Economic Growth and Inequality

Last time I went to MeasuringWorth, I got data for both Real GDP and Real GDP per Capita, 1800-2016. This time I look at the "per Capita" numbers. I added a Hodrick-Prescott trend line with a smoothing factor of 10,000, same as before, and made the vertical axis a log scale again. It looks like this:

Graph #1: Real GDP per Capita, and Trend

The arches are still there. Bigger this time, I think. Here's the second graph:

Graph #2: 20-year Trend Growth of RGDP per Capita (14% more in 1820 than in 1800, etc)

The path of 20-year trend growth is still not linear. It will never be linear, no matter what some people say. But at least, if you put a linear trend line on it, the line goes up this time instead of down.

Yeah. But forget the "linear trend" nonsense. Look at the blue line. Look at it since the high point of 1953. It's all downhill since 1953, at a painful rate. We're down now at the bottom of all that, with no end in sight. You want to know why the world is bad as it is today? That 65-year downhill stretch tells you just about all you need to know.


Inequality? Yes, inequality, of course. That only reinforces what I'm saying. Our economy is growing terrible slow, and almost all the spoils go to the victors. I know. And then apply the same sort of inequality to the world as a whole, where we are the ones who are doing well, and most of the world looks upon us as "the one percent".

Of course it would be better if we reduce inequality. Better for some of us, at least. But you have to remember that the people who are doing well want their fair share just like the rest of us. And the blue line has been going downhill. So when they get theirs, things are normal for them and bad for the rest of us.

Apply that to the world as a whole. It explains everything, even terrorism.


Eliminating inequality cannot work as long as the blue line is going down, because when the blue line is going down, eliminating inequality makes everybody poor. The highest priority is not to eliminate inequality, but to improve economic growth.

Part 3 of 4