Alternative title: Why I moved to China
Tyler Cowen likes to say that everyone is a regional thinker. It took me a while to understand how that applied to me. I have a split identity (and two passports to go with them). I am both Portuguese and British, with a German high-school education (in Lisbon). So, it’s not even clear which region I should be grouped with.
But Tyler’s statement (as I understand it) is not everyone can be classified as belonging to a regional school of thought, but rather your thinking, even in the most abstract of subjects will have been molded by where you spent your formative years.
I grew up in Portugal, coming of age in the 1990s. The narrative I learned at the time goes as follows: Portugal was held back by its mid-20th century dictatorship. Salazar, dictator from 1926-1968, famously said “Portugal will be proudly alone” and turned the country’s back to the world. Fortunately for the country (unfortunately for the regime), people were still learning about the outside world and eventually got fed up: after the revolution in 1974, the country turned to Europe, joined the EU, and started to catch up to the rest of the West.
Now, we were the first generation to grow up in a modern Portugal and we would have lives that were European and turned to the future, not the past. Everyone complained about all the construction that was taking place as the city of Lisbon was being transformed into a modern city, but it was also a sign of progress. The high point of this period was the 1998 World Expo in Lisbon, which included a large expansion of the subway network, and a shiny new bridge across the Tagus, at the time the longest in Europe.
I could now point to where this narrative was a bit too simplistic (in particular, there was a lot of economic growth in the 1950s and 60s, and the true victims of the dictatorship were in the African colonies), but the point is that this is how we thought of the situation: Portugal had been held back by an accident of history and we could see Spain across the border being slightly richer as an example of where the country would be a few years later and the core of the EU as where we could expect to be within our lifetimes.
In 1998, the World Expo in Lisbon was a huge success (after a few initial hiccups), a whole new modern-looking neighbourhood was built on what had been industrial lands. Now UN Secretary-General Guterres was prime-minister and he was one of the darlings of the international “Third Wave Socialists” movement. Portugal had gotten rid of the nasty Right-wing in 1974, now it also had a modern Left-wing.
Then came nothing. Economic growth stumbled. Guterres resigned a few years later (curiously, for someone who was bringing modern social-democracy to the country, Guterres was, and probably still is, a social-conservative). Outside of Lisbon, things were still improving as the other cities caught up to the capital, but eventually that petered out. Portugal has now had two lost decades. Adjusting for inflation, GDP per capita grew 7% between 2000 and 2008. I mean it grew 7% over that whole period, not on a yearly basis. Then it fell during the crisis and only last year did it get back to 2008 levels, so that between 2000 and 2017, total growth was 7%. Nobody believes that today’s 20-year-old kids will have an European lifestyle (and I don’t even mean a Nordic lifestyle, just a France/German lifestyle).
A few months ago, Noah Smith tweeted that “people compare themselves to other in their society, so saying that ‘things are getting better’ doesn’t help. Nobody compares themselves to people in 2318”. When I read that, I thought, “Why not? I might not look 300 years into the future, but I certainly compare our world to the world in 2038 and think we’re failing”. (Noah might have tweeted a better version, I couldn’t find the original tweet).
The idea of a Great Stagnation has always been deeply intuitive to me and I frankly cannot understand people who say that technology is moving too fast. I grew up seeing real change around me, see it suddenly stop, and feeling short changed by Portugal. Eventually, I left. I didn’t leave because growth stopped, but I stayed away because growth stopped.
I see a lot of superficial changes all the time, but that’s like fashion: now we wear tight jeans, we used to wear bell-bottoms. It’s change, it may even be a good thing, in that it is “fun and breaks the monotony” but it is not progress.
To be sure, stagnation may not be so bad. Germany is the stagnant country par excellence and it’s a nice place to live. It is certainly one of the best countries in the world in terms of quality of life. But, Germany is stagnant and once you see it, the gap between what could easily be and what actually is gets too large to be ignored. As time goes on, the gap will only get larger.
I guess if you grow up without large changes for decades, you start to expect stagnation, maybe even enjoy it. You compare yourself to the Jones’ next door and not to 2038 because there is no picture in your minds’ eye of what 2038 should look like and how it should be better.
The population who lived in Portugal through the last 10 years now gets excited over 2.2% year-on-year growth. After so many years of nothing, mediocre growth feels amazing. Still, if you cross the border into Spain it no longer feels “this is what Portugal will be in 2021”. Compared to Portugal, Spain now feels like a much wealthier, qualitatively different, better economy. Portugal could have been that, but, at least in my lifetime, it probably won’t be. This is a lost opportunity and it brings me sadness.
Maybe it’s not that I am a regional thinker, but a regional feeler. I have a visceral feel for what it means to “grow to the level of Greece or Portugal and then stop there” that comes from lived experience.
In summary, this is why I recommend you read Stubborn Attachments.
Meta Rabbit 
Nice post, even though I’d say that Japan has been the stagnant country par excellence for the last few decades (and it’s a nice place to live too.)
You are probably right. Unfortunately, I don’t know Japan that well.
Would you disagree with MMT advocates that neoliberal austerity and the lack of a sovereign currency have hindered Portugal? Intriguing you mention Germany and that Germans could be better off.
I am an NGDP-targeting guy (convinced by Scott Sumners arguments).
The lack of a sovereign currency did damage Portugal only in the sense that perhaps with its own currency, it might have had higher NGDP growth (although the fact the Portuguese Central Bank would often side with the Bundesbank inside the European Central Bank means that we should not automatically assume that it would have been pro-growth had it been independent).
“Neoliberal austerity” is an euphemism for “raising taxes”, which do have some impact on growth, but they are still not high enough to explain the problem; at most they explain 10% of the problem.
Germany could be better off, of course. Their infrastructure is terrible and there’s no uber.
The real victims of dictatorship were the colonies? More like “the Estado Novo was the best government those colonies ever had, and after a leftwing commie led coup in ’74 overthrew it and abandoned the colonies, they were ravaged by tribal conflicts, civil war, massacres that dwarfed ANYTHING the dictatorship ever did, economic ruin, starvation and disease.”
I mean really, how much of a brainwashed progressive does one need to be to look at Mozambique or Angola post-independence and says “yeah good thing they got rid of that oppressive colonial regime!”
The Carnation revolution by removing proper governance from those nations had (has really) a death toll in the millions. Not thousands, millions.
And yes, it was awful for Portugal too, going from a growing pious nation to whatever the heck this mediocrity is now, mostly run by Brussels anyways. No wonder they don’t have kids anymore and the youth are a bunch of hedonistic nothings, happy to be replaced by barbarians they welcome into their historic homeland.
What a ruin of a nation. An embarrassment to your ancestors.