The wonders of economic growth

Many of us often refer to the “good old days” and the era we think of seems to range from thirty to a hundred years ago, depending in part on our age. But Franklin Pierce Adams, one of the most eminent American chroniclers of the early twentieth century, noting the same trend at the time, expressed it well when he wrote: “Nothing is more responsible for the good old just a bad memory. Fortunately, hardly anyone refers to medieval times as the good old days. But it’s still worth seeing how people lived back then.

This is from David R. Henderson, “The Wonders of Economic Growth,” define ideasJune 2, 2022.

Another excerpt:

In 2000, Brad DeLong, an economist at UC-Berkeley, wrote an excellent article called “Cornucopia”. Included is a bar chart showing economic growth per capita over ten centuries, from the 11th to the 20th century. It approaches zero for many centuries (except in the 14th century, when there is more than one jolt), increases considerably in the 19th century, then explodes in the 20th century. In that same article, DeLong pulls off a wonderful stunt. He takes Montgomery Ward’s 1895 catalog and, instead of comparing the prices of various items then and in 2000, gives data on how many hours it would have taken to work at the 1895 average wage in the United States to buy various items compared to the number of hours it would take had to work to buy those same items in 2000.

The results are stunning. Consider four of his ten examples. Buying six volumes of Horatio Alger’s novels in 1895 required 21 hours of work, compared to 0.6 hours in 2000. A single-speed bicycle required 260 hours of work, compared to 7.2 hours in 2000. A desk chair? Twenty-four hours then, against 2 hours in 2000. A set of Encyclopedia Britannica costs 140 hours of work, compared to 33.8 in 2000. This last figure considerably underestimates the progress made so far because hardly anyone wants to buy the Encyclopedia today, that’s why it is no longer published, and we can get Wikipedia at zero cost. Except on controversial topics, Wikipedia is pretty good. The only item that cost more in hours worked in 2000 than in 1895 was a sterling silver teaspoon, which took 26 hours in 1895 and 34 hours in 2000. But here DeLong tells an interesting story. Why did people want a sterling silver teaspoon in 1895? he asks. The answer: they wanted something that wouldn’t corrode. Now we have kitchen utensils that are very inexpensive and do not corrode.

Read it all.