That was 150 years ago. And I imagine the destruction of the Civil War sort of cancelled a lot of those benefits out.
Well, it’s factually ignorant.
The US is so wealthy for several reasons:
We are a large nation with lots of natural resources.
We have pretty much always had a strong tradition of personal freedom, innovation and entrepreneurship.
The US was spared the destruction of WW I and WW II.
The second point, however, is probably the most important. When people have freedom, protected by rule of law created by and for the people, the people tend to work harder. They are working harder because they are working for themselves and they get to reap the results of their labor. They find new ways to innovate and improve how things are done because they get to reap the rewards of doing so.
Kimmy_Gibbler’s graph would seem to paint a picture that makes the “US is in decline” crowd look like pretty foolish.
Median household income in Canada and Australia is pretty much the same as it is in the United States. Canada is a bit ahead, Australia a bit behind.
That the USA, Canada and Australia are more or les equally wealthy - as is, by the way, rather obvious to anyone who has bothered to visit all three countries - would lend support to the trifecta of
Lots of space and resources,
Modern democratic rule-of-law governments, and
Being spared a 20th century war.
It would not, however, suggest that “slavery” had a lot to do with it.
Wealth is relative, the wealth of the United States per capita is very high but there are states with higher per capita wealth. The United States is fairly unique in that it has a very high per capita wealth along with the largest economy (in absolute terms) of any country in the world. Countries that give the United States a run for its money in per capita terms tend to be smaller than an average American state (Liechtenstein, Luxembourg, Qatar, Brunei, Norway, Singapore–all smaller than Virginia.)
The U.S. has its position because it has vast natural resources and its legal and historical framework were perfect for it to exploit those resources to a degree you would not see elsewhere. The United States is obviously not the only area with great natural resources. However, much of Eurasia has been settled for millennia. For any European or even Asian power to expand has typically meant war with another fairly established country. China has been settled since as far back as civilization, and that can cause problems to accumulate. China has fought many, many internecine conflict. China has had dynasties crop up that caused society’s resources to not be efficiently utilized and that happened at a key point in history that has left China very poor per capita today.
The U.S. was essentially founded on land that was not heavily settled, and the people who had settled it were at a huge population and technology disadvantage versus the Europeans who settled the United States. Further, as compared to regions further South that were settled by the Spanish and Portuguese, the population density in North America was so low that it really just wasn’t much trouble to take all the land to the Pacific.
The fact that it was essentially “new territory” also freed it from all of the problems of the Old World. In Europe strong protections of hereditary land ownership and a hereditary ruling class lead to a great collection of wealth in people who, quite simply, weren’t equipped to manage it. The eternal problem with distributing assets based on familial descendants is even with strong upbringing some people just aren’t fit businessmen, great fortunes could be flitted away by a single bad seed, undoing a family’s work that took centuries. This reality lead to various levels of “protection” of the ruling class from the natural results of their fiscal malfeasance. For example in many European countries even when driven far into debt landed aristocrats could avoid the consequences of their actions (bankruptcy, foreclosure on their property etc) because of ancient custom and laws that protected the land from being severed from a given family. Over time this changed and it’s why Europe is still one of the richest parts of the world, but all of that most definitely got in the way of Europe’s economic progress.
You took 3 original points that were intertwined and separated them out for your analysis without pointing out that you were doing this or even realizing why this immediately causes your analysis to be different. As was pointed out in the original post, point #3 was directly connected to points #1 and #2, they don’t stand alone.
The original point #3 was not (based on my reading) merely stating that we had the freedom to immigrate. The original point #3 was “move in and take advantage” of #1 and #2, not just “move in”. This is an absolutely critical point: people had the freedom to make money from the natural resources available.
Well, for starters, the x-axis is “Income per person (GDP/capita, PPP$ inflation-adjusted)” which tells me that this is GDP per capita, using purchasing power parity and adjusting for inflation.
Since per capita GDP is just GDP/Pop, all you’re showing is that the U.S. has a larger population compared to Japan and European countries, which of course is true. Why is this? You’ll notice each of those countries has roughly the same GDP per capita (in between $30 and 40 thousand as of the mid-2000s). The United States has a much higher GDP because we have a much higher population. 300 million people times $40 thousand per person is going to come out much higher than 60 million people times $36 thousand per person.
By the way, “personal income” has a distinct meaning in national accounting, and it is unfortunate that this website equated the term with per capita GDP. At any rate, neither per capita GDP nor the national accounting definition of per capita personal income means anything like “mean personal earnings” or “median personal earnings.”
My graph demonstrates that over the past several years, the United States has not had the kind of runaway growth in productivity that I think you thought your graph revealed.
Of course Canada and Australia have far smaller populations.
Part of the advantage of the geography of the United States is how much arable land we have and our proximity to the Old World when during the period of great immigration. Canada shared our proximity but not our habitability, Australia proverbially got the short end of both sticks.
Canada is a big country but I believe only about 4.5% of Canadian land is considered arable, versus 18-19% in the United States. That would have been very important especially during the 19th century when farming techniques were less advanced, immigrants would have wanted to go to the country with more readily available useful land.
[QUOTE=Kimmy_Gibbler]
My graph demonstrates that over the past several years, the United States has not had the kind of runaway growth in productivity that I think you thought you graph revealed.
[/QUOTE]
Actually, I didn’t think it had much to do with productivity. I thought it was showing national GDP vs personal income. I really don’t understand your assertion about that it shows population and would really appreciate and explanation. Also, if you could be more detailed in what your graph is showing, I’d really appreciate that as well. I love that graphing tool, and am interested to see new aspects of it, and also to hear what some of the charts mean.
Huh? Unless I’m looking at a different graph yours isn’t showing productivity measures at all, it is showing GDP/capita over time.
Productivity isn’t measured that way by any source of which I’m aware, productivity would tend to be measured in a metric such as GDP per hour worked or some such.
This would appear to measure productivity. The higher a country is on the Y axis the more productive they are.
That roughly corresponds to what I’ve always heard; that the U.S. is more or less at the top for productivity (it also confirms what I’ve heard for a long time–that Norway is typically ranked at the very top of productivity measures.)
Given that GDP measures the value of an economy’s output during a given interval (typically a year), per capita GDP is a rough proxy of average worker productivity. Economies with large populations will produce higher GDPs even if their workforce is not very productive, because a lot of people being only moderately productive still turn out a lot of output. But this country will have only a moderate sized GDP per capita.
You are right that GDP per manhour is an even finer metric, but we tend to have accurate GDP and population numbers more readily at hand that such a figure for manhours. (You could estimate manhours by multiplying population by percent-employed by average-hours-worked-per-worker, but that just gives you a linear transformation of GDP per capita while overstating the significance of the figure.) Of course, there are drawbacks. For instance, there will be a distortion if a country routinely excludes some large portion of its populace, such as women, from its workforce. But by and large, GDP per capita gives you an imperfect, thumbnail sketch to compare worker productivity.
Um…yes, I guess GDP per capita can give “some idea” of productivity, but given I’ve been seeing reports on GDP per working hour for decades now I’m not sure why you’d not use it, as it is a far more appropriate metric. Productivity is generally understood to measure the value of a unit of a laborer’s output (generally a unit of time, generally a single one hour block of said unit.) You can of course measure it in other ways but per hours worked tends to be how it is measured.
GDP per capita, as you have already mentioned, isn’t a fine measurement of productivity at all. And as we contrast the graph you linked with the one I linked, you can see how using yours as a productivity graph would show inaccurate results.
[Past edit window] I guess this is also not always true when you have resource-rich, small nations. Qatar has the highest GDP per capita, but I suspect it is not a redoubt of Stakhanovite wonders.
Your analysis is flawed, as pointed out by some others.
Size don’t mean jack, if it’s China. As mentioned, there is a huge desert. IIRC, there are two, but I could be Ring incorrectly. Also, jillions of mountains.
Oil an Gas are but a fraction of the US’s natural resources, and as we see, we are ahead of China on one, and close on the other, with 1/4 the population. Also, just because China beats us, does not mean that it is not a reason for our superior wealth. Being third or fifth, in any market, is not contemptible.
I can’t follow the freedom to immigrate point, so, I can’t comment.
The constitutional argument actually surprised me, but, I have to agree with that. Many countries’ governments are quite handy about butting in, nationalizing, etc…, but, I think that the US is really pretty good about it, and it works as an incentive to produce wealth.
As an example of how GDP/working hour is a finer metric, note that my graph shows a 59% increase in productivity since 1980 while yours shows a 67% increase in GDP/capita, if we assumed GDP/capita was equivalent to productivity (which I do not, although they obviously have some correlation) then your graph actually overstates U.S. productivity gain since 1980.
The slavery/cheap labor argument seems to me to be completely debunked; not only have many other countries exploited cheap labor, but the comparison in question is against communist-dominated China, for crying out loud.
The desert argument strikes me as dubious – much of the western US is arid or outright desert.
I tend to agree with the “settled late, so resources were still unexploited when industrialization developed” and the “spared the destruction of major wars” ideas most of all.
Europe for example had been mined for minerals for thousands of years before steam engines kicked off the industrial revolution – not so the US.
For an example of that second concept, look at the part of the country that DID suffer the destruction of a major war – the South. As a generalization, Southern states are still burdened with more poverty and various statistically-measurable weaknesses in education and productivity, 150 years after the war, despite the sunbelt’s reputation for attracting development over the last 40 years or so.
And the South had the lion’s share of the supposed advantages of slavery.
Most other countries have experienced even more serious war and destruction. I wonder how big a part that ultimately plays.
Hmm. If this thesis is correct, then perhaps you can explain why it didn’t similarly benefit China, which has had slavery at least since the Xia and Shang dynasty, some thousand years before the birth of Christ, imported African slaves beginning with the Tang and Son dynasties (900 AD), and did not abolish slavery until January 31, 1910.
I’ve some doubts about this one. Not that I’m a specialist or anything, but I’ve been reading for a long time (first time around 1992, when writing an assignement for a girlfriend) that US infrastructure wasn’t that great and in particular wasn’t maintened properly or sufficiently modernized.
Well, complaints about the aging infrastructure don’t mean it wasn’t once the envy of the world (and mostly still is) or preclude it from having contributed to American wealth.
However, it didn’t spring up whole out of Zeus’ thigh. The American rail and highway and canal systems were built and maintained with American wealth, and can’t be considered a primary cause of that wealth.