Tuesday, December 13, 2016

Should some countries cease to exist?

Working on global inequality makes you ask questions you would never ask otherwise simply because they would not occur to you. It is like going from a two-dimensional world to a three-dimensional: even the familiar suddenly appears unusual. 

Take the convergence economics. In theory of growth convergence indicates the regularity that poorer countries tend to grow faster than richer countries because they can use all the knowledge and innovations that the richer have already produced. Simply put, when you are at the technological frontier, you need to invent something new all the time and you may grow at say, 1 or 1.5 percent per year. When you are below the frontier, you can copy and grow at the higher rate. (Of course, economists talk of “conditional convergence” because the theory assumes that all other factors, that in reality differ between the rich and poor countries, are the same.) Nevertheless, there is some evidence for conditional convergence in empirical studies and it is, for obvious reasons, considered a good thing.

Now, when you look more closely you realize that convergence is studied in terms of countries but in reality it deals with the convergence in living standards between individuals. We express it in terms of a poorer country catching up with the richer because we are used to doing our economics in terms of nation-states and implicitly assume that there is no movement of people between countries. But in reality convergence is nothing else but the diminution of income inequality between all individuals in the world. 

So, how best to achieve such a decrease in inequality between people? Economic theory, common sense and simulation exercises clearly show that it can be best done by allowing free movement of people. Such a policy would increase global income (as any free movement of factors of production in principle should), reduce global poverty and global inequality. It is immaterial, from a global perspective, that it might slower between-country convergence (as some recent results for EU indicate) because countries are, as we have just seen, not the relevant entities in global economics: the relevant entities are individuals and their welfare levels. If people’s incomes are more equal, it is wholly immaterial if the gap between the average incomes in A and B increases.  To see this point, think in the familiar terms of the nation-state: no one in his or her right mind would argue that people from the Appalachian in the US should not be allowed to move to California because the average income in the Appalachia might go down. In fact, both the average income in California and in Appalachia might go down, and both inequalities in the Appalachia and California might go up, and yet the overall US income would rise and US inequality would be less. 

The argument is identical for the world as a whole: a high-skilled Nigerian who moves to the United States might lower the mean income of Nigeria (and might also lower the mean income of the US), and might in addition cause both inequalities to go up, and yet the global GDP would be greater and global inequality would be less. In short, the world would be a better place. The objections to migration, namely that it might reduce the average income in recipient countries,  raised by Paul Collier in his book “Exodus” are immaterial because the real subject of our analysis is not the nation-state but the individual. 

Thus far the argument seems to me entirely incontestable. But then things get a bit messier. Pushing this logic further, and using the results of the Gallup poll that show the percentage of people who desire to move out of their countries, we find that in the case of unimpeded global migration some countries could lose up to 90 percent of their populations. They may cease to exist: everybody but a few thousand people might move out. Even the few who might at first remain, could  soon find their lives there intolerable, not least because providing public goods for a very small population may be exceedingly expensive. 

So, what?—it could be asked. If Chad, Liberia and Mauritania cease to exist because everybody wants to move to Italy and France, why should one be concerned: people have freely chosen to be better off in Italy and France, and that’s all there is to that. But then, it could be asked, would not disappearance of countries also mean disappearance of distinct cultures, languages and religions? Yes, but if people do not care about these cultures, languages and religions, why should they be maintained?  

Destroying the variety of human traditions is not costless, and I can see that one might believe that maintaining variety of languages and cultures is not less important that maintaining variety of the flora and fauna in the world, but I wonder who needs to bear the cost of that. Should people in Mali be forced to live in Mali because somebody in London thinks that some variety of human existence would be lost if they all came to England? I am not wholly insensitive to this argument, but I think that it would be more honest to say openly that the cost of maintaining this “worldwide heritage” is borne not by those who defend it in theory but by those in Mali who are not allowed to move out.

There is a clear trade-off between the maintenance of diversity of cultural traditions and freedom of individuals to do as they please. I would be happier  if the trade-off did not exist, but it does. And if I have to choose between the two, I would choose human freedom even if it means loss of tradition. After all, are traditions that no one cares about worth preserving? The world has lost Marcomanni, Quadi, Sarmatians, Visigoths, Alans, Vandals, Avars and thousands others.  They have disappeared together with their languages, cultures and traditions. Do we really miss them today?

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.