{"id":222,"date":"2015-10-07T21:49:29","date_gmt":"2015-10-08T01:49:29","guid":{"rendered":"https:\/\/blockschwenkcollective.com\/cool_by_osmosis\/?p=222"},"modified":"2015-10-14T15:54:41","modified_gmt":"2015-10-14T19:54:41","slug":"capital-in-the-21st-century-review-chapter-2-part-1-of-3","status":"publish","type":"post","link":"https:\/\/blockschwenkcollective.com\/cool_by_osmosis\/2015\/10\/07\/capital-in-the-21st-century-review-chapter-2-part-1-of-3\/","title":{"rendered":"Capital in the 21st Century Review: Chapter 2 (Part 1 of 3)"},"content":{"rendered":"

Chapter 2, titled \u201cGrowth:\u00a0 Illusions and Realities,\u201d consists of 3 parts:<\/p>\n

– Part 1 defines economic growth, and looks at the \u201cvery long run\u201d \u2013 literally the past couple of thousand years.\u00a0 It ends with an intriguing question about what effect growth has on inequality.<\/p>\n

– Part 2 looks at the past couple of centuries, looking at per capita productivity growth by sector, and what it implies, and asks if rapid economic growth is coming to an end.<\/p>\n

– Part 3 looks at other aspects of growth, and focuses on the 20th<\/sup> Century as a possible anomaly.<\/p>\n

 <\/p>\n

Parts 2 and 3 will show up in 2 weeks or so.<\/p>\n

Growth rates can be measured an terms of total output, population, and output per capita.\u00a0 Or, if you wish, size of the economy, number of people, and people\u2019s incomes respectively. One good equation to keep in mind is that, measured as percentages:<\/p>\n

(output per capita growth) + (population growth) = (total output growth) \u00a0<\/strong>
\n(You can do algebra to solve for any one of these three variables. \u00a0For example, total growth – pop. growth = output per capita growth)<\/p>\n

Chapter 2 starts off by pointing out that both population and income per capita growth between year zero and 1700 AD was, on average, extremely close to zero.\u00a0 (Thomas Malthus estimated 0.06% population growth and 0.02% per capita output growth.)<\/p>\n

The reason is quite simple:\u00a0 higher growth rates would imply, implausibly, that the world\u2019s population at the beginning of the Common Era was miniscule, or else that the standard of living was very substantially below commonly accepted levels of subsistence.\u00a0 For the same reason, growth in the centuries to come is likely to return to very low levels, at least insofar as the demographic ( = population ) component is concerned.<\/em> (page 74)<\/p>\n

<\/p>\n

One comment I have is that there were major booms and busts during\u00a0those 17 centuries.\u00a0 Looking at Western Europe, both population and per-capita income fell considerably as the Roman Empire crumbled to barbarian invasions.\u00a0 Europe recovered a bit in the 1100s and 1200s, then imploded again with the arrival of the Black Plague in 1330.\u00a0 Growth started to accelerate again with the arrival of wealth and superior plants from the New World in the 1500s.\u00a0 But it\u2019s true that these growth rates were all very modest by modern standards (though things could crumble quickly).\u00a0 On the other hand, my world history isn\u2019t good enough to know if other parts of the world were doing equally bad in those same centuries.\u00a0 Probably not, so in that case world growth would be more steady than that of one region.<\/p>\n

\"figure<\/a><\/p>\n

 <\/p>\n

In general, population growth spikes upward, then slows down. \u00a0Below is a more detailed table, showing that this happens on a regional basis.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

\"table<\/a>
\nHere\u2019s an excellent video (albeit almost an hour long) showing much the same trend: \u00a0population growth rapidly slowing in much of the developing world. The speaker, Hans Rosling, has many good videos on Youtube:\u00a0 search on \u201cGapminder Foundation.\u201d<\/p>\n