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2010 December 08 Wednesday
Medieval England Higher Living Standards Than Africa Today

Better to live in Medieval England than Zaire of today. Higher living standards, the castles were in much better shape than they are today, and the population wasn't growing rapidly.

New research led by economists at the University of Warwick reveals that medieval England was not only far more prosperous than previously believed, it also actually boasted an average income that would be more than double the average per capita income of the world’s poorest nations today.

In a paper entitled British Economic Growth 1270-1870 published by the University of Warwick’s Centre on Competitive Advantage in the Global Economy (CAGE) the researchers find that living standards in medieval England were far above the “bare bones subsistence” experience of people in many of today’s poor countries.

The figure of $400 annually (as expressed in 1990 international dollars) is commonly is used as a measure of “bare bones subsistence” and was previously believed to be the average income in England in the middle ages.

However the University of Warwick led researchers found that English per capita incomes in the late Middle Ages were actually of the order of $1,000 (again as expressed in 1990 dollars). Even on the eve of the Black Death, which first struck in 1348/49, the researchers found  per capita incomes in England of more than $800 using the same 1990 dollar measure. Their estimates for other European countries also suggest late medieval living standards well above $400.

These results provide further support for the evidence that Gregory Clark lays out in his book A Farewell to Alms: A Brief Economic History of the World. The pre-industrialization Malthusian Trap had such high death rates from disease and influences reducing fertility that human populations lived less resource-poor lives than people in Malthusian Trap nations in Africa today.

This new figure of $1,000 is not only significantly higher than previous estimates for that period in England – it also indicates that on average medieval England was better off than some of the world’s poorest nations today including the following (again average annual income as expressed in 1990 dollars).

  • Zaire $249
  • Burundi $479
  • Niger $514
  • Central African Republic $536
  • Comoro Islands $549
  • Togo $606
  • Guinea Bissau $617
  • Guinea $628
  • Sierra Leone $686
  • Haiti $686
  • Chad $706
  • Zimbabwe $779
  • Afghanistan $869

It is worth noting that the efforts of Bill Gates to cure the many diseases of Africa will increase poverty. Weakened immune systems due to malnutrition lead to more disease. If people get their diseases cured they will live longer to compete more with each other for limited food spread out over even more people. The result: lower living standards.

Africa can not rise up without huge increases in average skill levels and productivity combined with equally large declines in fertility. Curing diseases will just make the already severe poverty worse.

By Randall Parker    2010 December 08 11:01 PM Entry Permalink | Comments (7)
2005 July 06 Wednesday
How Much Does A Dollar A Day Buy In Malawi?

Xanthe Scharff has an article in the Christian Science Monitor about a Malawian mother of 4 children Selina Bonefesi and her husband Bonefesi Malema and how they live on a dollar a day.

Mrs. Bonefesi has a small business making fritters - fried cakes made of wheat, salt, sugar, and yeast.

....

The fruits of her labor are 150 small fritters and 150 large fritters, which will sell for about $.02 and $.04, respectively. Her customers are her neighbors, schoolchildren hungering for a midmorning snack, and people headed to the market three miles past her town. They all know Selina's house and yell out to her from the yard for service with a smile.

I don't know how big these fritters are or how many calories are in each fritter. But I'm struck by their low prices. I also wonder whether this family eats some of the fritters themselves.

Scharff says 4 donuts cost this family 16 cents. You certainly can't buy a donut in a donut shop in the United States for 16 cents, let alone multiple donuts. But how big are these donuts? What are they made from?

She spent all of 50 cents (US dollars) for trousers and two blouses. Doesn't this suggest that a dollar buys a lot more stuff in Malawi?

On a new day, Selina walks the three miles to the market. With the money that's left over from buying $3.92 worth of fritter supplies, she'll purchase fish ($.24), tomatoes ($.08), and practical items - soap, lotion, and salt, for a total of $.51. Trousers and two blouses for her youngest children tally $.50 after bargaining down the price. Next week she'll give her son $1.25 to select his clothes but will spend up to $1.60 on her daughter, knowing the importance of an attractive wrap. She motions to the brightly colored cloth that covers her legs. "If a woman has more than one of these, then she is a real woman," she says.

The $3.92 buys enough supplies for the 150 large fritters and 150 small fritters. Those sell for about $9 total.

Since salaries are very low in most occupations in Malawi the cost of school tuition is incredibly low as well.

They do, however, consistently pay Sifiledi's yearly tuition bill of $29.09 and a per annum of $6.46 for school supplies and smart pink-and-blue uniforms for the three school-going children.

I'm going to guess the school building is incredibly cheap and the construction is well below Western standards. But the kids can stll receive instructions.

These people are extremely poor, without a doubt. But when one hears about some Third Worlders living on something like a dollar a day one can't look at such numbers from the standpoint of prices we pay in developed countries. This Christian Science Monitor article should have provided more data on weights of what was purchased. But even from the details provided it seems clear that a dollar buys a lot more of the bare necessities in Malawi than it does in the United States or Europe.

Meanwhile Der Speigel has a good article on how aid money to Africa hasn't helped any.

Money is, for the Europeans, the solution to all of Africa's problems. But despite yearly payments of, at last count, some $26 billion, the majority of the continent resembles something approaching one big emergency military hospital.

Already today there are increasing numbers of Africans who call for an end to this sort of support. They believe that it simply benefits a paternalistic economy, supports corruption, weakens trade and places Africans into the degrading position of having to accept charity. "Just stop this terrible aid," says the Kenyan economic expert James Shikwati.

...

Often, what started out so promising ends up as a fiasco. Hendrik Hempel, who works for the German Society for Technical Cooperation (GTZ), helped renovate a state-owned farm in North Eritrea after the war with Ethiopia. For years he literally created a blooming landscape.

But Hempel's case became a silent indictment of the incompetence of the ruling government party. He managed to get better yields than the state-run farms. But despite his success, he was forced to give up when the government suddenly installed hundreds of former freedom fighters, who had been left without work after a number of state-run farms had gone bust, as paid employees in his business.

Still, Africa has some bright spots.

Taking office in 1995, current president Benjamin Mkapa vowed to move Tanzania into the middle rank of the world's economies by 2025. He pushed reform forward, most importantly by dismantling the moribund state mining company and offering tax and other incentives to private firms. The result was a boom in the mining of gold, diamond and tanzanite, albeit with a frightening rise in dangerous, privately owned mines. Still, by last year, mining had surpassed agriculture as the nation's leading export industry, bringing in $652 million and powering GNP growth to 6.7 percent this year, up from 4.2 percent in 1996. Tanzania is now among Africa's fastest-growing economies. Foreign reserves are healthy. Inflation stands at a modest 4.2 percent. Government tax revenues have quadrupled to more than $1.7 billion.

As long time readers know, I think the prospects for Africa will be bad for decades to come. But Africa could certainly be made less bad. If Western aid to governments gets cut back and more money goes toward problems whose improvement would allow greater economic growth Africa could do much better than it is doing today. For example, food fortification with micronutrients would raise average IQs. Fortification with vitamins, iodine, and other micronutrients would do more to raise Africa's growth rate than the hundreds of billions on projects funded through African governments. Vitamins and minerals are cheap. To give just one example off the top of my head: the proposed addition of vitamin D fortification to the US food supply has been estimated to add an annual cost of well below $20 million (from memory, sorry no URL). Africans don't need vitamin D. But they do need vitamin A, iodine, and some other micronutrients essential for brain development. If all US aid to Africa was aimed solely at food fortification then that alone would be enough to eliminate the vast bulk of African micronutrient deficiencies. Also, development of vaccines holds the potential of dramatically reducing brain damage by malaria and other diseases. Again, this would increase economic growth.

By Randall Parker    2005 July 06 01:04 PM Entry Permalink | Comments (2)
2005 January 27 Thursday
Thinking About Economic Development And Pollution

The industrialization of China and India pose a significant threat to the world's environment because a large number of people in those countries are going to pass through a phase where they are engaged in enough industrial activity to generate pollution but where they are going to have earnings per person so low that they will not be strongly inclined to make political demands for reduction of pollution.

Economists have noted (and, yes, I need to go dig up some links in support of these points) that there are threshold levels of per capita GDP where populaces begin using different types of products. So, for example, there is a per capita GDP level at which laundry detergent demand becomes noticeable and other per capita GDP levels at which the demand for replaceable blade shavers and electric shavers start to be felt. This phenomenon is found for a large variety of products and services. Consumer goods companies such as Procter & Gamble use this knowledge as a guide for when to try to introduce various products and types of packaging in different countries. Even the sizes of portions sold change as people become more affluent.

Economists even argue that there is a level of living standard at which populaces will begin to make substantial demands of political systems to reduce pollution. As living standards continue to rise the demand for cleaner environments inevitably becomes stronger as people reach the point of having satisfied other desires. Among industrialized countries living standards had some influence on which countries developed environmental movements first. The United States, with a higher per capita GDP than Europe, adopted many environmental regulations before European countries did and, for example, banned the use of lead in gasoline many years before most European countries did. Also, leaded gasoline continue to be used in Mexico many years after it was banned in the United States. This makes sense. Mexicans were poorer and were more concerned about getting cheaper gas and cheaper cars than in getting cleaner air.

This brings us to China and India. When the United States and Britain went through their industrial revolution they had smaller populations than they have today. But China and India are each multiples larger than the current US population. So this strikes me as a problem. A few billion people are going to go through a stage where they generate more pollution but where they are not going to be making enough money to care all that much.

Will the economic development of India and China inevitably lead to massive increases in the amounts of air and water pollution coming from these countries? Well, we have a few things going for us I think.

One factor that weighs against a worst case scenario for increased pollution is an uneven rate of development in different regions in each country. The Chinese coastal provinces could conceivably reach average living standards high enough to trigger adoption of local area environmental regulations before the hundreds of millions of inland Chinese start to engage in much pollution generating economic activity.

Also, technologies that are cleaner ways to do various industrial processes exist today and have come down in price since first being developed. For example, the cost of reducing car emissions is much lower than it was in the 1970s. So resistance to environmental regulations based on costs should not be as great in China and India was it was in the United States.

Plus, the threats to human health and to the environment that are posed by pollution are much better understood today than they were 50 or 100 years ago. So arguments for economic benefits from pollution reduction are easier to make.

Still, China and India have a lot of people. Various types of pollution seems likely to increase in both countries for at least the next couple of decades. Will these sources of pollution become a serious problem for the rest of the world? Any educated guesses with real facts to back them up?

By Randall Parker    2005 January 27 02:31 AM Entry Permalink | Comments (9)
2004 December 30 Thursday
Milestone: More Than Half The Human Race Has Piped Water

Half the human race has piped water for the first time in history.

Across the developing world, some 700 million people have gained a household connection to drinking water since 1990 - and helped the world reach a crucial tipping point. Now for the first time, more than half the globe's people have drinking water piped into their homes, according to an August report from the World Health Organization (WHO) and UNICEF.

While a lot has been written about a supposed coming global water shortage here is this very positive trend that has gotten far less press. My guess is that as the industrialization of China and South Asia continues the resulting rising affluence will create the demand from hundreds of millions of people for much more indoor plumbing and better sanitation. That will reduce the incidence of diseases, save huge amounts of time, and make much more time available for education and for the creation of wealth.

Of course the increase in indoor plumbing and of water piped through neighborhoods is reducing the risk of water-borne disease. But it is having a number of other consequences that are perhaps less immediately obvious to most of us First Worlders. Women who no longer have to spend a large part of their day going to get water now have a lot of time to engage in wealth generating and educational activities.

For instance, Tanzanians are building new schools in just five months in watered districts, where women have time to swing hammers. Equivalent projects drag on for eight months or more in areas where women spend their days fetching water, according to the Tanzanian Embassy in the United States. What's more, children who don't need to haul water are more apt to go to school and break a cycle of poverty, says Ms. Smith-Nilson.

Will this virtuous cycle continue? My guess is that progress will continue in most of South Asia and in China. But will higher population growth rates in the most backward countries of Africa overwhelm any advances there?

By Randall Parker    2004 December 30 01:31 AM Entry Permalink | Comments (2)
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