growth: De Long view

Brad De Long delong at econ.Berkeley.EDU
Thu Sep 9 06:03:37 PDT 1999



>Brad De Long wrote:
>
>>Note that that is an arithmetic average, not a geometric average...
>
>Brad, you mention the Nordhaus critique. But really. What does it
>mean that world product was $35 billion in 1700? People lived on
>pork fat and alcohol and lived on farms. There's no meaningful sense
>in which a 1999 dollar can be expressed as a 1700 dollar, and vice
>versa. What were you trying to do with this?
>
>Doug

*Lucky* people lived on pork fat and alcohol. Unlucky people lived on rye porridge or rice, and were so undernourished that female ovulation was a sometime thing...

When you say: "GDP per worker in 1700 was 1/X of GDP per worker today," you are saying one of seven things:

1) If you took what the average worker produced in 1700, stuffed it into a time machine, brought it forward in time to today, and sold it, you would find that it sold for 1/X of what the product of the average worker today sells for.

2) An average person living today would be indifferent--from the standpoint of material well-being alone, mind you--between living today with average income and living in 1700 with X times average income.

3) An average person living today would be indifferent--from the standpoint of material well-being alone, mind you--between living today with 1/X average income and living in 1700 with average income.

4) An average person (in the timeless autonomous liberal individual sense) would be indifferent--from the standpoint of material well-being alone, mind you--between living today with average income and living in 1700 with X times average income.

5) An average person (in the timeless autonomous liberal individual sense) would be indifferent--from the standpoint of material well-being alone, mind you--between living today with 1/X average income and living in 1700 with average income.

6) An average person living in 1700 would be indifferent--from the standpoint of material well-being alone, mind you--between living today with average income and living in 1700 with X times average income.

7) An average person living in 1700 would be indifferent--from the standpoint of material well-being alone, mind you--between living today with 1/X average income and living in 1700 with average income.

My *guesses* (because that is what they are) are rough concept #1 guesses.

Concept #2 produces a number larger than concept #1--I think that the number it produces is infinity; the average person today is used to a lot of stuff that was simply not available to anyone in 1700...

Concept #3 produces a number smaller than concept #1--what we today are (comparatively) best at is making luxuries, not true necessities, which remain relatively costly.

I don't know what concepts #4 and #5 produce: I don't know who the timeless autonomous liberal individual is. If I make the (to me natural) assumption that he's someone like me, than the answer is obvious. But I know that that assumption is wrong...

I think that #7 produces the same answer as #3 (whatever it is) because acquired tastes for modern-day conveniences and luxuries are simply not very relevant at such low income levels.

I don't know what I think the answer according to concept #6 is. What would George Washington think of middle-class life in Asbury Park today? One view is that upper classes in the past were psychologically addicted to the sense of personal domination that you got from having lots of servants, dependents, and clients at your beck and call, and that they would profoundly miss that exercise of power: after all, your dishwasher doesn't cringe, bow, and scrape when you command it (although the people that you boss do; and my dishwasher right now is giving off an alarming plasticky smell). As Paul Krugman put it, the major point to the truly wealthy of having wealth is seeing them jump. The other view is that the greatly enlarged technological capabilities of today would overwhelm the reduction in the personal exercise of *herrschaft*--even for someone who had not grown up with telephones and jet airplanes.

One view is that the measurement problems--the conceptual problems--are so overwhelming that all one can say is that we are richer (in a material welfare sense) than those who subsisted on pork fat and bad corn moonshine, but that the qualitative difference is such that we can't even make a quantitative estimate. My view is that we can make a lot of quantitative estimates--a lot of very different quantitative estimates, ranging from a factor of 5 through a factor of infinity--and that trying to think through what these different estimates mean and what assumptions they implicitly make is a way to start the ball rolling for a truly great economic history class...

Brad DeLong



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