Per-Capita GDP: U.S. States vs G7 Countries

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The Cautious Optimism Correspondent for Economic Affairs stumbled across this chart with rankings that come as no surprise.

49 of America’s 50 states produce a higher per-capita GDP (economic output) than every non-American nation of the G7. And #50 Mississippi has a higher per-capita GDP than every member except Canada and Germany.

Read on for more details, including the "no surprise" part.

The Economics Correspondent wrote last month that nominal GDP and nominal per-capita GDP are the best measure for comparing the productivity and output of nations and their people, and that’s what this chart does.

Despite all the cries that European socialized democracies, or semi-capitalist European welfare states with high taxes and heavy regulation, are just as wealthy and productive as the USA, the data say otherwise.

The results are also no surprise given data from past analyses.

Back in 2015 the Ludwig von Mises Institute published data comparing the USA and European countries but included three adjustments, all of which served as handicaps to boost the European case.

First, instead of per-capita GDP the article used per-capita income. So instead of looking at economic output the article looked at how much income citizens receive in the ostensibly more “equal” European states.

Second, the income data included all the freebies so many citizens receive in each European country like healthcare and college education, setting aside how long cancer-stricken Europeans wait in line for a chance to use their free healthcare but giving European citizens an “income” boost that Americans don’t get.

Third, the data used “median income” which addresses the criticism that U.S. “average per-capita GDP” is skewed upwards by a small number of mega-rich earners who hoard all the income from the trounced-upon masses.

The result after all these adjustments?

Median per-capita income for the United States was still higher than 22 of 25 European countries plus Australia, Canada, Chile, Israel, Japan, Mexico, South Korea, and New Zealand—basically 30 of 33 OECD countries. Even vaunted Sweden’s median per-capita income (again, including all the freebies for citizens) was lower than 38 states placing it in the poorest quartile, poorer than Georgia, Missouri, Kansas, South Dakota, and Wyoming among others.

Click chart below:

Even red-state Texas, which liberal progressives try to frame as a conservative failure, ranked higher than the same 22 of 25 European countries including Germany, France, Sweden, Finland, and the UK.

As for those three European countries with higher median per-capita income—Switzerland, Norway, and Luxembourg—they had populations smaller than Virginia, Atlanta, and Fresno, CA respectively while the United States is the third most populous country in the world after India and China.

Two also rank far higher than the United States in the Heritage Index of Economic Freedom, both placed in the world’s top five (Switzerland and Luxembourg at #2 and #5), The third, Norway, is world’s #4 largest natural gas exporter and #8 oil exporter—all for the world's #116 population, smaller than Atlanta metro.

So it should come as no surprise that when shedding the combined handicaps of “median,” per-capita “income,” and “government benefits,” and looking solely at “economic output” the USA and 49 of its states would outperform all the G7 countries.

ps. It should also come as no surprise that Washington, DC is the “state” with by far the highest per-capita GDP. Since GDP includes the dollar quantity of government purchases the nation’s capital comes out on top despite not really producing as much as most other states. Washington’s outsized role of government within its economy artificially inflates its ranking.

A Political and Economic History of China, Part 26: The Republican Era of 1912-1928, Part 2—International Power Struggles

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6 MIN READ - The Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff continues with the chaotic Republican Era of China, this time detailing foreign influence in the power struggles of the 1910’s and 1920’s including the opening chapter of the Chinese Communist Party.

Picture: Revolutionary founder of modern China Sun Yat-sen (seated) with young military commandant Chiang Kai-shek (standing, center).

After General Yuan Shikai’s death in 1916, Republican China was unable to establish an effective government. Not only was the central government’s army lacking to counter the regional warlords’ private armies, internal republican bickering and infighting produced fourteen different presidents in the twelve year period of 1916-1928.

And not only warlords vied for power in this era. Foreign governments exerted their own malign influence over China.

JAPAN

As most people know Japan invaded Manchuria in 1931 and China proper in 1937. But the fascist Japanese government had been planning these invasions for a long time, even positioning themselves for an eventual conquest of China back in the 1910’s.

As China descended into post-Qing chaos, Japan attempted to exert influence and gain pre-invasion footholds.

At the outbreak of World War I Japan declared war on Germany in a classic display of realpolitik. Tokyo couldn’t have cared less about Europe, instead leveraging entry in the war to expand its presence in Asia. 

While Germany was bogged down in the trenches of Europe, Japan invaded and occupied German territory in China’s Shandong Province. Japan also grabbed a few German territories in Micronesia which would gain notoriety during World War II: the Marshall Islands (including Kwajalein), the Carolines (including Truk), and the Marianas (Guam, Saipan, Tinian).

By making token contributions to the allied effort Japan successfully gained a permanent seat at the League of Nations. The Japanese also bribed a regional Chinese warlord into granting sovereignty over Shandong province, followed up by tacit albeit lukewarm consent from the allies at Versailles. Chinese government representatives only put up weak objections.

But the handover of Shandong unexpectedly triggered a watershed event in Chinese history: the May 4th movement of 1919.

Everyday Chinese were so incensed over their loss of territory to Japan that mass demonstrations began throughout the country. In what’s now considered the birth of modern Chinese nationalism, protestors criticized Japan, the Versailles Treaty, the allied powers, and the Chinese Republican government itself. Disillusioned with the continuing failure of China’s elites, the masses turned away from traditional Confucian deference to intellectuals, and Chinese who had formerly considered themselves “Sichuanese” or “Shanghainese” or “Cantonese” unified in a populist mindshift to being “Chinese.” 

The western powers, surprised at the level of outcry from the Chinese public, forced Japan to relinquish sovereignty over Shandong which was promptly returned to China.

However much of the social die was now already cast. Along with rejecting much of Confucian traditionalism many young Chinese were now searching outside the country for new philosophy, new ideas, and new direction.

One of the many strange and foreign ideas that found growing acceptance among everyday Chinese was the anti-imperialist credo of Marxism. In 1921 a small group of radical revolutionaries, anti-imperialist and drawn to Karl Marx’s promises of utopian equality and total peace, founded the Chinese Communist Party in Shanghai with the 27-year old Mao Zedong representing his native Hunan province.

RUSSIA/THE USSR

Vladimir Lenin and the Bolsheviks seized control of the Russian Empire in 1917 and, after a centuries-long history of border and territorial disputes in Manchuria and Xinjiang, watched with interest the chaos unfolding in China just four years later.

While attempts at establishing republican government in China floundered, none of the formerly imperialist western powers stepped up to help. Some European governments were concerned about continued reparations payments from the now defunct Qing dynasty. 

The extent of their interest in Chinese stability was usually limited to a desire to avoid total national disintegration, for that would put their business investments at risk. However, western powers also disliked the idea of a tightly unified China that might one day find the strength to say no to outside demands.

Sun Yat-sen, who by now had formed the Nationalist Party or Guomindang, looked to the foreign powers for help getting the new China on its feet, just as he had looked outside for help bringing down the Qing dynasty a decade earlier. But for the reasons just mentioned he found few takers.

The only major power that offered assistance was the Soviet Union, but as one might guess that help hardly came for free.

The Lenin government, concerned that capitalist countries might attack Russia to destroy the communist revolution in its fragile infancy, found the idea of a communist ally on its huge eastern border appealing. Ideologically Lenin also saw China as a fraternal century-plus target of capitalist imperialism and was sympathetic to Sun’s revolution to throw out the foreign Qing rulers.

Given Sun’s need for help, negotiations between Soviet and Nationalist officials led to an alliance in 1923. In exchange for financial and diplomatic assistance, the Nationalists agreed to welcome Soviet advisors who restructured the party with more rigorous discipline.

The Soviets also attached a condition for aid which would change the history of China: The Nationalists must agree to an alliance with the Chinese Communist Party and allow the small upstart movement into their ranks. 

After all, both the Nationalists and Communists were anti-Qing, both were anti-imperialist, and both wanted to build a new, modern China. To Sun, the Communists seemed harmless and possibly even a good fit.

In secret Moscow believed one day they would order the Chinese communists to usurp Nationalist leadership, take over the party for themselves, and transform China into a communist state. However the Soviets felt China wasn’t yet ready for communism—not having first passed through the key Marxist historical stages of capitalism and socialism—and for now ordered the CCP to simply cooperate with the Nationalists.

The Chinese communists, as the Soviets would later learn, had their own timetable which we’ll discuss in an upcoming chapter.

Sun agreed to integrate the Communist Party into the Nationalist Party, but one of his top young protégés—the commander of the party’s military wing—viewed the Communists with suspicion, although he didn’t yet possess the power or rank to act. 

This shrewd lieutenant was Chiang Kai-shek.

We’ll get more into the Nationalist/Communist alliance and Soviet influence ending with the 1949 communist victory later, but on a final note it’s important to contrast Sun and Chiang’s views on alliances and power which in turn informed their different views on the Communists.

For all his strengths, Sun was at heart an intellectual and often politically naïve. By contrast Chiang Kai-shek, mentored in his youth by one of Shanghai’s most notorious anti-Qing societies-turned-organized crime syndicate (the Green Gang), held more cynical and realistic views.

A story recounts how in 1920 Sun entered into another alliance with Guangxi warlord Chen Jiongming. Chiang, still a young protégé, calculated Chen had much to gain by betraying the Nationalist alliance and repeatedly warned Sun of the danger but was ignored. Sure enough Chen rebelled, shelling the Nationalist Guangdong headquarters in 1922 with Sun barely escaping with his life. Chiang, always loyal, made speed from Shanghai to rescue his master and they spent several weeks hiding out on a small riverboat during which time Chiang’s stock rose in Sun’s eyes.

Chiang viewed the communist alliance with similar suspicion. He believed, correctly, that the Communists would attempt to subvert the Nationalist Party from within and take over, but for now Sun sleepwalked into accepting Soviet demands, oblivious to the danger that his young disciple foresaw.

In the next installment we’ll discuss growing tensions between Nationalists and Communists against the backdrop of the campaign to finally reunify China.

A Political and Economic History of China, Part 25: The Republican Era of 1912-1928, Part 1—Domestic Power Struggles

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6 MIN READ - With the 2024 campaign and election over, the Cautious Optimism Correspondent for Economic Affairs and Other Egghead Stuff restarts his history of China series, picking up with the chaos that ensued after the fall of the last imperial dynasty in 1911.

Attached picture: Rough outline of regional Chinese warlord control in 1925. Blue areas are controlled by Sun Yat-sen’s revolutionary Nationalist (Guomindang or GMD) party.

In July we left off with the tireless efforts of Chinese revolutionary Sun Yat-sen whose work played a role in the collapse of the Qing dynasty (1644-1911).

The Qing’s disintegration was sudden and unexpected. Sun was himself in Denver, Colorado raising money when it happened and quickly returned to China to formulate a new, more modern government to fill the power vacuum that had so abruptly appeared.

Despite his revered place in history today, it’s important to understand that in 1911 Sun was only one of many players working to topple the Qing, an alien dynasty of outsiders that had fallen out of favor with its ethnic Chinese subjects. Upon Sun’s return to China he was still not very well known. Among the candidates to lead a new China Sun was viewed as lacking the strongman character needed to rule a provisional government during such a precarious time.

After deliberation among revolutionary leaders a fairly obvious choice was made to assume that role, at least temporarily: General Yuan Shikai. 

Sun assented to Yuan's presidency for the same reasons.

YUAN SHIKAI

Yuan Shikai is a shady figure in Chinese history and likewise loathed in modern China. Dubbed the “traitor general” for:

1) Betraying the young emperor Guangxu’s plans to reform China in 1898 by ratting him out to his aunt, the powerful empress dowager Cixi. Cixi then arrested Guangxu and later had him poisoned, and

2) Betraying the anti-Qing Xinhai revolution, something we’re about to get to.

A little background on Yuan.

During the great Taiping rebellion of 1851-1864 the scholar-general Zeng Guofan commanded Qing forces so skillfully that he was awarded control over most of the postwar imperial army. Zeng’s protégé, Li Hongzhang, assumed that role shortly after when the aging Zeng, who had been brought out of semi-retirement during the civil war, called it quits.

Over the next four decades the Qing weakened and Beijing increasingly lost its ability to govern the country. Subsequently regional military governors, generals previously appointed by Zeng and Li, took greater control of their provinces. By the time of the Qing’s collapse Li’s protégé, the aforementioned Yuan Shikai, was now general of the most powerful armies based in Beijing and it was only he who could keep the semi-autonomous provincial generals (later dubbed “warlords”) in line.

So in 1912 most anti-Qing revolutionary leaders viewed Yuan as the only man strong enough to prevent China from breaking up into military fiefdoms and he easily won appointment as provisional president by vote of the new provisional senate.

In theory China would become a republic with a democratically elected parliament and president sharing power. The Nationalist Party, or KMT (known as the “Guomindang” in mandarin) held the most seats in parliament with Sun Yat-sen as party leader.

However before long it became clear Yuan was interested in neither democratic government nor power sharing. He attempted to dissolve the republican house of representatives and senate, leading to clashes with the Nationalists and other democratic reform-minded parties. In response Yuan consolidated his power by granting even more autonomous powers to his regional military allies in return for support.

In 1915 Yuan made it official by arranging a puppet council vote to “offer” him the emperorship of China which he “accepted” as head of a new dynasty. He quickly ordered jade seals and imperial robes for himself.

It seemed after all the hard work and sacrifice to rid China of the Qing dynasty the imperial monarchy had returned.

But the political backlash against Yuan’s new dynasty was so great that even many of his warlord allies protested. A few provinces outright rebelled.

Surprised by the opposition Yuan delayed his coronation ceremony over and over again, attempting to appease his detractors enough to eventually carry through with his ascension, but after just 83 days officially as emperor he “abdicated” and restored the republic—in part due to growing revolts but also because his own health was failing. 

Yuan died just three months later of uremia.

China had dodged a restoration of the dynastic system, but Yuan’s death would leave behind an even larger power vacuum than the one he had filled. Now there was no obvious choice to control the warlords and China began its descent into regional and provincial chaos.

Once again, in theory a democratically elected republican government in Beijing—composed of a parliament and president—would run China. But in practice the republican government had no effective power to control the autonomous warlords and their personal armies.

Further complicating matters was internal bickering among republican politicians and a few political assassinations. Without clear direction no elected president held power long enough to challenge the warlords let alone build a new China, and the Beijing government often became a puppet of the strongest militarist warlord cliques. By one count after Yuan’s death Republican China had fourteen presidents from 1916 to 1928, the year Chiang Kai-shek officially became president and held power until the communist civil war victory in 1949.

WARLORDS

Hence the 1916-1928 period is famously known as the “warlord era.” Multiple generals enjoyed regional authority over counties, provinces, and in some cases multiple provinces. Most craved expansion of their fiefdoms, some signed fragile alliances with one another, and others went to war.

The one constant under all warlords was general suffering of the common people. Warlords raised funds for their mini-empires by imposing direct taxation—often precocious and excessive—on the peasants. To the common Chinese villager it seemed that things hadn’t changed much from the Qing dynasty. Instead of corrupt regional Qing officials it was now regional warlords who squeezed them.

The many warlords also made for a colorful cast of characters, some whose nicknames found their way into the western press. For example there was Zhang Xun, known as the “Pigtail General” for his Qing loyalties. Zhang wished to restore the Qing monarchy and ordered his troops to retain their queues.

Then there was the “Christian General” Feng Yuxian, who converted his troops to Christianity and baptized them with a fire hose.

One of the worst warlords was Zhang Zongchang, dubbed the “Dogmeat General” because of his taste for a Chinese tonic named “dogmeat” and penchant for playing the Chinese gambling game known as “eating dogmeat.” Time Magazine called Zhang Zongchang “the basest warlord” for his brutality, eccentric personality, and lavish lifestyle—financed by the peasants he crushed under repressive taxation.

Given that the warlords enjoyed de facto control over their regions, business interests—both domestic and foreign—were forced to deal with them which usually meant paying regular bribes to retain their investments and run their operations.

The most consequential warlord-foreign investment relationship was between Japan and perhaps the most famous and powerful of all the warlords: Zhang Zuolin, who enjoyed control over all three provinces of Manchuria while engaging in power-sharing agreements with Beijing.

During the 1920’s Japan made significant investments in Manchuria, the offshoot of expelling Russia during the Russo-Japanese War of 1905. Zhang's army received financial backing from the Japanese in exchange for allowing the construction of Japanese railroads and factories.

Japan, which history now records had its eye all along on the outright conquest of Manchuria, felt Zhang was too formidable an obstacle to their plans and arranged his assassination by exploding a bomb under his railcar the evening of June 4, 1928. From there the Japanese attempted to install his more malleable, opium-addicted son Zhang Xueliang to replace him. However, the Japanese were soon surprised at the son’s resolve when he shook off his opium habit, assumed his father’s place with authority, and put up a great deal more resistance than they had anticipated.

A decade later Zhang Xueliang, serving as a general in Chiang Kai-Shek’s Nationalist army, would kidnap his own boss in an incident with huge implications for China’s future, a subject we’ll get to during World War II.

In the next installment on the Republican Era we’ll look at foreign interference during China’s early road to modernization.