August 17, 2008
Determinants of the Olympic Success of Different Countries-Becker
Hundreds of millions of men and women all over the world have been tuned to their television sets and clued to their computer screens as they followed the Olympic extravaganza in Beijing. The pride taken by people of different countries in their own athletes as they compete against the best from other countries is truly remarkable. To Americans, the main interest this year has been Michael Phelps' pursuit of a record setting 8 gold medals in swimming-which he accomplished- the gold and silver medals won by two young American girls in the all around gymnastic finals, and the new basketball "dream team" that so far has easily won against China, Spain, and elsewhere. The Chinese have been thrilled by their successes in gymnastics and diving, the Australians by their swimmers, and the Rumanian's by the victory of their 38 year old mother in the women’s marathon. Pictures were shown of how in 2004 the almost all black country of Zimbabwe with a history of significant racial conflict gave a wildly enthusiastic parade to a white Zimbabwe swimmer who won a gold medal during the Athens Olympics. And so it goes in other countries whose athletes have won medals.
All the accolades given to Olympic medal winners-especially to those who get gold- provides plenty of incentive for young and talented athletes to train hard for the Olympics in the hope of becoming a medal winner. When practically all participants in the Olympics are working hard in their training regimes, and since various random factors, such as illness, injuries, and psychological state are extremely important, it becomes difficult to predict individual winners in many of the competitions. Yet it is rather easy to predict quite well the total number of medals won by different nations.
The article "A Tale of Two Seasons: Participation and Medal Counts at the Summer and Winter Olympic Games", published in 2004 in the Social Science Quarterly by Professor Daniel Johnson of Colorado College and a co-author, examines the determinants of how many medals were won by different countries in the summer and winter Olympics since the end of World War II. Their regression analysis shows that two very important variables are the total population and per capita incomes of different countries. Also important are whether a country has an authoritarian government-such as communism- a country's climate, and whether a country is the host country for a particular Olympics. These five variables taken together predict closely the total number of medals won by different countries in the winter as well as summer Games.
It is surely no surprise that population matters a lot since there are many more athletes to choose from in large countries. This is why the breakup of a big country, such as the Soviet Union, had a large effect on the number of medals won by Russia, if Russia is identified with the Soviet Union. Climate is also no surprise since, for instance, the warm climates of African nations makes it highly unlikely that they will be contenders during the winter Olympics in skiing and other cold weather sports. Yet countries with colder climates, such as Russia and Scandinavian countries, do well, given the other variables, in summer as well as the winter Games. Host country effects are somewhat more surprising, but they might be explained by greater familiarity of host athletes with the weather and other conditions of the Games, by the extra incentives provided by the cheers of their fans in attendance, and possibly by the greater preparation efforts of host country athletes.
It is further entirely reasonable that countries with higher per capita incomes, other things the same, do better in Olympic and other international competitions. Parents of promising athletes have more resources to hire coaches, buy equipment, and get other help in their quest to improve the performances of their children. High schools and colleges have more resources to spend on their athletic programs. Private groups establish Olympic and other committees with generous resources to help in the training of the most promising athletes. Companies sponsor athletic programs and offer other incentives- such as the $1 million that Speedo promised Michael Phelps if he succeeded in winning 8 gold medals at the Beijing Olympics.
The importance of communist and other single party countries on the surface is more surprising. It is not that these countries send more athletes to the Olympics than other countries with similar populations, etc- they do not- but authoritarian countries do better per athlete that they send. The reason appears to be that governments of these countries spend considerable resources and energies in finding young promising athletes, and in providing systematic training and equipment in centralized facilities. According to the NY Times' editorial of August 17th, China has spent billions of dollars on its state sports program since the 2000 Sydney Games. These countries also can sometimes use their authoritarian structure to force parents to let their children be taken to centralized facilities, and have refu'ed to allow athletes who win medals to retire. Such activities clearly help explain China’s rapid rise to athletic prominence, but the same considerations were behind East Germany's success in earlier Olympics, and in the great success of the Soviet Union prior to its breakup.
Democratic governments would not be able to employ some of the techniques used by authoritarian governments, but still must decide on the proper role of their governments in preparing athletes for Olympic and other international athletic competitions. The strong interest of countrymen in cheering on athletes representing their countries seems like a positive "externality", especially from Olympic success. However, in private market economies, these so-called externalities from Olympic and some other international athletic achievements are internalized to a considerable extent by endorsements, requests for well-paid speeches, job offers, and other private advantages given to successful athletes. Many of these private advantages are not possible in government-controlled economies, which might explain why their governments are much more active in financing and training athletes.
Perhaps some externalities remain that justify considerable government involvement in democratic countries. Indeed, recently countries, such as Germany, have indicated that they plan to spend more in preparing their athletes for future Olympics. The Times' editorial opposes further government spending on the US Olympic program mainly because the government budget is in deficit and the economy has slowed down. I believe there are much better reasons for opposition to a much larger government involvement. The highly decentralized, mainly but far from entirely, privately financed approach to athletics found in countries like the United States and Great Britain is the right way to attract and train Olympic and other athletes in democratic countries with strong decentralized private economic and philanthropic sectors.
Posted by becker at 09:36 PM | Comments (15) | TrackBack
Financing the Olympic Games--Posner's Comment
When a sport or other game is played all over the world (chess for example, or soccer), it is natural that there should be international competition. The oddity of the Olympics is that they are presented as athletic competitions between nations, rather than between teams each of which presumably would have a permanent residence in one nation yet might recruit team members from other nations as well. Nations in the grip of nationalist emotion or wanting to advertise their power to the world (nations such as Hitler's Germany, which made the 1936 summer Olympics, held in Berlin, a major propaganda event; East Germany and other communist countries; and now China) invest heavily in training their Olympic athletes. China is estimated to have spent as much as half a billion dollars to train their athletes for the Olympic games now underway in Beijing. The heavy investments that nations that regard Olympic competition as a propaganda opportunity in turn spur other nations to invest heavily in training their own Olympic athletes.
The nationalistic fervor and great-power aspirations that Olympic competition stimulates seem to me a negative externality. In addition, some unknown but doubtless large fraction of the expenditures on training athletes have no social product, but are in the nature of "arms race" expenditures. If one nation spends very heavily on training its Olympic athletes, other nations, if they want to win a respectable number of medals, have to spend heavily as well. The expenditures are offsetting to the extent that the objective of competition is to win rather than to produce an intrinsically better performance. Economic competition produces better products at lower quality-adjusted prices, and this effect dominates the costs of competition in duplication of facilities and offsetting advertising. The balance in athletic competition is different, because the main product (as in war) is winning, and it makes little difference to the consumer whether the winner ran a mile in 3.05 minutes or in 3.01 minutes. Moreover, Olympic competition is inherently lopsided since, as Becker explains, success is largely determined by a nation's population, per capita income, and (in the winter Olympics) climate. Why should Americans feel good if an American team beats a team from Costa Rica?
Since the United States is acknowledged to be the world's most powerful nation, it has nothing to prove by doing well in the Olympics, and so we are sensible not to allot any tax revenues to financing the training of our Olympic athletes. Doubtless we would were it not for the private donations that generously support the United States Olympic Committee. Since other countries do not have the same tradition of charitable giving as the United States, and so rely on tax revenues to finance activities that in the United States are financed by private charity, our charitable support of Olympic competition actually places pressure on other nations to support their Olympic teams out of tax revenues.
Becker raises an interesting point by asking whether Olympic competition creates a positive externality that might warrant public subsidy, though he recommends against subsidization. The Olympic games are immensely popular, but, given advertising-supported television, it is apparently impossible to finance them (and in particular the training of the Olympic athletes) out of television-advertising revenues. There are, however, as he notes, other (private) sources of revenue of Olympic participants, such as endorsements by champion athletes. Moreover, were there no public subsidies of Olympic competition, this would not doom the Olympic games; it would just reduce the amount of training that Olympic athletes received (the arms-race effect). This would reduce the number of new world records set, and marginally reduce the quality of play and hence the pleasure that the audience for the Olympic games derives, but would actually tend to sharpen Olympic competition by reducing the effect of a nation's per capita income on its Olympic prospects.
Posted by Richard Posner at 07:43 PM | Comments (9) | TrackBack
August 10, 2008
The Economics of Gay Marriage--Posner
In 1989, Denmark began allowing homosexual couples to form "registered partnerships," which gives a couple most of the legal rights of married persons; the other Scandinavian countries followed suit. In 2001 the Netherlands began allowing homosexual couples to marry. Spain followed, despite the fierce opposition of the Catholic Church. Canada too, and it is plain that most North Atlantic nations will soon recognize gay marriage. In the United States, Massachusetts and California, by virtue of state court constitutional rulings, now allow gay marriage. Several other states recognize "civil unions" or "domestic partnerships," the equivalent of Denmark's registered partnerships. (All these laws, except the Scandinavian ones, are recent, and there have been few studies of their effects.) The federal Defense of Marriage Act (1996), however, not only denies the federal benefits of marriage to gay marriages, but also empowers states to refuse to recognize such marriages, and a majority of states have enacted laws (usually as part of the state's constitution) refusing to recognize such marriages.
The gay-marriage movement raises a number of interesting questions, which I approach from an economic perspective: why do homosexuals want to marry? What are the consequences of gay marriage likely to be? Why is there opposition to gay marriage?
All sentimental and religious considerations to one side, marriage is a source of benefits. One, which is a genuine social benefit, is a saving of transaction costs. If you want to leave money to someone to whom you are not married, you will need a will; but if you are married, upon your death your spouse (if you have no will) will automatically receive a share of your estate. Nor do you have to have a contract specifying the financial or other consequences of an abandonment or other dissolution of the relationship; the law of divorce supplies the necessary machinery. In other words, the law provides a kind of standard contract that enables the costs of negotiating and drafting a private contract to be avoided. In this respect it is very much like partnership law, so that the term "domestic partnership" to describe a marriage-like law for homosexuals is apt.
There are also private benefits (in the sense that there does not seem to be an efficiency justification for them), such as survivors' social security benefits and rights under the Family and Medical Leave Act, but most of these benefits (offset, but for most couples not fully, by the "marriage tax"--the higher incomes taxes paid by a couple each of whom has a good income than they would have to pay if they were not married) are federal, and the Defense of Marriage Act denies federal marriage benefits to the parties to gay marriage. There are also, however, state-law evidentiary privileges that enable one to prevent his or her spouse (or sometimes even ex-spouse) to testify against one in a criminal case.
Employers often provide health and other benefits to the spouses of their employees as well as to the employees themselves, but there is nothing to prevent employers from offering those benefits to a same-sex partner of the employee, whether or not married.
Given the Defense of Marriage Act (and no-fault divorce, which enables each spouse to dissolve the marriage unilaterally), the net benefits of gay marriage to homosexuals are small, and indeed no greater than those conferred by domestic-partnership laws. Nevertheless, most homosexuals are very strong supporters of gay marriage even on the assumption that the Defense of Marriage Act will not be repealed and even though it appears that relatively few homosexuals have taken advantage of the Massachusetts law, though this may be because of its newness; it was created by the state's highest court by an interpretation of the state's constitution in 2004, and there was initial uncertainty whether it would stand, or be nullified by constitutional amendment. But probably the main reason for homosexuals' support of gay marriage is simply their desire to be treated equally with heterosexuals, which probably is also the principal reason for homosexuals' opposition to the armed forces' discrimination against them, rather than a great desire for either marriage or military service.
What are likely to be the consequences of gay marriage? If few homosexual couples take advantage of the right to undertake such a marriage, the consequences, at least in the short run, will be slight, especially since the right will be recognized in only a few states for the foreseeable future. But even if all states recognized gay marriage and the Defense of Marriage Act were repealed, the consequences would be small simply because the homosexual population is small and many homosexual couples will not bother to marry; many heterosexual couples nowadays do not bother to marry, especially if they don’t plan to have children, and a higher percentage of heterosexual than homosexual couples do not plan to have children. The much-bandied-about figure that 10 percent of the population is homosexual is false; it is based on a misinterpretation of Kinsey's data. The true figure is about 2 to 3 percent for men and 1 percent for women.
My qualification "in the short run" was intended to leave open the question whether widespread recognition of gay marriage, and thus the legitimating of homosexual relationships, might either increase the number of homosexuals or undermine heterosexual marriage. I do not think either consequences is likely. Sexual preference seems pretty clearly to be genetic or otherwise innate rather than chosen on the basis of social attitudes toward particular sexual practices. Despite greatly increased tolerance of homosexual behavior in many countries (including the United States) in recent decades, there is no evidence that I am aware of that the number of people who prefer homosexual to heterosexual sex has grown. Homosexuals are more open about their sexual identity and this creates an impression that there is more homosexuality than there used to be--and there may indeed be more homosexual behavior. But the preference appears to be unchanged. So parents probably need not worry that recognizing gay marriage will increase the likelihood of their child's turning out to be homosexual.
Although some of the opposition to gay marriage is religiously motivated, I believe the main opposition comes from the feeling of many (heterosexually) married people that allowing gay marriage degrades or depreciates the concept of marriage, much as if polygamous marriage were permitted or people were permitted to marry their dogs or their automobiles. Apart from the weight that widespread public opinion is entitled to be given in a democratic society, there is the danger that if people respect the institution of marriage less, the marriage rate, already low, will fall still lower, with adverse social consequences. Again, the danger seems small. The people who worry about the effect of gay marriage on the institution of marriage are those most committed to the institution, and they are unlikely to desert it. And if they did? If what marriage mainly is is simply a standard contract, it is not obvious that its decline, and replacement by private contracts (in other words, the privatization of marriage), would have serious social consequences, given the ease with which under modern law marriages can be dissolved by either party.
Marriage retains and will probably long retain tremendous symbolic significance in our society as a symbol of love and commitment (that is why cheating on a spouse attracts greater opprobrium than cheating on a person with whom one has a long-term, but not marital, sexual relationship), and it is likely to retain that significance even as gay marriage becomes more widespread, as it seems bound to do.
Posted by Richard Posner at 05:01 PM | Comments (62) | TrackBack
Should Gay Marriages be Allowed? Becker
Many gay couples want to be allowed to call their union "marriage" mainly because they believe this will give their relation a degree of acceptance that is closer to that given to heterosexual unions. They also believe that marriage connotes a more stable long-term relation, although gay unions have a well-known tendency to dissolve at even higher rates than heterosexual marriages, and that very likely would continue even if their unions are called marriages. The narrowly economic gains from being married are a decidedly minor part of the desire by gays to have their matches called marriages.
For the reasons just stated, one can understand why many gay couples want to be allowed to marry. What I find difficult to understand is why there is so much opposition; for example, I doubt if a referendum legalizing gay marriage would pass in many states. As Posner indicates, allowing gay couples to marry will have little effect on either the attraction or stability of marriages between heterosexuals. I believe this opposition reflects hostility to gays and their unions that can no longer be expressed in other more traditional forms, such as calling them names or harassing them. As a result, the marriage issue has become a rallying point that allows hostility to gays to be hidden behind other reasons.
To be sure, it is a strange way to express that hostility in light of other options that have been allowed to gays that are far more radical. I am mainly thinking of the recent practices of allowing gay couples, married or not, to adopt children, allowing lesbian couples to bear children through sperm supplied by sperm banks, or allowing male gay couples to use their sperm to impregnate women who bear children that a gay couple raises. Although rather few gay couples have children as yet, that practice is a far bigger venture into the unknown than is permitting gay couples to be married. It is still too early to have reliable evidence on the effects on children of being raised by gay parents, but I suspect these effects will be more negative than positive, in part because even married gay couples are likely to dissolve their match at relatively high rates.
I also find it strange that gays having and raising children arouses much less opposition than does polygamy, where several women voluntarily agree to be married to the same man (a far rarer form of polygamy is when several men agree to be married to the same woman). Why should society care if two (or more) women are willing to be married to the same man, especially in an environment where men and women rather than their parents generally make their choices about who to marry? We trust women to make many other decisions that seem strange to others-such as when a twenty year old woman marries a 65 year old man- so what logical grounds are there to disallow several woman voluntarily accepting marriage to the same man? Moreover, since polygamy would increase the demand for women as marital partners-however slightly since polygamy would be very uncommon- the argument that it is a form of exploitation of women is also without foundation.
I have proposed for many years that marriage should be basically a private contract between the men and women involved-they can add a religious ceremony if they so desire. There is no reason why the standard contract should be supplied by the government rather than by market forces. An explicit contract would be compulsory, even if it only has a minimum number of stipulations and rules. Most persons marrying might use such a standard contract, but others would have special provisions, such as the allocation of assets in event of dissolution, responsibilities for housework and other activities, and obligations toward children. The state would set minimum obligations toward children since society has an interest in how children are treated.
Such contracts would be equally available to homosexuals, as they are already in some countries and many states of the United States. These contracts would reduce the role of governments in marital arrangements where they have no special competence or interests- again, aside from the protection of children. It would also eliminate the gay marriage issue since gays would have access to contracts as fully as heterosexuals. It would also allow couples to stipulate in writing any special arrangements they want to see enforced in their unions.
Such contracts are unlikely to replace government determined marital terms in the foreseeable future. So until then, it would be wise to expand the concept of marriage to include homosexual relations, and perhaps polygamy as well.
Posted by becker at 04:15 PM | Comments (35) | TrackBack
August 03, 2008
Is America in Decline? Becker
Articles about whether America is in decline is a cyclical industry that rises and falls over about a twenty-year cycle. The previous cycle started with Paul Kennedy's bestseller of 1986 "The Rise and Fall of the Great Powers", and was vigorously discussed during the next decade. It was finally dismissed after starting in the early years of the Reagan presidency there was more than twenty-five years of vigorous growth in GDP-much faster than in Western Europe- declines in unemployment to very low levels, and the complete absence of any inflationary pressure.
This gloom and doom industry has begun to grow again during the past few years. Kennedy had attributed his projected decline of the United States to its role as the world's policeman, and the resulting spending on defense and military manpower and equipment, Yet, defense spending did not account for more than six percent of GDP, and some of the military spending went for military R&D and training that had carryover to civilian products and services, such as the development of the Internet, and the training of pilots. The new pessimists continue to blame America's role as policeman, and in particular its protracted involvement in Iraq and Afghanistan. They also see possible doom in the debacle in the US housing market, the high price of oil, and the current economic slowdown in income growth, and declines in employment. Much emphasis too is placed on the growth of China and India, and also Brazil, and the shift of the world's attention toward these large rapidly developing nations. Some members of the doom school claim in addition that the United States is getting "old", like old Europe, and is suffering from ailments that afflict old nations.
Readers of our blog will realize that I generally do not subscribe to this gloom and doom school concerning America. I do agree that being the world's policeman does take resources that could be producing civilian output, and countries in Europe and elsewhere free ride off of America's efforts, but when done right this policeman's role also makes the world a safer place in the future. However, the resources spent on military manpower and equipment is not large enough to have a serious effect on the growth of US civilian output. The economy and housing market will before long recover from their current difficulties. The rapid expansion of China, India, and a few other large nations does mean that the share of world GDP produced by the United States has begun to decline, and is likely to continue to decline over the next decade and longer. After all, these two huge nations, along with Brazil, comprise over forty percent of the world's population, so their rapid growth must lead to a decline in America's share of world GDP. But the success of other nations should not be taken per se an indication that America is in decline.
Moreover, and on the whole, the growth of these other nations will help US growth prospects. The United States has been for several decades the world's leader in technological innovation, so that other nations have been able to free ride to some extent over US investments in new ideas and technologies. With the rapid growth of China and others, they too will begin to make considerable innovations, and the US will now be able to take advantage of their technological advances. In other words, in the future, America will become more of an importer as well as continuing to be an exporter of new ideas and innovations.
The expansion of exports from China and other poorer nations has not benefited all nations, especially those that compete with exports of similar products. However, it has greatly benefited the US and other developed countries because the rich countries can import amazingly cheap consumer goods, and these developing countries provide a market for the industrial goods and advanced services of richer nations. As the rapidly developing countries get richer, the mix of their products and services will change, and some of them will compete directly with those of richer nations. Yet the evidence is strong that trade is stronger in general between countries of similar levels rather than different levels of economic development, but is mutually beneficial to both sides. I see no reason why this should not continue as China's, India's, and Brazil's economic development become much closer to that of the US, Japan, and Western Europe.
Another argument made by the America is declining camp is that as countries continue to get richer, individuals lose their motivation and begin to sharply cut their hours of work and ambitions regarding further accumulation of wealth and income. In a celebrated article published in 1931 called, "Economic Possibilities for our Grandchildren", the great economist John Maynard Keynes predicted that as incomes continued to grow, then adults in Europe and the United States would by the year 2030 be working about 15 hours per week, and they would spent most of their time in leisure pursuits. Keynes’ predictions about the long-term rates of growth of income were surprisingly quite accurate, despite the worldwide depression then in effect, but his predictions about how people would spend their growing wealth were way off the mark. He did not appreciate that higher hourly earnings could lead people to work more hours even though their incomes were higher, and that the continuing development of new products, such as computers and television, would increase people's desire for more spending power. These effects were magnified by the interest in relative economic position since that induces men and women to strive for higher incomes in order to move ahead of their peers (on all this, see the article by Luis Rayo and me "Why Keynes Underestimated Consumption and Overestimated Leisure for the Long Run", in the recent collection of essays, "Revisiting Keynes".
I am an optimist about the future prospects of America; that is, I believe the individuality, entrepreneurship, and drive in this country will continue to propel the economy and society forward at a good pace. The biggest risk to America's continuing success lies not in the considerations already discussed, but in the expansion of government regulations and controls that can throttle the dynamic energies of its competitive private sector. Clearly, various forms of government spending and regulation, such as spending on police and the military, on schools and other infrastructure, are crucial to any prosperous society. However, the tendency during the past half-century has been to go further than is warranted as different interest groups look to the government for help. Governments now often decide what consumer goods can be produced (see our blog discussion last week), subsidize housing and other goods, and regulate who can be fired and hired (especially in many European countries but also increasingly in the US). Governments also are placing greater stress on equality as opposed to opportunity and efficiency, and pay for medical spending, provide retirement incomes, and often impose heavy taxes on persons who earn more than average.
So far, this expansion of the role of government has not been a crucial deterrent to entrepreneurship and private energies in the United States-a much greater expansion of government has had much more harmful effects in countries like Italy and France. Although I remain optimistic, I do fear that interest group pressures toward a much larger role of government in the United States may become much harder to resist in the future, and that this could eventually kill, or at least badly wound, the free market-entrepreneurial goose that has been laying the golden eggs.
Posted by becker at 08:23 PM | Comments (44) | TrackBack
Is America in Decline? Posner's Comment
I agree that there is no reason to expect the rate of growth of per capita income in the United States to decline in the foreseeable future. Of course it may decline; the future is uncertain; a particular uncertainty concerns the ever-present possibility of catastrophe (see my book Catastrophe: Risk and Response [2004]). Abrupt global warming, nuclear terrorism, a pandemic, an asteroid strike—all are possible events that could have cataclysmic effects on economic growth. Also, it is important to distinguish between monetary income and economic welfare. Increases in leisure and in the quality and variety of products and services can increase welfare without increasing per capita income; conversely, expenditures on security, while they may be cost-justified because of the risk of terrorist or other attacks, reduce consumption; and service deteriorations, for example due to congestion, can reduce welfare; but in neither case would the welfare loss show up in lower per capita incomes. A related example is wasteful expenditures on health care, all of which show up as income to providers, though it is possible that as much as a third of all expenditures on health care in the United States either yield no benefits in greater longevity or better health or exceed what it would cost to achieve the same benefits more cheaply (for example, by exercise and healthy eating).
I do not share Becker's pessimism about the rise of regulation. The deregulation and privatization movements have, since their beginning in the late 1970s, freed large parts of the economy from government control; income tax rates have fallen; unions have continued to decline; and the courts have become more conservative with respect to economic issues. (The Supreme Court's "liberal" Justices are liberal mainly concerning issues, such as abortion, capital punishment, and homosexual rights, that have little economic significance.) There will now be some re-regulation, but I would be surprised if it went far, given the political power of business.
Environmental regulation has increased, but it deals with real externalities. The increased regulation of labor markets, however, mainly as a result of antidiscrimination laws, is difficult to justify on economic grounds, though its economic effects may be largely offset by the decline of unions. Even after the recent increase in the federal minimum wage, that wage in real (i.e., inflation-adjusted) terms is no higher than it was in 1960.
Social conservatives believe that the nation is in free fall because of the decline of traditional social values, a decline reflected in low marriage and high divorce rates, a high rate of births out of wedlock, increases in pornography and vulgarity, the flaunting of homosexual relations, and abortion on demand. Becker does not cite any of these factors as inimical to economic growth; nor would I.
But there is a crucial ambiguity in the word "decline" when applied to a nation, and I will devote the rest of my comment to that. To begin with, the word might denote not a reduction in the rate of growth of per capita income but a reduction in that rate relative to the rate in other countries. Small differences in growth rates cumulate over time, like compound interest. Some nations will grow faster than the United States, but I do not see the growth rate of the United States dropping below the world average.
The idea of national decline might even refer to a decline in a nation's share of world income. The U.S. share peaked in 1951 at 28 percent, fell to 21 percent by 1975, and is about 20 percent today. The percentage will continue to fall as incomes in China, India, Brazil, and other rapidly developing countries rise. This almost certain "decline" has, however, no significance for the welfare of Americans--except insofar as a nation's share of world income is correlated with the nation’s political (and ultimately military) power--"geopolitical power." And when one speaks of a nation in "decline," it usually is to the nation's geopolitical power that one is referring.
Although China's military expenditures are far smaller than those of the United States, they are increasing more rapidly and eventually may surpass ours; and their increase is driving Japan to become once again a major world military power. Russia's military expenditures are increasing as well. India's too. And these are all countries that have potential enemies and so take military preparedness seriously (unlike Western Europe). What is more, the power of large countries such as the United States (and before that, notably, Great Britain) to coerce small ones has declined. When early in World War II Iraq and Iran began leaning toward the Axis powers, Britain (aided in Iran by the Soviet Union) quickly intervened and, more or less effortlessly, changed the governments in those countries. Britain of course for centuries controlled a vast empire with slight military forces. Tiny Holland ruled what is now Indonesia. France ruled what is now Vietnam, Cambodia, and Laos. Japan ruled Korea and Taiwan. The Western nations, including the United States, are vastly less powerful than they were half a century ago. The U.S., despite a military budget roughly equal to that of all other nations combined, has its hands full trying to control two militarily third-rate countries, Iraq and Afghanistan, and is incapable of preventing Iran from becoming a nuclear power.
From a political rather than an economic standpoint, the United States today may be in a position comparable to that of the Roman Empire in the fourth century A.D. or the British Empire in the 1930s: the world's leading "empire" (in the sense not of having colonies, but of having the most influence over other countries), but, as an empire, in decline.
Posted by Richard Posner at 07:36 PM | Comments (32) | TrackBack
