Global Prosperity

Activity: Global conditions quiz

Lecture handout: Global prosperity*

Textbook Reading: Chapter 12 (Intro, Section 12.2, and 12.3; pp. 397-399 and pp. 404-421)

Here is my Economics Mission Statement, March 2018.

Activity: Stoves Handout, May 2020 // Here are the Stoves charts

The incredible data visualisation used at the beginning of my lecture is from Gapminder. I strongly encourage you to visit their website and play around with the tools. In particular, try to create a chart showing GDP per capita against infant mortality and then see how the data has changed over time.

Here is the more about Mansa Musa, the richest person who ever lived.

The increases in global income have been incredible. In Factfulness, Hans Rosling tells us that 100,000 years ago everyone was poor and most children didn’t survive long enough to become parents. 200 years ago, 85% of the world were still in extreme poverty. Today, most people live in middle-income countries, with living standards similar to Western Europe and North America in the 1950s (see p.38).

Some more detail can be found in “Rosling’s Charts“.

Higher incomes are important, they lead to:

  • Reduced population growth – poor communities have lots of children because many will die early, and they need a contribution to family income. As they get richer, the need for more extra children declines and parents focus on quality not quantity… based on current growth projections total global population is due to stabilise at ~11 bn people. As Rosling says, “Once parents see children survive, once the children are no longer needed for child labour, and once the women are educated and have information about and access to contraceptives, across cultures and religion both the men and the women instead start dreaming of having fewer, well-educated children” (p.91)
  • Greater concern for the environment
  • More resources for humanitarian assistance (e.g. for natural disasters or global pandemics)

One of the most important contributions to the rise in global living standards was the Green Revolution. A 2021 paper found that “if the Green Revolution had never happened GDP per capita in the developing world would be half of its current level… More realistically, if the Green Revolution had been delayed by ten years incomes in the developing world would be 17% lower today. In terms of cumulative GDP what this means is that the investments which made the Green Revolution possible were responsible for some US $83 trillion in benefits” (summary from Alex Tabarrok). Unfortunately, we missed out on similar benefits from Golden Rice.

In the lecture I argue that infant mortality figures are better proxies for living standards than life expectancy. As Hans Rosling argues, “this measure takes the temperature of the whole society” (p.20). This is because children are fragile, and you therefore require lots of good circumstances in order for children to routinely survive – it tells us about access to basic health care, the literacy of mothers, etc.

Some great videos to watch that explore the themes from the lecture:

Although as Tim Harford (“50 Things that Made the Modern Economy”) points out we tend to have more clothes and wash them more regularly, and therefore haven’t saved much time. A better example for a household technology that has unambiguously increased leisure time may be TV dinners and other forms of processed food

In the lecture I included some data on the long term declines in violence. You can see more about this in Steven Pinker’s Enlightenment Now, but one common rejoinder is U.S. gun crime. According to this article by Pew Research, gun murder has increased in recent years, but are still below their 1968 values.

This review of Bryan Burrough’s 2015 book, ‘Days of Rage’, highlights a separatist movement that “bombed NYC like 300 times, killed people, shot up Congress, tried to kill POTUS (Truman). Nobody remembers it.” In the 1970s they “bombed 2 theaters in the Bronx, injuring eleven, in 1970. NYT gave it 6 paragraphs.” For those who think street violence is new , “You have to understand: in 1968, many radicals absolutely believed that the United States was getting ready to collapse.”

If our focus is on Development Economics, and a set of policy prescriptions that can improve the quality of life for the world’s most desperate people, a relatively simple solution is more free migration. For a thorough and highly readable defense of open borders see Caplan, B., and Weinersmith, Z., 2019, Open Borders: The Science and Ethics of Immigration, First Second New York.

I argue that “good” economic policy consists of:

  • Private property rights to generate incentives
  • Reliable legal framework to correct externalities and constrain predation
  • Stable monetary system to maximise information
  • Free trade and the embrace of markets

Similarly, McMillan, argues that a workable platform for markets has five elements:

  1. Information flows smoothly
  2. People can be trusted to live up to their promises
  3. Competition is fostered
  4. Property rights are protected but not overprotected
  5. Side effects on third parties are curtailed

(see McMillan, J., (2002) Reinventing the Bazaar, W.W. Norton & Co. (p.135))

Learning Objectives: Understand the empirical evidence around economic growth and globalisation

Focus on diversity: Esther Duflo has done highly impactful research on the role of RCTs in combating poverty. She has shown how field research is an important part of the economics toolkit. 

Share and be social