Friday, November 4, 2011

Look Up, Chicken Little

I am not a statistician.

If it wasn't for our extraordinarily patient teaching assistant, my social statistics class in college would have been a complete nightmare.

But if there is one thing I learned from that class, it is that anybody can make numbers say anything they want.  The trick with statistics is to make sure the numbers you're crunching pertain to the questions they're supposed to answer.  Unless your data is collected and tabulated properly, it will be spurious, or put another way, your answers won't exactly answer the question.  Your conclusions may appear to address the original problem, but they really won't.

And it takes a really good statistician to know how to make results work in their favor.  And usually a politician to make them work, even when they don't.

Granted, he's not a politician.  But for all his vaunted academic credentials, Niall Ferguson appears to have committed the cardinal sin of statisticians: he's let spurious results lead him to some inaccurate conclusions.

And like Chicken Little, he's let those conclusions paint a bleak picture for the future of the United States and our Western allies.

We should not be unconcerned that our world's power structure is shifting rapidly eastward, to Asia.  It's not news any longer that the post-World-War-Two Pacific Rim has begun eating our economic lunch, as well as making the box it came in.  Yet Ferguson has jumped on the Orient Express with a one-way ticket, bristling with data purportedly proving the demise of Western hegemony in exchange for China's and South Korea's.

In his blustery article for CNN.com, Why the West is Losing Out to the Rest, Ferguson lays out his attempt at corralling a bunch of socioeconomic statistics into a repudiation of what he considers to be the West's delusional grasp on world power.  Or at least, what Ferguson has deduced is the West's delusion that it still holds global power.

And yes, many Westerners - Americans in particular - have been lulled into a false complacency about our dominance in the world's economy.  Even before we were birthed as a nation, Europe had managed to develop a sophisticated paradigm of enlightenment, conquest, trade, government, education, and transportation that established most of the mechanics of modern life we take for granted today.  We Americans have been fortunate enough to benefit from some of the most stellar of these advances as we've built our economy into the world's largest.

Ever.

Meanwhile, much of what it's taken to build that economy has involved a slow deconstruction of the way we live, work, and govern.  The outsourcing of jobs that began decades ago has come back to bite us, as has the deliberate nation-building with which the United States has been engaged after the Second World War in countries like South Korea and Japan.  We've also been - along with Russia, oddly enough - the world's peacekeepers, for better or worse, keeping military strife from encompassing the globe for the past sixty-five years.

How Much Is the West Ceding to the Rest?

Ferguson says all of this hasn't been enough to keep pace with our planet's socioeconomic evolution.  And maybe it hasn't.  But are things as dire as he claims?

Consider several of his breathlessly excitable examples of what he sees as growing disparities between "the West and the rest:"

"Did you know that 26 of the 30 biggest shopping malls in the world are now in emerging markets, mostly in Asia? Only three are in the United States."

Get with the times, Ferguson.  Shopping malls in North America are so 1980's.  Might malls be bigger in Asia and developing countries because they're in a greater hurry to acquire those things Westerners have been enjoying for the past fifty years?  Plus, most Americans no longer like shopping malls, since neighborhood strip malls and Internet retailing are so much more convenient.  The statistics you should be comparing are buying power, available methods for consumer purchasing, and retailer profitability.

"Statistics from the World Intellectual Property Organization show that already more patents originate in Japan than in the United States, that South Korea overtook Germany to take third place in 2005, and that China is poised to overtake Germany, too." 

Are patents themselves a sign of ingenuity?  What are all these patents for?  How easy is it to get a patent in these countries?  How much duplicity and intellectual property fraud is taking place?  What is the economic value of the products produced by these patents?  Where were the people educated who invented the commodities being patented?

"Well, the World Economic Forum has conducted a comprehensive global competitiveness survey every year since 1979. Since the current methodology was adopted in 2004, the U.S. average competitiveness score has fallen from 5.82 to 5.43, one of the steepest declines among developed economies. China's score, meanwhile, has leapt up from 4.29 to 4.9. " 

You tell me, Ferguson, how sophisticated democracies like the United States and Germany can compete against countries lacking human rights laws, environmental protection laws, labor laws, and even stringent building codes?  Is it our fault that we value individual life more than communist societies do?

Is Everyone Else Playing Catch-Up a Bad Thing?

In fact, the biggest fallacy in Ferguson's argument involves how he ignores repressive governments throughout Asia.  China has communism, Singapore has a brittle autocracy, while Malaysia and Indonesia have increasingly violent Islamic governments.  Being able to control one's population - populations which tend to be far more homogeneous than ours in the United States - makes controlling the economy that much easier, isnt' it?

Plus, speaking of China, increasingly frequent news accounts of cracks appearing in China's financial facade have some experts wondering if the explosive growth we've been seeing there isn't just another mirage.  Entire cities have been built for a population that can't afford to live in them.  Shoddy quality control and workers growing increasingly aware of health and safety rights are making foreign customers leery of China's long-term viability as a manufacturing juggernaut.  Indeed, the country's corruption-choked bureaucracy, despite being run by engineers instead of lawyers (as in America), combined with massive yet questionably-built public works projects, threatens to undermine the sustainability of China's ambitions.

And South Korea?  And Japan?  Nice enough places, surely, but without the United States, they're sitting ducks in terms of their national security.  Indeed, it could be argued that they owe most of their post-war economic successes directly to the country whose continued military protection they can't survive without.

Does the United States in particular, and the post-industrialized West in general, need to get its act together to remain relevant in the 21st Century?  Of course we do.  Does the economic tide of good fortune seem to be cresting towards China and its neighbors?  At this point, yes, it does.

Is the West going to be suddenly obsolete and impotent just because some of the world's largest countries - China and India - actually attain the economic influence commensurate with their populations?

No, not necessarily.  And certainly not because they have bigger shopping malls than we do.

Ferguson makes a classic mistake when reading the tea leaves of international commerce.  He forgets that it's not countries who exact change on the world, but people.

And up until now, the fact that Americans have had one of the most dynamic democracies working in our favor has helped make us who we are.

Therefore, moreso than global finance, it's the ability of the American people to wise up - and then rise up - to challenges both in our own back yard, and across oceans, that will help chart the future of our country.

And hopefully, everybody else's, too.

It's true that America doesn't have the patent on democracy or free markets.  But neither does Asia.
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