A small argument elsewhere

What looks like a bunch of Georgists wants to say that that past wasn’t as poor as all that:

What about the point made by Worstall, that average incomes were only $450 until recent centuries? There are two answers. First, that $1.23 per day implies either that they live on land of little value and rent, or else that this figure does not account for the rental value of they land in which they live and work. Secondly, these were not free societies. Typically there were serfs or slaves working for a landlord or master, and much of their output went to the landlord or master. Therefore this history is not relevant to the question of whether poverty is natural.

They’re right in a way, the rules of the system do determine how rich it becomes. But they’re wrong in which rules they’re talking about here. Because, as I’ve pointed out:

No, I’m afraid not:

“What about the point made by Worstall, that average incomes were only $450 until recent centuries? There are two answers. First, that $1.23 per day implies either that they live on land of little value and rent, or else that this figure does not account for the rental value of they land in which they live and work. Secondly, these were not free societies. Typically there were serfs or slaves working for a landlord or master, and much of their output went to the landlord or master. Therefore this history is not relevant to the question of whether poverty is natural.”

The estimates of historical poverty – usually derived from Angus Maddison but Brad Delong is another useful source – are comparable to the current World Bank estimates of absolute poverty. You know, the $1.90 a day stuff that 700 million people are still mired in.

These are estimates of the value of consumption. That is, real incomes – a real income being what you are able to consume. They include the market value of any home produced and home consumed items – so, say, a peasant growing and eating their own crops.

Maddison’s figures are actually GDP per capita. Adjusted, as far as is possible, across time and geography for prices. And including the value of those things – home production – which are not included in more formal GDP estimates. And they are the average across the society. We have, therefore, the estimate that the value of all production, per capita, across England in 1600 AD is $1,000 a year. The same number for China in 1978. Thus, England in 1600, or China in 1978, were at about the same level of living standards. Because, obviously, given that GDP is all incomes, all consumption and or all production, each of the three being equal to either of the other two. Further, that’s about the same living standard as $1,000 would buy today (actually, in 1992 dollars but still). Or, very little above that $1.90 a day we say is absolute poverty today.

The reason we say that the past was poor is because very little was produced. Therefore very little could be consumed. It is *not* about how people were oppressed, or the Lords ate everything. Sure, of course, there was horrendous inequality, but that’s not the cause of these startlingly low numbers. The average production across the whole society for England in 1600 was $1,000 a year. Therefore the average consumption across the same society must have been the same.

As to why this was all true this is where Malthus was right.

21 thoughts on “A small argument elsewhere”

  1. If most production was agricultural then large parts of the year would have had little to no production. The peasantry, unless they had a. landlord with an improbable genius for land improvement, must have spent much of the year doing nothing.

  2. The peasantry … must have spent much of the year doing nothing

    I refer you to historians such as Stuart Peachey and his TV series Tales from the Green Valley.

  3. @ philip
    If you have to do everything by hand it takes a long time. So all hands to the scythe at harvest time but maintenance is done when you are not ploughing or reaping or lambing. Shepherd and swineherd and, to a lesser extent, cowherd was a full-time job to protect their animals from wild beasts or getting lost or stuck in bogs or …
    Work wasn’t 24/7 but the derivation of “holiday” from holy day implies that work six days a week was the norm

  4. I love the title, “which is natural, poverty or wealth?”
    Well how wealthy are hunter gatherers? Particularly those who haven’t discovered fire or invented tools?
    Because that’s how wealthy mankind is naturally.

  5. “The peasantry, unless they had a. landlord with an improbable genius for land improvement, must have spent much of the year doing nothing.”

    When absolutely everything has to be done by hand, with very few tools, you’d be surprised how long things take.

  6. Firstly I agree that people in the past were incredibly poor compared to today (even if we ignore medicine, in many ways I am richer than the last Tsar of Russia).
    But really 450 USD pa? I would be homeless and starve on that – even turnips and a tent would cost more. So I think the comparisons are wrong

  7. It’s a slightly old figure. Think the value of USD in 1992 or so. Upgrade it to today, mebbe $600 a year? $2 a day? That is what we say is absolute poverty in the global sense, $1.90 a day. And that really is what we’re saying too.

    Go buy life on £1.50 a day at today’s Tesco prices. No, not food, life.

    It’s only when you understand how miserably, fucking awfully, poor the past was that we begin to understand the achievements of the past couple of centuries.

  8. ‘Sure, of course, there was horrendous inequality, but that’s not the cause of these startlingly low numbers.’

    NO! There WAS equality.

  9. David: “But really 450 USD pa? I would be homeless and starve on that”

    Yes, you would, because you cannot imagine anything other than a comfortable western way of life. It is impossible, but take away every basic thing you assume essential, in a place where everyone is equally desperately poor… which is why there is a flood of migrants from less prosperous parts of the world today.

  10. “By the above definition, the proposition that poverty is natural is neither true nor false, but rather, meaningless.”

    The Progress article is an excellent example of sophistry. To win an argument just propose definitions that let you trash your opponent’s arguments without ever actually addressing them.

  11. I would love to see the sums of how someone can survive on 600 USD p.a in the UK. What campsite costs less than 400 USD pa for a tent to stay there for example?

  12. I would love to see the sums of how someone can survive on 600 USD p.a in the UK. What campsite costs less than 400 USD pa for a tent to stay there for example?

    You’re missing the point. $600pa means you build your “tent” (ie house) out of whatever materials you can find lying around. You make your own clothes out of whatever materials you can find lying around. You eat whatever you can find lying around or can grow or raise yourself.

    It’s not “I’ve got $600, how do I maintain my comfortable Western lifestyle on that?”. It’s “What the fuck can I get for free to survive until tomorrow”. Most of that $600 will be the equivalent of bartering what little you can spare for what little the next bloke over can spare.

  13. Bloke in wales
    But without owning land, how can one rent the land for a tent for less than 600 USD. I would really love to see what the average person ate, housing etc in the 1700s and how much it would cost today.

  14. Btw I do think that people were poor in the past, just would like to see what they consumed with price tags to be sure.
    Of course poverty is natural, without artifical things like machinery etc we would all be poor.

  15. @ David The price of pasture land in England is just over £1/square yard, in the USA it is pennies per square yard [that is to buy, not to rent).

  16. @john77
    Thank you – although presumably it would not be legal to camp on that? Or could I just buy a tent, pasture land and live like a 17th century peasant, if I wanted to? (I don’t).

  17. @Jim March 16, 2020 at 10:39 am

    When absolutely everything has to be done by hand, with very few tools, you’d be surprised how long things take

    +1

    Also illustrates the confidence, determination and perseverance of man – canal system inc tunnels built with pick & shovel

    Docu I saw recently on Severn Bridge to Wales: tarmac dumped by lorry, then wheel-barrows, rakes and trowels

    @David

    Think more: £1.25 buys 2.5kg of potatoes, that’s all you eat every day unless you catch a bird, fish, rabbit

    The comparisons are correct

    @March 17, 2020 at 7:43 am
    It is legal, tent is a temporary structure. Also, no planning laws then or council jobsworths

    As BiW says, you’re applying Western C21 norms to <=C18

    @Tim Worstall March 16, 2020 at 11:16 am

    +100

  18. @David

    Bear in mind: in 1980’s, 90s and later there were peeps in UK who had no bath/shower room and an outside loo

  19. @ David
    The answer is that someone who *wanted* to live like a pre-industrial revolution peasant could buy/rent 6 to 10 (depending on whether or not he had a family) square yards of land and erect a foundationless shack using wood from the nearest forest or copse, so rent/amortisation of purchase cost would be less than 1% of annual income.

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