Friday, December 25, 2009

A Christmas Day Story: The 'Vertical Leap'

For many, there will be no tears shed for year 2009 coming to an end. Some say the Great Recession is over, but many are beset with great troubles. And if we're lucky enough not to have great troubles, we're still probably feeling troubled about the state of the economy and world stability.

But today, Christmas Day, let's be properly thankful for the blessings we do have. As troubled as the times are, a big blessing is to be living in the world at this moment in time. Consider the following, from a speech that I heard recently:

"Economists have tried to reconstruct what the average income of people would have been through time. By the way, this is not easy. Obviously we didn't have price indexes and statistical agencies, and so on, until the 20th century. But using a kind of 'economic archaeology,' economists have estimated that between the time of Christ and 1800, the average world income was flat.

"Just think about that. Although incomes in some parts of the world were higher than others, on average people throughout the world were no better off in 1800 than they were 1,800 years earlier.

"That's remarkable! And yet, in the last 200 years, U.S. income per capita has increased by a factor of 30 or 40. If you were to look at any chart of per capita income in the world — or by country — you would see an almost vertical leap starting from the Industrial Revolution and continuing on thereafter."

Robert Litan, an expert on banking and finance, told the above to an audience of Foreign Policy Research Institute members and guests. You could hear jaws dropping all over the room at the Union League when he unveiled this economic fact of life — 2,009 years of life since the birth of Christ that is being celebrated today — to the rapt crowd.

Yes, Virginia, it's a good day, and a good time, and a good place, to be alive. As tough as the year may have been, there have been tougher years — many many more tougher and leaner years — in the history of humankind. Let's celebrate and be thankful. Merry Christmas!

The Foreign Policy Research Institute is a Philadelphia-based think tank on global affairs. Robert Litan is vice president for research at the Ewing Marion Kauffman Foundation and a senior fellow of Economic Studies at the Brookings Institution. He is an economist and lawyer who has served in a variety of federal agencies and White House posts. Click here for a full copy of his FPRI speech, "Innovation and the World Economy: The Second Annual Rocco Martino Lecture on Innovation."
Illustration: "The Carpenter" by Nathan Greene