The "Great Enrichment"

We live in the luckiest era in history, and here's why - Enrichment rooted in capitalism has made life better in so many ways, including ones that touch very close to home. It's worth considering if you favor systemic change. 

Excerpt:

The facts are that for most of human history the “natural” way of things was for parents to bury children. Nowadays, as my friend suggests, such sorrows are rare tragedies. The numbers tell the story. In 1860, the share of the global population that died in the first five years of life was 41%. In 2017, it was 4%.

In the U.S., in 1900, 1 child in every 4 died before his or her fifth birthday. Today it is 1 out of 167.

This 98% decline is an incredible success story. What changed? Call it the Industrial Revolution. Call it capitalism. The result was what economic historian Deidre McCloskey calls the Great Enrichment.

For most of history, humans survived on roughly the equivalent of $3 a day — enough for subsistence living. In good times living standards might rise, but one bad harvest or natural disaster could plunge a community back into abject poverty.

Around 200 years ago things began to change rapidly. Today the average American lives on about $130 a day. Europe, Canada, Australia and parts of South America and Asia have enjoyed similar increases.

This vast increase in wealth — widely shared — enabled us to afford medicines and medical treatments, diets, clothing and shelter, among other things, which banished such stories as the Pettijohns’ to the realm of freak horror.

This Great Enrichment — rooted in capitalism — continues to benefit humanity. Worldwide, there are 200 million fewer people undernourished than there were as recently as 1990. Since 1993, the share of humans living in extreme poverty has fallen from 34% to 10%, while the number of people living in extreme poverty has fallen by 1.1 billion.

Since 2000, worldwide deaths from malaria have fallen by half. The income of the median person on the globe has doubled since 2003. Life expectancy is now higher than ever before on all the world’s continents.

Hasn’t all this come at a great environmental cost? Perhaps, but it ought to be remembered that this cost liberated us from the horrific world of Thomas and Charity Pettijohn and generations of ancestors. When people say that we need “system change” or that “another world is possible,” we should remember what the world of the Pettijohns was really like.

And, beyond a certain level of wealth, countries become greener. Worldwide, between 1990 and 2014, CO2 emissions per $1 of GDP fell from 0.76 kg to 0.32 kg — a 58% decline. In the U.S., they fell from 0.81 kg to 0.30 kg — 63%. There needn’t be a trade-off between the environment and continued economic growth.

This is not just my first Christmas without my dad, but also my first Christmas as a dad. My son was born in May. When I think of what Thomas and Charity Pettijohn went through, I feel sick. My heart breaks for them, and I cannot imagine how I would cope. I am thankful that the likelihood of my having to try is so vastly diminished.

For all the doom-mongering around us, we are the luckiest generation in history. Considering the falling environmental cost of economic growth, there is no reason the Great Enrichment cannot continue. If we keep sight of what it was that has made us so fortunate, the economic possibilities for our children are bright.

Comment: Follow tag Age of Abundance

The Age of Abundance

Economic Growth from Octavian to Modern Times

Excerpt:

According to the researchers at GGDC, real or inflation adjusted income per person around the time of Octavian (63 BC – AD 14) varied from $1,546 in Italy to $973 in Spain. That amounts to between $4.2 and $2.7 per person per day. It is a testament to the unevenness of economic development that, over two millennia later, some countries are still stuck at those (and even lower) levels. In 2016, GDP per person in Burundi, Central African Republic, Democratic Republic of Congo, Liberia, Malawi and Niger was $692, $619, $836, $764, $950 and $906 respectively.

Those African countries are outliers, of course. In most of the world, GDP per capita has risen dramatically, especially over the last two centuries. To get a sense of how recent and unprecedented the Age of Abundance is, consider France. In AD 1, GDP per person in the Roman province of Gaul was $1,050 – and that’s where it remained for the next 13 (yes, thirteen) centuries. During the first half of the 14th century, however, French incomes rose by some 50 percent, reaching a high of $1,553 in 1355. Why?

The end of the Medieval Warm Period in the late 13th century led to cooler weather and higher rainfall. Harvests shrunk and famines proliferated (e.g., 1304, 1305, 1310, 1315–1317, 1330–34 and 1349–51). To make matters much worse, the Black Plague (1347-1351) wiped out between 75 and 80 percent of those French who survived the climate change. Curiously, the two catastrophes had a salutary effect on both the economic and institutional developments in Western Europe. Abundance of land and agricultural tools seemed to have increased productivity of the surviving peasants, while labor shortages encouraged the lower classes to demand better treatment from their feudal overlords. As a consequence, serfdom gradually disappeared from the region, although it continued to persist in Eastern Europe, where the Black Plague was, due to lower population density, much less deadly.

As the population of Western Europe recovered, incomes waxed and waned, neither falling to their pre-plague levels, nor rising above their mid-14th century maximum. Thus, as late as 1831, the average GDP per person in France was only $1,534. Put differently, in the 18 centuries that separated the reigns of the first Roman Emperor and the last French king (Louis Phillipe), incomes rose by a paltry 50 percent. The Industrial Revolution, a British import, changed French fortunes considerably. Between 1831 and 1881, incomes rose by 100 percent ($3,067). As such, France made twice as much economic progress in 50 years as it did in the previous 1,800 years. In 2016, French GDP per capita stood at $38,758, meaning that a modern Frenchman is roughly-speaking 24 times better off (in real terms) than his ancestor 200 years ago. Remarkable.

Comment: Helpful reminders below:

Capitalism is not a zero sum game. The rich are getting richer but so are the poor getting richer.https://t.co/I4ADS3i66n

— Senator Rand Paul (@RandPaul) July 17, 2019