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Revised Growth Claim

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Revised Growth Claim

Robin Hanson
Jun 20, 2011
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Revised Growth Claim

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Me in March:

Non-democracies seem more our future than democracies, because while the two groups have the same average economic growth rates, non-democracy rates vary more, and high rates dominate. … Whenever you have a portfolio of items with different (log) growth rates, your portfolio’s long run average return is dominated by the portfolio items with the highest average rates.

William Easterly in May (see also):

The large literature on growth regressions has demonstrated that there is no easy answer to separating out the partial correlation of one particular variable from a long list of other equally plausible variables. The scope for specification searching leads to results that are not credible. The same situation holds here. Indeed, it is not hard with the above variables to produce regressions either showing autocracy to be statistically significant with other controls or statistically insignificant.

His point is valid. So let me revise my claim: Some nations appear to have more variance in general, which manifests itself in more variation in growth, leaders, and forms of governance. What exactly causes this higher variance is unclear, as is how much some kinds of variance encourage other kinds. It makes sense for democracy to reduce policy variance, but we can’t tell how important is that channel relative to other channels.

But whatever causes this variance, the higher variance set of nations should eventually dominate wealth, because peak growth rates dominate wealth. And if having dictators more often continues to be part of that mix, then rich nations will eventually have a lot of dictators among them.

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Revised Growth Claim

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Revised Growth Claim

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gwern
May 15

Yes, this is a problem for the claim. One of the findings, IIRC, is that the wealthier a nation is (per capita), the less likely any transition from authoritarianism to democracy will ever be reversed. So even if we assume the risk of democratization is exogenous and unvarying, the mix of countries will be continually shifting towards democracy.

(South Korea comes to mind. Strong military dictatorship which, during the break-neck growth, tipped into a real democracy, and there is no domestic sign it will ever reverse (short of, I dunno, North Korea conquering it).)

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Overcoming Bias Commenter
May 15

But this is a fantastically stupid post though isn't it? Your 'high variance mystery factor X' which some nations have and others don't is just something you've made up - it has no grounding in reality.

You seem to model the 'dictatorship or democracy' variable and the 'economic growth rate' variable, for each nation, as stationary time series. As if the progress of human history had now 'settled out' into a number of equilibria - one for each nation (all evolving independently of each other, of course!) - and all we have to do to understand and prophecy our long term future is to determine the parameters of these time series.

This is *monumentally* obtuse.

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