Naked Economics by Wheelan, Charles (spanish books to read .txt) 📕

came up with a novel way to express our economic progress over the course of the twentieth century: Compare how long we had to work in 2000 to buy basic items with how long we had to work to buy the same items in 1900. As the officials at the Dallas Fed explain, “Making money takes time, so when we shop, we’re really spending time. The real cost of living isn’t measured in dollars and cents but in the hours and minutes we must work to live.”1

So here goes: A pair of stockings cost 25 cents in 1900. Of course, the average wage at the time was 14.8 cents an hour, so the real cost of stockings at the beginning of the twentieth century was one hour and forty-one minutes of work for the average American. If you walk into a department store today, stockings (pantyhose) are seemingly more expensive than they were in 1900—but they’re not. By 2000, the price had gone up, but our wages had gone up even faster. Stockings in 2000 cost around $4, while America’s average wage was over $13 an hour. As a result, a pair of stockings cost the average worker only eighteen minutes of time, a stunning improvement from an hour and forty-one minutes a century earlier.

The same is true for most goods over most long stretches of time. If your grandmother were to complain that a chicken costs more today than it did when she was growing up, she would be correct only in the most technical sense. The price of a three-pound chicken has indeed climbed from $1.23 in 1919 to $3.86 in 2009. But grandma really has nothing to complain about. The “work time” necessary to earn a chicken has dropped remarkably. In 1919, the average worker spent two hours and thirty-seven minutes to earn enough money to buy a chicken (and, I’m guessing, at least another forty-five minutes for the mashed potatoes). In short, you would work most of your morning just to earn lunch. How long does it take to “earn” a chicken these days? Just under thirteen minutes. Cut out one personal phone call and you’ve got Sunday dinner taken care of. Skip surfing the web for a little while and you could probably feed the neighbors, too.

Do you remember the days when it was novel, perhaps even mildly impressive, to see someone speaking on a cellular phone in a restaurant? (Okay, it was a short stretch of time, but a cell phone did have a certain cachet in the mid-1980s.) No wonder; back then a cell phone “cost” about 456 hours of work for the average American. Almost three decades later, cell phones are just plain annoying, in large part because everyone has one. The reason everyone has one is that they now “cost” about nine hours of work for the average worker—98 percent less than they cost twenty years ago.

We take this material progress for granted; we shouldn’t. A rapidly rising standard of living has not been the norm throughout history. Robert Lucas, Jr., winner of the Nobel Prize in 1995 for his numerous contributions to macroeconomics, has argued that even in the richest countries, the phenomenon of sustained growth in living standards is only a few centuries old. Other economists have concluded that the growth rate of GDP per capita in Europe between 500 and 1500 was essentially zero.2 They don’t call it the Dark Ages for nothing.

We should also make clear what it means for a country to be poor by global standards at the beginning of the twenty-first century. As I’ve noted, India has a per capita GDP of $2,900. But let’s translate that into something more than just a number. Modern India has more than 100,000 cases of Hansen’s disease, better known to the world as leprosy. Leprosy is a contagious disease that attacks the body’s tissues and nerves, leaving horrible scars and limb deformities. The striking thing about Hansen’s disease is that it is easily cured, and, if caught early, recovery is complete. How much does it cost to treat leprosy? One $3 dose of antibiotic will cure a mild case; a $20 regimen of three antibiotics will cure a more severe case. The World Health Organization even provides the drugs free, but India’s health care infrastructure is not good enough to identify the afflicted and get them the medicine they need.3

So, more than 100,000 people in India are horribly disfigured by a disease that costs $3 to cure. That is what it means to have a per capita GDP of $2,900.

Having said all that, GDP is, like any other statistic, just one measure. Figure skating and golf notwithstanding, it is hard to collapse complex entities into a single number. The list of knocks against GDP as a measure of social progress is a long one. GDP does not count any economic activity that is not paid for, such as work done in the home. If you cook dinner, take care of the kids, and tidy up around the house, none of that counts toward the nation’s official output. However, if you order out food, drop your kids off at a child care center, and hire a cleaning lady, all of that does. Nor does GDP account for environmental degradation; if a company clear-cuts a virgin forest to make paper, the value of the paper shows up in the GDP figures without any corresponding debit for the forest that is now gone.

China has taken this last point to heart. Chinese GDP growth over the past decade has been the envy of the world, but it has come at the cost of significant environmental degradation. Of the twenty-five most polluted cities in the world, sixteen are in China (you’ve never heard of most of them). China’s State Environmental Protection Administration has begun to calculate “Green GDP” figures, which seek to evaluate the true quality of economic growth by subtracting the costs of environmental damage. Using this metric, China’s 10 percent