O que é este blog?

Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org. Para a maior parte de meus textos, ver minha página na plataforma Academia.edu, link: https://itamaraty.academia.edu/PauloRobertodeAlmeida;

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sexta-feira, 27 de janeiro de 2012

Inequality in America: looking for a new Tocqueville? - Charles Murray (WSJ)

Tocqueville tinha registrado, na quarta década do século XIX, a tendência igualitária nos EUA. Não parece ser mais o caso. Existem razões complexas para o crescimento das desigualdades, entre elas o fato de que a produtividade do trabalho dos que já são ricos é muito superior, por uma série de condições ambientais e estruturais, do que a dos mais pobres, não especializados.
Trata-se de um grande desafio no quadro das modernas democracias de mercado.
Paulo Roberto de Almeida

The New American Divide

The ideal of an 'American way of life' is fading as the working class falls further away from institutions like marriage and religion and the upper class becomes more isolated. Charles Murray on what's cleaving America, and why.

The Wall Street Journal, Saturday Essay, January 21, 2012
America is coming apart. For most of our nation's history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway. "The more opulent citizens take great care not to stand aloof from the people," wrote Alexis de Tocqueville, the great chronicler of American democracy, in the 1830s. "On the contrary, they constantly keep on easy terms with the lower classes: They listen to them, they speak to them every day."
Americans love to see themselves this way. But there's a problem: It's not true anymore, and it has been progressively less true since the 1960s.
People are starting to notice the great divide. The tea party sees the aloofness in a political elite that thinks it knows best and orders the rest of America to fall in line. The Occupy movement sees it in an economic elite that lives in mansions and flies on private jets. Each is right about an aspect of the problem, but that problem is more pervasive than either political or economic inequality. What we now face is a problem of cultural inequality.
When Americans used to brag about "the American way of life"—a phrase still in common use in 1960—they were talking about a civic culture that swept an extremely large proportion of Americans of all classes into its embrace. It was a culture encompassing shared experiences of daily life and shared assumptions about central American values involving marriage, honesty, hard work and religiosity.
Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America's core cultural institutions.
To illustrate just how wide the gap has grown between the new upper class and the new lower class, let me start with the broader upper-middle and working classes from which they are drawn, using two fictional neighborhoods that I hereby label Belmont (after an archetypal upper-middle-class suburb near Boston) and Fishtown (after a neighborhood in Philadelphia that has been home to the white working class since the Revolution).
To be assigned to Belmont, the people in the statistical nationwide databases on which I am drawing must have at least a bachelor's degree and work as a manager, physician, attorney, engineer, architect, scientist, college professor or content producer in the media. To be assigned to Fishtown, they must have no academic degree higher than a high-school diploma. If they work, it must be in a blue-collar job, a low-skill service job such as cashier, or a low-skill white-collar job such as mail clerk or receptionist.
People who qualify for my Belmont constitute about 20% of the white population of the U.S., ages 30 to 49. People who qualify for my Fishtown constitute about 30% of the white population of the U.S., ages 30 to 49.
I specify white, meaning non-Latino white, as a way of clarifying how broad and deep the cultural divisions in the U.S. have become. Cultural inequality is not grounded in race or ethnicity. I specify ages 30 to 49—what I call prime-age adults—to make it clear that these trends are not explained by changes in the ages of marriage or retirement.
In Belmont and Fishtown, here's what happened to America's common culture between 1960 and 2010.
Marriage: In 1960, extremely high proportions of whites in both Belmont and Fishtown were married—94% in Belmont and 84% in Fishtown. In the 1970s, those percentages declined about equally in both places. Then came the great divergence. In Belmont, marriage stabilized during the mid-1980s, standing at 83% in 2010. In Fishtown, however, marriage continued to slide; as of 2010, a minority (just 48%) were married. The gap in marriage between Belmont and Fishtown grew to 35 percentage points, from just 10.
Single parenthood: Another aspect of marriage—the percentage of children born to unmarried women—showed just as great a divergence. Though politicians and media eminences are too frightened to say so, nonmarital births are problematic. On just about any measure of development you can think of, children who are born to unmarried women fare worse than the children of divorce and far worse than children raised in intact families. This unwelcome reality persists even after controlling for the income and education of the parents.
In 1960, just 2% of all white births were nonmarital. When we first started recording the education level of mothers in 1970, 6% of births to white women with no more than a high-school education—women, that is, with a Fishtown education—were out of wedlock. By 2008, 44% were nonmarital. Among the college-educated women of Belmont, less than 6% of all births were out of wedlock as of 2008, up from 1% in 1970.
Industriousness: The norms for work and women were revolutionized after 1960, but the norm for men putatively has remained the same: Healthy men are supposed to work. In practice, though, that norm has eroded everywhere. In Fishtown, the change has been drastic. (To avoid conflating this phenomenon with the latest recession, I use data collected in March 2008 as the end point for the trends.)
apart
Ryan Collerd for The Wall Street Journal
Fishtown, a neighborhood in Philadelphia, stands in as a symbol of America's white working class in Charles Murray's new book.
The primary indicator of the erosion of industriousness in the working class is the increase of prime-age males with no more than a high school education who say they are not available for work—they are "out of the labor force." That percentage went from a low of 3% in 1968 to 12% in 2008. Twelve percent may not sound like much until you think about the men we're talking about: in the prime of their working lives, their 30s and 40s, when, according to hallowed American tradition, every American man is working or looking for work. Almost one out of eight now aren't. Meanwhile, not much has changed among males with college educations. Only 3% were out of the labor force in 2008.
There's also been a notable change in the rates of less-than-full-time work. Of the men in Fishtown who had jobs, 10% worked fewer than 40 hours a week in 1960, a figure that grew to 20% by 2008. In Belmont, the number rose from 9% in 1960 to 12% in 2008.
Crime: The surge in crime that began in the mid-1960s and continued through the 1980s left Belmont almost untouched and ravaged Fishtown. From 1960 to 1995, the violent crime rate in Fishtown more than sextupled while remaining nearly flat in Belmont. The reductions in crime since the mid-1990s that have benefited the nation as a whole have been smaller in Fishtown, leaving it today with a violent crime rate that is still 4.7 times the 1960 rate.
Religiosity: Whatever your personal religious views, you need to realize that about half of American philanthropy, volunteering and associational memberships is directly church-related, and that religious Americans also account for much more nonreligious social capital than their secular neighbors. In that context, it is worrisome for the culture that the U.S. as a whole has become markedly more secular since 1960, and especially worrisome that Fishtown has become much more secular than Belmont. It runs against the prevailing narrative of secular elites versus a working class still clinging to religion, but the evidence from the General Social Survey, the most widely used database on American attitudes and values, does not leave much room for argument.
For example, suppose we define "de facto secular" as someone who either professes no religion at all or who attends a worship service no more than once a year. For the early GSS surveys conducted from 1972 to 1976, 29% of Belmont and 38% of Fishtown fell into that category. Over the next three decades, secularization did indeed grow in Belmont, from 29% in the 1970s to 40% in the GSS surveys taken from 2006 to 2010. But it grew even more in Fishtown, from 38% to 59%.

***

It can be said without hyperbole that these divergences put Belmont and Fishtown into different cultures. But it's not just the working class that's moved; the upper middle class has pulled away in its own fashion, too.
If you were an executive living in Belmont in 1960, income inequality would have separated you from the construction worker in Fishtown, but remarkably little cultural inequality. You lived a more expensive life, but not a much different life. Your kitchen was bigger, but you didn't use it to prepare yogurt and muesli for breakfast. Your television screen was bigger, but you and the construction worker watched a lot of the same shows (you didn't have much choice). Your house might have had a den that the construction worker's lacked, but it had no StairMaster or lap pool, nor any gadget to monitor your percentage of body fat. You both drank Bud, Miller, Schlitz or Pabst, and the phrase "boutique beer" never crossed your lips. You probably both smoked. If you didn't, you did not glare contemptuously at people who did.
When you went on vacation, you both probably took the family to the seashore or on a fishing trip, and neither involved hotels with five stars. If you had ever vacationed outside the U.S. (and you probably hadn't), it was a one-time trip to Europe, where you saw eight cities in 14 days—not one of the two or three trips abroad you now take every year for business, conferences or eco-vacations in the cloud forests of Costa Rica.
You both lived in neighborhoods where the majority of people had only high-school diplomas—and that might well have included you. The people around you who did have college degrees had almost invariably gotten them at state universities or small religious colleges mostly peopled by students who were the first generation of their families to attend college. Except in academia, investment banking, a few foundations, the CIA and the State Department, you were unlikely to run into a graduate of Harvard, Princeton or Yale.
Even the income inequality that separated you from the construction worker was likely to be new to your adulthood. The odds are good that your parents had been in the working class or middle class, that their income had not been much different from the construction worker's, that they had lived in communities much like his, and that the texture of the construction worker's life was recognizable to you from your own childhood.
Taken separately, the differences in lifestyle that now separate Belmont from Fishtown are not sinister, but those quirks of the upper-middle class that I mentioned—the yogurt and muesli and the rest—are part of a mosaic of distinctive practices that have developed in Belmont. These have to do with the food Belmonters eat, their drinking habits, the ages at which they marry and have children, the books they read (and their number), the television shows and movies they watch (and the hours spent on them), the humor they enjoy, the way they take care of their bodies, the way they decorate their homes, their leisure activities, their work environments and their child-raising practices. Together, they have engendered cultural separation.
apart
M. Scott Brauer for The Wall Street Journal
Belmont, an archetypal suburb of Boston, stands in for the white upper middle class.
It gets worse. A subset of Belmont consists of those who have risen to the top of American society. They run the country, meaning that they are responsible for the films and television shows you watch, the news you see and read, the fortunes of the nation's corporations and financial institutions, and the jurisprudence, legislation and regulations produced by government. They are the new upper class, even more detached from the lives of the great majority of Americans than the people of Belmont—not just socially but spatially as well. The members of this elite have increasingly sorted themselves into hyper-wealthy and hyper-elite ZIP Codes that I call the SuperZIPs.
In 1960, America already had the equivalent of SuperZIPs in the form of famously elite neighborhoods—places like the Upper East Side of New York, Philadelphia's Main Line, the North Shore of Chicago and Beverly Hills. But despite their prestige, the people in them weren't uniformly wealthy or even affluent. Across 14 of the most elite places to live in 1960, the median family income wasn't close to affluence. It was just $84,000 (in today's purchasing power). Only one in four adults in those elite communities had a college degree.
By 2000, that diversity had dwindled. Median family income had doubled, to $163,000 in the same elite ZIP Codes. The percentage of adults with B.A.s rose to 67% from 26%. And it's not just that elite neighborhoods became more homogeneously affluent and highly educated—they also formed larger and larger clusters.
If you are invited to a dinner party by one of Washington's power elite, the odds are high that you will be going to a home in Georgetown, the rest of Northwest D.C., Chevy Chase, Bethesda, Potomac or McLean, comprising 13 adjacent ZIP Codes in all. If you rank all the ZIP Codes in the country on an index of education and income and group them by percentiles, you will find that 11 of these 13 D.C.-area ZIP Codes are in the 99th percentile and the other two in the 98th. Ten of them are in the top half of the 99th percentile.
Similarly large clusters of SuperZIPs can be found around New York City, Los Angeles, the San Francisco-San Jose corridor, Boston and a few of the nation's other largest cities. Because running major institutions in this country usually means living near one of these cities, it works out that the nation's power elite does in fact live in a world that is far more culturally rarefied and isolated than the world of the power elite in 1960.
And the isolation is only going to get worse. Increasingly, the people who run the country were born into that world. Unlike the typical member of the elite in 1960, they have never known anything but the new upper-class culture. We are now seeing more and more third-generation members of the elite. Not even their grandparents have been able to give them a window into life in the rest of America.

***

Why have these new lower and upper classes emerged? For explaining the formation of the new lower class, the easy explanations from the left don't withstand scrutiny. It's not that white working class males can no longer make a "family wage" that enables them to marry. The average male employed in a working-class occupation earned as much in 2010 as he did in 1960. It's not that a bad job market led discouraged men to drop out of the labor force. Labor-force dropout increased just as fast during the boom years of the 1980s, 1990s and 2000s as it did during bad years.

Top 10 SuperZIPs

In 'Coming Apart,' Charles Murray identifies 882 'SuperZIPs,' ZIP Codes where residents score in the 95th through the 99th percentile on a combined measure of income and education, based on the 2000 census. Here are the top-ranked areas:
  • 1. 60043: Kenilworth, Ill. (Chicago's North Shore)
  • 2. 60022: Glencoe, Ill. (Chicago's North Shore)
  • 3. 07078: Short Hills, N.J. (New York metro area)
  • 4. 94027: Atherton, Calif. (San Francisco-San Jose corridor)
  • 5. 10514: Chappaqua, N.Y. (New York metro area)
  • 6. 19035: Gladwyne, Pa. (Philadelphia's Main Line)
  • 7. 94028: Portola Valley, Calif. (S.F.-San Jose corridor)
  • 8. 92067: Rancho Santa Fe, Calif. (San Diego suburbs)
  • 9. 02493: Weston, Mass. (Boston suburbs)
  • 10. 10577: Purchase, N.Y. (New York metro area)
As I've argued in much of my previous work, I think that the reforms of the 1960s jump-started the deterioration. Changes in social policy during the 1960s made it economically more feasible to have a child without having a husband if you were a woman or to get along without a job if you were a man; safer to commit crimes without suffering consequences; and easier to let the government deal with problems in your community that you and your neighbors formerly had to take care of.
But, for practical purposes, understanding why the new lower class got started isn't especially important. Once the deterioration was under way, a self-reinforcing loop took hold as traditionally powerful social norms broke down. Because the process has become self-reinforcing, repealing the reforms of the 1960s (something that's not going to happen) would change the trends slowly at best.
Meanwhile, the formation of the new upper class has been driven by forces that are nobody's fault and resist manipulation. The economic value of brains in the marketplace will continue to increase no matter what, and the most successful of each generation will tend to marry each other no matter what. As a result, the most successful Americans will continue to trend toward consolidation and isolation as a class. Changes in marginal tax rates on the wealthy won't make a difference. Increasing scholarships for working-class children won't make a difference.
The only thing that can make a difference is the recognition among Americans of all classes that a problem of cultural inequality exists and that something has to be done about it. That "something" has nothing to do with new government programs or regulations. Public policy has certainly affected the culture, unfortunately, but unintended consequences have been as grimly inevitable for conservative social engineering as for liberal social engineering.
The "something" that I have in mind has to be defined in terms of individual American families acting in their own interests and the interests of their children. Doing that in Fishtown requires support from outside. There remains a core of civic virtue and involvement in working-class America that could make headway against its problems if the people who are trying to do the right things get the reinforcement they need—not in the form of government assistance, but in validation of the values and standards they continue to uphold. The best thing that the new upper class can do to provide that reinforcement is to drop its condescending "nonjudgmentalism." Married, educated people who work hard and conscientiously raise their kids shouldn't hesitate to voice their disapproval of those who defy these norms. When it comes to marriage and the work ethic, the new upper class must start preaching what it practices.
Changing life in the SuperZIPs requires that members of the new upper class rethink their priorities. Here are some propositions that might guide them: Life sequestered from anybody not like yourself tends to be self-limiting. Places to live in which the people around you have no problems that need cooperative solutions tend to be sterile. America outside the enclaves of the new upper class is still a wonderful place, filled with smart, interesting, entertaining people. If you're not part of that America, you've stripped yourself of much of what makes being American special.
Such priorities can be expressed in any number of familiar decisions: the neighborhood where you buy your next home, the next school that you choose for your children, what you tell them about the value and virtues of physical labor and military service, whether you become an active member of a religious congregation (and what kind you choose) and whether you become involved in the life of your community at a more meaningful level than charity events.
Everyone in the new upper class has the monetary resources to make a wide variety of decisions that determine whether they engage themselves and their children in the rest of America or whether they isolate themselves from it. The only question is which they prefer to do.
That's it? But where's my five-point plan? We're supposed to trust that large numbers of parents will spontaneously, voluntarily make the right choice for the country by making the right choice for themselves and their children?
Yes, we are, but I don't think that's naive. I see too many signs that the trends I've described are already worrying a lot of people. If enough Americans look unblinkingly at the nature of the problem, they'll fix it. One family at a time. For their own sakes. That's the American way.
—Mr. Murray is the W.H. Brady Scholar at the American Enterprise Institute. His new book, "Coming Apart: The State of White America, 1960–2010" (Crown Forum) will be published on Jan. 31.

Debating a Post-American World: a book on international relations

Um livro de que participei, e sobre o qual já informei aqui, 


Clark, Sean and Sabrina Hoque (eds.):
Debating a Post-American World: What Lies Ahead?
(London: Routledge, 2011, 288 p.; ISBN-10: 0415690552; ISBN-13: 978-0415690553, p. 135-141; available: http://www.routledge.com/books/details/9780415690553/); capítulo Paulo Roberto de Almeida: “Attraction and Repulsion: Brazil and the American world”
(ver: http://www.pralmeida.org/01Livros/2FramesBooks/PostAmericanWorld.html)


foi objeto de uma entrevista num blog canadense dedicado aos estudos internacionais, como me informa um dos organizadores, em comunicação pessoal, que reproduzo abaixo:


From: Sabrina Hoque <shoque@xxxxx.xx>
Subject: Promoting 'What Lies Ahead'
Date: 21 de janeiro de 2012 07:40:39 GMT+00:00
To: Paulo Roberto de Almeida
Cc: sean.clark@xxxxx.xx

Good morning Dr. Almeida,

Published in the UK on December 7, I'm happy to tell you that our book, 'What Lies Ahead', is now also available in North America. Sean and I hope you successfully received your complimentary contributor's copy, as those were mailed out from the UK in mid-December (though it may have been delayed by the holiday mail crush). If you haven't received a copy of a book by January 27, please do let us know and we will follow up with the publishers.

In addition to the steps Routledge is taking, Sean and I have also been busy promoting and marketing our book. Here are a few updates:

- Copies of our book have been sent out to several journals who are interested in writing a review: International Journal, Canadian Foreign Policy Journal, International Affairs, Canadian Journal of Political Science, and The Diplomat (online journal).

- There will be a book launch at Dalhousie's 7th Annual Political Science Graduate Student Symposium (March 2012), with our books available for purchase. The symposium is regularly attended by graduate students from across North America, faculty, members of the Canadian International Council, and the broader public community. The theme of this year's symposium is: "Rise of the Rest: Opportunities and Implications".

- Sean and I were recently interviewed by Verkko.ca (a Canadian online network for International Affairs)

At this stage, we welcome any further suggestions or recommendations you may have on how we may do more to market the book.

Lastly, Sean and I will both be attending ISA in San Diego this year (April 2012). Please let us know if you will be attending as well, as it would be great to meet up and perhaps enjoy a celebratory drink together!

Should you have any questions or concerns, please do not hesitate to contact me at shoque@dal.ca. I look forward to continued correspondence with you, and hope to see you at ISA.

Sincerely,
Sabrina Hoque
PhD Candidate of International Relations
Doctoral Fellow, Centre for Foreign Policy Studies
Dalhousie University

Debating a Post-American World: What Lies Ahead (Routledge, 2011)


50 Scholars Debate Post-American World in Newly Released Book
Posted By verkko.ca, January-10-12
Two PhD candidates in International Relations at the Centre for Foreign Policy Studies at Dalhousie University, Sean Clark and Sabrina Hoque have edited a newly released book called Debating a Post-American World What Lies Ahead? Verkko recently sat down with the two to talk about this project.
1) Tell us about your publication and how this project came about?
Fareed Zakaria's argument regarding the Post-American World garnered a lot of scholarly attention, engaging with the debate on the US' role in world politics, and whether its position was indeed shifting with respect to rising powers. As editors, we aimed to bridge the gap between theory and current world events by bringing together academic and policy experts who offer their perspectives on the debate.
This assumption provides another key reason why the "post-American world” was chosen as the central topic for discussion. One of the chief purposes of this book has been to provide students with an extensive overview of the current debate surrounding the prospects for a "Post-American world". It has been our experience that students are eager to consider and discuss the potential for a truly massive shift in the international distribution of power. As graduate students ourselves, we know how important it is to be able to analyze global events with a theoretical lens. The topic therefore offers a unique opportunity to combine theory and practice in one setting. Indeed, this book illustrates how knowledge is best advanced when the two are considered in tandem. Above all, we hope we to communicate the fact that today’s students will graduate into a world fraught with much tragedy and peril – but also tremendous promise.
2) Why do you feel this publication is particularly relevant today?
For all the tension and dangers of the Cold War era, the international system remained relatively stable. The postwar decades had a degree of predictability to them: the Soviet’s had their sphere and we in the West had ours. Each attended to their own backyard in relative peace, and certainly faced no challenger outside this nuclear dyad. This left Europe and Japan to rapidly rebuild from the ashes of World War II, joining North America in an unrivaled period of prosperity. Even living standards in the Soviet empire, propelled by harsh, Stalinist industrialization, grew at a modest but predictable rate. Much of the rest of the world, however, stayed poor. Latin America tipped into autocracy and hyperinflation. Asia languished under repressive dictators like Mao and Kim Il-Sung, with massive famine following megalomania. In sub-Saharan Africa, average life expectancy in the postwar period actually declined. In short, those who were rich and powerful in 1945 generally found themselves in the same enviable position when the millennium came to an end.
In contrast, the world of today is far more dynamic. A modern-day foreign investor in Africa is just as likely to be Chinese, Turkish, or Indian in origin than British or American. Some estimates project that China’s economy, at least when measured in purchasing power parity, will overtake that of the United States before the decade is out. Indian firms like Tata and ArcelorMittal are lean and hungry and unafraid of battling with the traditional, Western behemoths of General Electric and General Motors. Brazil, in a sharp contradiction to neo-Marxist expectations, now imports aircraft components from wealthy Europe and America, exporting back finished products in return. Over the past decade, six of the world’s ten fastest-growing countries were found in Africa. Even if the decline of the West has been over-stated, the political and economic relationship between the global North and South has never been so competitive.
Given this remarkable tumult, we see no better time to examine what implications these changes might bring. Change is coming fast and furiously, and we think both scholars and students will be interested in an analysis of where and how their world is going to be affected.
3) Who are some of the key contributors to your book?
To our good fortune, we were able to solicit think-pieces from over 50 contributors. Given the range of topics addressed in our book, you can imagine that each of our contributors brings their own unique and key perspective to the debate. Indeed, this is one of the appeals of our edited volume - students are able to connect, compare, and contrast individual scholars with theory and current events. We also put together an innovative panel at the recent 2010 Annual convention in Montreal, hosted by the International Studies Association. Our panel, consisting of a selection of our contributors: Joseph Nye, William Wohlforth, Mark Brawley, Tim Shaw, William R. Thompson, Ronald Tammen, Christopher Layne, and Thomas Fues, debated the prospects of a Post-American world and was received with wide enthusiasm, with over a 100 conference participants in attendance.
4) What are some of the key issues addressed in your book?
Our book is divided into five parts, with international relations scholars and policy experts exploring and discussing a wide range of topics. The edited volume is an effort to frame the debate regarding the question of ‘what lies ahead’. First and foremost is to ask if we are destined for, to use Fareed Zakaria’s term, a "post-American world.” In other words, will America retain a leading role in world affairs, or will its slippage mirror the fallen titans of ages past? To achieve the former, some very large hurdles will have to be overcome. In Part I, we conduct a realist-type evaluation of future power trends. These dynamics are examined not only from the perspective of the United States, but also from that of the "risers and the rest.” Part III enters into a more specific discussion regarding the course and conduct of wars to come, including the future of nuclear weapons, arms control, and "liberal wars in the age of risk.” Part IV looks more to the liberal concerns of laws and institutions, and how they might fare in a world absent of American hegemony. Lastly, Part V touches upon issues often overlooked by mainstream scholarship: energy and the environment. The post-American world may, after all, end up being dark and hungry.
5) In your opinion, what are the main challenges to Canada and the rest of the world caused by a transition from American dominance to the rise of alternative powers?
A post-American world is one ripe with opportunity for countries like Canada, but one that is also fraught with dangers we cannot control. As a resource exporter, the rapid industrialization of the Global South provides a tremendous boon to the Canadian economy. The ever-longer queue for Canadian iron, oil, beef, and timber has already meant a fortuitous partial de-coupling of Canada from the United States economy, sparing Canadians the steep recession that America continues to find itself mired in. Wealthy societies make for good customers and, as we have learned with the recent Keystone XL debacle, it never hurts to have alternative clients waiting in the wings.
This rosy take relies, of course, on the assumption that the present, Washington-centric world order can continue to mollify the rising South’s political and economic ambitions. If not, the growth of these new powers may bring sustained international confrontation. We have already seen rumblings by China and others that the present set of multilateral institutions are not up to the task. Public communiqués, for example, assert China’s intentions of a "peaceful rise”—yet this image fits uncomfortably alongside the elaborate military parades of the People’s Republic's Diamond Jubilee of October 1, 2009. Guns, pride, and fear can make for a potent mix. Indeed, there is always the possibility that, like in 1914, a changing international economic balance could really lead things awry. To this prospect, policymakers of countries both large and small must remain constantly vigilant.

World Bank looks at European crisis (The Economist)


Europe's debt crisis

At bursting point?

Jan 27th 2012, 0:31 by The Economist | BRUSSELS

THIS grotesque map of the world, depicting Europe as a bloated balloon, caught my eye this week, and powerfully illustrates one of the factors in Europe's debt crisis. It depicts the countries of the world sized according to the amount of government spending*. thatthey spend on social protection, from pensions to health, education and unemployment benefits.
In the words of the World Bank, which published it in a report issued this week ("Golden Growth: Restoring the lustre of the European Economic model", here), Europe is the world's “lifestyle superpower”. As opposed to America, which spends almost as much as the rest of the world put together on defence, Europe spends more than the rest of the globe combined on social policies.
In many ways this is an admirable aspect of Europe's economic model, which combines high living standards with high standards of social welfare. The trouble is, such spending is helping to bankrupt governments—not least because those very same caring policies ensure that Europeans live longer, requiring more expenditure on health care and the payment of pensions for more years.
Anybody who wants to understand the strengths and weaknesses of European economies in this time of crisis would do well to read the report (the overview is here).
First the strengths. Europe, say the authors, invented a unique “convergence machine” by admitting successive waves of poorer countries and quickly raising their standards of living. Convergence has been accelerated by the free flow of trade and capital within the European Union. As the report puts it:
Between 1950 and 1973, Western European incomes converged quickly towards those in the United States. Then, until the early 1990s, the incomes of more than 100 million people in the poorer southern periphery—Greece, southern Italy, Portugal, and Spain—grew closer to those in advanced Europe. With the first association agreements with Hungary and Poland in 1994, another 100 million people in Central and Eastern Europe were absorbed into the European Union, and their incomes increased quickly. Another 100 million in the candidate countries in Southeastern Europe are already benefiting from the same aspirations and similar institutions that have helped almost half a billion people achieve the highest standards of living on the planet. If European integration continues, the 75 million people in the eastern partnership will profit in ways that are similar in scope and speed.
Yet this convergence machine is spluttering, and deep reforms are needed. Much effort has been expended on explaining the nature of the financial crisis of the past two years. The sharpest and most concise analysis I know of is a recent policy brief by Jean Pisani-Ferry, director of the Bruegel think-tank in Brussels ("The euro crisis and the new impossible trinity", here). This argues that the problems are deeper than a lack of fiscal discipline: there is a flaw in the way the euro zone was designed, without a lender of last resort, without joint bonds and with a vicious feedback loop that weakens both sovereigns and their banks. There is a tendency in Brussels to think that, if only the euro zone were to make the leap to federalism, all would be solved. Far from it.
The World Bank report shows that Europe has deep structural flaws to contend with. Perhaps most worrying is the slowdown in labour productivity, the underlying driver of economic growth over the long term. This chart (right) shows how Western Europe had almost closed the productivity gap with America by 1995. But thereafter it started to lag ever farther behind the United States (and kept losing its lead over Japan).
The effect is most alarming on the Mediterranean rim. These next two charts show that, as expected, in 2002 northern Europe was more productive than southern Europe, which in turn led the new member states of eastern Europe. But between 2002 and 2008 something strange happened. The convergence machine went into reverse for southern Europe. While the easterners were roaring ahead to catch up with the northerners, prroductivity in Mediterranean countries actually fell.

Part of the reason is contained in this chart (right). It shows how foreign direct investment was abruptly redirected from southern countries to the new member states in the east. Mediterranean members faced a triple challenge: they were hit hard by globalisation and the loss of low-tech industries such as textiles; they faced competition from cheaper labour in ex-communist members; and the adoption of the euro made it harder for them to adjust through devaluation. Yet Club Med has only itself to blame. 
A premature adoption of the euro by southern economies is sometimes blamed for this reversal of fortune. Others say that letting the formerly communist countries into the European Union so soon did not give the south enough time to become competitive. But perhaps the most likely explanation is that of all the economies in Europe, the entrepreneurial structures of Greece, Italy, Portugal, and Spain were least suited for the wider European economy. For one thing, a sizable part of net output in southern economies is generated in small firms—almost a third of it in tiny enterprises (with fewer than 10 workers). This is not an entrepreneurial profile suited for a big market. Unsurprisingly, with the expansion of the single market in the 2000s, foreign capital from the richer economies of Continental Europe quickly changed direction, going east instead of south as it had done in the 1990s.
Did the south need more time to adjust, or did it squander opportunities? The latter seems more plausible. Ireland has shown that EU institutions and resources can be translated quickly into competitiveness. The Baltic economies are now doing the same. The chief culprits for the south’s poor performance were high taxes and too many regulations, often poorly administered. While these mattered less when its eastern neighbors were communist and China and India suffered the least business-friendly systems in the world, they are now crippling southern enterprise.
All is not lost. Northern European states, especially Nordic countries, show it is possible to innovate, raise productivity and maintain generous social welfare at the same time. This is the World Bank's explanation for their success:
What has the north done to encourage enterprise and innovation? Much of its success has come from creating a good climate for doing business. All the northern economies are in the top 15 countries of 183 in the World Bank’s Doing Business rankings; at 14th, Sweden is the lowest ranked among them. They have given their enterprises considerable economic freedom. Their governments are doing a lot more. They have speeded up innovation by downloading the “killer applications” that have made the United States the global leader in technology: better incentives for enterprise-sponsored research and development (R&D), public funding mechanisms and intellectual property regimes to foster profitable relations between universities and firms, and a steady supply of workers with tertiary education. Tellingly, Europe’s innovation leaders perform especially well in areas where Europe as a whole lags the United States the most. These features make them global leaders; combining them with generous government spending on R&D and public education systems makes their innovation systems distinctively European.
Even so, there are reasons to worry, even in northern Europe. For instance:
What has been more perplexing is Europe’s generally poor performance in the most technology-intensive sectors—the Internet, biotechnology, computer software, health care equipment, and semiconductors. Put another way, the United States, the Republic of Korea, and Taiwan, China, have been doing well in sectors that are huge now but barely existed in 1975. Europe has been doing better in the more established sectors, especially industrial machinery, electrical equipment, telecommunications, aerospace, automobiles, and personal goods. The United States has young firms like Amazon, Amgen, Apple, Google, Intel, and Microsoft; Europe has Airbus, Mercedes, Nokia, and Volkswagen.
The productivity gap is especially important in Europe, given that Europeans tend to work less than Americans, while spending more on social protection. 
The hallmark of the European economic model is perhaps the balance between work and life. With prosperity, Americans buy more goods and services, Europeans more leisure. In the 1950s, Western Europeans worked the equivalent of almost a month more than Americans. By the 1970s, they worked about the same amount. Today, Americans work a month a year more than Dutch, French, Germans, and Swedes, and work notably longer than the less well-off Greeks, Hungarians, Poles, and Spaniards..
And on top of fewer working hours in the day, and taking longer holidays, Europeans have tended to retire earlier—even as they lived longer. By 2007, the French could expect to draw pensions for 15 years longer than they did in 1965. On current trends for immigration and participation in the workforce, says the World Bank, the 45 European countries in its study will lose 50m workers over the next 50 years. Which brings us to that spending bulge.
Europe’s states are not big spenders on either health or education. The variation among countries stems from a difference in spending on pensions and social assistance. Europe’s countries also differ how they tax these benefits; Northern European countries tax the social security benefits of people with high incomes more than others in Europe. After taxes are considered, the southern periphery is the biggest social spender in Western Europe. But the reason why Europe spends more than its peer on public pensions is the same in the north, center and south. This is not because Europe has the oldest population (Japan’s is much older) nor because of higher pension benefits (annual subsidies per pensioner are about the same in Greece as in Japan). It spends more because of easier and earlier eligibility for pensions.
So the outlook is gloomy. Even with greater productivity, even if governments can reduce unemployment and bring more women into the workforce, Europeans will have to stay in work for many more years. Even so, the workforce will decrease. So Europeans will have to rethink migration policies too.
* A correction to my post last night: the World Bank's map is sized according to all government spending, not just spending on social policies. The World Bank tells me the map would be even more distorted were it to focus only on public spending on health, education and welfare benefits.