Thursday, 10 October 2013

Graph(s) of the week: European values

A few months ago I was sent a link to this interesting interactive webpage called the Atlas of European Values. Breezing through it I found quite a few interesting facts about cross-country differences in Europe. The page presents a series of maps which include a range of survey data across the globe (but most detailed in Europe) on a number of issues in politics, religion, work, society, well-being and the like. Some of the issues I found were quite striking. 

Democracy and authoritarianism 

Let's start with this one - the number of people who think democracy is the best political system:
Source: Atlas of European Values
The variation is cross-regional in all the maps, which is good as it gives us a deeper insight into inter-country differences. Even though the majority of the population in each country feels that democracy is the best system of governance, the number of people convinced in this idea is far greater in Western Europe (always around or above 90%, except in some parts of Britain - I guess some people there still fancy the monarchy?), than it is in Eastern Europe (the former socialist countries). Take Russia or Ukraine for example, where the majority supporting democracy is the lowest. On the other hand 88% of Belorussians-  Belarus being the only remaining dictatorship in Europe - feel that democracy is the best political system. 

In another map, when asked whether or not the people have confidence in their governments, a majority of Russians (above 60%) said that they do, as opposed to all other Western (and Eastern) countries exhibiting a very low level of confidence in their government (between 10 and 30%). This goes a long way in understanding why Putin still receives strong support in this country, despite his authoritative reign. Or maybe precisely because of it!

The next graph shows why. It maps the percentage of people that think having a strong leader who does not have to bother with parliament and elections is a good idea (so basically the definition of Putin). Here's how it maps out (the higher the number - the more red an area is - the more people favor an authoritative leader): 
Source: Atlas of European Values
The East-West divide on this issue is huge. While in Western Europe (including the new EU member states except for Romania and Bulgaria) the number of people who feel this way is quite low (average around 20%), in certain former members of the Soviet Bloc the effect is almost completely the opposite, with the aforementioned exceptions of Romania and Bulgaria leading the way by having almost 90% of the people feeling the need for strong leadership. There are several possible explanations of such behavior. Perhaps the people simply got accustomed to strong authority leading the country during socialist times, so in current times of misery and a failed consolidation of capitalism, they invoke upon the older system characterized by more stability and different informal institutions - or to be more precise, where the level of social trust was higher

But look at Poland for example. Out of all former socialist countries it has the least desire for strong authority. History plays an important role here. Poland was historically always torn between two superpowers - Prussia (Germans) and the Russian empire, so their final episode of socialism only made them even more resilient never again to have an autocratic system. 

Technocratic governments 

Moving on, the next graph is on whether or not experts should run the government. The darker the area, the more people believe that a government of technocrats is a good idea. 
Source: Atlas of European Values
A very interesting finding where former socialist countries like ex-Yugoslavia, Hungary, Bulgaria, Romania, Czech Republic, Slovakia and Poland all seem to feel strongly in favour of an expert-led government (on average more than 80%). This correlates well with the lack of trust in government and especially with the lack of trust in domestic political elites. The people are simply faced with lack of supply of high-quality individuals on the political market, and are running out of options. Interestingly enough, Spain joins this group of countries, probably due to the disastrous effect its political elites had on the country

Mind you, the survey was taken in 2008, so some of these factors might have changed due to the influence of the crisis. For example Greece and Italy, two countries that actually did have technocratic governments (neither of which lasted for too long), had it even worse in terms of political cronyism before the crisis but the people there didn't think that resorting to experts is the best alternative. Perhaps that explains why the reign of technocratic governments was short-lived. 

Government intervention 

Finally, the issue of whether the state should control firms more effectively.
Source: Atlas of European Values
It is no wonder why West Germany (notice the German divide), Britain, Scandinavia, and Poland are doing relatively better than the rest of Europe. In the end it all comes down to preferences and informal institutions. 

10 comments:

  1. Russia has ever only been ruled by totalitarians of one sort or another. I wonder if it is so ingrained in their culture that they may never have anything but a strong man in charge.

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  2. On the notion of government intervention: Your argument reminds me of something. Once Professor Paar talked about his friend from the Nederlands who was a prominent fighter for limiting global emissions of CO2 in th air. But, on the other hand this Dutch chap had a house, and three floors, and all three floors were significantly heated by gas. So, in conclusion, yes, emissions of CO2 would have to be limited, but it is always in a way that rich, prosperous and industrially developed countries are pushing the environment issue when all you need to become rich, prosperous and industrially developed is industry. Meaning, you have to emit CO2.
    So, what's my point? Yes, it is easy for England, and Scandinavia, and West Germany to delimit the state control in companies now when they are rich and prosperous. But they became rich and prosperous by strategy and government controls. So hell yeah, let's abandon government control BUT only when we get the social and political stability of the countries like Scandinavian ones have, or being rich and prosperous like those countries...

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    1. But their progress wasn't due to state control, it was exactly the opposite. Read for example this text on the Nordic countries and how they've achieved prosperity - it has much to do with efficiency and competition, not gov't size. Also, you can take a look at this text on Sweden and what they did back in 1992, or this one on the German reforms in 2005.

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    2. Actually, in your texts all arguments practically denote post-1990 years, when a certain recession hit Sweden, which was a part of political instabilities of those times.
      But what I'm stressing is the period of 50s, 60s, and especially 70s. At the end of 50s Denmark and Sweden we're in a similar position as Croatia is today (not by the debt issue, but general social wealth, but Denmark in the post-war years was practically starving)). And during those 30 years they achieved government regulations which led them (Denmark, Norway and Sweden) to the top. The crisis at the end of 80s was different issue, as well as necessary deregulations in the 90s. But, the point still stands, up until the 90s the countries in the region did reach a strong social and political stability, making them prosperous and rich, by using means of government control. Deregulations that came after only made them keep that position.
      So the question is: when do we reach for deregulations? For Croatia, I'd say, after we make room for social and political prosperity. We can't boost our GDP by statistics only.

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    3. I see your point but I don't think the period you speak of (50s, 60s and 70s) led them to the top. In those years they've only managed to achieve temporary growth via a heavily skewed redistribution of resources. The long-term sustainability of their economic systems wasn't achieved until the structural reforms made in the 90-ies.
      If your argument is that perhaps the period of heavy government involvement made their informal institutions more stable and has increased their social capital, then I could say I agree, as this made it easier for the people to accept the necessary reforms afterwards.
      But I cannot accept an argument claiming a causal relationship between government control and prosperity.
      I'll give you an example. During the same period (50-70s) there was another country achieving even higher levels of growth and development with a command economy at its disposal - Soviet Russia. Many economists in the 70-ies believed it was only a matter of time before Russia overtakes the US as the world's leading economic superpower (economic, not political) - just as they talk of China today, in fact. But the socialist model quickly crumbled, whether in Scandinavia or Russia, somewhere more severely, somewhere less. The reason was precisely the unsustainability of such a model that will sooner or later reach its dead end. That's why I find it hard to believe in the link between government control and prosperity - even though an inference can go in that direction, what led to prosperity was something else. In econometrics, one would call this an omitted variable bias.

      Btw, here is a good paper on Sweden only, covering a long historical period.

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  4. Sorry for the late reply. :)
    You're doing a serious mistake in methodology: you CAN'T compare government control in liberal economy and government control in centrally planned economy, that is: government involvement in social-democracy and in communism/socialism.

    In the 50-ies Yugoslavia was also one of the pinpoints regarding the GDP growth, the same as SSSR.
    So how come government control worked in Sweden, and didn't work in Yugoslavia and SSSR (or why does it work in today's China - because they have monopartisan system BUT they gave up the centrally planned economy).
    Because we're having different systems. How come both Willy Brandt in Germany and Bruno Kreisky in Austria made their countries economic superpowers in the 70-ies? Because they went to Sweden (part exile, part political friendship with O. Palme) and got the Scandinavian taste of social-democracy and sense of community.
    All those countries had a boost in economy, social security, political security, etc, etc, thanks to the Scandinavian political "mentality".
    I'm afraid those facts cannot be omitted.
    How come Norway has 750 billion euros in savings on their bank account, gathered solely by government control.
    So, I do think you are wrong when attributing their wealth on the 90-is. The point is that they could afford to do this in the 90-ies. And we don't have the same political landscape as those countries had, and like those countries were building from in the 70-ies...
    That's it ;)

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    1. Concerning the article you gave me to read - again a mistake in methodology. Of course Sweden fell behind on statistical scale, but that happened because they invested their money in social wealth and rising the political and social stability and not in sustaining industrial growth from one quarter to another.
      But falling from the 4th place to 14th place doesn't mean they became poor, on the contrary, more people became equally wealthy ;) which of course slowed down the industrial boost - BUT it made the 90s possible to happen because they avoided all sorts of possible social protest and unrest. Which happens of course when a country is wealthy and not one step from bankruptcy like Croatia...

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    2. You haven't read my response carefully enough.
      "If your argument is that perhaps the period of heavy government involvement made their informal institutions more stable and has increased their social capital, then I could say I agree, as this made it easier for the people to accept the necessary reforms afterwards.
      But I cannot accept an argument claiming a causal relationship between government control and prosperity."
      The prosperity wasn't created and never is created purely by redistribution (neither can we resolve inequality this way - only via higher social mobility). State investments can hold it for some time, but sooner or later an unsustainable system faces its inevitable end and needs to be reformed (as Europe is realizing now, and so is America - just google "US entitlement system"). Your argument is basically (correct me if I'm wrong): let's have the state pull us out of a mess and establish more control so that we can temporarily make the people "better of", and then let's reform it.
      Perhaps I can interest you in this text on why people in societies with poor government regulation want more government? - bottom line it's all about social capital and trust (both interpersonal and the trust in institutions).

      As for Norway, have in mind that they accumulated all that money thanks to oil, i.e. natural resources. They are a good example of a reversed natural resource curse.
      As for China, its housing and shadow banking bubble is going to burst into an even larger crisis than in the US - the culprit? State-driven goals requiring high malinvestments. (see here or here.)

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