Comparing the Real GDPs per Capita of the Former Soviet Republics

The Baltics are excluded from consideration in this post. This is the current (2013) ranking of former Soviet republics in real GDP per capita (PPP) terms. The statement in brackets refers to change in country/republic rank from the year 1990.

1. Russia (from 1) [0]

2. Kazakhstan (from 2) [0]

3. Belarus (from 6) [Up 3]

4. Azerbaijan (from 4) [0]

5. Turkmenistan (from 5) [0]

6. Ukraine (from 3) [Down 3]

7. Armenia (from 9) [Up 2]

8. Georgia (from 7) [Down 1]

9. Uzbekistan (from 12) [Up 3]

10. Moldova (from 8) [Down 2]

11. Kyrgyzstan (from 11) [0]

12. Tajikistan (from 10) [Down 2]

These, consequently, are the best and worst performers in changing their real GDP per capita (PPP) rankings in the FSU since 1990:

1. Belarus and Uzbekistan [Up 3]

2. Armenia [Up 2]

3. No change: Russia, Kazakhstan, Azerbaijan, Turkmenistan, Kyrgyzstan

4. Georgia [Down 1]

5. Moldova and Tajikistan [Down 2]

6. Ukraine [Down 3]

Here is another ranking: country’s real GDP per capita in 2013 compared to that at relevant 1990s business cycle trough:

1. Azerbaijan: 5.00X

2. Armenia: 4.09X

3. Belarus: 3.24X

4. Turkmenistan: 3.21X

5. Georgia: 3.17X

6. Kazakhstan: 2.78X

7. Tajikistan: 2.34X

8. Uzbekistan: 2.26X

9. Russia: 2.11X

10. Moldova: 1.99X

11. Ukraine: 1.90X

12. Kyrgyzstan: 1.83X

Thus, the below is the annualized growth rate in real GDP per capita in each former Soviet country between the year it hit its respective 1990s business cycle trough and 2013:

Azerbaijan: 9.35%

Turkmenistan: 7.37%

Armenia: 7.3%

Belarus: 6.75%

Georgia: 6.26%

Kazakhstan: 5.85%

Tajikistan: 5.13%

Russia: 5.11%

Moldova: 5.05%

Uzbekistan: 4.92%

Ukraine: 4.38%

Kyrgyzstan: 3.42%

What’s the matter with Kyrgyzstan? Its terrible education system? Its lack of industries built up during the Soviet era? Its geographic isolation? It’s certainly interesting that Ethiopia and Armenia are rapidly growing, but Kyrgyzstan isn’t. Also, the Belarussian economic miracle (which, for different reasons in each year, stalled in 2012 and 2013) hasn’t at all been emphasized in the U.S. media.

 

 

Advertisements

Price Level v. Real GDP: The AS-AD Model Examined

People in the economics blogosphere (e.g., Krugman, Sumner) all talk about a lack of aggregate demand since the 2007-9 recession. Yet, they never seem to try to test that claim using the same graphics they were taught in Econ 101, which can be easily generated in Excel using data from FRED.

realgdppricelevel
X-axis is Real GDP; Y-axis is Price Level (the GDP deflator). Blue line is historical data points.

Now, for the big reveal:

pricelevelgdp2008

The red Aggregate Demand curve is for Q2 2009 and is based on Scott Sumner’s assumption that AD=NGDP. The blue line is still historical data points. As you can see, using the Sumner NGDP/Aggregate Demand curve, most (62.7%) of the change in Real GDP during the 2007-9 recession was caused by supply-side phenomena.

Now, let’s look at the U.S. recession of 1990. The recession was caused by a credit contraction, not the oil price shock of the Gulf War-oil shocks don’t cause recessions these days; credit contractions do. And there was a credit contraction in America by April of 1990.

pricelevelgdp1990

The red AD/NGDP curve is for Q1 of 1991. The blue line is historical data points. As anyone can see, there was hardly any AD/NGDP decline at all in 1990-91- certainly not enough to spark a significant decline in Real GDP. The decline in Real GDP was pretty much entirely supply-side. Indeed, AD/NGDP was slightly higher at the bottom of the recession than when the recession began.

So Scott Sumner is right: NGDP targeting regimes would create stagflation in all recessions because recessions in modern economies are mostly supply-side phenomena. This might seem counter-intuitive to most New Keynesians, who think of the Great Depression of the 1930s as the ur-example of recessions, but when you’re an Austrian, thanks to ABCT, you’d think most recessions would be inflationary and would be very surprised at the highly unusual Great Depression of the 1930s, which was clearly a demand-side phenomenon, as the American price level was higher in March 1921 than in June 1932 (both months had the same level of real output), thus indicating a movement of the Aggregate Supply curve to the right between these months.

 

This is What Happens When the Police Don’t Take Back the Streets

http://www.kmov.com/news/local-video-ndn/RAW-Watch-as-looters-raid-Ferguson-Market–Liquor-271505481.html
http://www.kmov.com/video/featured-videos/Raw-Video–Inside-a-looted-Ferguson-liquor-store-271507191.html

Looters ran out of shops with boxes stacked in their arms up to their chins. Behind them lay overturned shelves, spilled goods and wrecked displays. All the while, police stayed back by their armored vehicles and observed but did not stop them.

http://www.nationalreview.com/corner/385553/new-police-tactic-ferguson-betray-local-business-owners-rich-lowry
http://www.breitbart.com/Big-Government/2014/08/15/Looters-Strike-Again-in-Ferguson-Assault-Threaten-Citizens-Defending-Businesses
http://www.kmov.com/special-coverage-001/video/Video-Looters-caught-on-video-leaving-beauty-store-with-merchandise–271492781.html
http://www.politico.com/story/2014/08/ferguson-reporters-media-110080.html
http://www.ksdk.com/story/news/local/2014/08/16/looters-force-beauty-supply-store-to-close/14156089/
Ferguson Beauty Supply Store owners find store in disarray after looting
Despicable. The police exist to protect the people and their property. What good is a state that does not carry out its functions? It is no better than anarchy! Was the donation of surplus military equipment to the Ferguson police all for naught? The police’s role is not to be subject to the disingenuous whining of the leftist media establishment, but to protect the citizenry under its jurisdiction! Unleash the cops! Take back the streets! Restore order to the residents of Ferguson, Missouri! Ignore the petulant complaints about “police militarization” from the prophets of Ba’al of our day.
A great libertarian intellectual, Murray Rothbard, once (correctly) wrote, at the height of the 1990s crime wave:

There is only one way to fulfill the vital police function, the only way that works: the public announcement–backed by willingness to enforce it–made by the late Mayor Richard Daley in the Chicago riots of the 1960s–ordering the police to shoot to kill any looters, rioters, arsonists, or muggers they might find. That very announcement was enough to induce the rioters to pocket their “rage” and go back to their peaceful pursuits.
Who knows the hearts of men? Who knows all the causes, the motivations, of action? But one thing is clear: regardless of the murky “causes,” would-be looters and muggers would get such a message loud and clear.

http://mises.org/econsense/ch17.asp

4. Take Back the Streets: Crush Criminals. And by this I mean, of course, not “white collar criminals” or “inside traders” but violent street criminals – robbers, muggers, rapists, murderers. Cops must be unleashed, and allowed to administer instant punishment, subject of course to liability when they are in error.

http://archive.lewrockwell.com/rothbard/ir/Ch5.html

And so, Pat proclaimed, “we must take back our cities, and take back our culture, and take back our country.” Yes, yes, yes!

http://www.lewrockwell.com/1970/01/murray-n-rothbard/the-irrepressible-rothbard-essays-of-murray-n-rothbardedited-by-llewellyn-h-rockwell-jr-8/

A Note on the Airstrikes

As everyone knows now, Obama, usually a good friend of the Islamic State, has in the past few weeks began performing concrete action against it. Does this negate my position that Obama is a firm supporter of the Islamic State and all the instability in the Fertile Crescent and Libya today? No.

Obama only began countering the Islamic State when it approached dangerously close to the city of Arbela after its decisive victory to the Southwest of Gaugamela. Apparently, the integrity of the government of Iraqi Kurdistan is infinitely more important to the present American administration than the fate of the Kurds of North Syria, the fate of the Shiites of the region of Baghdad, the fate of the Syrian rebels in the region of Deir ez-Zor, or the fate of the Christians who once used to reside in Raqqa and Mosul. That’s a pretty big list. Iraqi Kurdistan is, it seems, a vital client state of the United States, effectively allowed by it to export oil to Turkey without the permission of the Iraqi government. Iraq, if with Maliki, is not. Let us see how the present Iraq, without Maliki, will be treated by the present American administration.

In other news, the media silence on Turkey’s complicity with the Islamic State’s expansion has finally ended. I am very surprised.

Edit: Even Turkey has begun to attempt to reduce Islamist militant activity within its own borders. Apparently, it wants to keep the instability it has created in Iraq and Syria in Iraq and Syria, not within its own territory. This goes for the Syrian rebels, too. Of course, South Carchemish and Tell Abyad are still in Islamic State hands, thus demonstrating Turkey has no full-fledged war on militant Islam.