April 11, 2017

Data as History: Charting the Last 2000 Years of Human Progress

By Marian L. Tupy
Angus Maddison, the late professor of economics at the University of Groningen, never won a Nobel Prize for economics, but he did leave behind an enduring legacy in the form of his income estimates going back to the time of Christ (or, for the secularly-inclined, Caesar Augustus). On a previous occasion, I discussed the graph below, which shows the painfully slow (almost non-existent) growth in average per capita incomes prior to the Industrial Revolution and the extraordinary growth that humanity has experienced over the last two-and-half centuries. Adjusted for inflation, an average inhabitant of the planet is today roughly ten times as rich as she or he was just two centuries ago.
Considering that Homo sapiens only emerged as a unique species of hominids some 200,000 years ago, our experience with prosperity is incredibly short, amounting to no more than 0.1 percent of our time on Earth. The remarkable novelty of our present abundance may, perhaps, explain our unease with it ("all good things must come to an end") and our eschatological obsessions ranging from overpopulation to out-of-control global warming.

Continued human progress does, of course, depend on maintaining policies, institutions and ideas (intellectual enlightenment, classical liberalism and free exchange) that made it possible in the first place.

I was reminded of that fact on the death of my grandfather who, having been born in 1922, frequently mused about the relative prosperity of his native Czechoslovakia between the wars. A life-long anti-communist (for decades, he was prevented from practicing law, because he married the wrong kind of a girl; no, not a prostitute, but the daughter of a wealthy family), he always maintained that Czechoslovakia could have been as wealthy as Austria "if it hadn't been for the Bolshevik putsch of 1948."

Maddison's remarkable data allows us to see such "what ifs" very clearly. Czechoslovakia emerged as an independent nation from the ruins of the Austro-Hungarian Empire following the conclusion of the Great War in 1918. In 1920, the country's per capita income was 80 percent of that of Austria (the industrialized Czech lands were probably as wealthy as Austria, but the average was brought down by rural and poorer Slovakia) and kept up with Austria until the early 1950s. During the communist period, Czechoslovakia fell far behind Austria. When communism fell, income in the former amounted to a mere 54 percent of the latter. Similar comparisons can be made between North and South Korea, East and West Germany, Argentina and Chile, or Zimbabwe and Botswana. The historical evidence in favor of "free minds and free markets," is there for everyone to see. Unfortunately, evidence does not appear to be sufficient to prevent socialism's continued appeal, as witnessed by the humanitarian catastrophe unfolding in Venezuela or periodic outbreaks of stupidity on American campuses.

This first appeared in Reason.