We now take economic growth for granted, but historically it is a very recent phenomenon, see the graph above. In human history, sustained positive economic growth has only been a reality in the last few hundred years. Using this dataset of GDP per capita from year 1 to 2003 in Western Europe, we can see that:
1. It first took more than 1800 years (until about 1820) for per capita income to double from $600 to $1200, and the annual growth rate during that period was 1/25 of 1% per year, almost negligible.
2. It next took about 70 years (until 1890) for per capita income to double from $1200 to $2400, and annual growth in income was about 1% per year.
3. It next took about 60 years (until 1950) and economic growth was about 1.2% per year.
4. Since the 1950s, growth has been doubling every 20-25 years in Western Europe and the US, at a rate of about 2-3% year.
Bottom Line: Sustained economic growth of even 1% per year was not a reality until the 19th century, and sustained economic growth of 2-3% was not a reality until the last 50 years. Putting it in historical perspective, it makes the recent obsession with "income inequality" kind of inconsequential. It could be a lot worse, and was a lot worse throughout human history, for the average person. And complaining about income inequality in a country like the US where per capita GDP is about $42,000, must seem very strange to those in the rest of the world where per capita GDP is only $7500. Kind of like members of an exclusive, private country club complaining about differences in income between the "rich" and "super-rich" member of that club?
1. It first took more than 1800 years (until about 1820) for per capita income to double from $600 to $1200, and the annual growth rate during that period was 1/25 of 1% per year, almost negligible.
2. It next took about 70 years (until 1890) for per capita income to double from $1200 to $2400, and annual growth in income was about 1% per year.
3. It next took about 60 years (until 1950) and economic growth was about 1.2% per year.
4. Since the 1950s, growth has been doubling every 20-25 years in Western Europe and the US, at a rate of about 2-3% year.
Bottom Line: Sustained economic growth of even 1% per year was not a reality until the 19th century, and sustained economic growth of 2-3% was not a reality until the last 50 years. Putting it in historical perspective, it makes the recent obsession with "income inequality" kind of inconsequential. It could be a lot worse, and was a lot worse throughout human history, for the average person. And complaining about income inequality in a country like the US where per capita GDP is about $42,000, must seem very strange to those in the rest of the world where per capita GDP is only $7500. Kind of like members of an exclusive, private country club complaining about differences in income between the "rich" and "super-rich" member of that club?
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