There is a common misconception that increasing progress and prosperity have been the norm for as long as human beings have been around.
History reveals that this is decidedly not the case.
Imagine, for example, that the Roman statesman Cicero in the year 50 B.C. was magically invited to visit Thomas Jefferson at Monticello more than 1,800 years later.
Cicero would travel to Virginia the same way Jefferson would to visit Rome all those years later.
He would ride a horse to the nearest port and trust his fate to a windblown ship.
When Cicero arrived at Monticello months later, things would look quite familiar.
Jefferson’s home was heated by fire in the winter, and the doors and windows were left wide open in the summer, the same as in ancient Rome.
Jefferson would read by candlelight, eat mostly what he grew, use an outhouse and be attended by his slaves, the same as Romans 18 centuries earlier.
Cicero would learn that most of Jefferson’s six children did not survive early childhood. Nothing new there. This was sadly the case for most of human history.
Except for a few notable innovations – like the printing press, gunpowder and the compass – life in 1800 was hardly distinguishable from life almost two millennia earlier.
Since then, however, there has been an explosion in human progress and prosperity.
Economic historian Deirdre McCloskey calls it the “Great Enrichment,” a period of exponential wealth creation that started more than 200 years ago and is still accelerating.
This is plainly visible in the quality of your transportation, the speed of your communications, your many laborsaving devices, and the huge variety of goods, services and outright luxuries available to you at the click of a button.
Thomas Jefferson did not have electricity, cars, trains, airplanes, microwave ovens, central heat and air, radio, television, cameras and video recorders, landlines and smartphones, computers, lasers, batteries, the World Wide Web, antibiotics, vaccines, pacemakers, artificial hearts, MRI scans, gene therapies, and countless other lifesaving and life-enhancing innovations.
Moreover, while the goods and services we want get more expensive over time (thanks to inflation), they require us to work less to get them.
The authors analyzed the prices of hundreds of commodities, goods and services spanning two centuries and found that resources became not scarcer but more abundant as the population grew.
This was especially true when they looked at “time prices,” how long people must work to buy something.
Nominal prices are expressed in dollars and cents. But time prices are expressed in hours and minutes.
If, for example, a barrel of oil costs $90 and you earn $15 an hour, the time price is six hours.
If the cost rises to $100 a barrel and you earn $20 an hour, the time price is five hours.
Even though the nominal cost is higher, the time price – how long you’d need to work to buy it – is lower.
Time prices are an excellent way to measure increases in human well-being over time.
Especially since inflation cannot be overstated or understated, as current prices and wages are used at every point on the timeline.
In my last column, I noted that the authors measured the costs of 50 commodities between 1980 and 2000.
The average time price decline of those commodities – including oil, natural gas, wheat, cotton, soybeans, beef, corn, pork and sugar – was a whopping 75.2%.
In other words, a blue-collar worker had to work 75% less to afford the same amount of those commodities.
The same thing happened with finished goods.
Over the same 40-year period, the time price of a utensil set declined 51%, a dishwasher declined 62%, a washer declined 65%, men’s clothing declined 72%, a bicycle declined 74%, a vacuum declined 83% and a food processor declined 86%.
It’s impossible, of course, to measure the 40-year time price decline in things like laptops, smartphones and flat-panel TVs because none of those were even imagined in 1980.
Home prices always seem high – and especially so today. Yet the cost of housing has also declined when measured in time prices.
For example, the average price of a square foot of housing in 1970 was $15.33, and the U.S. blue-collar hourly compensation rate was $3.93, indicating a time price of 3.9 hours per square foot.
In 2019, the average price of a square foot of housing was $88.89 and the blue-collar hourly compensation rate was $32.36, indicating a time price of 2.75 hours per square foot.
In other words, the time price of a house declined by nearly 30%.
And today’s houses are more energy efficient, contain numerous home appliances, and almost always include modern features like central heat and air and granite countertops.
It’s true that consumer prices have risen faster than wages over the last year and a half.
Yet when measured in decades, wages rise faster than prices, allowing Americans to buy more while working less.
This flies in the face of virtually everything the mainstream media tells us about the modern economy.
Indeed, George Mason University economics professor Donald Boudreaux writes that the authors of Superabundance “bust the myth of middle-class stagnation to smithereens.”
Skeptic magazine publisher Michael Shermer calls the book a “fact-filled reminder of how good our lives are compared to ages past.”
And Nobel Prize-winning economist Angus Deaton says it provides “hope that the doom-mongers will be wrong about the future, just as they always have been wrong about the past.”
How have Americans prospered so much and for so long? And why do most of us remain almost completely ignorant of our progress?
I’ll reveal the surprising answers in my next column.