The Hockey Stick Graph

growth 1

And then below, two graphs of world population growth. And the very first thing you notice is that the three graphs are hockey stick graphs, graphs showing spikes beginning about 1700, and then rising rapidly, exponentially in the 18th and 19th centuries until the present time.

So what happened about 1700 to account for the rapid rise of both per capita GDP and population, world wide? Do you know? What would you say?

Michael Shermer seems to know.

Michael Shermer wiki portrait4.jpg

In any case he confidently calls these years, from about 1750 until the present, the Miracle Years. And the increase alone of the per capita wealth, the wealth of people,  of our ancestors only a few generations removed from us, does seem to be a Miracle. But not being believers ourselves we look for an explanation of what happened. We look to explain away, as it were the miracle.

Now I speak of all this as a rank amateur myself. But I do see two different, both reasonable explanations. There was the French Revolution closely followed, or preceded by the Enlightenment that French intellectual movement that celebrated reason, and reason’s greatest achievement (at least so far) science. And closely allied with reason and science there was humanism, that meaning a coming together of all mankind everywhere into accepting that all men were as one, one species of course, possessing hearts and minds pretty much the same. In addition there was the individual, and the recognition that society was at best a collection of individuals first, not first a community, but first a community of individuals. And finally there was the idea of progress.

This then is the first explanation of the miracle of hockey stick economic growth,  being best explained by the dominant positions of reason, of science, of the individual, of the rights of the individual, of humanism…. They all came together and  made our modern world of affluence, a world never before seen and therefore a kind of miracle.

The other explanation? People having children, more and more of them, and in order to feed them adequately the people had to work more efficiently and more intelligently than ever before. Hunting and gathering, even the implantation of modern agriculture into more and more of the world’s nations and regions would by themselves not be enough to feed the new billions of us. As parents do miraculous things to provide for their children so the world had now to provide for its people.

Two huge, powerful events happening at the same time. Which one is cause, which one the effect? Did the enlightenment values push the people to have larger families?  My first reaction would be to say no for the values of the enlightenment were to begin with pretty much confined to one of the world’s regions, and still have not reached many regions of the world. Whereas population growth has of course. It does seem more that the spike in population (without offering an explanation of the spike) did to some extent cause the growth of the world’s wealth. The people had to eat….

The Hockey Stick of Human Prosperity

What creates wealth? On a timeline of human history, the recent rise in standards of living resembles a hockey stick, flat-lining for all of human history and then skyrocketing in just the last few centuries.

With specialization and trade, our ancient ancestors only consumed what they could make themselves. How can specialization and trade help explain the astonishing growth of productivity and output in such a short amount of time—after millennia of famine, low life expectancy, and incurable disease.

The astonishing growth in prosperity in the last two or three hundred years is one of the greatest events of humankind. Take the average human in say the year 1000 BC. He’s poor, fighting to find food and to fend off diseases. Fast forward 500 years to the time of classical Greece. Still poor still hungry. How about another thousand years after that? It’s the dark ages. Wow. Still poor. Then jump to the 18th century and forward. Things change rapidly. This phenomenon is known as the hockey stick of human prosperity. Take what is surely one of the most important measures human well-being: life expectancy. Before the Industrial Revolution life expectancy was around thirty years. Today in the United States we expect to live to be about eighty. Prior to the industrial revolution one in four kids would die before the age of 5.

Today in developed countries it is more like one in two hundred. Due to better nutrition we grow to be four inches taller than we were just two hundred fifty years ago. Remember this disease? No you don’t, because it was eradicated in 1977.

Look around–you’ll find a roof over your head and a hard floor under your feet. Most of our ancestors with the huts with dirt floors and thatched roofs. Everything was infested with insects and rodents. Streets and alleys were open sewers. There were none of these. The filth was horrible and often toxic. Our ancestors ate gruel and wore the same home-made underwear over and over. Now even the least fortunate Americans typically have electricity, running water, toilets, refrigerators, televisions, and yes, cheap washable underwear.

Those of us who live in modern industrial society are incredibly, amazingly, off the charts rich compared to our ancestors and here’s yet another huge difference between us and our ancestors.

Before the Industrial Revolution people knew how to make from scratch many other things they consumed. They made a lot of their own clothing, grew most to their own food, and build their own dwellings.

Fast forward to today and believe it or not none of us is a hint how to make the majority of the things that we consume. Just getting ready in the morning involves taking many trips around the globe. Take this coffee for example. Beans come from Guatemala, and they were brewed in this coffeemaker from Switzerland. The container ship that carried the beans was built in Korea, it is insured by a company from London, and it’s captained by Frenchman who loves Turkish cigarettes.

We’ve transitioned from each of us doing many things to each of us doing one thing. Having a job only makes sense in a modern world where each individual typically does only one type of work. So while we mostly only produce one thing, doing one job, each of us now consumes a whole bunch of products that require a whole bunch of jobs to produce.

The question where prosperity comes from launched the field of economics. It’s why Adam Smith wrote the first book in modern economics. An Inquiry Into the Nature and Causes of The Wealth of Nations. Back in 1776 when he published it Smith was trying to understand the causes of modern prosperity that were just starting to appear.

Poverty and starvation were still normal as they had been from the beginning, but in the late 18th century for the first time ever the masses began to enjoy riches once reserved only for the nobility. It is this mass prosperity that Adam Smith sought to explain.

Why was it happening? What was causing wealth to move from being the exception to being the norm? Now look around try to figure out what causes poverty instead of what causes prosperity.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s