Wednesday, September 1, 2010

It's all DownHill (almost)

Martin Wolf's picture of growth since the 1980s:


The graph displays GDP growth summaries for six nations -- "the six biggest high-income economies," Martin Wolf points out. For each nation, the graph shows a cluster of vertical bars. The first bar in each cluster (except the Germany cluster) shows growth for the 1980-2009 period as a whole. The remaining bars in each cluster look at growth by decade.

(The last bar in each cluster shows 2000-2009. The next-to-last bar shows 2000-2007, "that is, before the recent deep recession," as Wolf puts it. The cluster for Germany shows only three bars, because the numbers are for "United Germany," and "All-German data are unavailable for the entire period.")

(In order to look at growth-by-decade I ignore the first bar where it represents the whole 1980-2009 period. To simplify this presentation I ignore the last bar, which basically duplicates the 2000-2007 bar. We take it as given that the growth of 2000-09 is slower than that of 2000-07 due to the sad events of 2008 and 2009.)

For Germany, the graph shows slower growth in the 2000s than the 1990s.

For France, the graph shows slower growth in the 2000s than the 1990s, and slower in the 1990s than the 1980s.

For Italy, the US and the UK, it is the same as France: Older is better; newer is slower, newest is slowest. Japan is the only nation of the six to show any improvement at all. For Japan, the 1980s were very good, the 1990s were very bad, and then for 2000-07 things were up a bit.

For Germany, two time periods and one decline. For France, Italy, the US and the UK, three periods and two declines. Each. For Japan, three periods, one step down and one step up. I count eleven steps in total: ten go down, one goes up.

Out of 11 flips of a coin, the chance of getting heads once and tails ten times is eleven out of 2048 -- check me on that -- or about 1 in 186 tries. Not much chance that Martin Wolf's downhill trend is just bad luck.

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