Most people take economic progress for granted. They assume next year will be better than the last. They expect new technologies and better devices to fill store shelves every five or six months. They hold off on buying the latest and greatest because, of course, the price will only drop.
Yet, most people are mistaken about economic progress.
History shows time and again that significant economic regress is possible. Unlike in America, economic relapse and distress have lasted for decades in many regions around the world, not just for the few months and years following a financial crisis.
Consider Zambia. Between the years of 1964 and 1995, the population of Zambia doubled. It received more humanitarian aid from Western governments than almost any other country. Its people were, along with the rest of the world, introduced to new technology like telecommunications and various agricultural innovations. Yet in 1995, Zambia’s real GDP per capita was actually smaller than it was in 1964. Its people earned less in real terms and had regular access to virtually none of the technologies introduced to them over those years. Life in Zambia was no better in 1995 than it was thirty years prior.
Or consider the Soviet Union. Between 1970 and 1979, the average life expectancy for a Russian male dropped by an entire year, even as that for an American male (and most other Western people) grew by almost three years. This was accompanied by snail-pace growth in household income and personal savings.
Only in a select few countries around the world do people have no doubt that the future will be better than the past.
Still unconvinced? Consider Haiti, where per capita income has remained largely unchanged since 1960. Or Burundi, where GDP dropped more than one-third between 1990 and 2003. Or Sudan, Madagascar, Guinea, Nicaragua. The same goes for literally hundreds, if not thousands, of small and large economic zones around the world.
In that light, it’s easy to see why it’s wrong to assume economic progress will accompany the passage of time. For many people around the world, just the opposite is expected—every passing year brings only new challenges and economic strife, as people struggle even to earn a living. Only in a select few countries around the world do people have no doubt that the future will be better than the past.
But having established that economic progress is anything but a given, what causes it in the first place? Why have Americans seen such consistent economic growth that we routinely expect it to continue in the future? And what—if anything—can we do to make sure it does, indeed, continue?
I’ll answer that in my next post.