The Modern World

The ongoing debate about Tyler Cowen’s stagnation thesis has gotten me thinking about what’s really at stake.  Here’s a few highly subjective thoughts:

Part 1  The Great Inflation:

I don’t mean price inflation, I mean inflation in the sense used by physicists explaining the early expansion of the universe.  In my admittedly subjective take on ordinary human life since 1500 BC, I see two periods (before and after), separated by one explosion of change; 1900-1960s.  In 1900 my grandmother (then 10 years old) lived in a little town in Wisconsin, without running water and indoor plumbing, without any sort of “health care” capable of doing more good than harm, without lights, phones, TVs, radio, cars, home appliances, central heating, etc.  Isn’t that pretty much how the Romans lived in 200 AD?  Yes, the outside world had trains and telegraphs and elevators by 1900, but I’m talking about daily life for the average person.  A Roman visiting her would have been surprised by some gadgets around the house, but not awestruck.  Go back another 1700 years to 1500 BC, and the Minoans had running water in their houses.  They would have been disgusted at how my grandmother’s generation had regressed in plumbing technology.

If at age 10 I could have been magically transported from the 1960s to 2011, I would have been very impressed by the internet.  But I might have also asked “Dude, where’s my flying car?“  I might have been surprised that people still flew in Boeing 7X7s that go about 575 miles an hour.  Where are those super-sonic jets?  I would have noticed changes, but nothing (except maybe the internet) would have blown me away.

In contrast a Roman or Minoan citizen would have been awestruck by the 1960s.  An average working man can blast down the highway at 80 mph?  You can watch TV shows?  Even electric lights (which modern people wrongly take for granted) would have astounded the ancients.  People have no idea what life was like when one’s entire world was quite dark and cold for 16 hours of the day.  Travelling alone at nighttime was frightening.  And here’s my claim, I think my grandmother would have been almost equally stupefied.  I wish I’d asked her, she died the month they landed on the moon.

Even in health care the big explosion was 1900 to the 1960s, when life expectancy rose from 47 (only modestly above Roman levels), to about 70 (only modestly below current levels.)  If you want to bring in the “big picture” and talk about how trains and the telegraph would have amazed the Romans, well then how about jumbo jets, rockets to the moon, nuclear power plants and nuclear bombs?  Ancient scientists might have been able to wrap their heads around Newtonian physics.  But general relativity and quantum mechanics?

Part 2:  I’ll take 1973

I’ve noticed that younger commenters like Morgan look back at the 1960s like I look back at the Dark Ages.  No high-speed internet connections!?!?!?  Here’s a challenge offered by Bryan Caplan, who’s also much younger than me:

Even stranger: I learned this thought experiment over a decade ago from none other than Tyler Cowen himself!  I think he called it the “deflationary century.”  His point: Most of us would rather have $1000 nominal dollars to spend on year 2000 goods than $1000 nominal dollars to spend on year 1900 goods. . . .

Of course, Tyler might say that his thought experiment works for 1900 versus 2000, but not 1973 versus 2010.  But none too convincingly.

None too convincingly?  I’m totally convinced.  I’d take 2011 over 1900 at the same nominal income, but I’d take 1973 over today in a heartbeat.  I’d cash out my high six figure Newton home and see what was available in the Hollywood hills for that price in 1973.  I’d take my low six figure income and live the life of a wealthy person in 1973.  Sure, I’d miss the internet.  But let’s face it, the internet is a sort of drug.  Unless you are Tyler Cowen, it crowds out more authentic pleasures like books, films, music, and jet travel to exotic spots (without T&A frisking at airports), all easily done in 1973 on the sort of nominal income that now makes me merely another faceless upper-middle class professional in today’s Boston metro area.

Yes, life expectancy was lower in 1973, but some of that was smoking, and I don’t smoke.  So where do I sign up for the time machine?

David Henderson points out that part of Tyler’s problem was that he titled his book “The Great Stagnation” which implies no progress.  In my previous post I agreed with Tyler’s view that progress slowed sharply after 1973.  But I see this as a return to normalcy.  Progress is still occurring, and compared to most periods of human history it is occurring at a rapid rate.  The real outlier was my grandma’s life.  That took us from an ordinary daily life not all that different from that of the ancient Romans, to a world (in the 1960s) not all that different from 2011.  Or at least that’s the highly subjective take of a grouchy, reactionary 55 year old.  But I suppose everyone thinks their youth was some sort of Golden Age.

Back in the 1960s people talked about “modern life” and “the modern world” as opposed to the old ways.  For me, the 1960s will always be the modern world.  And I don’t think I am the only one.  New York’s MOMA is full of art from the 1950s and the 1960s.

PS.  I don’t want any annoying historians lecturing me that America in 1900 was richer than Rome circa 200.  I know that.  Brad DeLong has a new post citing a study that says ancient Romans were at roughly the economic level of Vienna and Florence in 1875.  I don’t think they were even that high.  Sometimes I exaggerate for effect.

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About Scott Sumner 492 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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