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Julian Simon Was Right About Population and Prosperity

Blog Post | Economic Growth

Julian Simon Was Right About Population and Prosperity

A half-century of population growth, increasing prosperity, and falling commodity prices.

Many people believe that global population growth leads to greater poverty and more famines, but evidence suggests otherwise. Between 1960 and 2016, the world’s population increased by 145 percent. Over the same time period, real average annual per capita income in the world rose by 183 percent.

Instead of a rise in poverty rates, the world saw the greatest poverty reduction in human history. In 1981, the World Bank estimated, 42.2 percent of humanity lived on less than $1.90 per person per day (adjusted for purchasing power). In 2013, that figure stood at 10.7 percent. That’s a reduction of 75 percent. According to the Bank’s more recent estimates, absolute poverty fell to less than 10 percent in 2015.

Rising incomes helped lower the infant mortality rate from 64.8 per 1,000 live births in 1990 to 30.5 in 2016. That’s a 53 percent reduction. Over the same time period, the mortality rate for children under five years of age declined from 93.4 per 1,000 to 40.8. That’s a reduction of 56 percent. The number of maternal deaths declined from 532,000 in 1990 to 303,000 in 2015 — a 43 percent decrease.

Famine has all but disappeared outside of war zones. In 1961, food supply in 54 out of 183 countries was less than 2,000 calories per person per day. That was true of only two countries in 2013. In 1960, average life expectancy in the world was 52.6 years. In 2015, it was 71.9 years — a 37 percent increase.

In 1960, American workers worked, on average, 1,930 hours per year. In 2017, they worked 1,758 hours per year — a reduction of 9 percent. The data for the world are patchy. That said, a personal calculation based on the available data for 31 rich and middle-income countries suggests a 14 percent decline in hours worked per worker per year.

Enrollment at all education levels is up. For example, the primary school completion rate rose from 74 percent in 1970 to 90 percent in 2015 — a 20 percent increase. The lower secondary school completion rate rose from 53 percent in 1986 to 77 percent in 2015 — a 45 percent increase. Tertiary school enrollment rose from 10 percent in 1970 to 36 percent in 2015 — a 260 percent increase.

Even our air is getting cleaner. In the United States, for example, aggregate emissions of six common pollutants (i.e., carbon monoxide, lead, nitrogen dioxide, ozone, fine and coarse particulate matter, and sulfur dioxide) fell by 67 percent between 1980 and 2016.

And, in spite of a recent increase in terrorist killings and the number of civil wars, the world is still much safer than it was at the height of the Cold War.

Last but not least, an ordinary person has greater access to information than ever before. All in all, we live on a safer, cleaner, and more prosperous planet than was the case in 1960.

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Blog Post | Tourism & Leisure

Cruising Has Never Been More Abundant

Over the past 50 years, the time price of a Caribbean cruise has dropped over 70 percent. Blue-collar and unskilled workers now get 3.4 cruises for the time price of one in 1972.

Summary: In the last 50 years, the time price of a Caribbean cruise vacation has dropped significantly, making it accessible to blue-collar and unskilled workers. Ted Arison’s Carnival cruise line, starting in 1972, transformed cruising from an exclusive luxury to an affordable vacation for many. Today’s cruises offer vastly improved experiences and illustrate how entrepreneurial vision can make luxuries accessible to all.

Entrepreneur Ted Arison launched his first ship, the Mardi Gras, on March 11, 1972. At the time, cruising was considered an expensive luxury for older rich people. Over the past five decades, Arison’s Carnival cruise line made this high-end experience affordable for everybody, including plumbers, schoolteachers, and college students. The Mardi Gras sailed for 20 years and created the market we enjoy today. It even gave life to a popular TV show, The Love Boat, which aired from 1976 to 1990. Carnival cruise line managed to grow from a one-ship line to the largest cruise company in the world. The first Mardi Gras cost $5 million and accommodated 1,248 passengers on 10 decks.

1972 Mardi Gras

You could book a seven-day cruise from Miami to the Caribbean for $240 to $595. Blue-collar workers at the time were earning around $4.59 an hour in wages and benefits. At $240, a cruise would cost them 52.3 hours. Unskilled workers were earning closer to $2.14 an hour, making their time price around 112.2 hours.

In 2021, Carnival launched its new Mardi Gras. This $950 million ship accommodates 6,500 passengers and approximately 2,000 crew members. It hosts “Bolt” the world’s first shipboard roller coaster, along with a water park and a sports center and is powered with liquified natural gas. The quality of the experience has vastly improved in 50 years with better food choices, entertainment, comfort, and safety. The new Mardi Gras weighs 180,000 tons, around 6.6 times more than the 27,284-ton original. This larger size dramatically reduces sea sickness.

2024 Mardi Gras

Today you can book a seven-day cruise from Carnival’s new $163 million, 188,000-square-foot terminal at Port Canaveral, Florida, to the Caribbean for $549. Blue-collar workers are now earning around $36.15 an hour in wages and benefits, putting their time price at 15.2 hours. Unskilled workers are earning closer to $16.51 an hour today, making their time price around 33.3 hours.

For these workers, the time price has dropped more than 70 percent. For the time it took them to earn the money to buy 1 cruise in 1972, they get 3.4 today. Cruise abundance has increased 240 percent. If you “upskilled” from an unskilled worker in 1972 to a blue-collar worker by 2022, your cruise abundance increased by a factor of 7.38, or 638 percent. Everybody floats first class now.

The larger the market, the more affordable things become for everyone. Adam Smith wrote about this in 1776. From 1972 to today, US population increased 131 percent from 208 million to around 340 million. Every 1 percent increase in population corresponded to a 1.83 percent to 4.87 percent increase in personal cruise abundance.

It’s visionary entrepreneurs like Ted Arison that take on enormous risks and create whole new markets and then get fabulously rich by making luxuries affordable for everyone.

This article was published at Gale Winds on June 28, 2024.

Blog Post | Air Transport

Flying Abundance (And Safety) Has Increased Dramatically

Get 10.8 flights from New York to London today for the time price of one in 1970 and be 80.4 times safer.

Summary: Since the Wright brothers’ pioneering flight in 1903, the aviation industry has made remarkable strides in safety, affordability, and accessibility. Comparing flight prices from 1970 to today reveals a staggering 90.8 percent decrease in the time price of flying, with transcontinental flights now affordable for the average person. Additionally, advancements in aviation technology have made flying dramatically safer today than it was in 1970, and are likely to improve flying safety in the future.

The Wright brothers launched the era of aviation on December 17, 1903, with a 12-second flight. Since then, aeronautical engineers and market innovators have made the experience safer, faster, and much more affordable.

For example, in 1970 the price for a roundtrip ticket from New York to London was $550. Blue-collar workers at the time were earning around $3.93 an hour in compensation (wages and benefits). This suggests a time price of around 140 hours.

Today, the ticket price has dropped to around $467. Blue-collar workers are now earning closer to $36.15 an hour, putting the time price at 12.9 hours. The time price has fallen by 90.8 percent: for the time required to earn the money to buy one flight in 1970, you can get 10.8 flights today.

Flying abundance has increased by 980 percent, compounding at an annual rate of 4.5 percent over the last 54 years. During this same period the global population increased by 4.3 billion (117 percent), from 3.7 billion to more than 8 billion. Every 1 percentage point increase in population corresponded to an 8.4 percentage point increase in flying abundance.

This graphic highlights how flight abundance has increased to 10.8 times the amount it was in 1970.

Now transcontinental flights are affordable for almost everyone. Free-market entrepreneurial capitalism isn’t about making more luxuries for the wealthy, it’s about making luxuries affordable for the average person.

While it is true that the 1970s flights may have had roomier cabins and better dining, flying today is dramatically safer. The Aviation Safety Network tracks airline accident data. Revenue passenger kilometer (RPK) is a standard metric used in aviation. Using this data, Javier Mediavilla plotted the ratio of fatalities per trillion RPK from 1970 to 2019 using five-year averages. The ratio decreased by 98.76 percent, from 3,218 to 40, during this 49-year range. Flying is more than 80.4 times safer today than in 1970, and safety has been improving at a compound rate of around 9.37 percent a year.

This graph highlights how the number fatalities per RPK has seen a steep decline since 1970.

Considering both the time price and safety, flying has become 868 times more abundant since 1970 (10.8 x 80.4 = 868). If there had been no innovation in flying since 1970,  New York to London airfare would be around $5,059 today. Only the rich could afford transatlantic flights in 1970.

The 3,442-mile flight takes around seven hours. The supersonic Concorde could fly it in less than three. While there are no commercial supersonic flights available today, Boom Supersonic, a private company based in Colorado, aims to bring them back to US airlines by 2029. Perhaps spending half as much time on flights will allow people to use their most valuable resource for other value-creating activities.

This article was published at Gale Winds on 3/26/2024.

Nature | Noncommunicable Disease

New Car-T Cancer Therapy Is Now Made At One-Tenth the Cost

“A small Indian biotechnology company is producing a home-grown version of a cutting-edge cancer treatment known as chimeric antigen receptor (CAR) T-cell therapy that was pioneered in the United States. CAR-T therapies are used mainly to treat blood cancers and have burgeoned in the past few years.

The Indian CAR-T therapy costs one-tenth that of comparable commercial products available globally.”

From Nature.

Blog Post | Cost of Services

Vision Abundance Doubles on the LASIK Eye Surgery Market

The time price of LASIK eye surgery fell by over 50 percent since 1998.

Summary: Time price calculations show that LASIK surgery costs have fallen significantly since 1998. Advancements in LASIK technology, such as the transition to bladeless methods and personalized treatments, have enhanced both safety and efficacy. Dr. Gholam A. Peyman’s pivotal patent in 1988 laid the foundation for LASIK innovation, contributing to its increased affordability and accessibility, especially in countries like China and India.

According to Market Scope, the typical cost for LASIK surgery in 2023 was $4,492. This is up slightly from the 1998 price of $4,360. Let’s calculate and compare the time prices to see the true price difference. Unskilled hourly compensation in 1998 was around $7.75, indicating a time price of 562.6 hours. Unskilled hourly compensation is closer to $16.15 today, indicating a time price of 272.1 hours. The time price has fallen 51.6 percent. You get 2.07 eyes corrected today for the time it took to earn the money to correct one in 1998. LASIK has become 107 percent more abundant.

LASIK is the acronym for laser-assisted in situ keratomileusis. Keratomileusis is the medical term for corneal reshaping. Clearsight.com reports:

LASIK technology has significantly advanced since its inception. The initial blade-based approach has been replaced by the bladeless method, using femtosecond lasers for increased precision. Wavefront and topography-guided technology now allow for personalized treatment, while sophisticated eye-tracking systems enhance the surgery’s accuracy and safety. The remarkable advancements have not only improved visual acuity but also enhanced the overall quality of visual perception, offering patients the ability to see the world around them more clearly and vividly.

While thousands of ophthalmologists and researchers from all over the world have been involved in advancing the technology, Iranian-born immigrant to the United States Dr. Gholam A. Peyman was awarded the key patent in 1988. He holds over 200 US patents, including for novel medical devices, intraocular drug delivery, surgical techniques, and new methods of diagnosis and treatment. In 2011, President Barack Obama awarded Peyman the National Medal of Innovation and Technology.

Continuous innovation in LASIK technology is making vision correction safer, faster, more precise, and more affordable. If you want to save some money and take a bit more risk, the procedure is around $1,600 in China and under $1,000 in India. China performs the most vision correction procedures on the planet.

Remember, the learning curve ordains that with every doubling of production, costs per unit fall between 20 percent and 30 percent. This is because we discover valuable new knowledge every time we perform the procedure.

This graph shows the level of abundance of LASIK in US compared to the rest of the world.

As noted, since 1998, LASIK has become 107 percent more abundant in the United States, in contrast to hospital services, which have become 37.7 percent less abundant. Why the huge difference? LASIK has been relatively free to innovate. Perhaps more important, health insurance does not pay for this procedure, and LASIK is globally competitive. We also note that elective procedures have enjoyed much greater abundance growth than insurance-covered surgeries.

When entrepreneurs are free to innovate and compete, prices fall and quality increases. The opposite happens when governments and bureaucrats step in to protect the status quo. Imagine where we would be today if the manufacturers of eyeglasses had prevented the innovation of contact lenses? Or the contact lens industry had prevented LASIK?

This article was published at Gale Winds on 2/28/2024.