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What is the Great Enrichment?

In the last 200 years, according to economist Deirdre McCloskey, per capita income in the capitalist countries has grown from $1-3 per person per day to over $100 per person per day, in real dollars. There has been nothing like it, ever.

For more, see here, here and here.

The Great Enrichment

 

This page shows the trend of per-capita daily income in the United States since 1800.

The Story of the Great Enrichment

US Per Capita Income Since 1800

Chart E.01: US Per Capita Income Since 1800

US Per Capita Income in Log Scale

Chart E.02: US Per Capita Income in Log Scale

Back in 1800, the per capita income per day in the United States was just over $4 per person per day. In 2009 dollars. That includes everyone, workers, housewives, babies, old folks. By 2020, using projected population and GDP forecasts, the daily per-capita income should hit $150 per person per day. So in 220 years, the real income of the average person in the United States will be over 37 times higher than back in 1800.

Notice the most notable notches in the curve in Fig E.01. They occur at the Great Depression in the 1930s and the Great Recession in 2009-2010.

But the exponential curve in Fig E.01 does not give us the growth rate. To do that we need a logarithmic curve. In a log curve, a constant growth rate in per capita income would appear as a straight line. You can see that in the log chart in Fig E.02 the growth rate starts out pretty low, then starts a solid and consistent growth rate in the 1840s that lasts until the Crash of 1907. Then per-capita growth slows up until after the Great Depression and World War II. Then from 1950 to 2008 growth in per-capita income is pretty solid and consistent. The slow growth since the Great Recession is pretty clear. We may hope that it resumes its upward trend.

You can compare the US experience of the Great Enrichment with the rather similar experience in Great Britain here.

The Global Great Enrichment

Chart E.03: Global Per Capita Income in Log Scale

Chart E.03 shows the US Great Enrichment against the other great nations of the world. You can see that in the 1820s countries like Germany, Russia, India, China, and Japan were essentially agricultural with an income of about $600 per capita per year in 1990 dollars. But each of these nations eventually began a takeoff into Enrichment. Notice the dips; each of these represents an episode of unimaginable human misery.

Data from Table 3.4: GDP per capita in selected countries, 1820-2010 in Bolt, jutta, Marcel Timmer and Jan Luiten van Zanden (2014), “GDP per capita since 1820”, in Jan Luiten van Zanden, et al. (eds.), How Was Life?: Global Well-being since 1820, OECD Publishing. link

Data since 2010 from international data series at St. Louis FRED.

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But What Does It Mean?

The great question of the modern era is: what did it? How did human society transform itself so remarkably from the agricultural society that obtained for the last ten thousand years into the modern industrial and post-industrial world of today? There are, of course, many answers on offer. Here are just a few.

The answer from Deirdre McCloskey is “trade-tested betterment.” She means by this the process of middle-class people offering onto the market ideas, products, and services for improvement in physical and social living standards, and then abiding by the verdict of the market. McCloskey develops this idea in her “Bourgeois Era” books.

Another answer is “capital accumulation,” most recently argued in Capital in the Twenty First Century by Thomas Piketty. This represents modern prosperity as the result of people saving their income and thus accumulating capital.

Many people believe that it was the Enlightenment, a new birth of reason that flowered in the 17th century and replaced in human minds the superstitions of the Medieval Era.

In his book The Protestant Ethic and the Spirit of Capitalism, Max Weber famously argued that the Protestant ethic that emerged out of the Reformation encouraged people to engage in work in the secular world and accumulate wealth for investment.

In the narrative established by Marxism, the welfare of the working class depends on revolution to break the natural tendency of capitalism to lead to the immiseration and exploitation of the workers and the petit-bourgeoisie as market competition squeezes capitalist profits and thus the wages of the workers.

In the narrative of social democracy the welfare of the workers depends upon the rise of an enlightened elite of politicians and experts to enact beneficial social legislation to protect workers from the unhampered action of the labor market.

In the environmentalist narrative our modern prosperity rides on the back of a reckless use of non-renewable fossil fuels that has despoiled the Earth and risks a catastrophic anthropogenic global warming from a buildup of carbon dioxide in the atmosphere.

In a technological narrative the Great Enrichment is the result of several technological revolutions, starting with steam power in the 19th century, the development of electric energy in the early 20th century, the internal combustion engine throughout the 20th century, and the electronics and information revolutions of the late 20th century.

Needless to say, there are many competing theories out there that attempt to explain our extraordinary age. It would probably be a good idea if we can come to some kind of loose agreement about What Did It.

Suggested Video: All About Welfare

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Federal Budget for FY25 Released

On March 11, 2024, we updated usgovernmentspending.com with the numbers from the Public Budget Database in the Budget of the United States Government for Fiscal Year 2025

Here is how headline budget estimates for the upcoming FY 2024 fiscal year have changed since the release of the FY 2024 budget a year ago in Winter 2023.

Federal Budget Changes for 2024
$ billionEstimate for 2024
in FY2024 Budget
Estimate for 2024
in FY2025 Budget
Change
Federal Outlays$6,371.8$6,940.9 +$569.1
Federal Receipts$4,802.5$5,081.6+$279.1
Federal Deficit$1,569.4$1,859.4+$290.0

You can see line item changes from budget to budget here. You can compare budget estimates with actuals here.

Account level spending estimates through FY 2029 come from the Outlays table in the Public Budget Database and were updated on usgovernmentspending.com on March 11, 2024.

Account level budget authority estimates through FY 2029 come from the Budget Authority table in the Public Budget Database and were updated on usgovernmentspending.com on March 11, 2024. 

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Federal Budget for FY25 Released

On March 11, 2024, we updated usgovernmentspending.com with the numbers from the Public Budget Database in the Budget of the United States Government for Fiscal Year 2025

Here is how headline budget estimates for the upcoming FY 2024 fiscal year have changed since the release of the FY 2024 budget a year ago in Winter 2023.

Federal Budget Changes for 2024
$ billionEstimate for 2024
in FY2024 Budget
Estimate for 2024
in FY2025 Budget
Change
Federal Outlays$6,371.8$6,940.9 +$569.1
Federal Receipts$4,802.5$5,081.6+$279.1
Federal Deficit$1,569.4$1,859.4+$290.0

You can see line item changes from budget to budget here. You can compare budget estimates with actuals here.

Account level spending estimates through FY 2029 come from the Outlays table in the Public Budget Database and were updated on usgovernmentspending.com on March 11, 2024.

Account level budget authority estimates through FY 2029 come from the Budget Authority table in the Public Budget Database and were updated on usgovernmentspending.com on March 11, 2024. 

Agency Debt Update for 2023
On March 11, 2024, usgovernmentspending.com updated its data for agency debt from the Federal Reserve Board database. Data is now available for the period 1945-2023. You can see our Agency Debt pag ...

US GDP for 2023 Updated
On January 19, 2024 usgovernmentspending.com updated its GDP series with the latest data from the Bureau of Economic Analysis, ...

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