A view of economic progress. Ponder the productivity improvement and resulting increase in wealth to go from this:
The overall standard of living has increased by a factor of somewhere between 30 and 100 in the last 200 years.
The little side trip in this post and the next will lead me back to my discussion of ancient finances in general and Alexander’s haul from his military campaigns in particular.
(Cross post from Attestation Update.)
Writing in Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World, Professor Deirdre McCloskey says it this way:
..in the two centuries after 1800 the trade-tested goods and services available to the average person in Sweden or Taiwan rose by a factor of 30 or 100. Not 100 percent, understand— a mere doubling— but in its highest estimate a factor of 100, nearly 10,000 percent, and at least a factor of 30, or 2,900 percent. The Great Enrichment of the past two centuries has dwarfed any of the previous and temporary enrichments.
Let me phrase that another way. The value of what is enjoyed today by an average person is roughly equal to what 30 or 100 people had two centuries ago. That means the constant dollar value of what is consumed and enjoyed has grown by a factor of somewhere between 30 and 100.
That is a weak comparison because we cannot quantify apart from the dollars involved how much better a steak and baked potato cooked at restaurant is instead of another bowl of porridge just like what you ate every night for the six months. It may cost a whole bunch more in dollars but its value is even higher than the constant-dollar cost.
Nor can we calculate a number to compare a root canal treatment that saves a tooth to the pain of an abscess that costs a tooth ultimately removed with a pair of pliers.
How can we calculate the value of a simple antibiotic med today compared to an early death from infection 200 years ago?
I have discussed at length that we are 20 times better off today than a mere 100 years ago.
More calculations of how much life has improved
Here is another way to look at it. Prof. McCloskey points to an analysis which indicates early British settlers in the Americas back in the 1620s lived on the equivalent of $2 a day. The average in the US today is $132. That is a betterment by a factor of 66.
This does not include the radical improvement in quality of life over the last two centuries. For example, instead of a dentist using a pair of pliers to ‘fix’ a painful tooth, today we have high-speed drills with Novocain (or whatever it is that is used today) so you don’t feel the pain. Dentists even apply a topical painkiller so you don’t even feel the needle which delivers the Novocain.
We travel by cars instead of by foot or horse. We can cross the ocean in a few hours instead of a few weeks. Antibiotics quickly end an infection instead of possibly taking our life.
We have running water and sewer systems which make the output of our trip to the bathroom seem to disappear instead of having to use a chamber pot which we get to smell until we it carry outside.
She points to research from another economist, with whom she agrees, who says that when you include the improvement in our quality of life, the increase from the Great Betterment (the label she uses to describe the widespread economic improvement since 1800) goes from a factor of 44 or 66 up to something in the range of a factor of 100. That is a very rough guess but given the necessary vagueness of the methodology it makes sense.
As an indicator of how much productivity has improved and how much better off we are, look at how much labor it takes to feed ourselves, according to Dr. McCloskey:
- 200 years ago – – 4 out of 5 people worked on the farm to feed the 5 people – that gives a productivity of 1 person feeding 1.25 people
- Today – – 1 farmer feeds 300 people
That is a productivity increase by a factor of 240.
So take your pick. Our economic prosperity has improved by factor of 44. Or perhaps 66. Or perhaps 100. In terms of farm productivity, the improvement is a factor of 240.
For simplicity and to be a bit cautious on the improvement, I will go with 44 and then rounded to 40.
Next, I will apply that knowledge to the value of an Athenian Talent.