Nearly eighty years ago, John Maynard Keynes did the math on economic growth and concluded that within a few generations—by the time his peers' great-grandchildren came of age in, say, the 2000's—the persistent economic problem of too-scarce resources and too-few goods would no longer bedevil a substantial portion of humanity. He was right—even in the midst of our current hard times, he is right.
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Keynes thought that by today we would have reached a realm of plenty where "We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin."
As an example of how cheap goods have become, Delong makes a comparison after my own heart:
Our goods are not only plentiful but cheap. I am a book addict. Yet even I am fighting hard to spend as great a share of my income on books as Adam Smith did in his day. Back on March 9, 1776 Adam Smith's Inquiry into the Nature and Causes of the Wealth of Nations went on sale for the price of 1.8 pounds sterling at a time when the median family made perhaps 30 pounds a year. That one book (admittedly a big book and an expensive one) cost six percent of the median family's annual income. In the United States today, median family income is $50,000 a year and Smith's Wealth of Nations costs $7.95 at Amazon (in the Bantam Classics edition). The 18th Century British family could buy 17 copies of the Wealth of Nations out of its annual income. The American family in 2009 can buy 6,000 copies: a multiplication factor of 350.Personally, I'd probably go dig up a nice hard cover copy more analogous to the original 1.8L edition, but I'd still be able to do so for less than .1% of the median US household income.
I love historical examples that put our current travails in this kind of perspective. Yet what Keynes seems not to have taken into account in his speculation is human nature, which in any situation is able to quickly acclimate itself enough to want more. Delong's estimation strikes me as much more in keeping with fallen humanity:
But no dice. I look around, and all I can say is: not yet, not for a long time to come, and perhaps never. I'm convinced that everyone I know can easily imagine how to spend up to three times their current income usefully and productively. (It is only beyond three times your current spending that people judge others' spending as absurd and wasteful.) And everybody I know finds it very difficult to imagine how people can survive on less than one-third of what they spend—never mind that all of our pre-industrial ancestors did so all the time. There is a point at which we say "enough!" to more oat porridge. But all evidence suggests Keynes was wrong: We are simply not built to ever say "enough!" to stuff in general.
4 comments:
Funny that coming from DeLong. The guy is almost as bad as Krugman for being vitriolic in his hatred of conservatives.
The Blackadder Says:
DeLong has a point, but I also think it's overstated a bit. The truth is that people today aren't as focused on maximizing their accumulation of material goods as in prior ages.
I know this sounds like a crazy thing to say. After all, doesn't the modern American have a lot more stuff now than in prior ages? But the fact is that the relative bountifulness of consumer goods has made people less willing to work hard to acquire more and more of such goods. I know a lot of people, for example, who are willing to work for much less than they could get at another job because they would find this other work less meaningful or more unpleasant to do. Based on conversations with friends from places like India and China this kind of attitude (that what matters in a career is following your dreams, finding fulfilling work, etc. rather than what puts bread on the table) can be rather mystifying to people for whom a certain level of prosperity isn't taken for granted.
Studies also indicate that people today work less, spend more time in school, retire earlier, etc. None of this is too surprising once you recognize that consumption is subject to the law of diminishing returns, so that past a certain point people will require greater and greater levels of compensation in order to induce them into additional amounts of labor.
Your previous post addresses the main reason this might be the case.
Actually, that's a good point, BA. Most people would certainly like to make several times what they currently make, but the level of comfort we have attained does result in most people not actually being willing to sacrifice too much of their other lifestyle aspects to do so.
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