Economic Evolution Continued
The Industrial Revolution was a time of immense economic growth, which insinuated the emergence of vast inequality. A true middle class exploded at this time because in 200 years, growth increased by 4000%.
Rule of 72: how economists measure growth --> put the number 72 over the percent of growth and you'll know how many years it will take to double.
World income doubles every fifteen years. If we continue along this projected function, the world will eventually double in growth every two weeks. This growth is evident in quality of life as the poorest people on earth today are better than the poorer people of the past. In fact, there has been an 80% reduction in poverty in the past forty years. This being said, there is a huge gap between rich and poor in today's world. America is 75% richer than the poorest countries in Africa. 152 million people live on $1 a day.
How do people get rich?
- produce more
- trade for something else
Neither of the above make anyone else poorer!
Extensive growth: if there was growth, resources went to the growing world population; living standards don't improve.
If you want to get richer, you want intensive growth!
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