Hourly Exam 1- Readings

Hourly Exam 1- Readings - Hourly Exam 1: Readings The...

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Hourly Exam 1: Readings The Industrial Revolution: Past and Future. By Robert Lucas Over the same period during which population has grown from 3 billion to 6.1 billion, total world production has grown much faster than population, from $6.5 trillion in 1960 to $31 trillion in 2000. The answer lies in the role and wealth of landowners, who receive about 30 percent to 40 percent of agricultural income. A nation of 10 million people with a per capita production of $600 per year has a total income of $6 billion. Thirty percent of $6 billion is $1.8 billion. In the hands of a small elite, this kind of money can support a fairly lavish lifestyle or build impressive temples or subsidize many artists and intellectuals. As we know from many historical examples, traditional agricultural society can support an impressive civilization. What it cannot do is generate improvement in the living standards of masses of people. The difference between the two curves is about constant up until 1800, reflecting the assumption that production per person was roughly constant prior to that date. Then in the 19th century, growth in both series accelerates dramatically, and production growth accelerates more. European imperialism brought advances in technology to much of the colonized world, and these advances led to increases in production that could, as in British India, be impressive. But the outcome of colonial economic growth was larger populations, not higher living standards. What occurred around 1800 that is new, that differentiates the modern age from all previous periods, is not technological change by itself but the fact that sometime after that date fertility increases ceased to translate improvements in technology into increases in population. That is, the industrial revolution is invariably associated with the reduction in fertility known as the demographic transition . e. The model predicts that the living standards of working people are maintained at a roughly constant, “subsistence” level, but with realistic shares of income going to landowners, the theory is consistent as well with high civilization based on large concentrations of wealth. As family income rises, spending on children increases, as assumed in Malthusian theory,
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Hourly Exam 1- Readings - Hourly Exam 1: Readings The...

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