20100929+slides - Economics 1: Fall 2010 J. Bradford...

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Unformatted text preview: Economics 1: Fall 2010 J. Bradford DeLong, Michael Urbancic, and a cast of thousands... hAp://delong.typepad.com/econ_1_fall_2010/ Ladies and Gentlemen, to Your i>Clickers... •  What is the most likely outcome for the U.S. budget come 2060? –  A. We will have raised taxes to pay for government health spending. –  B. We will have cut doctors wages and enslaved them by draSing them into a socialist naTonal health service. –  C. We will have abandoned our commitment to providing state ­ of ­the ­art health care to the sick and not just the wealthy. –  D. The health care fairy will have figured out a way for us all to have all the medically ­appropriate care we need for a surprisingly low private and public budgetary cost. –  E. The federal government as we know it will have collapsed, and those of us sTll alive will be starring involuntarily in a remake of “Mad Max: Beyond Thunderdome” Administrivia •  Complex dance for the midterm... –  Want to get more space... –  Want to avoid the ten ­minute caAle drive... •  Ashley, A[la, Ignacio, Sinaia, and Stephen secTons will take the midterm in Lewis 100 •  Anne, David, Gautam, Haozhe, Michaela, and Sandley secTons will take the exam in Wheeler Auditorium •  Reviews for midterm... –  Friday here, 12 ­1... •  Thank you for taking the midterm... –  It’s about us, not about you—feedback device... Economics 1: Fall 2010: Economic Growth J. Bradford DeLong September 27, 2010, 12 ­1 Wheeler Auditorium, U.C. Berkeley Ladies and Gentlemen, to Your i>Clickers... •  When was the Neolithic RevoluTon—the invenTon of agriculture? –  A. 50,000 BC –  B. 10,000 BC –  C. 3,000 BC –  D. 400 BC –  E. 1 AD The Bird’s Eye View: Before the InvenTon of Agriculture •  PopulaTon Status –  Maybe 100K in 48,000 BC? –  Buff •  And tall –  Short ­lived—life expectancy of 25? –  Maybe 5M in 8000 BC? •  Growth rate: –  That is 40000/25 = 1600 generaTons –  ln(50) = 4 –  4/1600 = 0.0025 = 0.25%/generaTon •  A healthy seAled populaTon with ample food doubles every generaTon •  Life was nasty –  You live a healthy life, but you watch your children die, and you die young The Bird’s Eye View: Agrarian SocieTes •  PopulaTon Status –  Maybe 5M in 8200 BC? –  Short: from 5’9” to 5’1” •  Upper classes different –  Lose your teeth –  Petri dishes for bacteria –  Maybe 750M by 1800? •  Growth rate: –  That is 10000/25 = 400 generaTons –  ln(150) = 5 –  5/400 = 0.0125 = 1.25%/generaTon •  A healthy seAled populaTon with ample food doubles every generaTon •  Life was bruTsh—and short –  Life expectancy of 25? –  And you are really bored –  Your back doesn’t do too well either •  So you live an unhealthy life, andyou watch your children die, and you die young Guessing at Some Numbers •  Growth rates of populaTon –  –  –  –  HG: 0.01%/year AS: 0.05%/year EM: 0.2%/year >1800: 1.0%/year •  Growth rates of technological and organizaTonal knowledge –  –  –  –  HG: ???? AS: 0.01%/year EM: 0.09%/year IS: 2%/year –  –  –  –  AS: 0.05%/year EM: 0.2%/year EIS: 1.4%/year IS: 3.4%/year •  Growth rates of global GDP The Big Historical QuesTons •  What happened aSer 1800, and even more so aSer 1900? –  We call it the Industrial RevoluTon •  What happened aSer 1500? –  Not the market economy –  Limited government –  The Columbian Exchange •  What did not happen before 1500? –  They were, aSer all, about as smart as we are... •  We are going to dodge the big historical quesTons –  Simply note that they exist, and go on to describing what is 1800 The Great Divergence to 1968 Convergence to 2009 Why Divergence to 1968? •  The agrarian legacy –  China’s populaTon has grown by a factor of 7 since 1800 –  Egypt’s by a factor of 30 –  If most of your people are sTll unmechanized farmers, that is a huge set of headwinds •  The infrastructural task –  Even if most of your people aren’t unmechanized farmers and live in ciTes, a rapid populaTon growth rate means a large investment burden •  DifficulTes of technology transfer •  DifficulTes of government –  Communism –  CorrupTon Ladies and Gentlemen, to Your i>Clickers... •  Were Chinese living standards on average? –  A. Higher in 1820 than in 1968, and higher today than in 1968. –  B. Higher in 1820 than in 1968, and higher in 1968 than today. –  C. Lower in 1820 than in 1968, and higher in 1968 today? –  D. Lower in 1820 than in 1968, and higher today than in 1968? Why Convergence ASer 1968? •  •  •  •  End of High Communism Expansion of world trade Technology transfer But if you look at it, the big difference between before 1968 and aSer 1968 is the different desTnies of two countries –  China –  India –  If you count one ­country ­as ­one, rather than one ­ person ­as ­one, it is hard to see a paAern Test Your Knowledge •  What was the rate of populaTon growth before the Neolithic RevoluTon? •  What was the rate of populaTon growth during the Agrarian Age? •  What do we know about average living standards both before the Neolithic RevoluTon and during the Agrarian Age? •  What do we know about the pace of improvement of global knowledge during the Agrarian Age? •  How does the pace of growth of global knowledge during the Agrarian Age compare to the pace of growth since the Industrial RevoluTon began? ...
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