March 20, 2007
The Richest and Most Powerful Country of the Time III Posted by John Steele Gordon at 05:05 PM EST A few points. First, telling a joke to Mr. Zeitz is like showing vacation pictures to a blind man. I mean, why bother? As I stated, it was a joke and, more, a joke told to me by a Canadian. He told it because he thought it was funny, not mocking. And so did I. One would think that even someone as humor-challenged as Mr. Zeitz would recognize that the joke is about “Trojan geese,” not relative military power. I in no way, shape, or form “mocked” Canada—a country in which I spent some of the happiest days of my childhood and adolescence, where I have many old friends, and which I love more than any but my own. Second, I did not “write off” Ireland, a country I have never visited, which gives me something to look forward to. I merely said it was a tax haven, which it is. The European Union bureaucrats in Brussels are furious with Ireland’s tax-cutting ways. Mr. Zeitz writes, “It might be helpful to remember that Ireland now has one of the most robust economies in the developed world and is, for the first time since the nineteenth-century famine, attracting immigrants rather than exporting migrants.” Exactly. What does Mr. Zeitz think brought that about, leprechauns? It came about because Ireland drastically cut taxes, becoming a magnet for development capital from all over Europe. Its new-found prosperity began virtually the day it embarked on its tax-cutting program. Since Mr. Zeitz seems never to have seen a tax cut he favored, regardless of how beneficial it might be to the economy as a whole, one would think he would avoid the example of Ireland at all costs. Ireland is a poster child for the benefits of low taxes. Third, I don’t deny that per capita GDP is an important measure of a country’s prosperity, but not necessarily its wealth and certainly not its power. Surely a scholar such as Mr. Zeitz must realize that statistics can be very misleading, which is why Disraeli numbered them among the three forms of mendacity. Number 8 on the list to which he refers, for instance, is the Cayman Islands, with a per capita income of $43,800 to $43,500 for the United States. I have never been to the Cayman Islands, but I would be very surprised indeed if they differ much from, say, the British Virgin Islands (number 12 on the list at $38,500), which I have visited often. Only a total fool, having taken an hour’s drive around, would say their prosperity comes close to that of the United States. So where’s all that handsome per capita income? A little maldistributed is where. The population of the Caymans is about 43,000, but if you add the incomes of half a dozen billionaires who establish legal residence there to avoid taxes elsewhere but rarely set foot on the islands, add a few banks that establish headquarters there (in a post office box sometimes), then suddenly—bingo!—the Caymans have a per capita income greater than that of the United States. For places like the Cayman Islands, average per capita income is a meaningless statistic. Median per capita income is what’s needed. Of the nine territories with per capita income greater than the United States on that list, four of them (Bermuda, Jersey, Guernsey, and Cayman Islands) are not even sovereign and don’t have a population over 100,000. Two more are oil puddles, and Norway, while a fully developed country, has a small population (only 4.6 million) and vast oil reserves in the North Sea. One of the oil puddles, Equatorial Guinea, has a population of only 529,000. By the way, the same website that gives Equatorial Guinea’s per capita income as $50,200 gives its life expectancy as 49.5 years. Does something not seem to compute here? If the people of Equatorial Guinea are so individually rich, why don’t they have proper health care? The other two countries are Luxembourg and Ireland, both very small countries with very small populations. Luxembourg is only two thirds the size of Rhode Island with one third of Rhode Island’s population. So let’s compare apples with apples, large population countries with sophisticated and diversified economies. The countries with the 10 largest GDP’s are United States, Japan, China, Germany, United Kingdom, France, Italy, Spain, Canada, and Brazil. They have per capita GDP’s, respectively, of $43,500, $33,100, $7,600, $31,400, $31,400, $30,100, $29,700, $27,000, $35,200, and $8,600. Thus the per capita GDP of the United States is more than 23 percent larger than the next highest on this list, Canada. With large-population countries, average per capita incomes can be meaningfully compared. So I’m quite content with the notion that the United States is the richest, as measured by income, of all the world’s major economies. Since power is a function of total GDP, not per capita GDP (Luxembourg is on no one’s short list for getting a U.N. veto), the United States is by orders of magnitude the most powerful country on earth.
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