taxes can be vastly reduced on the rich with no negative consequences to anyone gets banquets in his honour, funding from “think tanks”, and handed the reins of policy. But this sh*t tests me.

Searching for something positive to say…at least he said the goal of government is to get poor people to be prosperous.

(Source: BBC)

memeengine replied to your post: Or can the influence of any ancestor ever fade down to zero? (Or, well… to arbitrarily small size?)

An AR[1] process can go arbitrarily ↓0 as time↑∞. But in real life the sins of the fathers set their childrens’ teeth on edge in a stiffer, more heriting, architectural way. (I was alluding to that with the new-parents post scriptum.)

I don’t know of any “grande classes of models” wherein you stay stuck from where the past put you, but for example you could say

  • if ($income >= 10 guineas) { $opportunities = 1000; } else { $opportunities = 3; }.

I’m neither an expert on history nor do I find the econometrics super compelling, but ∃ some theories of the past carving out a channel for the future.

  • In central Africa — the form of governance from 1000, 1500, 1800 AD still has an influence on GDP per capita today. Even once you statistically control for other “obvious” determinants of production power. (Here I learned the interesting term “ethnofract”—a measure of ethnic disparity.)
  • In the southeastern US — a county’s history of slave-holding has statistical relevance to. (Nathan Nunn is a co-author.)
  • In socialist Sweden — the class mobility from generation to generation is greater than in free-market United States.
  • According to Arvind Thornton, north-western European social norms of family size, structure, and intra-/inter-relationships set the stage for “industrial revolution” type anti-Malthusian family structures that inform major subcultures all over the OECD today. I.e., a small nuclear family wherefrom kids form their own families in a separate home; high value placed upon individualism; etc. 
  • In British-colonial Jamaica and French-colonial Haiti, an oligarchic political form in the 1700’s passed on poverty to its ‘fterbears. Sugar plantations financed European vacations, fine liberal educations, and leisure for the elites, but sugar is not an investment in the future. Indeed, growth markets might have overthrown the political structure by empowering the hands, so the positive-sum games were forestalled by the landed interests. (Story can be found on Daron Acemoglu’s website.)
  • (A similar argument has been applied to Europe in the Needham question: why did Europeans dominate the globe rather than Asians, when the Asians were ahead earlier on in the race? Perhaps because of the over-powerful Chinese government.)
  • In Louisiana, USA — juridical forms differ from the other 49 States. Since Louisiana’s French colonial history bequeathed it a civil-law rather than a common-law system of justice, not just its laws but the underlying reasoning for how they’re executed, differs orthogonally to other interstate legal variations.
  • Come to think of it: any common-law system, by design, to carve a river that the future will follow.

In all of the statistical examples we’ve got to ask if it’s possible to statistically control for parameter changes. To which the correct answer is: No. Well, maybe. Um, in a local sense any parameter change can be estimated as linear. If the underlying function is ≥once-differentiable. So, err. I’ll have to get back to you on that.

(I’ll look up paper links later…if you as a reader know the papers or related ones you could also do me the favour and post links in the Reply or Disqus Comments. =) )

  • Africans drink 7 litres of commercial beer per year.
  • Chinese drink 35 litres of commercial beer per year.
  • Americans drink 70+ litres of commercial beer per year.

(minute 7)

From my own little corner of the Earth, it looks like home-brewed beer is growing in appeal—as are micro-brews and wines & ciders made from fruits with a little more natural variation.

So it’s interesting that—just when my crowd is being led by Pied Piper Pollan away from Corporate Consistency-topia into the Land of Natural Individual Variation—those climbing up the Ladder of Disposable Income might drift the opposite direction.


I was going to try to make an alluring mathematical comment on this story, but I’m out of steam. Here are the mathematical concepts involved in this story:

  • "direction" — implies ∃ beer space, ∋ beer vectors
  • this is a perceptual space — what are the dimensions? Is it linear?
  • how would you mathematically model variable-versus-consistent beer tastes?

    Maybe as a contour plot / heatmap of confidence intervals? Or a Schwartz distribution?

    I wouldn’t assume that the variation is Gaussian. Whatever the taste / smell space looks like, a lot of the variation in homebrewing is due to creativity (discontinuous leaps to elsewhere in the space) — not just to production “errors” (which might in fact be normal).

PS Tusker Beer rules.


Thanks to Ed Leamer, a saint and anti-mystic.

Thanks to Ed Leamer, a saint and anti-mystic.


his source:
my source:

his source:

my source:


Over the past millennium, world population rose 22–fold. Per capita income increased 13–fold, world GDP nearly 300–fold. This contrasts sharply with the preceding millennium, when world population grew by only a sixth, and there was no advance in per capita income.

history of world GDP by country

From the year 1000 to 1820 the advance in per capita income was a slow crawl — the world average rose about 50 per cent. Most of the growth went to accommodate a fourfold increase in population.

Since 1820, world development has been much more dynamic. Per capita income rose more than eightfold, population more than fivefold.

Per capita income growth is not the only indicator of welfare. Over the long run, there has been  a dramatic increase in life expectation. In the year 1000, the average infant could expect to live about  24 years. A third would die in the first year of life, hunger and epidemic disease would ravage the  survivors. There was an almost imperceptible rise up to 1820, mainly in Western Europe. Most of the  improvement has occurred since then. Now the average infant can expect to survive 66 years.

The growth process was uneven in space as well as time. The rise in life expectation and income has been most rapid in Western Europe, North America, Australasia and Japan. By 1820, this group  had forged ahead to an income level twice that in the rest of the world. By 1998, the gap was 7:1.

Between the United States (the present world leader) and Africa (the poorest region) the gap is now  20:1. This gap is still widening. Divergence is dominant but not inexorable. In the past half century,  resurgent Asian countries have demonstrated that an important degree of catch-up is feasible.

Nevertheless world economic growth has slowed substantially since 1973, and the Asian advance has  been offset by stagnation or retrogression elsewhere.


Everybody should know these amazing yet basic facts.