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GDP: A Brief but Affectionate History by Diane Coyle
Asian financial crisis, Berlin Wall, big-box store, Bretton Woods, BRICs, clean water, computer age, conceptual framework, crowdsourcing, Diane Coyle, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Fall of the Berlin Wall, falling living standards, financial intermediation, global supply chain, happiness index / gross national happiness, income inequality, income per capita, informal economy, John von Neumann, Kevin Kelly, Long Term Capital Management, mutually assured destruction, Nathan Meyer Rothschild: antibiotics, new economy, Occupy movement, purchasing power parity, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, The Wealth of Nations by Adam Smith, Thorstein Veblen, University of East Anglia, working-age population
Alexander Fleming first discovered penicillin in the laboratory in 1928. There were medical trials throughout the 1930s. In 1942, Merck’s first commercial batch of the lifesaving antibiotic, a precious five and a half grams of it (half the entire stock of the United States) was used on a patient with streptococcal septicemia. By 1950, it was in mass production and its price had fallen to four cents a dose, the same as one-sixteenth of a gallon of milk.3 It was not just that this flood of innovations existed but that so many people could afford them. As the economic historian David Landes observed, Nathan Meyer Rothschild, the richest man in the world of his time, died in 1836 for want of an antibiotic to cure an infection.4 This is what GDP growth consists of. So what was going wrong by the late 1960s, a decade that ended with students in the streets throwing stones and crude Molotov cocktails at the police, workers on strike, power cuts, and citizens hoarding food?
You can try this for yourself on websites that allow you to create a personal ISEW, giving different components weights according to your personal priorities; I could not make the index match GDP growth no matter what weights I tried.36 Besides, although it is useful for everyone to be able to create their own policy target, depending on how much they care about crime rather than clean rivers, so they know for whom to vote in the next election, the published official statistics need to be impersonal, not personalized. The alternative indicators also err in only subtracting from measured GDP. In addition to adding in the value of household production, they ought to be adjusting the measure upward to take account of the improvements that come from innovation. These are difficult indeed to measure. How could one begin to estimate the impact on society’s welfare of new products such as antibiotics in the 1940s, or central heating and air conditioning, or the Internet and mobile phones? Earlier, we saw how hard it is to capture quality improvements in some items in GDP. In chapter 6 I’ll return to the challenge of measuring innovation and the variety of products and services available. For now, it’s enough to acknowledge that, as the economic historian Brad DeLong expresses it, “Modern growth is so fast it’s off the scale.”37 Although GDP does not measure welfare directly, it does contribute to it and is highly correlated with things that definitely do affect our well-being, such as life expectancy and infant mortality.
autonomous vehicles, banking crisis, Bartolomé de las Casas, Berlin Wall, Bertrand Russell: In Praise of Idleness, Branko Milanovic, cognitive dissonance, computer age, conceptual framework, credit crunch, David Graeber, Diane Coyle, Erik Brynjolfsson, everywhere but in the productivity statistics, Fall of the Berlin Wall, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Gilder, happiness index / gross national happiness, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, income inequality, invention of gunpowder, James Watt: steam engine, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, Kodak vs Instagram, labour market flexibility, labour mobility, low skilled workers, means of production, megacity, meta analysis, meta-analysis, microcredit, minimum wage unemployment, Mont Pelerin Society, Nathan Meyer Rothschild: antibiotics, Occupy movement, offshore financial centre, Peter Thiel, post-industrial society, precariat, RAND corporation, randomized controlled trial, Ray Kurzweil, Ronald Reagan, Second Machine Age, Silicon Valley, Simon Kuznets, Skype, stem cell, Steven Pinker, telemarketer, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tyler Cowen: Great Stagnation, universal basic income, wage slave, War on Poverty, We wanted flying cars, instead we got 140 characters, wikimedia commons, women in the workforce, working poor, World Values Survey
Since 1990, the TB mortality rate has dropped by nearly half. Since 2000, the number of people dying from malaria has been reduced by a quarter, and so has the number of AIDS deaths since 2005. Some figures seem almost too good to be true. For example, 50 years ago, one in five children died before reaching their fifth birthday. Today? One in 20. In 1836, the richest man in the world, one Nathan Meyer Rothschild, died due to a simple lack of antibiotics. In recent decades, dirt-cheap vaccines against measles, tetanus, whooping cough, diphtheria, and polio have saved more lives each year than world peace would have saved in the 20th century.14 Obviously, there are still plenty of diseases to go – cancer, for one – but we’re making progress even on that front. In 2013, the prestigious journal Science reported on the discovery of a way to harness the immune system to battle tumors, hailing it as the biggest scientific breakthrough of the year.