Comparative Histograms of World Economic Powers
Jan 20, 2008 at 09:42PM 8 Comments Here are 3 graphs that I've come across in the past 24 hours that truly express the scale of the U.S. economy (output as GDP) compared to other countries throughout history.
The first, from Greg Minkiw's blog referencing Michael Milken's piece in the Wall Street Journal:
And then Catherine Mulbrandon interprets it, but going back 500 years:
And then after an hour or so rifling through my bookshelves, I found my folded up copy of the Rand McNally Histograph of World History, showing the rise and fall of peoples of the past 4,000 years. (Shown here is the bottom 6 inches of a 6' long map. Click the link above to see just how long this map is...!) Sorry for the cruddy image here, but it is highly detailed and shrinks down badly. (The U.S. is the blue band, 2nd from the left. India, China and Japan are the last three bands on the right)
Michael Milken explains quite succinctly the sudden appearance and bulge of the United States in historical context [from Mankiw's post]:
China and India combined to produce nearly half the world's economic output in 1820 compared to just 1.8% for the U.S. Our remarkable growth since 1820 has benefited from democratic institutions, a belief in capitalism, private property rights, an entrepreneurial culture, abundant resources, openness to foreign investment, the best universities, immigration and relatively transparent markets.
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Reader Comments (8)
But those are terribly misleading graphs. The first somehow implies that some total (of what?) has gone from 50% in 1820 to 40% in 2001. It appears that China has had more "output" than the US during that whole period, and that even India has outpaced the US every year since 1820. It could also reasonably be read to say that in 2001, India produced 40% of the worlds output, compared to the US's 18% or so. Is that right?
i agree that these graphs might be misleading, which i think is the problem with this histogram graph type. the graphs plot the relative percentages of each country in question against the *entire* output of all countries in the world. therefore if india and the u.s. gdp grows in absolute terms in a given year, the graph adjusts again simply to show the relative percentages of those increases against everyone else's (others could all have grown as well). i think the utility of this type of graph are the *relative* sizes over time. these histograms do not plot the growing output of aggregate gdp's overall. (aggregate world gdp has obviously grown in absolute terms overall for the past x hundred years of course.) thanks for your comment.
Andrew, you're misinterpreting the top chart (it's a very poor chart).
china is only about 10% in 2001, usa 18%, india 5%.
China and India combined to produce nearly half the world's economic output in 1820 compared to just 1.8% for the U.S. Our remarkable growth since 1820 has benefited from democratic institutions, a belief in capitalism, private property rights, an entrepreneurial culture, abundant resources, openness to foreign investment, the best universities, immigration and relatively transparent markets.
while the graphs are interesting, the above quote is ridiculous on it's face. china was invaded and divvied up among many colonial nations into 'spheres of influence' that saw any chinese production being absorbed into their 'GDPs'
"At the start of the 20th century, the Boxer Rebellion threatened northern China. This was a conservative anti-imperialist movement that sought to return China to old ways. The Empress Dowager, probably seeking to ensure her continued grip on power, sided with the Boxers when they advanced on Beijing. In response the Eight-Nation Alliance invaded China. Consisting of British, Japanese, Russian, Italian, German, French, US and Austrian troops, the alliance defeated the Boxers and demanded further concessions from the Qing government." - <A href="http://en.wikipedia.org/wiki/China_history#Qing_Dynasty">Brief History of China from wikipedia
"For example, between the 1870s and the 1910s, although the Chinese Empire still existed as a sovereign country, it was divided into 6 SOI zones officially in which Russia took the area north of the Great Wall, Germany the Shandong Province, Japan the Fujian Province, Britain the Yangtze River basin, France the southwestern Chinese provinces bordering French Indochina and Britain/France jointly the Guangdong Province." - <A href="http://en.wikipedia.org/wiki/Sphere_of_influence">Sphere of influence article on Wikipedia
that kind of exploitation does not reflect kindly upon a nation's GDP.
as to india, it came under the control of the east india company by the late 18th century, and by the 19th century(<A href="http://en.wikipedia.org/wiki/British_India">1858, apparently) officially became britain's source of cheap materials and labour(indians being enslaved and dumped as far away as south africa and west indies), often referred to as 'the crown jewel', a cruel joke since many of the crown jewels probably came from indian mines. and india was crippled when given independence(partition anyone?) in a way that took away a lot of the fertile lands that were originally part of historic india.
the US conversely followed a mostly isolationist policy, with small but successful efforts at colonialism of it's own(philippines, hawaii etc.) and really only entered this phase of prosperity after the second world war thanks to a mildly redistributive econo-social policy(GI Bill etc) and a reasonably strong social safety net.
Also India and China were hardly reaping the benefits themselves but rather their colonial masters were stripping the GDP outputs and funneling them back to their respective countries. Both were colonised by more than 1 country during these periods and it is questionable whether either would be worthy of comparison if it were not for this.
And what is your point? That today is an end of an era of credit expansion based on the dollar as a reserve?
http://www.emergingsouth.net/there-is-a-limit-to-the-things-we-can-buy/
Would be intriguing to read how you think the histogram will evolve the coming 20 years. Our kids will come out of university by that time.
What I appreciate about this is the clear implication that the USA is not, and has never been, economically dominant over Western Europe, a region of the world equal in size and population to us. Western Europe (the EU, basically, as the nation states are quickly converging into a new entity not dissimilar to the United States of America) and the US are the new superpowers, but the current administration doesn't seem to recognize this emerging reality.These charts really make the world's power structures crystal clear.
Of course, the whole structure can be thrown to the winds by violence -- war and terrorism -- perpetrated by entities both wealthy and impoverished.
The larger problem is why we cherish the GDP. It measures spending but not quality of spending and this is the problem. According to the GDP, it's great that we spend more than we can afford to. Disasters (natural and man-made) are great for the GDP but not for overall value. War, pestilence, divorce? All great for the GDP. So what?
You might consult the GPI (Genuine Progress Indicator) for an alternative view. This offsets spending that isn't good for society. This shows that our real spending power has dropped almost by half since 1950, instead of doubling (which the GDP shows). That's why two-income households are still finding it hard to live the "American Dream" while the GDP says we should be living large.