The Street Light: Return to the Center of the World

The Street Light: Return to the Center of the World:

Gavyn Davies points us to a neat map created by Danny Quah at the LSE in his recent paper "The Global Economy's Shifting Centre of Gravity" (pdf). In it, Quah calculates "the average location of economic activity across geographies on Earth." Here's the map:


The westernmost black dot on the map represents where the Earth's center of economic gravity was in 1980 - somewhere in the Atlantic Ocean, a bit west of the Madeira islands. Since then it has drifted eastward to its current position near Cairo. The red dots then extrapolate the motion of this point until 2050, assuming the next 40 years are characterized by similar growth patterns to the past 30 years.

One of the things I love about this map is that it reminds me (in an admittedly purely superficial way) of one of my favorite economic models: the "gravity" model of trade flows, in which the trade between two countries or regions is roughly predicted by the size of the two regions and how far apart they are, just like physical gravity.

More substantively, I also find it interesting to think about this movement of the world's economic center of gravity as really just backtracking, an undoing of the point's westward movement that took place between about 1700 and 1900. From the time of the first pyramids until perhaps the 16th or 17th century, the world's economic center of gravity consistently hovered in the Middle East somewhere. Its movement westward into the Atlantic is really a relatively recent phenomenon. (Granted, if Quah's projections are correct, we may overshoot a bit as the point moves back east to where it came from, but that remains to be seen.)

It's not a coincidence that nearly all European maps of the world until the 16th century had the Middle East (often specifically Jerusalem) in the middle of the map. To medieval European map-makers, the Middle East was, and had always been, right at the center of the world, geographically, spiritually, and economically. Note that the requirement to represent that visually is what led to the classic T-O maps of the European Middle Ages. (The T-O maps are oriented with east at the top, with the Mediterranean forming the vertical stroke of the 'T', and with the Middle East right at the center of the world where the three continents meet.)

In that context, Quah's map above - and the changes in the world economy that it so nicely distills - could be interpreted as simply the correction of a temporary global aberration.

Oil: A Commodity Traded On A Global Marketplace

Yglesias:

there’s a single worldwide price of oil that’s determined by global supply and global demand. It’s not possible for one country to unilaterally alter the price its own citizens pay at the pump by altering the quantity of oil it produces. A new well in the United States has exactly the same impact on global prices as a new well in Norway or Venezuela or Saudi Arabis and thus the exactly the same impact on the price American consumers pay.

And yet turn it into a political story and suddenly all this knowledge drops away:

“What about domestic supply?” asked Sen. David Vitter (R-LA) this week. “What about the Gulf of Mexico? What about all of our other vast energy resources that we are taking off the table and shutting down?”

Rep. Doc Hastings (R-WA), who is chairman of the House Natural Resources Committee, has cataloged ways he says the administration has frustrated oil production, from suspended drilling leases to increased red tape. House Speaker John Boehner (R-OH) posted highlights of the list on his website.

“Since this administration has taken over, they have done everything to block energy development in this country,” Hastings said.

Well what about domestic supply? Why would it matter if the supply is domestic?