On 2/26/12, Ken Caldeira <[email protected]> wrote: > It is an impossible task to estimate GDP in year 12 in current dollar > terms, but it would nevertheless be interesting to try to estimate economic > growth rates on the millennial time scale. This might provide an effective > long-term discount rate that both environmentalists and economists could > live with.
A longtime silent reader on your conversations, but I thought I would pop in here. (George Morrison... BMO Nesbitt Burns, Toronto, ON) There have, in fact, been efforts made to "estimate economic growth rates on the millenial time scale." The most notable is probably Angus Maddison's "The World Economy: A Millennial Perspective". (Despite the description on Amazon, it does extend backwards to roughly 0 A.D.) http://amzn.to/A6RggM Here is an excerpt from a good write-up of this work. (Apologies for poor formatting, and inability to show the graphs. I have an outdated browser on this work P.C.) http://www.efficientfrontier.com/ef/404/CH1.HTM ... The portrait that Maddison and others painted was as stunning as it was unexpected. The lot of the average individual, measured as real per capita GDP, did not change at all during the first millennium after the birth of Christ. Over the next 500 years, between A.D. 1000 and 1500, things did not get much better. Figure 1–4, which plots Maddison’s estimates of world per capita GDP since the year A.D. 1, brings the welfare of the average person into sharp focus. Before 1820, there had been only minuscule material progress from decade to decade and century to century. After 1820, the world steadily became a more prosperous place. The data are "noisy" enough that identifying 1820 as the annus mirabilis of world economic growth is more than a little arbitrary. The British data, as we shall see, put the ignition of growth a bit later; the American data, a bit earlier. Whatever date is chosen, however, it is clear that sometime in the first half of the nineteenth century, growth of the global economy took off, bringing prosperity despite the repeated devastation of war, civil strife, and revolution. Figure 1–5, which summarizes the average annual growth in worldwide real per capita GDP, displays the breakout that occurred about 1820 from a different viewpoint. Once again, prior to 1820, there was little improvement in the material welfare of the average person. This picture is contrary to that commonly taught in the nation’s humanities departments. From the perspective of the Romance language expert or the art historian, the Renaissance appears to be the pivotal point of the second millennium. The great writers and artists of that period, however, did little to improve nutrition, to augment transport, or to prevent plague. In an age when the average person never ventured more than a few miles from the place of his birth, the Sistine Chapel frescoes could do little to uplift the collective human spirit. Economists have found it easy to criticize Maddison’s estimates of income and production in centuries long past. After all, how can he be certain that the annual per capita GDP of Japan at the birth of Christ was $400 in current dollars, rather than $200 or $800? Maddison himself concedes the point: "To go back earlier involves use of weaker evidence, greater reliance on clues and conjecture."13 The modern era presents a more basic problem. Even the most accurate economic data cannot measure the real value of new inventions. How much would J. P. Morgan have paid for even a cheap seat on a jumbo jet from Kennedy Airport to Heathrow? What value would Shakespeare have placed on the ability to churn out five thousand words a day on a Macintosh and then e-mail them to a few dozen friends? Even the poorest citizens in the developed West have access to goods and services, such as reliable automobiles, television, and the Internet, that were unavailable at any price a century ago. While many modern goods and services are of dubious value, others are not. As late as 1940, pneumonia and meningitis, which today can be prevented with a few dollars’ worth of antibiotics, struck down those at the pinnacle of wealth and power almost as frequently as they felled the poor. In a different vein, try to imagine what the great engineers and physicists of the early twentieth century could have managed with a personal computer. How do economic historians measure the GDP of ancient Rome or of the Carolingian Empire? After all, millennia ago there was no Commerce Department and no Bureau of Economic Analysis. Not until the seventeenth century did early demographers like John Graunt and Caspar Naumann begin tabulating actuarial data, and not until two centuries later did economists begin to collect the first accurate aggregate financial data for individual countries. If you want to measure economic progress over the centuries, you first must ask, How much money is necessary to sustain a subsistence level of existence? Maddison estimated that in an underdeveloped nation in 1990, about $400 per year was required. Next, economic historians use whatever data they can find to determine what percentage of a population existed at this level. A society in which nearly 100% of the population is engaged in farming and that does not export any substantial amount of its agricultural products lives, by definition, very close to the $400 per year subsistence level. It is highly arbitrary to assign the same $400 per capita GDP, as Maddison did, to Europe at the beginning of the first century A.D., to China in 1950, or to modern-day Burkina Faso, but doing so at least provides economic historians with a benchmark against which to measure economic growth. -- You received this message because you are subscribed to the Google Groups "geoengineering" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. 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