I narrated a video more than 10 years ago to explain the recipe for poor nations to become rich nations.
Kite & Key Media has unveiled a video with a similar message.
The country comparisons were the most compelling part of the video.
Indeed, I’ve cited the very same examples.
I also liked how the Baltic nations got some positive attention.
And Singapore as well.
But I do have one criticism of the video. It should have used the Fraser Institute’s Economic Freedom or the World or the Heritage Foundation’s Index of Economic Freedom as its main source.
This is because there is some very sloppy methodology in the Atlantic Council’s Freedom and Prosperity Indexes.
Their Prosperity Index, for instance, uses some common-sense variables such as per-capita economic output, but it also is based in part on mis-measured variables such as years of education rather than actual education achievement.
Worst of all, there is an inequality variable. And to give you an idea of why that’s methodological garbage, the U.S. score would increase if all rich Americans were exiled even though that would mean a big drop in per-capita GDP.
You may think I’m being pedantic or ideological, but here’s some real-world evidence to show you why the Atlantic Council’s analysis is laughably misguided.
This chart shows IMF data on per-capita GDP. You can see the United States on the right, way ahead of the other nations with more than $80,000 of economic output per person.
What do all the other countries have in common, besides having much-lower levels of per-capita GDP? They all score higher than the United States in the Atlantic Council’s Prosperity Index.
I’m not joking. Click here and see for yourself.
Reminds me of the dodgy analysis from the OECD that asserted that poverty was higher in the United States than in nations such as Portugal, Greece, Turkey, Hungary, Mexico, and Poland.
P.S. One other thing I would correct in the video was the discussion of Romania. Yes, Romania is now much richer today than it was in 1950.
But simply showing the difference between living standards in 1950 and today obscures the very important fact that the vast bulk of the improvement came after Romania escaped communist slavery.
The lesson from Romania and other nations is that the key to national prosperity is freedom. Especially if freedom is properly measured.
