Archive for the ‘Book Reviews’ Category

The Promise of Canada by Charlotte Gray – A review

November 7, 2016

I would strongly recommend this book to all diplomats posted to Canada, as well as to all Canadians posted abroad who need to understand the history of their country. In fact, the same is true for all Canadians who, if like me, may think they know how Canada evolved but would be pushed to identify all the relevant factors. Charlotte Gray has done this in a brilliantly researched and written way.

I came to Canada from the UK over sixty years ago and have lived here ever since, except for a period of study at the London School of Economics. Two years after arrival I became a landed immigrant and after a further thirteen a citizen. My children and grandchildren are all Canadian by birth.

Charlotte Gray arrived in 1979 and has become a superb chronicler of the evolution of Canada over the past two centuries. In my time here, I have not fully appreciated what was going on around me, but now I do, as she has skillfully authored an account of the country’s evolution from the time of politician Sir George-Etienne Cartier (1814-1873) to rapper Shad (1982- who is new to me).

It requires an enormous amount of skilled research (using both secondary sources and interviews) to develop these materials, and still more to integrate them into an intelligent portrait of a country which has grown in both size and numerous other ways.

Canadian literary blue-bloods have rightly given the book outstanding reviews. Rather than add to these, I will try to outline several things I have learned or have come to appreciate about Canada.

  1. One starting point to understanding Canada is geography, both its relation to other parts of the world, and what goes on inside. As for the latter, there are very few people in Canada in terms of population density or persons per square km. In 1961, the figure was 2/sq km and in 2015 4/sq km. Comparable figures for other countries are Russia 7 and 9; US 20 and 35; China 70 and 146; Singapore 2541 and 7829. Canada is largely empty.
  2. By far the majority of Canadians live in urban areas,18 million (about 60 %) in the ten largest metropolitan areas as of 2011. A light map of the country shows most of these people living close to the US border, while large swathes of the country are drenched in darkness.
  3. The rural population expects preferred treatment and often has difficulty in making its voice heard. The continuation of such measures as supply management for dairy products shows that in some instances this occurs.
  4. The diverse regions in which Canadians live include the Maritimes, Central Canada, the Prairies, British Columbia and the North. The economic, cultural and social character of each has meant that it is often difficult to get agreement on things that affect the whole country, and explains why parts, especially French Canada, from time to time toy with separation. Holding the parts together is a continuing challenge for federal politicians.
  5. All Canadians are immigrants who have arrived at different times. The original settlers came out of Africa about 60,000 to 100,000 years ago, travelling up to and through today’s Russia, across the land bridge to Alaska and down into North and South America. Later settlers, the ones most often covered in history books, came from Europe, especially the French, English, Dutch and Spanish. The arrival of each changes the lives of those already there, and does so for migrants arriving today.

It is how Canada has and continues to respond to these geographic and demographic factors which has influenced how the country has and may evolve in the future. Charlotte Gray’s detailed portraits of nine Canadians from different walks of life, politician, policeman, artist, academic, lawyer, and vignettes of five others (journalist, business, mayor, rapper and pop artist) provides the reader with an outstanding introduction to understanding Canada today and how we got here from there.

Roald Dahl by David Sturrock

October 18, 2016

“Mr Dahl could tell and write a good yarn but he certainly was a boozy, misogynistic, misanthropic git in the flesh.” (Anon).

 

Asked by the family to write a biography of Roald Dahl (1916-1990) presents the author with a challenge in selecting and interpreting the facts. Dahl was an enormously talented author of children’s books like Charlie and the Chocolate Factory, while at the same time having a number of less than desirable personal and personality traits. Rather than list these flaws, which can best be grasped by reading David Sturrock’s excellent biography of Dahl (Simon and Schuster, 2010), following are some of the ingredients which are associated with Dahl’s career as a writer. I don’t think it is a formula which can or needs to be repeated, but some may see similarities with other writers.

 

Any biography of Dahl has to include his Norwegian parents, his birth in Wales and education at English boarding schools with their disciplinary features which included beating, bullying and buggery, plus fairly spartan living conditions. Dahl survived all of these because he was a big boy, six foot six inches when a grown up, and was not the focus of older boys, or even masters, when he was young. He was also good at sports especially rugby, squash and fives (a form of handball played in a squash type court). He did not attend university.

 

Dahl’s size brings to mind the Peter Cook and Dudley Moore sketch where pupil Cook is to be beaten by housemaster Moore for stealing some shoes. After a scolding by Moore, Cook points out that “while you are older and wiser than me, I am bigger than you,” and Moore ends up congratulating Cook.

 

At the start of WW2, age 23, Dahl joined the RAF and learned to fly. His plane crashed in the North African desert leaving him alive, but badly burnt and requiring extensive plastic surgery. Amazingly this does not show up in later photographs. Much of the rest of the war was spent as a junior RAF officer doing public relations at the British Embassy in Washington, where he met President Roosevelt and played tennis with Vice-President Wallace.

 

His relationship with the British Ambassador, Lord Halifax, who had been sent there by Churchill to remove him from Whitehall, was strained. Halifax had been a contender with Churchill for prime minister in 1940, and had previously wanted England to make a deal with Hitler. Given the number of Americans who at the start of the war were pro-German, and the reluctance of many in the US to assist the U.K. financially and with weapons, Halifax seems like an odd choice for ambassador. Churchill was more astute in dealing with the Germanophile Duke of Windsor, by sending him as Governor of the Bahamas from 1940 to 1945. Dahl’s role in Washington was writing PR pieces on behalf of England and attending social gatherings.

 

While Dahl was accomplished with his pen, he was, from an early age, active and popular with the ladies. He married twice, first in 1953 Patricia Neal (1926 – 2010), the American star who in 1963 won the Best Actress award for her role in Hud. They had five children, one of whom died age seven, and another who suffered brain damage after being hit by a taxi in New York. Neal suffered a stroke in 1965 from which she recovered with Roald’s help and was able to continue her career. The marriage ended in divorce in 1983. Dahl had taken up with Felicity Crosland whom he married in 1983 and who survived Dahl’s death in 1990.

 

His penmanship (actually he used pencils), while accomplished from an early age, took time to generate much money and it was not until his children’s books took off from the 1960s, and some became films, that he had the funds to pursue the lifestyle that he craved. That included collecting and appreciating wines, gambling, greyhound racing, travelling and meeting important people, especially in the US and UK.

 

If this combination of personality, interests, behaviour and so on are the necessary ingredients for the creativity that produces books which have such wide appeal to children and many adults, then it seems to be something that happens fortuitously rather than being created.

 

Dahl was/is an enormously successful author of childrens books. Aside from his own talents, his interaction with the publishing industry is instructive. He worked closely with agents, publishers, editors, artists and publicists to shape and market his written work. While the author often gets most of the credit and public acclaim, it is because he or she has a team of people that helps to produce and distribute the final work. This is not unlike theatre, film, dance and music. David Sturrock’s Dahl is a fine case study of how it can all fit together in the case of publishing. Fortunately for today’s audience much of Dahl’s work is available in some form via the internet. A Roald Dahl museum in Great Missenden, UK, is extremely popular…..especially with children.

Clumping, 23 days and counting, to what?

October 15, 2016

General Franco and Chairman Mao climbed to power through force. Mussolini and Hitler took the political route of getting elected and then abolished the institutions which gave them power. Mussolini did it first and provided Hitler with a role model. Once in power, Hitler was better able to control events, while Mussolini both lost control and was defeated militarily prior to the demise of Hitler. Mussolini ruled constitutionally from 1923 to 1925 and then set up a legal dictatorship, if that makes any sense. All these events took place in the past one hundred years and many in the past 82 years of my lifetime. Could any of this happen again?

Chairman Trump and some of his supporters sound very much like those who supported Hitler and Mussolini. They are willing to give him the benefit of any doubts, and there are many, that they have in order to bring about political and economic change. They don’t respect the political mechanisms in the US, at least federally, and don’t believe they can be changed without exploding the Trump bomb. These conditions in the US are, in some ways, like those previously in Italy and Germany.

An account of how the US political system became and remains toxic is found in a book by David Daley, Ratf**ked: The True Story Behind the Secret Plan to Steal America’s Democracy. It is reviewed by Elizabeth Drew in the New York Review of Books, August 18, 2016 (available online). Canadians have not reached, nor appear to be on track to reaching a state of political paralysis, and yet are considering changing their federal voting system. Why? There is no unbiased system, and a new one will merely change the biases with the possibility of encouraging paralysis in the future.

Clumping Closer

October 3, 2016

Forty days and counting to the US presidential election. It sometimes seems as though the Democrats may be backing a Republican candidate, who harms his chances of being elected and thus favours the Democrats. But Trump’s base support seems not to waiver despite the positions he takes and his manner of presenting them.

Political forecasting has become more than ever a mugs game, but one thing seems reasonably sure, and that is, whoever wins, the circumstances that surround the election will remain. They include a visceral dislike of both candidates by many voters, and the conditions that give rise to their contempt.

If Bernie Sanders supporters were added to Trump supporters, they might be a majority of voters. The problem is that they reside at different ends of the political spectrum so that such a coalition will probably not happen. But it may lead to people not voting, or voting for one of the two third party candidates, and how that plays out is a mystery to me.

Another unknown is whether those voting mechanisms, which are electronically controlled, have been hacked into such that some voters may have trouble exercising their vote. Edward Snowden and Julian Assange are masters at breaking into secure systems, and the Russians appear to have accessed Colin Powell’s emails and those of other politicians. Remember also that the Stuxnet virus was used to sabotage Iranian nuclear facilities. Cyber terrorism exists. How and where it will erupt is another mystery surrounding this election.

As suggested, once the election is over, the conditions remain which have given rise to both disaffected Democrat and Republican supporters. For low income white voters in states like Kentucky and Ohio where manufacturing jobs have been lost, the situation is forcefully described in Hill Billy Elegy by J.D.Vance, a thirty-one year old author who comes from a poor white background, a descendant of Scottish-Irish immigrants from several generations back. I strongly recommend it for both content, and the style with which the situation is explained. Of course there are other problems, such as race relations, immigration and the impact of globalization, but Vance sets out the plight of white working-class families in impressive detail.

 

The Idea of Canada – a review

June 21, 2016

David Johnston, The Idea of Canada, Letters to a Nation (Penguin 2016).

A challenging topic is addressed in an interesting and highly readable style. The contents certainly justify the title, which should be required reading for all foreign diplomats posted to Canada, and probably all Canadian officials posted abroad. Although not written as a history of Canada, it is one, with morsels of the historical record in each chapter. Each is written as a letter to some Canadian or foreigner past or present who has excelled in some manner. Many could be expanded into a chapter for understanding some aspect of Canada.
The Idea of Canada could also be used in school and university classrooms for the presentation and discussion of Canadian history, a subject woefully under-taught at the moment, judging by what students today seem to know about their country. It would also require that teachers having a better knowledge of Canada, which I fear may often also be missing. My understanding of the country is vastly improved by this book. Especially how the parts fit together and how values have emerged.

The author’s hero is Samuel de Champlain (1574 – 1636), one of whose skills was to learn about coping with all aspects of the environment, from those already living in what was to become Canada. (Note, these natives were themselves immigrants from earlier years as humans moved out of the African continent. All Canadians are immigrants of some generation. I am one from 1956). As an individual, Champlain achieved on land and sea with the limited technology available, at least by today’s standards, what NASA is achieving in exploring space supported by vast amounts of public funding.

Foremost in David Johnston’s life is his family, especially six womenfolk and twelve grandchildren, who continue to educate him. Through their lives and work they provide linkages to various aspects of Canada, especially those related to current conditions.

In the letters the author has written to a wide variety of persons, the combination of people, places, values, and events become both summarized  and intertwined, providing material for understanding Canada’s history. Few are able to take these pieces and fit them together so that the jigsaw becomes a comprehensible picture of a society, and what can be viewed as a nation. The author has done this.

The sections of the book are entitled What Shapes Me, What Consumes Me, and What Inspires Me. Summarized in each section are topics such as education, caring, innovation, philanthropy, volunteerism, and support for families and children. Many of these are in letters written to Canadians who have won awards in one of these areas.

Readers will have their own “aha” moments. One of mine was p.179  “…I’m a regular churchgoer, I tend not to get caught up in the doctrinal aspects of religion. To me church is a way to connect with friends and neighbours to get a sense of the views of others…..” (Though both my grandparents were vicars, I am not a regular churchgoer, but I understand how the various aspects of religion may satisfy individuals and contribute to societal wellbeing, as does club membership).

It would be easy to extend this review, but I recommend that readers read the book themselves, find out what interests them, and use it for discussion purposes. Each chapter is short, well written, understandable and thought provoking….easy to pick up and put down.

A Rehearsal for WW2 – The Spanish Civil War

May 17, 2016

 

I use to think that the interwar years were those of peace between two world wars. My mistake, which a reading of Adam Hochschild, Spain In Our Hearts, Americans in the Spanish Civil War, 1936-1939 (Houghton Mifflin Harcourt, 2016) makes clear. It illustrates the state of the global political economy, especially in Europe, North America and the Soviet Union at that time.

Economically, these were the depression years in North America, illustrated in prose by Steinbeck’s Grapes of Wrath and later in a movie. In the Soviet Union there were ghastly experiments taking place especially in agriculture, which led to many deaths through starvation. And in Europe the political choice for the future was seen by many to be between Fascism and Communism, with the prospects for capitalism and liberal democracy considered by many to be non-existent.

And yet the last survived in North America and Europe, and to various degrees in countries such as Japan and India, although not in many parts of the former Soviet Union, where elements of liberal democracy are a rare find.

The opponents in the Spanish Civil War were right-wing Spanish Nationalists and left-wing Spanish Republicans. When the war started, Spain was ruled by the Republicans who, having disposed of the monarchy, were to be overthrown by  Francisco Franco. He ruled Spain from 1939 until his death in 1975. From 1978 to the present, the country has operated as a constitutional monarchy which was not something Franco had planned for.

At home, Franco was backed by parts of the military, the Catholic Church and the wealthier classes especially the landowners. Abroad, he was supported by Hitler and Mussolini, as well as by certain interests in North America and Europe. Germany provided aircraft and pilots, using the occasion to prepare for warfare that was to follow in Europe after 1939. Texaco supplied fuel for Franco’s planes and tanks.

Some of the Spanish armed forces remained loyal to the official Spanish government run by the Republicans, but they were supplemented with foreign fighters from an estimated 50 countries, including the Soviet Union, France, the UK, US and Canada. These international brigades, organized by the Communist International, contained about 60,000 people overall, principally male, of which about 20,000 were active at any one time. A memorial to over 1500 Canadians who served in the Mackenzie-Papineau brigade during the civil war was unveiled in Ottawa in 2001. It is situated on Green Island off Sussex Drive.

Hochschild’s account of the war is based on interviews, correspondence and writings of those present at the time such as George Orwell (Homage to Catalonia) and Ernest Hemingway (For Whom the Bell Tolls). It is likely that there are no living veterans, but their descendants are still around. A book about the Canadian participants is Michael Petrou, Renegades: Canadians in the Spanish Civil War, UBC Press, 2008; and there are numerous titles (book and magazine) about other aspects of the war.

A link between the world wars

The threads that bind 1918, the end of WW1, to 1939 and the start of WW2, include the global economic conditions, especially the burden of reparations imposed by the victors on Germany at the end of the war. Keynes accurately portrayed in Economic Consequences of the Peace the damage to future world order that these payments would create. They lead to the rise of Hitler and the demise of democratic institutions in that country.  At the same time, Mussolini, in cooperation with the Pope and Vatican, established a Fascist dictatorship in Italy. Both Hitler and Mussolini had supporters in the US, UK and other parts of Western Europe who were prepared to make a deal with the dictators.

Mussolini came to power in Italy in the 1920s about a decade before Hitler. God’s Bankers by Gerald Posner provides a good account of the Vatican’s cooperation with Hitler (reviewed in this blog March 28, 2016):

…Pope Pius XI signing the Reichskonkordat with ­Hitler, which, in return for winning a measure of freedom for German Catholics ­under the Nazis, assured silence from the Holy See over the forced sterilization of 400,000 people and then only the faintest of ­objections to the Holocaust. 

Another interwar thread was made up of the hyper-inflationary conditions in Germany, the economic depression in the US and elsewhere, and the pressure for political independence by a number of countries associated with European empires. Independence was to come in the postwar period. Today there are about 200 sovereign countries, although sovereignty often does not come with much political or economic independence, as Scotland may soon find out.

Adam Hochschild’s first rate treatment of the Spanish Civil War fits neatly into this inter world war period, describing a time of localised economic and military conflict, while the major combatants prepared for the main action which was to start in 1939 in Europe and the Far East.

The events described are based on the author’s personal interviews with survivors, and materials which participants recorded, often in letters, about their combat experiences. The war pit Spaniard against Spaniard, leaving tensions which remain, including issues of Basque and Catalan sovereignty. Today we can read about it but also view the war in a television documentary made a few years ago by Granada TV.

God’s Bankers by Gerald Posner

March 28, 2016

An institution with two thousand years of history like the Catholic Church is bound to have an interesting story to tell. It does

 

Think of medieval popes waging the Crusades — raising armies, sacking ­cities and conquering territory — in the name of Jesus Christ. Or prelates torturing apostates and heretics during the Inquisition. Or Pope Pius V expelling Jews from the Papal States in 1569. Or Pope Pius XI signing the Reichskonkordat with ­Hitler, which, in return for winning a measure of freedom for German Catholics ­under the Nazis, assured silence from the Holy See over the forced sterilization of 400,000 people and then only the faintest of ­objections to the Holocaust. Or more ­recently, bishops and other church officials concealing widespread and repeated child sexual abuse by priests.

 

The foregoing is an extract from a NYT review of Posner’s recent book. How the Vatican makes and spends money and operates its banking arrangements is central to the story. And the conclusion is that it has operated more like a mafia-type than what might be expected from a religious organization. While priests in the field undoubtedly continue to do good work, corruption has prevailed at head office. Its charitable works have come at a price. And while various popes have tried to clean things up, they have been sandbagged by the Cardinals and Vatican bureaucrats who been feathering their own nests.

 

Pope Francis appears to be making a valiant attempt to remedy things, but the odds are against him. Other Popes have tried and failed. Some made things worse. Partly this is due to the age at which they and the gang of Cardinals reach their positions. While undoubtedly learned in the doctrines of the church, they are often too old to have the energy to confront the entrenched bureaucracy.

 

Elected politicians are frequently corrupt, even in democratic societies, but regular elections provide some opportunity to clean house. In the Vatican’s case, the Pope is elected by the Cardinals, while the Cardinals are appointed for life, and once installed can carry on with little pressure for change. The bureaucrats beneath them often forestall change knowing that Popes are eventually replaced. With the majority of Catholics now in Central and South America, Africa and parts of Asia, there may be a slight possibility to clean house. But optimism is not high.

http://www.usatoday.com/story/news/world/2013/03/12/catholic-church-africa/1963171/

 

NYT Book Review at http://www.nytimes.com/2015/03/22/books/review/gods-bankers-by-gerald-posner.html?_r=0

The End of Pax Americana; what will follow?

February 6, 2015

A review of Clyde Sanger, Malcolm MacDonald, Bringing an End to Empire, McGill-Queen’s Press, 1995.

A chance reading of Malay and Thai history brought me to this biography of Malcolm MacDonald (1901-1981), son of British Labour Prime Minister Ramsay MacDonald. Malcolm’s career as MP, cabinet minister and diplomat covered not only the winding down of the British Empire but influenced many of the measures taken in SE Asia, the Middle East, especially Palestine (Israel and Jordan), parts of Africa, Canada and Ireland. This makes him one of the most knowledgeable participants in the end of empire. Clyde Sanger has done a remarkable and informative job of documenting MacDonald’s professional and personal life. The two are intertwined as is often the case.

This biography, as well as any other I have read (a few it must be admitted) allows the reader to appreciate how the empire ended, and whether it did or what replaced it. The book gives the reader a glimpse of the empire during this period, what caused the changes and what emerged in its place, which is what we live with today.

A  global tour shows developments in several colonies and dominions. The Middle East is one of the most interesting where MacDonald negotiated the conditions in Palestine which is now Israel, Palestine and the neighbouring countries.  As Colonial Secretary MacDonald wrote (from Constant Surprise, pp. 161,165, of Macdonald’s unpublished biography) :

“By the summer of 1938 the situation in Palestine was appalling. The quarrel between the Arabs and the Jews there had reached a vicious stage; and the problem was made more complex by the fact that the former were supported by all the nearby independent Arab nations and the latter were supported by the influential Jewish communities and their powerful friends in Great Britain, the United States and elsewhere…”

Eighty years later, has anything changed? One thing is that there are many more people living in this area.

Malcolm MacDonald was British High Commissioner to Canada 1941-46, liaised closely with Prime Minister Mackenzie King, whom he had known since before the war, as well as with some of Canada’s distinguished diplomats and senior civil servants. At that time, domestic and foreign policy was conducted on a more personal basis, and MacDonald’s relationship with British politicians and officials from his earlier times allowed him to influence Canada’s domestic and foreign policy, and to alert British politicians to the likely reaction of Canada to measures flowing from London.

Malcolm MacDonald was a part of the ending of Pax Britannica which lasted from the Battle of Waterloo in 1815 to 1914. It was followed with a 31 year gap by the Pax Americana in 1945, which now appears to be weakening. In the former period, Britain was seen to be the dominant world power, while in the latter it has been the US. When the ending comes, it happens quickly. In earlier times, there was a Pax Romana which too ended.

Today, the signs are writings dealing with America in decline (a number of recent books have decline in the title). America in Retreat by Bret Stephens is a thorough discussion of weaknesses displayed by the current US administration, and argues that the US should be more assertive with regards to the Middle East, the Ukraine, China, Europe and Africa. Elsewhere, the retiring Economist editor (Jan.31, 2015) paints a depressing picture of the US, “…Washington remains synonomous with gridlock.”  And “The only way to feel good about American democracy is to set it beside Brussels. Woefully unaccountable and ineffective……”

Jon Stewart in the Daily Show provides a comedic take on US issues which are of serious concern to domestic and world politics. It has become an important way of presenting and influencing political issues. A related sign of global change is the weakening of the Washington consensus which proclaimed that democracy and capitalism would liberate the world. Francis Fukuyama, a proponent of this after 1989 is revising his views in his latest book, Political Order and Political Decay, where a reviewer summarises Fukuyama’s views that “…. unless liberal democracies can somehow manage to reform themselves and combat institutional decay, history will end not with a bang but with a resounding whimper.”

 

An Astronaut’s Guide To Life On Earth – a review

September 10, 2014

Chris Hadfield, An Astronaut’s Guide To Life On Earth, (Random House, 2013).

The title tells it all. Based on the many years that it takes to become an astronaut and be sent on missions, what is it that the rest of us mortals can learn?  Hadfield’s answer is informative and educational. How one conducts one’s daily life, interacts with other people, learns from them as well as instructs them is crucial to understanding both personal success and team achievement.  Astronauts have to be team players, each of whom may have specialties unfamiliar to others but necessary for mission success. Respect and trust are important attributes. This can be especially difficult to achieve when working with people trained in different countries, but who are brought together on a common mission where all have to cooperate in a highly sensitive environment. Mistakes can not only cost millions of dollars but jeopardize lives.

Hadfield’s book achieves two things, a detailed and personal description of what is required to be chosen as an astronaut, and what happens in fulfilling the job both on land and in orbit. There is much more that astronauts can tell us and maybe they have in other books. The following are questions which arose in my reading of this book:

  1. How does an astronaut balance family and work life? Hadfield does a good job of including members of his immediate family in the narrative, but there are many questions that the reader would like to learn from family members. (Maybe they would prefer not to share them.)
  2. How do the parties interested in space collaborate to persuade governments to provide the substantial funding required for something where the payoff, if it exists, is a long way off? Space travel is at the other end of the spending spectrum from building a highway or school, where the results can be seen relatively soon after the funding decision is made, and politicians can claim credit which will benefit them at the polls.
  3. How do you get a crew of astronauts and their ground handlers from different countries with different languages to operate as a team to build the equipment and manage it for launch, in orbit and for return to earth? The close cooperation which astronauts from Russia, the US, Canada and other countries have had tells you that it can be done, but how? What are the issues and how are they managed? Personalities play a part but so does the management and set up of the project.
  4. Once space travel is found to be possible, what are the next stages of exploration and how can financing be provided, either privately or through continued government support? This type of question must have faced Columbus after discovering the American continent. He was able to find valuable commodities for trade which encouraged others to provide further risk capital. How money can be made out of space or space travel is not yet obvious, at least to me?

None of these questions are criticisms of Hadfield’s book. They represent the type of issues which emerge from its content, and will be of interest to those concerned with this frontier for exploration. The book also helps to remind readers that earth is a minuscule object in the solar system, and, if it disappeared by being hit by a large meteorite, no-one elsewhere, if such people exist, would notice. In a universal context, we really don’t matter.

When skim milk looks like cream

September 7, 2014

Numbers provide information about different aspects of the world. But how reliable and useful is the information? Daily temperature, pressure and rainfall are accurate about the past and provide a forecast of the future. Short term forecasts tend to be more reliable than longer term ones. Economic statistics like GDP (Gross Domestic Product), inflation, employment/unemployment, interest rates, and stock market prices are recorded for the past often with forecasts for the future. How reliable are these statistics which each often measures a group of activities not one variable like temperature and pressure? This is the case with GDP which measures the output of all sectors of an economy.

Canada is chastised for not spending 2% of GDP on defense, a level reached by some other NATO countries. But what if the GDP of different countries is not a reliable comparative measure of a country’s yearly output? And what if different countries include different items in their defense expenditures? I will leave the latter for the defense gurus to discuss, and suggest why GDP has always been an approximate measure of output and today is increasingly so and more unreliable as a comparative measure.

 

Consider the following, much of which can be found in Diane Coyle’s excellent book, GDP, A brief but affectionate history (Princeton 2014):

 

  1. In 2010, Ghana’s GDP was increased 60% overnight when the country’s statistical agency changed the weights assigned to each sector of the economy when calculating GDP. Previously the weights for 1993 were being used.
  2. Six other African countries are undertaking a similar exercise which may increase their GDP by as much as 40%. Nigeria, already a large African economy, may then exceed South Africa, at present the largest on the continent.
  3. The service sector of all OECD economies now accounts for a larger share of GDP than previously, over 75% in many cases. Services output is notoriously difficult to measure in contrast to goods. How do you measure the advice given by a lawyer, accountant or economist? By the amount paid for the advice. But what happens if it is given for free (probably an unlikely case)? In the first case there is a record for inclusion in GDP, but not in the latter, even though production has taken place.
  4. Each country’s underground economy is by definition not measured. Services are often activities which are more susceptible to being exchanged without a record being kept, thus diluting the accuracy of GDP accounting. Tax measures often influence the size of the underground economy.
  5. There are many other examples of services which don’t get recorded. The woman who marries her chauffeur, the man who marries his housekeeper both cause GDP to decline while there is no change in the underlying economic activity – although other aspects of their lives may change drastically.
  6. While consumers tend to focus on items which are more expensive today than yesterday, many things have decreased in price and some are now consumed for free. They are not included in GDP as currently measured but do constitute part of a country’s economic output. I use to pay for long distance phone calls. Many today are free with access to the internet. Facetime is free. Skype calls are a fraction of what was formerly charged for long distance calls. Emails substitute for letters and the costs associated with writing and delivering them. In each case the nature of the economic output has not changed but it is no longer measured for inclusion in GDP accounting.
  7. Consider the production and distribution of videos, music, television, newspapers, books, magazines, education (online), all of which are affected by communications technology. Their real output has increased but measured in monetary terms their per unit value has declined. GDP relies on figures which measure monetary not real output, and with the growth of services this is far more difficult to do.

 

Other uses of GDP

Countries are classified as high, medium and low income based on GDP per capita. Their responsibilities and treatment will depend on where they rank. At times, a country may want to advertise that it has moved up the scale, such as its attractiveness for foreign investment. But for receipt of foreign aid, it may prefer to stay as a less developed country. Ghana’s sudden increase in GDP per capita in 2010 may result in it no longer being a recipient for certain types of aid and require it to make a larger contribution to the budgets of international organizations.

A country’s treatment for trade preferences is also determined by its level of per capita GDP. Ghana has become a middle income country and is now required to negotiate a free trade agreement in order to keep its preferences in the EU, and will be removed from Canadian GSP (General System of Preferences) in 2015

 

Conclusion

The foregoing represents only some of the difficulties in measuring and interpreting GDP. These have increased over time especially due to technological change. Like changes in weather conditions, changes in GDP get widely reported. The increasing unreliability of the latter should be an issue of concern for those using this information. GDP data often result in adjustments to fiscal and monetary policies, and inform investors about buying and selling securities.

In the medical arena, doctors prescribe on the basis of indicators like temperature and blood pressure. If the readings are false then the treatment may kill the patient. In the realm of economics, false or misleading information can undermine the health of an economy. This occurs now in the case of an important economic measure. Next time you read about change in a country’s GDP, interpret it with a few grains of salt.

Other economic statistics should also not be taken at face value, like the unemployment rate, inflation and the current account surplus or deficit on the balance of payments. In contrast, the current price of a stock, the interest rate and terms for various types of private and public debt are numbers which mean what they say. The moral is that familiar numbers do not always mean what they appear to say…..there is some quotation about skim milk made to appear like cream, but I have lost the source for this saying