Young People Migrating to Abroad

Across all recorded history, 99% of humanity has never invented a single thing. Yet, it is a truth universally acknowledged that long-run sustained progress in economic well-being arises from human creativity and innovativeness. In this regard, the average human and indeed the great majority of humanity over the last seven million years provide a completely misleading guide to what is possible.

Misapplied, the Law of Averages misinforms.

This is why, seemingly against all odds, every nation exhorts its people to be creative and innovative. It is why, apparently against all common sense, every country wants to claim Nobel Prizes for its citizens. Now and then a place as unlikely as Cyprus triumphs. For human success the average is not at all informative as an indicator of what is possible. Otherwise, humanity would still be where it was 7 million years ago.

Yet, when we contemplate the economic success of nations we are easily tempted to fall back on what we know about the average of nations: China cannot keep growing at better than 6% a year because no other country has for as long.

For at least two reasons, we should resist that seductive appeal. First, success is, as just-described, necessarily different from the norm. The average or even the great mass of the distribution of people or of nations simply isn’t revealing as a guide to what can happen. Second, perhaps even the typically-regarded growth decelerations and crashes in the data samples we do consider aren’t really failures after all.

Singapore, in one of the most spectacular of economic accelerations, saw its per capita GDP grow at over 6% per annum for over a decade.

But Lant Pritchett and Larry Summers (Asiaphoria Meets Regression to the Mean, 2014) document how after 1980 Singapore’s growth rate plummeted to a figure 4 percentage points lower than during that period of success. They note that Taipei,China and the Republic of Korea displayed similar trajectories. All these...