The 75th percentile of artificial states has a per capita GDP 83% higher than the 25th percentile of artificial ones.
NOTHING better encapsulates the different attitudes of America and Europe to the poor than a table towards the end of Alberto Alesina's and Edward Glaeser's remarkable book, due to be published later this month. It compares the prevalence of three beliefs: that the poor are trapped in poverty; that luck determines income; and that the poor are lazy. The first is held by only 29% of Americans but by 60% of citizens of the European Union; the second, by 30% of Americans and 54% of Europeans; and the third, by contrast, by 60% of Americans and 24% of Europeans.
The other half of the explanation lies in America's racial diversity. In spite of 20 years of unprecedented immigration, European countries, particularly smaller ones like Portugal and those of Scandinavia, are still highly racially homogenous. America, by contrast, has great diversity, which is especially wide in some states. In addition, the poor in America are disproportionately non-white. Non-Hispanic whites are 71% of America's population but only 46% of the poor.
Racial diversity in individual states is correlated with the generosity of welfare. For instance, the authors find that in 1990 Aid to Families with Dependent Children ranged from over $800 per family per month in mainly white Alaska to less than $150 in Alabama and Mississippi, where almost one-third of the population is black. Even after adjustment for inter-state differences in average incomes, the correlation with race remained strong. Across countries, too, racial diversity goes with low government spending on poverty relief.
The reason, argue the authors, is that “race matters”, and they marshal statistical evidence, much of it from opinion surveys, to back this up. People are likely to support welfare if they live close to recipients of their own race; but are antipathetic if they live near recipients from another race. The divergent attitudes of Europeans and Americans to the poor are underwritten by the fact that the poor in Europe tend to be ethnically the same as most other folk. In America, their skin is often a different colour.
One type of variable is conspicuously missing in our analysis: wars, both inter-national and civil. Our reason for not discussing it at length is that we found no effects of artificial borders on war. We did find an effect of artificial borders on a subjective measure of political instability and violence, as described above,but clearly it would be desirable to study the objective outbreaks of wars in addition to this variable.The lack of an immediate and strong evidence of a correlation between borders and wars surprised us (although it echoes similar non-results in the literature on ethnic diversity and war). We are not ready to conclude that ethnic rivalries and border disputes are unrelated to wars: we believe that more work is needed.