Skip to comments.The Amazing Hockey Stick of Economic Progress
Posted on 06/28/2014 3:35:18 PM PDT by Kaslin
Back in 2010, I shared a remarkable chart showing how quickly economic output doubles in a fast-growth economy, but it also showed how long it takes for GDP to expand if an economy only grows 1 percent or 2 percent per year.
My main message was that nations should follow good policy because:
even modest differences in economic growth can have a big impact on relative prosperity with a couple of decades.
But whats really astounding in a bad way is that there used to be no growth. I recently posted a remarkable video from Learn Liberty that showed how the world was mired in poverty for century after century until growth exploded around 1800.
Now Don Boudreaux has a similar must-watch video for Marginal Revolution University.
Ep. 1 of 5 - The Hockey Stick of Human Prosperity
The moral of the story is that poverty is, or at least was, the natural state of humanity.
But then something remarkable happened. The power of government was constrained and the vitality of markets was unleashed. The rest, as they say, is history.
And if you want to see a remarkable case study, the Fund for American Studieshas its own great video showing how one nation went from misery to prosperity in just 100 or so years.
And to augment that video, heres a chart from Wikipedia.
Just something to have in the back of your mind when some statist naively tells you the economy is a fixed pie and that successful entrepreneurs only become rich by making other people poor.
Thats simply not true.
Actually, allow me to revise my remarks. In the lefts fantasy world of taxes, bailouts, handouts, and cronyism, there is no growth and some people are able to use government coercion to become rich by ripping off others.
But in all likelihood, this satirical image shows the true impact of statism and redistribution.
Good article. Thanks.
Actually, for most of human history that was more or less true. The Romans, just one of many examples, became rich not by developing new products people wanted to buy, but by conquering them, taking their stuff, and, often as not, selling them into slavery.
The astonishing thing about the unleashing of the market in the last few centuries is that for the first time in human history conquest and exploitation were no longer the main ways to get rich.
Quibble with the first part of that statement. The British government of 1850 was immensely more powerful than the English government of 1500 or 1600. In fact, the power of that government to enforce the rule of law was essential to the development of the market and of freedom.
It's not so much the power of a government as it is what it uses that power to do.
NOW THAT’S A HOCKEY STICK!!
Strangely, it coincides with the emergence of the USA as THE world economic power and THE land of liberty. The same USA that the current administration wants to fundamentally change.
Mercantilism, slavery, the slave trade, the conquest of Latin America and all the rest of it.
(Is that racist to imply the black guy sucks handling the economic hockey stick?;)
Let's not demote the Founding Fathers just yet because powerhouse growth actually goes all the way back. Output by Americans has been doubling every 41 years since the beginning and growth has been steady and exponential. The problem before 1900 is not with our ancestors, it's with the linear graph that makes their work seem so small. Let's look again at a logarithmic plot that shows each 41 year doubling equally:
Sure, we did have a pretty hefty recovery in the late 1930's, but we really wouldn't want to call it a 'hockey stick'