Quotulatiousness

January 2, 2020

The 2010s … the best decade (so far) in human history

Filed under: Economics, Environment, Health, History, Technology — Tags: , , , — Nicholas @ 03:00

Matt Ridley explains why, despite all the doom and gloom in the daily headlines, the last ten years have been the best by almost any measure:

Let nobody tell you that the second decade of the 21st century has been a bad time. We are living through the greatest improvement in human living standards in history. Extreme poverty has fallen below 10 per cent of the world’s population for the first time. It was 60 per cent when I was born. Global inequality has been plunging as Africa and Asia experience faster economic growth than Europe and North America; child mortality has fallen to record low levels; famine virtually went extinct; malaria, polio and heart disease are all in decline.

Little of this made the news, because good news is no news. But I’ve been watching it all closely. Ever since I wrote The Rational Optimist in 2010, I’ve been faced with “what about …” questions: what about the great recession, the euro crisis, Syria, Ukraine, Donald Trump? How can I possibly say that things are getting better, given all that? The answer is: because bad things happen while the world still gets better. Yet get better it does, and it has done so over the course of this decade at a rate that has astonished even starry-eyed me.

Perhaps one of the least fashionable predictions I made nine years ago was that “the ecological footprint of human activity is probably shrinking” and “we are getting more sustainable, not less, in the way we use the planet”. That is to say: our population and economy would grow, but we’d learn how to reduce what we take from the planet. And so it has proved. An MIT scientist, Andrew McAfee, recently documented this in a book called More from Less, showing how some nations are beginning to use less stuff: less metal, less water, less land. Not just in proportion to productivity: less stuff overall.

This does not quite fit with what the Extinction Rebellion lot are telling us. But the next time you hear Sir David Attenborough say: “Anyone who thinks that you can have infinite growth on a planet with finite resources is either a madman or an economist”, ask him this: “But what if economic growth means using less stuff, not more?” For example, a normal drink can today contains 13 grams of aluminium, much of it recycled. In 1959, it contained 85 grams. Substituting the former for the latter is a contribution to economic growth, but it reduces the resources consumed per drink.

As for Britain, our consumption of “stuff” probably peaked around the turn of the century — an achievement that has gone almost entirely unnoticed. But the evidence is there. In 2011 Chris Goodall, an investor in electric vehicles, published research showing that the UK was now using not just relatively less “stuff” every year, but absolutely less. Events have since vindicated his thesis. The quantity of all resources consumed per person in Britain (domestic extraction of biomass, metals, minerals and fossil fuels, plus imports minus exports) fell by a third between 2000 and 2017, from 12.5 tonnes to 8.5 tonnes. That’s a faster decline than the increase in the number of people, so it means fewer resources consumed overall.

H/T to Damian Penny for the link.

December 16, 2019

QotD: The Great Pestilence of 1348

Filed under: Britain, Health, History, Quotations — Tags: , , , , — Nicholas @ 01:00

Long I have been curious about the Great Pestilence that trimmed the population of Britain and Europe by a third or more, in the fourteenth century. I make too much of it; the plague was a recurring event for centuries before and after. I notice from the tabloids that it is returning, through Africa this time. I know there will be pestilence to come, when we will all think it terribly important. It rivetted attention, I’m sure, in the autumn of 1348, and through the summer of 1349. And yet within a generation it is hardly mentioned.

England, below the Ribble and Tees, is special, thanks to the Domesday Book of the invading, tax-loving Normans, and their general propensity to good record-keeping. The towns and villages ennumerated in 1086 can be traced to the present day; nineteen in twenty are still there. Having figures to start, and through the parish books later, we can track an economic and demographic history with an accuracy possible in no other country. We can know, for instance, of the population boom through the twelfth and thirteenth centuries, which had slackened well before the “Black Death.” And with that boom, impressive advances in farming, technology, and building, as today. Nothing conduces to technical improvement, as a bit of crowding.

This proportion I cited — the nineteen-in-twenty (or more) — which I have from reading in economic history mostly years ago, fascinates my attention. We know large tracts were depopulated, we find the archaeological evidence easily enough. They were planting rye within the walls of Winchester, and many other towns. Everywhere, they had elbow-room again. Our deep ecologists would have been pleased — those who think life on this planet would be better had a few billion souls not been born. As Christianity, and environmentalism, are mortally opposed, and the fourteenth century was overwhelmingly Christian, I expect complaints of overpopulation were differently expressed at the time. Mostly it would have been moaning from younger brothers about the distribution of inherited land.

Always, there have been younger brothers. Always, there have been survivors. What delighted me was the speed with which all the vacant places were filled. As we’ve seen, too, after ghastly wars, demography abhors a vacuum.

David Warren, “Death the real illusion”, Essays in Idleness, 2017-11-04.

October 12, 2019

⚜ | Survivor Bias in World War 2

Filed under: History, Military, Technology, USA, WW2 — Tags: , — Nicholas @ 02:00

Military Aviation History
Published on 31 Aug 2017

Survivor Bias was a thing in World War 2. Let’s learn what happened.

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⚜ Sources ⚜
M. Mangel, F. J. Samaniego, Abraham Wald’s Work on Aircraft Survivability

Abraham Wald, A Reprint of “A Method of Estimating Plane Vulnerability Based on Damage of Survivors”

From the comments:

Military Aviation History
2 years ago (edited)
Hey all, I hope that you like this video. Small correction from my side at 05:00 – It was reprinted in 1980 not 1918. I misspoke. Obviously.

This video was actually planned for the end of September but since I had the script already, I decided to publish it now. As mentioned to my Patreons some days ago, I have a few unexpected home visists to make. The first set was last week and after returning two days ago, I flew off to yesterday for another week abroad. As such it made sense to get such a familiar topic out now since otherwise, there would be nothing.

It should be mentioned that I did not find the “original” study Wald responded to. Either it got lost, or it was never published. Perhaps Wald saw them work on it, saw the errors and published his paper leading the other group to abandon their project. However, there is also a slight chance that over the years parts of the story were exaggerated. Wald certainly published his papers (you’ll easily find it on the internet) and was given the credit for helping US designers — but what of that inital research group? What were their conclusions, their recommendations beyond what is usually linked to Wald? Without their study, no one seems to know.

September 28, 2019

QotD: Ship availability in the Royal Navy

Filed under: Britain, Military, Quotations — Tags: , , — Nicholas @ 01:00

[T]he traditional metric of how a navy can deploy is that it requires a roughly 3:1 ratio to sustain a vessel on a task indefinitely — in very rough terms this means that when a ship is deployed on OP KIPION, her successor is nominated and working up through to being on passage to join her (e.g. HMS Daring saw HMS Monmouth sail sometime before being relieved). At least one more ship is going to be somewhere in the refit system requiring essential maintenance, upkeep and life extension work too. This 3:1 ratio is something which can be broken, and availability can vary over time — but as a general rule if you want to keep a ship on task for the long haul, you’ll need three ships to do this.

In the case of the current RN, the force of 19 hulls is actually 17, with two in long term “harbour training ship” (NOT reserve which has a specific and different meaning) roles to save on manpower levels. This means the RN is sweating its assets incredibly hard to keep ships on task for the long haul — particularly at a point when the T23 fleet is starting to show its age, and also go through a complex Mid Life Update process — at its simplest, ships designed for 18 years of life will be nearly 40 before they leave service, and it’s showing.

But, the risk is that in looking at the headline figure of “only” 6 escorts, we lose the ability to explain that this is actually pretty good by any navy’s standards. If you look at the world’s navies right now, there are very few which are able to deploy and sustain more than one or two ships at distance from home — the USN, occasionally the French and Russians and that’s about it. Others can do some quite impressive training deployments, more for showing the flag than delivering effect. Other navies may deploy escorts, but to do so occupies a big chunk of their naval training and output for the year to deliver this, at the hidden cost of keeping other ships alongside.

Don’t make the lethal mistake of assuming that because the RN “only” has 6 ships out there that every other navy is laughing at it. In fact the RN’s ability to sweat its force so hard remains a real point of awe for other nations, who are amazed at how much the RN can do at one time.

Sir Humphrey, “Lies, Damned Lies and Statistics”, Thin Pinstriped Line, 2017-07-09.

July 21, 2019

The humble egg – wonder food or deadly poison?

Filed under: Food, Health, Media, Science — Tags: , , , , , — Nicholas @ 03:00

If you’ve paid any attention to popular reporting on nutrition studies over the years, you’ll have noticed how just about any advice on food has not only changed, but has often been completely the opposite of advice offered just a few years earlier. During my teenage years, the egg was pushed (thanks in part to the “Egg Marketing Board”, one of Canada’s supply management bureaucracies) as “the perfect food”. During the next decade, as newer nutrition studies were published, suddenly the wonderful, nutritious egg was now a huge risk to your cardiovascular health and even one egg per week might be enough to kill you. Rinse and repeat for so many other foods and you either stop eating altogether or, more sensibly, stop paying any attention at all to mainstream media interpretations of nutrition studies.

It’s been a tortuous path for the humble egg. For much of our history, it was a staple of the American breakfast — as in, bacon and eggs. Then, starting in the late 1970s and early 1980s, it began to be disparaged as a dangerous source of artery-clogging cholesterol, a probable culprit behind Americans’ exceptionally high rates of heart attack and stroke. Then, in the past few years, the chicken egg was redeemed and once again touted as an excellent source of protein, unique antioxidants like lutein and zeaxanthin, and many vitamins and minerals, including riboflavin and selenium, all in a fairly low-calorie package.

This March, a study published in JAMA put the egg back on the hot seat. It found that the amount of cholesterol in a bit less than two large eggs a day was associated with an increase in a person’s risk of cardiovascular disease and death by 17 percent and 18 percent, respectively. The risks grow with every additional half egg. It was a really large study, too — with nearly 30,000 participants — which suggests it should be fairly reliable.

So which is it? Is the egg good or bad? And, while we are on the subject, when so much of what we are told about diet, health, and weight loss is inconsistent and contradictory, can we believe any of it?

Quite frankly, probably not. Nutrition research tends to be unreliable because nearly all of it is based on observational studies, which are imprecise, have no controls, and don’t follow an experimental method. As nutrition-research critics Edward Archer and Carl Lavie have put it, “‘Nutrition’ is now a degenerating research paradigm in which scientifically illiterate methods, meaningless data, and consensus-driven censorship dominate the empirical landscape.”

Other nutrition research critics, such as John Ioannidis of Stanford University, have been similarly scathing in their commentary. They point out that observational nutrition studies are essentially just surveys: Researchers ask a group of study participants — a cohort — what they eat and how often, then they track the cohort over time to see what, if any, health conditions the study participants develop.

H/T to Marina Fontaine for the link.

July 6, 2019

Putting global worker pay into perspective

Filed under: Business, Economics — Tags: , , , — Nicholas @ 05:00

Tim Worstall explains why the headline-friendly numbers in a recent ILO report are nothing to be surprised at:

“Nearly half of all global pay is scooped up by only 10% of workers, according to the International Labour Organization, while the lowest-paid 50% receive only 6.4%.

“The lowest-paid 20% – about 650 million workers – get less than 1% of total pay, a figure that has barely moved in 13 years, ILO analysis found. It used labour income figures from 189 countries between 2004 and 2017, the latest available data.

“A worker in the top 10% receives $7,445 a month (£5,866), while a worker in the bottom 10% gets only $22. The average pay of the bottom half of the world’s workers is $198 a month.”

[…]

The explanation? To be in the top 10% of the global pay distribution you need to be making around and about minimum wage in one of the rich countries. Via another calculation route, perhaps median income in those rich countries. No, that £5,800 is the average of all the top 10%.

Note that this is in USD. About £2,000 a month puts you in the second decile, that’s about UK median income of 24,000 a year.

And as it happens about 20% of the people around the world are in one of the already rich countries. So, above median in a rich country and we’re there. Our definition of rich here not quite extending as far as all of the OECD countries even. Western Europe – plus offshoots like Oz and NZ, North America, Japan, S. Korea and, well, there’s not much else. Sure, it’s not exactly 10% of the people there but it’s not hugely off either.

So, what is it that these places have in common? They’ve been largely free market, largely capitalist, economies for more than a few decades. The most recent arrival, S. Korea, only just managing that few decades. It is also true that nowhere that hasn’t been such is in that listing. It’s even true that nowhere that is such hasn’t made it – not that we’d go to the wall for that last insistence although it’s difficult to think of places that breach that condition.

June 28, 2019

QotD: “Intelligence” is just a noun

Filed under: Books, Health, Media, Quotations — Tags: , , , — Nicholas @ 01:00

Howard Gardner has also convinced us that the word intelligence carries with it undue affect and political baggage. It is still a useful word, but we shall subsequently employ the more neutral term cognitive ability as often as possible to refer to the concept that we have hitherto called intelligence, just as we will use IQ as a generic synonym for intelligence test score. Since cognitive ability is an uneuphonious phrase, we lapse often so as to make the text readable. But at least we hope that it will help you think of intelligence as just a noun, not an accolade.

We have said that we will be drawing most heavily on data from the classical tradition. That implies that we also accept certain conclusions undergirding that tradition. To draw the strands of our perspective together and to set the stage for the rest of the book, let us set them down explicitly. Here are six conclusions regarding tests of cognitive ability, drawn from the classical tradition, that are by now beyond significant technical dispute:

  1. There is such a thing as a general factor of cognitive ability on which human beings differ.
  2. All standardized tests of academic aptitude or achievement measure this general factor to some degree, but IQ tests expressly designed for that purpose measure it most accurately.
  3. IQ scores match, to a first degree, whatever it is that people mean when they use the word intelligent or smart in ordinary language.
  4. IQ scores are stable, although not perfectly so, over much of a person’s life.
  5. Properly administered IQ tests are not demonstrably biased against social, economic, ethnic, or racial groups.
  6. Cognitive ability is substantially heritable, apparently no less than 40 percent and no more than 80 percent.

Charles Murray, “The Bell Curve Explained”, American Enterprise Institute, 2017-05-20.

June 21, 2019

Lies, damned lies, and hate crime statistics

Filed under: Britain, Law, Media — Tags: , , , , , , — Nicholas @ 03:00

Fraser Myers explains why the much-remarked-upon British crime statistics showing huge increases in hate crimes are much more a statistical artifact than a true reflection of the state of British society:

Allegedly, England and Wales are in the grip of a “surge” in homophobic and transphobic hate crime. “The rate of LGBT hate crime per capita rose by 144 per cent between 2013-14 and 2017-18”, it reports. Hate-crime hotspots like South Yorkshire and Hampshire experienced even larger surges, it claims, with police-recorded crimes rising by 376 per cent and 189 per cent in the same period, respectively.

To make matters worse, according to LBGT campaigners, this rise in hate crime doesn’t even capture the true extent of the hatred out there. Taz Edwards-White, alliance manager at equalities and diversity organisation Metro, told the Guardian that the hate-crime figures were likely to be “the tip of the iceberg”. She and other campaigners say this rise could be down to the rise of right-wing populism.

The truth is rather different. Every year for the past five years, the release of police-recorded data on hate crime has been accompanied by panicked media reports of a hate-crime surge. But as last year’s Home Office report made abundantly clear, large increases “are due to the improvements made by the police in their identification and recording of hate-crime offences and more people coming forward to report these crimes rather than a genuine increase” (emphasis mine).

What’s more, there is a good reason why the “surge” identified by the Guardian takes off in 2013-2014. 2014 was the year the College of Policing released its Hate Crime Operational Guidance [PDF], which is still used to this day. This guidance actually demands that the numbers increase. “Targets that see success as reducing hate crime are not appropriate”, it says. As part of the drive to record more crime, there has been a slew of public-information campaigns and regular exhortations from police for the public to report hateful incidents, particularly in the wake of major political events like the EU referendum and the 2017 terror attacks.

Police-recorded data has other problems, too. Police are obliged to record not only criminal actions but also all non-crime hate incidents. A non-crime hate incident is literally any event that is perceived by the victim or any other person to be motivated by hostility towards a so-called protected characteristic. The key word here is perceived. As the Operational Guidance makes clear: “The victim does not have to justify or provide evidence of their belief, and police officers or staff should not directly challenge this perception. Evidence of the hostility is not required for an incident or crime to be recorded as a hate crime or hate incidents.”

QotD: Caloric intake and weight gain

Filed under: Food, Health, Quotations, Science — Tags: , , — Nicholas @ 01:00

The average person needs about 800,000 calories per year. And it takes about 3,500 extra calories to gain a pound of weight. So if somebody stays about the same weight for a year, it means they fulfilled their 800,000 calorie requirement to within a tolerance of 3,500 calories, ie they were able to match their food intake to their caloric needs with 99.5% accuracy.

By this measure, even people who gain five or ten pounds a year are doing remarkably well, falling short of perfection by only a few percent. It’s not quite true that someone who gains five pounds is ((5*3,500)/800,000) = 98% accurate, because each pound you gain increases caloric requirements in a negative feedback loop, but it’s somewhere along those lines.

Take a second to think about that. Can you, armed with your FitBit and nutritional labeling information, accurately calculate how many calories you burn in a given day, and decide what amount of food you need to eat to compensate for it, within 10%? I think even the most obsessive personal trainer would consider that a tall order. But even the worst overeaters are subconsciously managing that all the time. However many double bacon cheeseburgers they appear to be eating in a single sitting, over the long term their body is going to do some kind of magic to get them to within a few percent of the calorie intake they need.

It’s not surprising that people overeat, it’s surprising that people don’t overeat much more. Consider someone who just has bad impulse control and so eats whatever they see – wouldn’t we expect them to deviate from ideal calorie input by more than a few percent, given that this person probably has no idea what their ideal input even is and maybe has never heard of calories?

Scott Alexander, “Book Review: The Hungry Brain”, Slate Star Codex, 2017-04-27.

June 6, 2019

New paper on minimum wage effects is bound to be mis-used

Filed under: Economics, Politics, USA — Tags: , , , — Nicholas @ 05:00

In the Washington Examiner, Tim Worstall explains why a new well-researched paper on the minimum wage will be misunderstood and then used to “prove” things it doesn’t actually say:

None of this changes the standard intuition that when there’s a heavy such bite then there will be ill effects. What it does do is then lead us to trying to calculate what is a wage that does have that snarl, that bite? What is a minimum wage that is “too high” in the sense of having an excess of those ill effects upon employment? This is where I predict — no, not fear, not posit, nor surmise, but predict — this paper will be misused.

Our thinking is that the effects come from the relationship between the minimum and median wages. If we insist that wages cannot be lower than more than we already pay half the people, then we really are going to have problems. A minimum wage of 100% of the median wage isn’t going to work, that is. That ratio is called the Kaitz Index. This paper shows us that there are few to no such bad things happening up to 0.59 on that Kaitz measure. We can have the minimum wage at 59% of the median wage and know that we’ll have the good effects and only trivial amounts, at worst, of the bad.

You can see what’s going to happen next, can’t you? The Economic Policy Institute tells us that the median wage is about $22 this year, and 59% of that is $13. A bit of rounding and some aspiration, and why not go for a $15 minimum wage?

Except there are two median wages. Part-time and seasonal wages tend to be lower than full-year and full-time ones. The Economic Policy Institute is using that higher full-time one. The one for all jobs is quite a bit lower, $18.58 per hour. Take 59% of that and you get a rather lower level of $10.95 an hour. That’s around and about what McDonald’s, Walmart, and similar establishments pay as entry-level wages, which does seem about right, doesn’t it?

So, the new research paper, from esteemed researchers, published in the world’s top English language economics journal, tells us that minimum wages up to a certain level cause few to no problems. They’ve shown this for up to 59% of median wages. But which median do they mean? Dube himself told me they mean that lower one — specifically, the “median wage of all workers, not just for full time.”

But we all know how this is going to be used, don’t we? As proof that $15 an hour won’t cause any problems — which isn’t what the paper shows at all. Rather, it says that a $10.95 an hour minimum wage shouldn’t cause any problems of note.

The new paper is good empirical work. The fault is in what people will argue it says, not what it does.

April 18, 2019

QotD: Roadblocks to deregulating the US healthcare market

Filed under: Bureaucracy, Government, Health, Quotations, USA — Tags: , , , — Nicholas @ 01:00

One problem America has is simply that our government administration isn’t very good. That’s not true across the board — our government statistics are, IMHO, the finest in the world. But there’s stuff that other countries can do that we can’t, either because our government is more decentralized, or because our civil service just isn’t as prestigious (and therefore as full of competent, motivated people) as those in other countries. And our regulatory approach — rules rather than principles based, and highly adversarial — is also suboptimal, and hard to change.

Given how much the government now interferes in health care, that’s a big problem. Given our lack of administrative competency, our first step should be pulling back where we can — trying to push more ordinary expenses onto consumers, for example, who can manage those the same way they manage their aspirin and antacid purchases now. And eliminating the tax deduction for employer sponsored health care would be major. But I fear, politically impossible.

Megan McArdle, “Ask Me Anything”, Reddit, 2017-04-10.

March 10, 2019

QotD: Surnames and taxes

Filed under: Europe, History, Quotations — Tags: , , , , , — Nicholas @ 01:00

… (related: Scott examined some of the same data about Holocaust survival rates as Eichmann In Jerusalem, but made them make a lot more sense: the greater the legibility of the state, the worse for the Jews. One reason Jewish survival in the Netherlands was so low was because the Netherlands had a very accurate census of how many Jews there were and where they lived; sometimes officials saved Jews by literally burning census records).

Centralized government projects promoting legibility have always been a two-steps-forward, one-step back sort of thing. The government very gradually expands its reach near the capital where its power is strongest, to peasants whom it knows will try to thwart it as soon as its back is turned, and then if its decrees survive it pushes outward toward the hinterlands.

Scott describes the spread of surnames. Peasants didn’t like permanent surnames. Their own system was quite reasonable for them: John the baker was John Baker, John the blacksmith was John Smith, John who lived under the hill was John Underhill, John who was really short was John Short. The same person might be John Smith and John Underhill in different contexts, where his status as a blacksmith or place of origin was more important.

But the government insisted on giving everyone a single permanent name, unique for the village, and tracking who was in the same family as whom. Resistance was intense:

    What evidence we have suggests that second names of any kind became rare as distance from the state’s fiscal reach increased. Whereas one-third of the housholds in Florence declared a second name, the proportion dropped to one-fifth for secondary towns and to one-tenth in the countryside. It was not until the seventeenth century that family names crystallized in the most remote and poorest areas of Tuscany – the areas that would have had the least contact with officialdom. […]

    State naming practices, like state mapping practices, were inevitably associated with taxes (labor, military service, grain, revenue) and hence aroused popular resistance. The great English peasant rising of 1381 (often called the Wat Tyler Rebellion) is attributed to an unprecedented decade of registration and assessments of poll taxes. For English as well as for Tuscan peasants, a census of all adult males could not but appear ominous, if not ruinous.

Scott Alexander, “Book Review: Seeing Like a State”, Slate Star Codex, 2017-03-16.

March 9, 2019

Old posts (from the old blog) about Chinese official economic statistics

Filed under: China, Economics, Media — Tags: , , , , , — Nicholas @ 03:00

This post at Continental Telegraph a few days back reminded me I wanted to get around to gathering some of my older posts about the reasons to take the official GDP numbers from the Chinese government with more than just a pinch of salt. Here’s my very first rant on the topic from 10 August, 2004 (original expired URL – http://bolditalic.com/quotulatiousness_archive/000323.html):

On my way in to work this morning, I heard a stock advisor doing his best to make reasonable assumptions about what the average listener needed to know about the economy. This guy has been pretty level-headed in the past, but this morning’s talk just got my head ready to explode.

The topic of discussion was the Chinese economy and how the Chinese central bank was having to take greater efforts to rein in economic expansion. He talked about how many different sectors of the North American economy were, to greater or lesser degree, depending more and more on Chinese growth to increase their own investments and output. The idea that the Chinese economy was "overheating" was bandied about. He closed by indicating that a slight drop in the official growth rate from 9.8% to 9.6% showed that the Chinese central bank was seeing some results from their intervention in the economy.

There are so many things wrong here that I’m almost at a loss where to start. While there is no doubt that China is a fast-growing economy, the most common mistake among both investors and pundits is to assume that China is really just like South Carolina or Ireland … a formerly depressed area now achieving good results from modernization. The problem is that China is not just the next Atlanta or Slovenia. China is still, more or less, a command economy with a capitalist face. One of the biggest players in the Chinese economy is the army, and not just in the sense of being a big purchaser of capital goods (like the United States Army, for example).

The Chinese army owns or controls huge sectors of the economy, and runs them in the same way it would run a division or an army corps. The very term "command economy" would seem to have been minted to describe this situation. The numbers reported by these "companies" bear about the same resemblance to reality as those posted by Enron or Worldcom. With so much of their economy not subject to profit and loss, every figure from China must be viewed as nothing more than a guess (at best) or active disinformation.

Probably the only figures that can be depended upon for any remote accuracy would be the imports from other countries — as reported by the exporting firms, not by their importing counterparts — and the exports to other countries. All internal numbers are political, not economic. When a factory manager can be fired, he has his own financial future at stake. When he can be sentenced to 20 years of internal exile, he has his life at stake. There are few rewards for honesty in that sort of environment: and many inducements to go along with what you are told to do.

Under those circumstances, any growth figures are going to be aggregated from all sectors, most of which are under strong pressure to report the right numbers, not necessarily corresponding with any real measurement of economic activity. So, if the economic office wants to see a drop in the economy, that’s what they’ll get.

Basing your own personal financial plans on numbers like this would quickly have you living in a cardboard box under a highway overpass. Companies in the soi-disant free world have shareholders or owners to answer to. Companies in China exist in a totally different environment.

I returned to the same topic on October 25, 2004, triggered by yet another talking head on the radio under the heading “More Economic Voodoo — or is that Feng Shui?” (original URL – http://www.bolditalic.com/quotulatiousness_archive/000580.html):

Again this morning, I was listening to my local jazz radio station on the way in to work. As usual, they had a broker from CIBC Wood Gundy giving portfolio advice at about 9:20 a.m. Today’s talk was about investing in China, and how the markets have been reacting to the recent small drop in the official GDP growth figures released by the Chinese central bank.

This time, the emphasis was on the idea that in spite of the breathtaking growth figures, Chinese firms still are not particularly profitable and that therefore there are better ways of investing your money to benefit from all that growth. Unlike the last time I addressed this issue, this time I thought that the advisor was actually making pretty good sense. The incredible transformation of China from a pure command-driven economy to a mixed economy will certainly provide lots of opportunities for people to get rich; it will also provide even more opportunities to lose big money.

Much of the problem is that even now, the Chinese economy is not particularly free: the official and unofficial controls on the economy provide far too many opportunities for rent-seeking officialdom to play favourites and cripple antagonists (and for once, "cripple" is not just a bit of hyperbole). Any numbers provided by the Chinese authorities cannot be depended upon, and should probably only be viewed as an indication of what the Chinese government wants the outside world to believe.

Even in a relatively free economy like Canada, the underground economy can be huge, with plenty of economic activity happening out of reach of the taxman. In China, where everybody was raised in an environment where providing the "wrong" answer to your leader could get you imprisoned (or executed) as an economic criminal, the numbers upon which the bankers and financial officials depend can only be described as extremely unreliable.

Update 26 October: The Last Amazon asks a highly pertinent and pointed question:

    In the past week, the Globe and Mail has been featuring the economic engine that China has become. Its economy is thriving so much so that Chinese government owned companies like China Minmetals Corp (which had revenues in 2003 of USD$11.7 billion) is currently negotiating to buy outright 100% of the stock of the Canadian mining corporation, Noranda Inc. The total stock is estimated at approximately CDN$6.7 billion.

    If the Chinese government can afford to buy Noranda Inc. why hasn’t anyone asked when China will reimburse the overburdened Canadian taxpayers of this fair land for the Cdn$65.4 million that has been given to China as foreign aid?

I managed to stay away from the topic until April 13, 2007, when I posted “The Chinese Economy”, which largely quoted from my first two posts (old URL – http://bolditalic.netfirms.com/quotulatiousness_archive/003649.html):

Everyone must have heard many different variations on how incredible the Chinese economy is: spectacular growth, innovations galore, etc., etc. And there’s much truth to it — China has been industrializing at a mind-croggling pace. At least, the visual evidence says so. The economic data coming out of China is, to be kind, not as dependable as similar data from most other countries. […]

Three years on, I must retract a tiny bit there … Enron’s and Worldcom’s figures, while deliberately misleading, were refutable (and the culprits taken to court). […]

Samizdata links to a brief Tyler Cowen post which includes this quote:

    …of the 3,220 Chinese citizens with a personal wealth of 100 million yuan ($13 million) or more, 2,932 are children of high-level cadres. Of the key positions in the five industrial sectors – finance, foreign trade, land development, large-scale engineering and securities – 85% to 90% are held by children of high-level cadres.

That’s even higher than I expected. But it’s an excellent example of what I originally wrote about back in 2004: the economy isn’t free, and the beneficiaries are disproportionally those who are politically well-connected. Caveat investor.

And that was when I discovered that my “full” backup of files from the old site is actually missing nearly a year of posts from May 2008 to May 2009 (when I moved to the current site). I vaguely recall that Jon (my former virtual landlord) was having problems with limited storage on that site — I was just a freeloading guest — so perhaps one of the things we lost was the auto-archiving after we reached a certain capacity.

Thanks to the Wayback Machine, I found a couple of other entries but they were often just rehashes of the first two posts interspersed with quotations from articles I felt were being too Pollyanna-ish about the Chinese economic numbers, like this one from May 2, 2008:

Those untrustworthy Chinese economic numbers

Regular readers will know that I’ve been a long-term skeptic about the economic figures reported by the Chinese government (for example, here and here back in 2004). As a result, this post at the Economist is not very surprising:

    As China’s importance in the global economy increases, investors are paying more attention to its economic numbers. Yet the country’s official statistics are notoriously ropy. Some commentators accuse China’s government of overstating GDP growth for political reasons, others complain that the official inflation rate is fraudulently low. So which data can you trust?

    One reason to be suspicious of GDP figures is that China is always one of the first countries to report them, usually only two weeks after the end of each quarter. Most developed economies take between four and six weeks to produce them.

However, The Economist still feels that the Chinese economy is larger than reported. My sense of distrust in the figures argues for it being neither as big nor as robust as the reported figures indicate. They’re professional economic reporters … I’m a guy typing a blog entry. I wonder what the long-term odds are for either of us to be closer to the truth?

It’s tough to disagree with this, though:

    The prize for the dodgiest figures goes to the labour market. The quarterly urban unemployment rate is meaningless because it excludes workers laid off by state-owned firms as well as large numbers of migrant workers, who normally live in urban areas but are not registered. Wage figures are also lousy. There has recently been much concern about the faster pace of increase in average urban earnings. But this series does not cover private firms, which are where most jobs have been created in recent years.

    Now that China is such an engine of global growth, it urgently needs to improve its economic data. Only a madman would drive a juggernaut at full speed with a faulty speedometer, a cracked rear-view mirror and a misty windscreen.

By this point, Jon was referring to my obsession with bogus Chinese economic statistics as my “hobby horse” … yet it wasn’t unknown for him to send me links to articles on that very topic. Here’s another post, courtesy of the Wayback Machine, from January 23, 2009:

China’s economic situation

There’s an article at The Economist today that shows a touching belief in the magic of the Chinese economy. The reported Gross Domestic Product has fallen to “only” 5.8%. The Economist‘s writer spends much of the article worrying about this gloomy report:

    New figures show that China’s GDP growth fell to 6.8% in the year to the fourth quarter, down from 9% in the third quarter and half its 13% pace in 2007. Growth of 6.8% may still sound pretty robust, but it implies that growth was virtually zero on a seasonally adjusted basis in the fourth quarter.

    Industrial production has slowed even more sharply, growing by only 5.7% in the 12 months to December, compared with an 18% pace in late 2007. Thousands of factories have closed and millions of migrant workers have already lost their jobs. But there could be worse to come. Chinese exports are likely to drop further in coming months as world demand shrinks. Qu Hongbin, an economist at HSBC, forecasts that exports in the first quarter could be 19% lower than a year ago. 2009 may well see the first full-year decline in exports in more than a quarter of a century.

    Economists have become gloomier about China’s prospects, with many now predicting GDP growth of only 5-6% in 2009, the lowest for almost two decades.

I’ve blogged about the Chinese economy on a few occasions (most recently here), generally with the same concern: that the numbers reported cannot be relied upon. The same is true here. Interestingly, the Economist article I linked to back in May makes this point quite well, yet today’s article appears to treat the Chinese government’s numbers as solid.

China has changed substantially from twenty years ago, and in many ways for the better. Most ordinary Chinese today are more free — economically anyway — than they were a generation ago, and there is a lot more opportunity for individuals to set up businesses and to succeed without needing Party connections. All this is indisputable … yet vast swathes of the Chinese economy are a legacy of the worst command-and-control period. It’s not an exaggeration to say that we can expect to discover the “official numbers” have absolutely no relationship to reality, because the numbers are compiled from various sources including both free-r quasi-capitalist companies and tottering government-owned (and often People’s Liberation Army-owned) conglomerates which cannot be depended upon to report anything accurately.

An example from this article: “a fall in electricity output of 6% in the year to the fourth quarter, down from average annual growth of 15% over the previous five years.” That’s not just a reduction in the rate of growth, that’s a reported drop in output of 6%. Imagine what the state of a European or Japanese/Korean economy running at only 94% of electricity … it’d be something you’d only see at times of severe economic contraction, not as a sign of a slow-down in growth.

Finally, on May 22, 2009, a final post on the topic at the old blog:

Official Chinese statistics

If you’ve read the blog for a while, you’ll know that I’m pretty skeptical about how believable the official statistics coming from the Chinese government may be. The Economist is somewhat undecided on the matter … sometimes publishing articles that treat the official numbers as legitimate and other times, showing more doubt:

    Part of the recent optimism in world markets rests on the belief that China’s fiscal-stimulus package is boosting its economy and that GDP growth could come close to the government’s target of 8% this year. Some economists, however, suspect that the figures overstate the economy’s true growth rate and that Beijing would report 8% regardless of the truth. Is China cheating?

    Economists have long doubted the credibility of Chinese data and it is widely accepted that GDP growth was overstated during the previous two downturns. In 1998-99, during the Asian financial crisis, China’s GDP grew by an average of 7.7%, according to official figures. However, using alternative measures of activity, such as energy production, air travel and imports, Thomas Rawski of the University of Pittsburgh calculated that the growth rate was at best 2%. Other economists reckon that Mr Rawski was too pessimistic. Arthur Kroeber of Dragonomics, a research firm in Beijing, estimates GDP growth was around 5% in 1998-99, for example. The top chart, plotting the official growth rate against estimates by Dragonomics, clearly suggests that some massaging of the government statistics may have gone on. The biggest adjustment seems to have been made in 1989, the year of political protests in Tiananmen Square. Officially, GDP grew by over 4%; Dragonomics reckons it actually declined by 1.5%.

Of course, The Economist doesn’t want to lose sales in China, so the last paragraph of the article blithely re-assures readers that things are improving and that the official numbers are much harder to fudge now than they used to be. That may well be true (I rather hope it is), but in the same way that you can get much more impressive growth from a very small base, you can become much more honest with your numbers when you’re starting from pure fiction.

[…] Let’s just say that I’m still unconvinced.

After that, my hobby-horse rides can be found by searching for “china economy” (or just click this link) on the current blog, or you can just peruse the China category.

February 23, 2019

How a statistical error became the key argument in the “everyone must turn vegan” movement

Filed under: Economics, Environment, Food, Health, Politics, USA — Tags: , , , — Nicholas @ 05:00

At The Conversation, Frank M. Mitloehner explains how a flawed statistic — comparing numbers derived from non-parallel bases — evolved into one of the most widely quoted arguments for governments forcing people to give up meat in their diet:

As the scale and impacts of climate change become increasingly alarming, meat is a popular target for action. Advocates urge the public to eat less meat to save the environment. Some activists have called for taxing meat to reduce consumption of it.

A key claim underlying these arguments holds that globally, meat production generates more greenhouse gases than the entire transportation sector. However, this claim is demonstrably wrong, as I will show. And its persistence has led to false assumptions about the linkage between meat and climate change.

[…]

Global livestock production by region (milk and eggs expressed in protein terms).
Source: United Nations Food and Agriculture Organization.

Setting the record straight on meat and greenhouse gases
A healthy portion of meat’s bad rap centers on the assertion that livestock is the largest source of greenhouse gases worldwide. For example, a 2009 analysis published by the Washington, D.C.-based Worldwatch Institute asserted that 51 percent of global GHG emissions come from rearing and processing livestock.

According to the U.S. Environmental Protection Agency, the largest sources of U.S. GHG emissions in 2016 were electricity production (28 percent of total emissions), transportation (28 percent) and industry (22 percent). All of agriculture accounted for a total of 9 percent. All of animal agriculture contributes less than half of this amount, representing 3.9 percent of total U.S. greenhouse gas emissions. That’s very different from claiming livestock represents as much or more than transportation.

Why the misconception? In 2006 the United Nations Food and Agriculture Organization published a study titled “Livestock’s Long Shadow,” which received widespread international attention. It stated that livestock produced a staggering 18 percent of the world’s greenhouse gas emissions. The agency drew a startling conclusion: Livestock was doing more to harm the climate than all modes of transportation combined.

This latter claim was wrong, and has since been corrected by Henning Steinfeld, the report’s senior author. The problem was that FAO analysts used a comprehensive life-cycle assessment to study the climate impact of livestock, but a different method when they analyzed transportation.

For livestock, they considered every factor associated with producing meat. This included emissions from fertilizer production, converting land from forests to pastures, growing feed, and direct emissions from animals (belching and manure) from birth to death.

However, when they looked at transportation’s carbon footprint, they ignored impacts on the climate from manufacturing vehicle materials and parts, assembling vehicles and maintaining roads, bridges and airports. Instead, they only considered the exhaust emitted by finished cars, trucks, trains and planes. As a result, the FAO’s comparison of greenhouse gas emissions from livestock to those from transportation was greatly distorted.

February 19, 2019

Judging a book by its cover (or people by their appearance)

Filed under: Books, History, Science — Tags: , , , , , — Nicholas @ 03:00

In the latest Libertarian Enterprise, Sean Gabb reviews How to Judge People by What They Look Like, by Edward Dutton:

This short book is equally naughty and entertaining. It bounces along, making its points in a light-hearted and generally a witty manner. It is naughty so far as it is a flat challenge to many of the pieties of our age.

We are told never to judge a book by its cover — that the substance of a person, this being character and intelligence, have no measurable relationship to his external form, this being his physical appearance. At the extreme, of looking at correlations between race and intelligence, you can get into serious trouble for disputing this piety. Even moderate dissent earns hostility or just ridicule. Look, for example, at the relevant textbooks. The phlogiston theory is covered as an early theory of combustion, superseded by the truth. Phrenology is denounced as barely short of a moral and intellectual failing. No one thinks ill of Lamarck for this theory of inherited characteristics. Lombroso and his measurement of criminal heads are seen as steps on the road to Auschwitz.

The author of this book takes aim at every one of these pieties. He begins with the easy targets. Within ethnic groups, he goes over the increasingly rehabilitated claim that intelligence is largely inherited — about 80 per cent. He adds the other increasingly rehabilitated claim that there are differences of average intelligence between groups—that the peaks of each distribution curve occur at different points along the scale.

[…]

Now, what follows from all this? The answer is that all truth is important — so far as this is the truth; and I do lack the statistical grounding and the time or inclination to check the author’s scholarship. Even when a particular truth has no practical value, a regard for truth is a generally useful prejudice. But there are certain conclusions that appear to follow.

First, there is has been a progressively greater diversity of external form since the industrial revolution. The stated reason for this is that the harsh conditions of a traditional society, in which about 40 per cent of children died, and the higher classes had more surviving offspring, created a strong bias towards the survival of the intelligent and conscientious. Since then, the fall of infant mortality towards zero has thrown this process into reverse. That may explain the growing fall in genius or just high intellectual quality as a fraction of modern populations. It may also explain the decay — and the author says nothing of this — of free institutions, and their replacement by less complex and more maternal forms of government. Old England was free because its people were capable of being free. Modern England is unfree because the people have changed.

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