Physical anthropology in general and craniology in particular have quite a sordid history. The size of the skull was of great interest to scientific racialists, who seized on minor differences in averages as evidence of differential capacity of the “races” for civilization. As we have shown before and we shall see again in what follows, race gives us a very poor handle on cranial morphology, and human morphology more generally. This does not mean that there is little systematic variation; that all variation in between individuals within populations. To the contrary, human morphology is geographically patterned. Situated local populations or demes differ systematically and significantly from each other, generating smooth geographic clines. In particular, as the next figure shows, our species obeys Bergmann’s rule—bigger variants are found in colder climes.  

Source: Ruff (1994)

Of course, skull size and body size scale together. We can read this off the US military anthropometric database. So we should expect the bigger people of colder climes to have bigger skulls as well. Indeed, if Ruff’s thermoregulatory theory is right, particular features of skull morphology should be adapted to the macroclimate even more than the postcranial skeleton (the bit below the head).  

It is easy enough to recover the monotonic relationship between climatic variables and cranial measurements. But there is a very serious problem. Suppose that we can rule out nutritional and other environmental influence, say because we know the parameter is very slow-moving. That does not mean that all systematic variation in that parameter is then due to the bioclimate. For it may instead be due to random drift. Indeed, we know that founder effects, isolation-by-distance, and genetic drift can generate geographic clines that confound the bioclimatic signal. There is mounting evidence that human morphology, just like the human genome and linguistic diversity, contains a strong population history signal. 

Segments of DNA under selection do not preserve the signal from population history well; the bit not under selection—”junk DNA”—does. Similarly, information on population history can be recovered from traits of cranial morphology that are neutral, ie not under selection. Scholars have used genetic distance to control for population history in order to recover information on bioclimatic adaptation from morphology. In what follows, I will show how we can use cranial morphology itself to the same effect.

Howells Craniometric Dataset contains 82 linear measurements 2,524 skulls from 30 populations located in five continents. We will be working exclusively with that data. Let us begin with skull size. The five continental “races” that Wade thinks are real—one each for Europe, Africa, Asia, Australia, and the Americas—explain 6 percent of the variation in skull size. Moreover, not even one of the mean differences between said “races” is statistically significant. See Table 1. 

While demes are lumpy, they can’t be called races; there are tens of thousands of them. And though races are useless fictions, demes or situated local populations are very useful fictions. Put another way, demes are to anthropology what particles are to physicists and representative rational agents are to economists. Recall the tyranny of distance over land before the late-nineteenth century. Under such conditions as prevailed well into the ethnographic present, populations were situated locally and isolated from nearby and far away demes; the latter more than the former and smoothly so. Dummies for the demes alone explain 44 percent of the variation. What needs to be explained is this systematic component. 

In order to understand variation in skull size we first note that Binford’s Effective Temperature (ET, estimated as a linear function of latitude) is a strong correlate of skull size (r=-0.547 for men, r=-0.472 for women) and orbital size, ie the size of the eye socket (r=-0.464 for men, r=-0.522 for women). See the top panel of next figure. Moreover, as you can see the bottom-left graph, orbital size is a strong predictor of skull size (r=0.506); raising an intriguing pathway of selective pressure that ties cranial variation not to thermal parameters but to variation in light conditions. Still, the bottom-right graph shows that ET is correlated with skull size even after controlling for orbital size. 

If we consider only the systematic component, orbital size alone explains half the variation in skull size. So we should try to understand variation in this mediating variable as well. 

A straightforward way to extract the population history signal is to isolate morphological parameters that are uncorrelated with climatic variables and use these to construct a neutral phenotypic distance measure. We identity 14 linear measurements in the dataset that are uncorrelated or very weakly correlated with ET. Assuming that these are neutral traits not under selection, we use them to compute phenotypic distance from the San. (We use Pearson’s correlation coefficient between standardized 14-vectors for the San and each of the 30 populations as our measure of phenotypic distance.) Basically we are using the fact that the San are known to have been the first to diverge from the rest of us so that the degree of correlation in these neutral measures contains information on the genetic distance between the two populations. We also know that genetic distance is proportional to geographic distance from sub-Saharan Africa due to our specific population history. So if our measure is capturing population history, it should be correlated with geographic distance. The next figure shows that this is indeed the case. 

If we are right about our reasoning, we are now in a position to decompose morphological variation into neutral, bioclimatic and non-systematic factors. We begin with our estimates of pairwise correlation between our neutral factor (phenotypic distance from San) and ET on the one hand and selected morphological variables on the other. 

We see that Cranial Index (head breadth/head length) is uncorrelated with both ET and Neutral, while orbital size and skull size are strongly correlated with both. Interestingly, the Nasal Index (nasal breadth/nasal length) is a strong correlate of ET but not our neutral factor, implying that nasal morphology contains a strong bioclimatic signal and a weak population history signal. These results are only suggestive however. In order to nail down the bioclimatic signal we must control for population history and vice-versa. 

We see that both population history and bioclimatic signals are present in skull size and orbital size; neither is present in the Cranial Index; and only the bioclimatic signal is present in the Nasal Index. This is consistent with known results in the field. Not just the Nasal Index but a bunch of other traits in facial morphology exhibit a strong bioclimatic signal, suggesting strong selective pressure on the only part of the human body exposed to the elements even in winter gear and even in the circumpolar region. 

Table 4 shows the percentage of variation explained by phenotypic distance from the San and ET. We see that Neutral and ET explain roughly 11 percent of the variation in skull size and orbital size each; neither explains CI; and ET explains 15.6 percent of the variation in the Nasal Index. More than three-fourths of the variation in these variables in not explained by either. 

Table 5 displays the portion of systematic (interdeme or interpopulation) variation explained by population history and ET. Interestingly, the population history signal is stronger than the bioclimatic signal for systematic variation in skull size and especially orbital size. Neutral phenotypic distance from the San, our population history variable, explains 35 percent of the systematic variation in orbital size and 28 percent in skull size. ET explains 22 percent in both. Population history and ET explain more than half the systematic variation in both size variables. ET explains 27 percent of the systematic variation in the Nasal Index likely reflecting morphological adaptation to the macroclimate. The less said about the Cranial Index the better. 

Remarkably, both ET and population history’s average share is more than a sixth but shy of a fifth, adding up to 37 percent of systematic variation of all four variables. If we drop the Cranial Index and average the other three morphological variables, they explain 24 percent of the variation each. In the horse race between population history and ET, we have a draw. The balance is more uneven in cranial size variables where population history has the upper hand. What happens if we introduce race dummies? 

We see that race is pretty much a useless fiction. It gives us no handle at all on craniometric variation. The best we can say is that Asian heads are more globular. Interestingly, ET and population history exchange rankings in explaining orbital size after controlling for race. But the overall picture is unchanged. 

In order to be sure than we are not picking up spurious correlations, we fit linear mixed-effects models. We allow for random-effects by deme and admit fixed-effects for sex and race. We report the number of continental race dummies (out of four) that are significant in each regression. 

Our main results are robust to the inclusion of random effects for demes. The Cranial Index is bunk. The Nasal Index contains a strong bioclimatic signal but an insignificant population history signal. The gradients of ET and phenotypic distance from the San are significant for skull size and orbital size. Note that the sex dummy is always significant due to dimorphism—the dimorphism index for skull size in the dataset is around 1.15. But race dummies are rarely significant. Indeed, of the 16 dummies for race in the above regressions only 3 were significant. And these had mostly to do with “the wrong latitude problem”: New World population morphology can be expected to be adapted to the paleoclimate of Siberia so that it is not surprising that the coefficient parameter of the dummy would absorb that systematic error. 

The results presented above are congruent with known results from dental, cranial, and postcranial morphology. The basic picture that is emerging suggests that some skeletal traits are developmentally-plastic so that they reflect health status (eg stature, femur length); some are selectively neutral (eg temporal bone, basicranium, molars) so that they can be used to track population history; and finally, some have been under selection and likely reflect bioclimatic adaptation (eg, nasal shape, orbital size, skull size, pelvic bone width). 

In the 1990s and the early 2000s there was a sort of panic in physical anthropology related to genetics. The genomic revolution threatened to put people out of business. But it has become increasingly clear that the genomic revolution has turned out to be a dud. Most efforts to tie phenotypic variation to genomic variation have failed utterly. So far the best use of DNA for understanding human variation has turned out to be just a fancy version fingerprinting. So if you have ancient DNA samples, you can track population history. It has since been shown that morphological variation itself can be used to track population history just as effectively as DNA markers. With the advent of new techniques such as geometric morphometrics, the resurgence of interest in understanding morphological variation, and the manifest failure of DNA as the key to understanding variation in human morphology, we are truly in the midst of an unannounced golden age in physical anthropology. 

In lieu of references: See the splendid work by, among others, Brace (1980), Beals (1983, 1984), Ruff (1994), Relethford (2004, 2010, 2017), Roseman (2004), Harvati and Waever (2006), von Cramon-Taubadel (2014), and Betti et al. (2010). 

The German Empire would not be proclaimed until next January, but it was forged in Bismarck’s splendid war against France in 1870. That was also the last year in which Germany would be more populous than the United States. Germany was born in relative demographic decline as a result of the settlement of the American West. In 1870, Greater Britain (Britain, Canada, and Australia—we don’t have data for New Zealand and South Africa)’s population was 37.0m, France’s population was 38.4m, America’s 40.2m, and Germany’s 40.8m. 1870 is really the crossover point of the population scissors. The populations of all four were roughly around 40m in 1870. Over the next forty years, while France’s grew by a mere 7 percent, Greater Britain’s grew by 53 percent, Germany’s by 58 percent. But both were dwarfed by America’s 131 percent. By 1910, France, Greater Britain, Germany, and the US weighed in at 41.2m, 56.5m, 64.6m, and 92.8m respectively.

The stagnation of the French population, the fact that Greater Britain expanded demographically nearly as much as Germany, and German demographic decline relative to the United States, all came to weigh heavily on the world question at the turn of the century. This was especially so because all four great powers were roughly at the technological frontier by the turn of the century. Although the United States had clear leadership, the secondary industrial revolution occurred in all four poles (and beyond). Germany in particular was a major center of innovation in the mechanical arts, leading in many sectors, eg industrial chemistry, heavy industry, and catching up in many where the Americans had led, eg automobiles.

Life expectancy is a good measure of everyday living standards. The next figure shows that by this measure, improvement in German living standards accelerated around 1890. But there was no relative improvement in Germany’s position because the Atlantic powers themselves hit the toe of the hockey-stick at the same time. The Anglo-Saxons opened up a gap with France as well. No one was as rich as them or lived as long.

The evidence from stature is even more daunting from the perspective of an aspiring world power. Americans still towered over Germans. Greater Britain and Germany remain close throughout, although with a British edge. France, which was closer to the Anglo-Saxons in life expectancy, lagged behind even though it too participated in the onset of the hockey stick.

Note that we have defined the average stature of Greater Britain as the population weighted average of British, Canadian, and Australian means. If you unpack Greater Britain, it turns out that Canadians and especially Australians enjoyed a definite settler premium. See next figure. American supremacy in stature is therefore not surprising. Britons would finally become taller than Americans for the first time in 1930. But that is a story for another day. Instead of unpacking Greater Britain, the challenge is to expand it to encompass not just New Zealand and White British subjects in southern Africa, but Greater Britain in a thick sense: as the predominance of the British diaspora in the offshore world. Proximately what was required was to monopolize prime temperate land in Anglo-Saxon hands; in order to do that, what was required was the take-off of self-reproducing settler colonies; preferably junior geopolitical allies of Belich’s Anglo oldlands (see the schematic map) that could thus anchor the world position of the two Anglo-Saxon great powers.

From Belich, Replenishing the Earth.

I still haven’t finished reading Belich’s Replenishing the Earth: the Settler Revolution and the Rise of the Anglo-World, 1783-1939, so I will hold my judgement of the first three-fourths of the book. I will say that his description of the wildcat banking and asset price bubbles of the Anglo-Saxon frontier is excellent. I also agree with him that explosive colonization was a bubble by construction. One went all in when one went to settle a fledgling colony. Things worked themselves out once enough talent showed up. Speculators abounded. Increasingly massive boom-bust cycles whipsawed the frontier. Boom towns expanded at prodigious rates; driven by investment booms, unregulated bank lending, furious speculation, and attendant asset price bubbles amid extraordinarily elevated rates of settler arrivals. At the heart of Settlerism itself was a Ponzi scheme; the Anglo-Saxon folie a famille in two senses. As the Anglo-Saxon madness of course. But also the self-accelerating aspect of settler success itself. The booms were in a fundamental sense self-igniting. They solved the problem of coordination through faith. Not just faith in God. But faith in the colony. The frontier attracted the believer like a magnet.

In the American West, there were three major medium term cycles that peaked in 1837, 1857, and 1873. (The last of the great booms peaked in 1893 and 1907.) After each of these busts, Belich argues, the West was re-colonized, reoriented to point towards to metropole; peripheralized via a vertical division of labor—Cincinnati would no longer produce books and periodicals (88,000 books were published in the town in the three months of 1831, Belich reports) but pork and grain; New York would supply the books and periodicals. Fair trade or not, this was the construction process of the Weltwirtschaft.

The topology of the world had been transformed by Anglo-Saxon settlement. Britain’s decline relative to Germany has been overestimated. If we consider the product of life expectancy and population as the measure of war potential instead of GDP which is a product of per capita GDP and population, Britain kept pace with Germany all the way. (We know the picture that emerges from income: Britain’s per capita GDP was 25 percent larger than Germany’s in 1900).

France was guaranteed to be a member of any balancing coalition against Germany. The real question was Anglo-German relations. Given the Anglo-Saxon stranglehold on the maritime world-economy, their naval mastery, and their settlement of all available prime temperate land, there was no solution to the problem of wrestling world control away from Anglo-Saxon hands. Fisher’s ‘five keys that lock up the world’ were Anglo-Saxon property by the time the German Empire was proclaimed. So the German bid to be one of the four world policeman was thwarted by the difficulty of dethroning Great Britain, the Franco-Russian alliance and the problem of two-front war, and above all, the settlement of the American West and the rise of the United States.

Population history is crucial to the Franco-German story, the Anglo-German balance, the rise of the United States to global mastery, and the cul-de-sac of German navalism. But was there no viable path for Germany to become a world power? The missed opportunity of 1905 points in the right direction. Above all, Germany needed to achieve military hegemony on the continent. Russia was out of business and France lay exposed. Navalism came to bite not only in 1914 but also in 1905 when the Kaiser decided to wait for a more favorable naval balance.

Sovereignty is always shaped from below, and by those who are afraid  — Michel Foucault

Marc Trachtenberg’s A Constructed Peace: The Making of the European Settlement, 1945-1963, won the George Louis Beer Prize as well as the Paul Birdsall Prize.[1] It remains highly regarded in the field. Trachtenberg argues convincingly that the German question was at the heart of postwar international politics and its resolution was the key to the establishment of a stable international system. Since the great powers disagreed so profoundly on what was to be done with Germany and put a great deal of importance on that question, a stable pattern of East-West relations could not obtain until the German question had been settled one way or the other. As long as the German question remained unresolved, the specter of general nuclear war hung over East-West relations. Once it was resolved, the basic parameters of the bipolar world fell into place, East-West relations were stabilized, and the Cold War in effect came to an end.[2]

The entire future of Germany was open for reconsideration when postwar planning began during the war.[3] Was Germany to pay reparations? Was it to be deindustrialized and turned into an agrarian country to reduce its power as envisioned in the Morgenthau Plan? Was Germany to be broken up into smaller statelets? Into two, three, or four pieces? Under whose sphere of influence were these pieces to fall? Who was going to control the Ruhr? Even after they had been agreed upon, were the occupation zones to be run separately by each occupying power as it wished? What was to be their socio-economic system? Were all non-fascist political parties to be tolerated in all zones? Or were the zones merely temporary and a unified German state was to be resurrected? And if so, was the Germany army to be reconstituted? And if German power was to be restored, was Germany going to be neutral or an ally of one of the three great powers?

Given the centrality of the German question to his account of the European postwar settlement, it is perplexing to find Trachtenberg begin his narrative at war’s end, some two years after official three-power negotiations began. A number of important decisions on the German question were in fact hashed out during the war; above all, the territorial division of Germany into occupation zones. The first steps in that direction were taken at the Moscow Conference in October 1943.[4] The British circulated a draft agreement on the zones of occupation on January 15, 1944.[5] On February 18, 1944, the Soviets accepted the British proposal for the eastern zone apparently without bargaining.[6] Why Stalin would accept a division that gave him control of the agrarian third of Germany is not clear.

So Trachtenberg is not interested in how the German question was resolved per se. What Trachtenberg does instead is mobilize it to explain why East-West relations took so long to stabilize. Secretary of State James Byrnes, ‘the real maker of American foreign policy during the early Truman period,’ we are told, pressed for ‘a spheres of influence settlement in Europe’ that the Soviets could get behind, whereby ‘each side would have a free hand in the area it dominated, and on that basis the two sides would be able to get along with each other in the future.’[7]

But a settlement of this sort did not come into being, not until 1963 at any rate. Why was it so long in the coming? Why did the division of Europe not lead directly to a stable international order?[8]

Trachtenberg’s answer is that profound disagreements on the German question prevented the emergence of a stable order. The Soviets were implacably opposed to the resurrection of German power, especially a nuclear-armed Germany, particularly one allied to the West. The US did not want an independent Germany. But the defense of Western Europe ultimately required the reconstitution of the German army. In the end, despite the fact that the Soviet Union had almost single-handedly defeated Hitler, the US was able to get its way on the German question. In effect, the US managed to impose its preferred outcome on the Soviet Union. Why?

Although Trachtenberg does not come right out and say it, the short answer is that the US leveraged its nuclear superiority to get its way on the German question. The first great confrontation was triggered by the introduction of a common currency into the three Western zones in 1948. It meant in effect the creation of a West German state. It is this that triggered the Berlin Crisis. At the time the United States enjoyed a nuclear monopoly, and according to Trachtenberg, ‘as long as it was a question of purely one-sided air-atomic war’ the US was ‘sure to win in the end’.[9] The West could thus afford to stand firm in the face of Soviet pressure. And the Soviets backed down once it became clear that the United States was prepared to go all the way to general nuclear war in order to defend the West’s position in West Berlin.

America responded to the loss of nuclear monopoly in 1949 with an enormous buildup of air-atomic forces. By 1952 the Strategic Air Command had emerged as a war-winning first-strike weapon. It was in this context that the resurrection of the German army was put on the table. Stalin responded by sending the famous March 1952 Note suggesting that the Soviets would be willing to accept a unified Germany with free elections and even a capitalist economic system as long as it was guaranteed to be neutral. The West dismissed the offer as a mere ploy. Trachtenberg, following Gaddis, concurs.[10] But many serious scholars of Soviet foreign policy have argued that the offer was in earnest.[11]

A series of increasingly hostile confrontations occurred in 1958-1962 culminating in the Cuban Missile Crisis, when Khrushchev, emboldened by the Soviet acquisition of ICBMs capable of reaching US cities, decided to force a showdown on the question of the introduction of tactical nuclear weapons into the German army. Astonishingly, Trachtenberg devotes less than three pages to this final confrontation over the German question, concluding that the US ‘laid down an ultimatum’ and the USSR ‘acceded’ without explaining why.[12] As Trachtenberg himself had argued elsewhere,

It really does seem that “we had a gun to their head and they didn’t move a muscle”—that their failure to make any preparations for general war was linked to a fear of provoking American preemptive action. … The effect therefore was to tie their hands, to limit their freedom of maneuver, and thus to increase their incentive to settle the crisis quickly.[13]

The picture that emerges thus calls for a major revision of the account presented in the monograph, one that pays attention to the balance of strategic power as it came to weigh on international politics at crucial moments in the resolution of the German question, 1942-1963.

Notes

[1] Trachtenberg, Marc. A Constructed Peace: The Making of the European Settlement, 1945-1963. Princeton University Press, 1999.

[2] Except for a brief revival under Reagan in the early 1980s. See Stephanson, Anders. “Cold War Degree Zero.” Uncertain Empire: American History and the Idea of the Cold War (2012): 19-50.

[3] This paragraph is adapted from an earlier essay that appeared on my blog.

[4] Mosely, Philip E. “The occupation of Germany: New light on how the zones were drawn.” Foreign Affairs 28, no. 4 (1950): 580-604, p. 580.

[5] Ibid, p. 589. Of course, the British awarded the Ruhr to themselves.

[6] Ibid, p. 591.

[7] Trachtenberg, p. 4.

[8] Ibid.

[9] Trachtenberg, p. 89.

[10] Ibid, p. 129.

[11] See Willging, Paul Raymond. “Soviet foreign policy in the German question: 1950-1955.” (1975): 1199-1199, and references therein.

[12] Trachtenberg, p. 352-355.

[13] Trachtenberg, Marc. History and strategy. Princeton University Press, 1991, p. 259.

The grim details of the extrajudicial torture-execution of the Post columnist are now clear. The most astonishing fact to emerge is that MBS did not even bother to cover his tracks. Instead of sending expendable killers-for-hire to maintain plausible deniability, the standard operating procedure for kinetic intelligence operations, MBS sent men from his own personal security detail to assassinate the journalist.

Journalists imprisoned. Source: CPJ.

Killing journalists is not a new trick for mafia states. On average a journalist is killed every week, according to the Committee to Protect Journalists. Some 44 have already been killed this year, although that number does not include Khashoggi.

Of the 1,323 journalists reported killed since 1992, 912 have been killed since the Iraq War began in 2003; including 159 Iraqi journalists and 110 Syrians. Outside these two warzones, the greatest rate of scribe killing is in the Philippines, followed by Algeria, Pakistan, Russia, Somalia, Colombia, India, Mexico, and Brazil. The next graph shows the notorious double-digits scorers in the CPJ database.

We can think of the number of scribes killed as measuring to what degree the state formation approximates a mafia state. This is not exactly right because the 1,323 total scribe killings since 1992 include some 131 involving criminal gangs, as when the Chicago mafia gets rid of a pesky reporter with the understanding of the local judge and politician. More generally, only 1,083 killings can be attributed to specific actors. The next table shows the breakdown. It’s clear that the vast bulk of the killings are ordered by political or military authorities.

So it cannot possibly be the case that the prestige media is up in arms about the mere killing of a journalist. Why then does it look like MBS has his feet to the fire? And why does it look like his days are numbered? Are they? What precisely can be done about MBS? and more generally, the Saudis?

What the extraordinary opprobrium in the Western press reflects, I think, is Said’s Orientalism in reverse. What was so egregious about the Khashoggi business was not that he was a scribe. It was that he was a columnist at the Washington Post. Indeed, he probably thought that his association with a prestige paper in the United States made him bulletproof. Put bluntly, the implicit norm said: You can kill a journalist in your backyard, especially one writing in the vernacular. And if you’re going to kill a prominent critic who is known internationally, you better have plausible deniability. But you can’t kill a card-carrying member of the Western Press, especially not without even a fig leaf of deniability. So MBS miscalculated badly. It may be because he has always lived in the Kingdom and has no first-hand experience of the rigidity of the liberal-democratic discourse in Western civil society.

Now what? What is the West to do with MBS? Must he go? Oh it can be arranged. And if you are thinking of European dependence on gulf crude, there are operational solutions to the problem of stabilizing oil prices. There is no need to occupy Saudi cities and the vast bulk of Saudi territory. All you need is to secure a small portion of the eastern province. US forces can secure the oil fields in the gulf with a light force, as a joint Anglo-Saxon plan had it in the 1970s, and as someone, probably Kissinger (Grey Anderson tells me that Edward Luttwak admitted to having authored the article in 2004) wrote about anonymously in Harper’s at the time of the Arab embargo. Since all of Saudi oil sits under a zone of Shiite predominance, the political problem can be solved by working with Iran just as the United States has to already in the arc of weakness that stretches from the gulf to the Levant. The micro-oil monarchies of the gulf are already under US protection. They would have to move closer. We cannot allow the Saudis to mediate between the United States and the Trucial States.

But knowing that the United States can secure the oil fields without putting many boots on the ground is an insurance policy, not the proposed strategy. The Policy Tensor has been suggesting for a long time that the United States ought to follow a more even handed policy in the gulf. Indeed, it would not hurt to ditch Saudi Arabia for Iran. To put it bluntly, Iran dwarfs the gulf region in warmaking potential. The United States shot itself in the foot by destroying the garrison state built by Saddam. The result of US debacle is that Iran is now the most influential power in southwest Asia. Iran understands that the US is capable and willing to confront Iranian foreign policy in the gulf region and in southwest Asia as a whole. But it is also true that the United States has little choice but to work with Iran on regional questions. I think it is obvious that rolling back Iranian influence in Syria and Iraq is a fool’s errand.Iran is a natural ally of the West in the fight against salafi jihadism. The US needs a working relationship with Iran; better still, would be a genuine partnership with Iran.

I think there has been increasing cooperation in US-Iranian relations, each has gained an increased appreciation of the other’s strength by fighting side-by-side against Isis. What needs to be recognized now is the congruence of interests between Iran and the West. Because Iran is the potential region hegemon of gulf region, it is best to have good working relations. It makes for stable relations to have potential regional hegemons invested in the status quo.  As Huntington observed, the world is uni-multipolar. The United States is the only state in the world that can project power system wide. But geopolitics is regional. In order to run the different regions of the world, at the minimum, the United States has to reach an understanding with China in east Asia, India in south Asia, Iran in southwest Asia, Russia across Eurasia, and Germany in Europe. This is particularly true under conditions of mutually-assured destruction.

What requires particular attention is gulf terror finance. Whether or not we contain Saudi Arabia more generally, terror finance from the gulf has to stop. Frankly, this requires eyeballs and interdiction by law enforcement in international financial flows from and to the gulf. Congress should fund this right quick and subject enforcement to oversight. But the real problem with Saudi Arabia is not restricted to terror finance even in the narrow sense of the war on terror. For Saudi Arabia is the world capital of salafism. Thousands of little religious schools run by the Saudis dot the Old World from Kosovo to Indonesia, where every attendant is at risk of recruitment by salafi jihadists. These schools are the breeding ground in which salafi jihadism grows. More generally, the propagation of salafism is the principal driver of jihadism. If we are serious about the fight against salafi jihadism, we must arm-twist the Saudis to roll-back their global network of salafi madrasas.

These are all matters of elementary security policy for the United States. But should Saudi Arabia be contained? What exactly would containment entail? Sanctions? Air strikes? I do not believe any of that is required. A simple threat of US abandonment would be enough to concentrate minds in the Kingdom. For if abandoned by the United States, the Kingdom would be faced with a vastly stronger power across the gulf without any security solutions. My proposal is not to jump to containment yet.

If the West were to act jointly, it would inform the Saudi authorities—once the intelligence is verified—that MBS has to go. He would be persona non grata. If the Saudis want to hold on to him even though there are thousands of princes waiting in line for the throne, it will be awkward for a while. But the West could very well stand firm on this. MBS just cut it too close to the bone.

Whether or not the Saudis ought to be subjected to sanctions depends on whether or not they are willing to cooperate in a major reorientation of Saudi policy (on terror finance, the madarsa network, and MBS). It would be best if the Saudis marginalized MBS without US intrigue. Although even intrigue would be better than having to deal with Saudi Arabia without talking to its de facto leader for whatever time it takes for the Saudis to come around.

Here’s how the unipolar world works. If there is a Nash equilibrium in international politics that the United States lays down and insists on, eg Washington Naval Conference of 1922, then a stable order can be secured. But this does not mean that Europe does not have a say. Indeed, the Europeans could unilaterally contain MBS. By declaring him persona non grata and opposing this administration on gulf policy, Europe can prepare the ground for when adults are back in Washington. This is already underway in the sense that the Europeans are working with the Iranians to pushback against the US reneging on the nuclear deal. Merkel would be wise to take this opportunity to extend the pushback to MBS.

When adults are back in Washington, one could move ahead in leaning harder on Saudi Arabia. But two things must be recognized. This is not just about Khashoggi and not just about MBS. This is above all an opportunity to reconsider Western gulf policy tout court. Why is the West containing Iran and arming the Saudis when core Western interests are closer to the former than the latter?

Tip of the hat to Ted Fertik for bringing Servaas Storm’s unpacking of total-factor-productivity growth (TFP) to my attention. Storm shows that TFP can be regarded mechanically as a weighted sum of the growth rates of labor and capital productivity, roughly in a 3:1 ratio in that order. TFP, of course, is a measure of our ignorance. It nudges us to look inside firms, ie the supply side. This leads down the path to situated communities of skilled practice, ie Crawford’s ‘ecologies of attention.’ But perhaps it is better to work directly with labor productivity, certainly if Storm is right. Some say that high wages incentivize firms to invest in labor-saving innovations thereby increasing labor productivity. This is certainly consistent with the standard microeconomics view of firm behavior in that they are expected to do whatever it takes to get a competitive advantage in the market. A straightforward implication of this hypothesis is that real wage growth ought to predict productivity growth. We’ll see what the evidence has to say about this presently. But let us first note the policy implications of the theory.

The fundamental challenge of contemporary Western political economy is how to restore economic dynamism. The first-best solution to the rise to China is for the West to maintain its technical and economic lead. Similarly, the first-best solution to political instability and the crisis of legitimacy is a revival in the underlying pace of economic growth. So far no one has offered a credible solution; Trump’s tariffs, nationalist socialism á la Streeck, restoration of high neoliberalism á la Macron, are all small bore. But if the hypothesis that a significant causal vector points from real wage growth to productivity growth holds, then a bold new Social Democratic solution to the fundamental challenge of Western political economy immediately becomes available.

What I have in mind is a new mandate for central bankers. To wit, Congress should mandate the Federal Reserve to maximize real median wage growth subject to monetary and labor market stability. Until now central banks have targeted labor market slack as understood in terms of employment and inflation. But the real price of labor (more precisely, productivity-adjusted real median wage) is also an excellent measure of labor market slack. The hypothesis implies that targeting productivity-adjusted real median wage growth could restore productivity growth; perhaps dramatically. My suggestion is consistent with social democracy’s concern with distributional questions as well as with standard central banking practice. So if the result holds, it’s very useful indeed.

We start of by checking that real wage growth predicts productivity growth in the United States. The correlation is large and significant (r=0.531, p<0.001). This is suggestive. 

In order to systematically investigate this question we interrogate the data from the International Labor Organization (ILO). The ILO provides estimates of real output per worker, unemployment rate, and the growth rate of real wages. We restrict our sample to N=30 industrial countries since wage growth has diverged so significantly between the slow-growing advanced economies and fast-growing developing countries. We estimate a number of linear models and collect our gradient estimates in Table 1.

We begin in the first column that reports estimates for the simple linear model that explains productivity growth by 1-year lagged real wage growth. In the second column, we introduce controls for a temporal trend and lagged productivity growth. This sharply reduces our estimate for the gradient suggesting that the estimate reported in column 1 was inflated due to autocorrelation. We introduce country-fixed effects (ie country dummies) in column 3, which modestly reduces our estimate of the gradient. Instead of country fixed-effects, in the fourth column, we control for the unemployment rate, which turns out to be significant and which very modestly increases our gradient estimate. In the last two columns we introduce random effects for country and year. What this means is that instead of dummies for each country and year which is equivalent to having fixed intercepts by country and year, we admit the possibility that the intercept for a given country and year is random.

We note that the gradient for lagged real wage growth remains significant across our linear models even after controlling for a temporal trend, lagged term for the dependent variable, lagged unemployment rate, country fixed-effects, and random effects for country and year. We can thus be fairly confident that real wage growth predicts productivity growth across the industrial world. The next step would be to embed this in a macro model to interrogate the viability of real median wage growth targeting by central banks.