Comments on economics, mystery fiction, drama, and art.

Sunday, June 23, 2013

Generating the Wealth of Nations 35: Two Views of Real GDP per Capita in Cambodia and Chile

One of the things that can make life difficult when thinking about economic growth in different countries is that two data sources can provide us with radically different views of what happened.  Here, for example (and this is motivated by the discussion of what happened in Cambodia during the Khmer Rouge years an afterwards), are two estimates of real GDP per capita in Cambodia from 1969 to 2010.  One is fromt he Maddison Project, data which we've been using a lot through the course.  The second is from the USDA International Macroeconomic Data Set.

(Click to enlarge.)

I'll be honest.  I have no idea which is more accurate, or why these estimates are so wildly at variance.  It does suggest (a)  I should have done more of these comparisons and (b) we need to use any data cautiously.

From the same two data sets, real GDP per capita in Chile for the same time period.  The pattern is much the same, the difference appears to be because they are using different price deflators.

(Click to enlarge.)

Saturday, June 22, 2013

On the origins of the name of "Legal Tender Road" in Bartholomew County, Indiana

While driving through south-central Indiana today on our way to a memorial service, we ran across "Legal Tender Road," which, for an economist was just too good to be true.  But why would a road in rural Indiana have that name?

Having looked for quite a while, I found this explanation, on the website of the Historic Indiana Indiana Message Board:

Legal Tender Road History Elizabethtown (E-Town) IndianaBartholomew County Indiana

The Legal Tender Act of 1862 stopped the use of gold and silver coins and bullion as monetary exchange. In place of that the United States Congress created the first “Greenbacks”. The intent was to fund projects that would benefit the Northern troops in the Civil War, which ended during 1865. Such as building roads that would get food crops to market and in turn feed the troops. There were many such projects and they put the name “Legal Tender” on them.

[image] "Greenback 1862"

The following information was provided by a dear friend in Columbus, who is a retired Columbus Historian and genealogist, and is now 99 years old. She writes to my brother and says: “I am enjoying life”. She writes that according to an 1888 Local History Book, Page 28, that turnpike companies were formed under the Legal Tender Act of 1862, to assist in the Civil War effort. Roads were built and tolls charged for use of the roads.

She grew up in the Burnsville/Grammer area and knows the road well.

The Legal Tender turnpike company in Rockcreek Township was responsible for the road in question. It set the toll rate and had to insure the road was maintained as prescribed by law.

The road was still marked on the maps of the 1960s and today in Bartholomew County. Forthcoming, we will provide a map dated July 20, 1960. The map will show the road leading from Elizabethtown, (where the Pennsylvania RR had a station) and then headed North and then East, right between Grammer and Burnsville, following the present day road number 300S.

In the early days transportation was a problem. Grist Mills were built on the river banks; trade was up and down the rivers. Towns grew up and farmers needed to build and maintain the roads. Hence, turnpike companies and toll roads were established. (Note: She adds that this was before her time)

There are other things around designated by “Legal Tender” such as a cemetery in what is now called Camp Atterbury located at the Ninevah area.

Special Challenge: For anyone who can find/locate early documentation that explains the road and the overall Legal Tender projects. Perhaps it would be located in the Columbus Historical Archives. To date nothing has been found.

Map Update E-Town (from Columbus go East on Hwy 7):


Thursday, June 13, 2013

Generating the Wealth of Nations 34: Real GDP per Capita in South Africa

Unless I'm missing something, the Maddison Project data do not seem to include South Africa.  If you'd like real GDP per capita data for South Africa from 1969 to 2011, you can find it here:

And here's a chart:

(Click to enlarge.)

Over the 1969-2011 period, growth in real GDP per capita averages 0.7% per year.  That, of course, incorporates the decline from 1969 to 1993.  From 1993 to 2011, growth averaged 2.2% per year.  From 1969 to 1981 (when the decline began), growth averaged 1.1% per year.

UPDATE:  I found the Maddison Project data, where there is a continuous data run from 1924 to 2011.  Growth was +2.2% per year from 1924 to 1981; -2% per year from 1981 to 1993, and +2.2% per year from 1993 to 2010.  (I got fooled because it was listed as "Cape Colony/South Africa."  Sigh.)


Tuesday, June 11, 2013

Generating the Wealth of Nations 33: When Things Don't Go Well

In addition to Libya's boom-and-bust, three nations have had less dramatic booms and significant busts that left them at lower reap GDP per capita than where they started.  Zimbabwe's recent decline is almost certainly related to the horrendous hyperinflation that occurred there in the early part of this century.

(Click to enlarge.)

And in four nations, it appears that growth never really got any traction.  In all four of these, real GDP per capita declined fairly slowlt but fairly steadily.  Both Congo/Kinsasha and Somalia have had ongoing civil wars of one intensity or another, which is clearly not good for growth. 

(Click to enlarge.)

Generating the Wealth of Nations 32: Three Charts on Africa

The first of these shows real GDP per capita in the Mediterranean nations of Africa.  As these things go, these 5 nations are among the highest-income nations in Africa.  Libya has the lest-normal pattern, with a huge oil boom, followed by decline.  

 (Click to enlarge.)

Two nations in Africa have grown at average annual rates of about 5% per year or faster.  I have no idea what happened in Equitorial Guinea beginning about 1995, but the 15 years since then have been spectacular.

(Click to enlarge.)

Then, four nations that have grown fairly steadily, all at about 3% per  year.

(Click to enlarge.)

Sunday, June 09, 2013

A side comment on the Russian Revolution

This is sparked by reading (of all things) a mystery novel (by John Lescroart, Rasputin's
), but actually dating back to thoughts I had when taking a course on the Russian revolution(s) (of 1905, 1917, and 1918), taught by Jack Wilson at DePauw University in 1968.  What occurred to me then, and was brought back to me by reading a work of fiction set in Russia in 1915, is how strangely cramped the political landscape of Russia was then.

On the one hand was the autocracy, Nicholas II and those dedicated to maintaining autcratic rule, a 20th century of Louis XIV's "I am the state."  On the other hand were the various factions of the extreme left--the Menshiviks, the Socialist Revolutionaries, the Peasant's Party--and the Bolsheviks.  And the middle was, essentially, empty.  There was no bourgeois faction, no real movement for political democracy, capitalist development, the rule of law, and the rights of individuals.  In one way or another, such groups had existed in England in the 17th and 18th and 19th and 20th centuries; in France in the 18th and 19th and 20th (albeit somewhat less effectually), in Italy, in Spain, in Germany...but not in Russia.

The consequence, and it was not surprising to me as I read about the revulutions in Russia, often written by the participants (N. N. Sukhanov, The Russian Revolution, 1917: A Personal Record; N. Bukharin, The ABCs of Communism; Trotsky's "biography" of Stalin), others not (B. Wolfe, Three Who Made a Revolution; E.H. Carr, The Bolshevik Revolution, 1917-1923 in 3 volumes; I. Deautcher's three volume biograpgy of Trotsky--The Prophet Armed, The Prophet Unarmed, The Prophet Outcast--amazing, but hardly objective; L. Shapiro, The Russian Revolutions of 1917: The Origins of Communism) that the Bolsheviks--the most radical, the least compromising, the most willing to use violence, subversion, and misrepresentation, the most disciplined--won.  Poor Russia never really had a chance.


Wednesday, June 05, 2013

Generating the Wealth of Nations 31: Unreal Growth in Real per capita GDP in Russia and the Ukraine

Before 1988, this is just too good to be true.

(Click to enlarge.)

If you look at growth in total GDP, you get something similar, which would imply that the annual growth in population was also unchanged over the 1969-1988 period...

Tuesday, June 04, 2013

Generating the Wealth of Nations 30: Three Asian Nations Identified

Yesterday I posted a chart of real GDP per capita for three Asian nations before World War II; here are the same three nations, with the same color-coding, since 1950.  Before WW2, the Philippines was clearly richer than either China or India, but both China and Indiana have done much better since (and especially since 1980):

(Click to enlarge.)

I received several responses picking the country represented by the black line to be Japan, which wasn't  bad guess.  Here's Japan and the Philippines:

(Click to enlarge.)

Clearly, a lot went right in Japan after WW2 and a lot did not go right in the Philippines.


Monday, June 03, 2013

Generating the Wealth of Nations 29: Three Asian Nations

The following chart shows real GDP per Capita in three Asian nations from 1900 to 1940.  Two questions:  (1) Which one (black, green, blue) seems pest positioned for a growth take-off after World War II?  (2) What are these three nations?  (Answers tomorrow.)

(Click to enarge.)

Sunday, June 02, 2013

Generating the Wealth of Nations 28: Trade Costs and Economic Growth

This spins off one of the charts in lecture 6, section 5, which shows the relationship between relative trade costs and the level of real GDP per capita (from the article "International trade and income differences,"  by Michael Waugh, published in the American Economic Review in 2010.  My take on this is that we need to look at the relationship between the costs of trade (e.g., tariffs, shipping costs...) and the rate of growth of real GDP per capita.  So I extracted Waugh's data on trade costs, added information of real GDP per capita growth (from 2005 to 2010), and I got this:

(Click to enlarge.)

There is not a clear negative relationship (higher trade costs associated with slower growth), and in fact the correlation is (insignificantly) positive.