A Place to Stand

    This graph was put up by Tim Worstall from an article in the New Yorker.



    Ignore the original article - it is about some economist complaining about rising inequality. Inequality is less important than overall growth unless you are one of those people who would rather have us all poorer than all of us better off, but some betterer off than others in which case you are motivated by hate and jealousy rather caring about society.

    Also ignore the purple line. It is about long term interest rates which is simply about how the wealth is divided up. The rate of interest is probably more a function of the reliability of the banking system before and after 1820. Also ignore the extension of the line beyond 2012 - that is just evidence free pushing of a political line.

    The important bit is the yellow line, which shows the long term growth rate in what is described as the world but I suspect is just the developed western world.

     This fits well with a previous graph on a previous post I presented. Indeed this post is pretty much a repetition of that one - but it is important enough to do so.

     Both graphs show that western growth rates have been going up throughout recorded history up until 1958.
And have been falling since.

    Now that just doesn't happen without very good reason.
    It isn't inevitable because as the 2nd graph shows, growth outside the developed west has not been affected, indeed is faster than at any time.
    It isn't because we have reached the end of technological progress because, measured by things like Moore's Law or increases in strength of materials, progress is far faster than at any time inn human history.

    Rising graphs like that are indicative of being at the foot of an S curve - human wealth should be increasing not just at the 1913-1950 rate (which would mean 6% annual growth now - pretty much what the non-EU/US countries are doing) but well above it - a bit speculative but at least 12% seems likely looking at the increasing of the slope between 1820-1913 & 1913-1950. Had we had growth of 6% average over the last 62 years we would all be 4 times better off. If we had had growth starting at 3% and rising to 12% (ie averaging 4.5% ahead of reality) we would ALL average 16 times better off.

   The only reason we know of to explain that is the growth in state regulatory parasitism. I have also noted the same tailing off of growth in nuclear power where, had the pre-1980 trend continued we would now all have at least 4 times as much power and be 4 times wealthier. Government parasitism has banned cheap power; it has banned cheap GM foods, it has destroyed at least 75% of the economy we could have had. And so on.

   As I say a bit of a repetition of what I have said before but every bit of extra evidence supports the position.

    We could get back on the natural growth rate at any time. Indeed I think that government parasitism must have repressed our growth and if released, like a spring, we would expect it to go well beyond the average 12% rate for some years. Which in turn supports my 24 point programme out of recession plan which suggested a maximum of 23%.
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      In a more modest vein John Redwood says that with cheaper power (the lack of which he wrongly blames on the EU) our industry would be 15% better off and creating half a million jobs. I have a comment.