CHAPTER 8

WEALTH

Poverty has no causes,” wrote the economist Peter Bauer. “Wealth has causes.” In a world governed by entropy and evolution, the streets are not paved with pastry, and cooked fish do not land at our feet. But it’s easy to forget this truism and think that wealth has always been with us. History is written not so much by the victors as by the affluent, the sliver of humanity with the leisure and education to write about it. As the economist Nathan Rosenberg and the legal scholar L. E. Birdzell Jr. point out, “We are led to forget the dominating misery of other times in part by the grace of literature, poetry, romance, and legend, which celebrate those who lived well and forget those who lived in the silence of poverty. The eras of misery have been mythologized and may even be remembered as golden ages of pastoral simplicity. They were not.”¹

Norberg, drawing on Braudel, offers vignettes of this era of misery, when the definition of poverty was simple: “if you could afford to buy bread to survive another day, you were not poor.”

In wealthy Genoa, poor people sold themselves as galley slaves every winter. In Paris the very poor were chained together in pairs and forced to do the hard work of cleaning the drains. In England, the poor had to work in workhouses to get relief, where they worked long hours for almost no pay. Some were instructed to crush dog, horse and cattle bones for use as fertilizer, until an inspection of a workhouse in 1845 showed that hungry paupers were fighting over the rotting bones to suck out the marrow.²

Another historian, Carlo Cipolla, noted:

In preindustrial Europe, the purchase of a garment or of the cloth for a garment remained a luxury the common people could only afford a few times in their lives. One of the main preoccupations of hospital administration was to ensure that the clothes of the deceased should not be usurped but should be given to lawful inheritors. During epidemics of plague, the town authorities had to struggle to confiscate the clothes of the dead and to burn them: people waited for others to die so as to take over their clothes—which generally had the effect of spreading the epidemic.³

The need to explain the creation of wealth is obscured yet again by political debates within modern societies on how wealth ought to be distributed, which presuppose that wealth worth distributing exists in the first place. Economists speak of a “lump fallacy” or “physical fallacy” in which a finite amount of wealth has existed since the beginning of time, like a lode of gold, and people have been fighting over how to divide it up ever since.⁴ Among the brainchildren of the Enlightenment is the realization that wealth is created.⁵ It is created primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor. The corollary, just as radical, is that we can figure out how to make more of it.

The endurance of poverty and the transition to modern affluence can be shown in a simple but stunning graph. It plots, for the past two thousand years, a standard measure of wealth creation, the Gross World Product, measured in 2011 international dollars. (An international dollar is a hypothetical unit of currency equivalent to a US dollar in a particular reference year, adjusted for inflation and for purchasing-power parity. The latter compensates for differences in the prices of comparable goods and services in different places—the fact that a haircut, for example, is cheaper in Dhaka than in London.)

The story of the growth of prosperity in human history depicted in figure 8-1 is close to: nothing . . . nothing . . . nothing . . . (repeat for a few thousand years) . . . boom! A millennium after the year 1 CE, the world was barely richer than it was at the time of Jesus. It took another half-millennium for income to double. Some regions enjoyed spurts now and again, but they did not lead to sustained, cumulative growth. Starting in the 19th century, the increments turned into leaps and bounds. Between 1820 and 1900, the world’s income tripled. It tripled again in a bit more than fifty years. It took only twenty-five years for it to triple again, and another thirty-three years to triple yet another time. The Gross World Product today has grown almost a hundredfold since the Industrial Revolution was in place in 1820, and almost two hundredfold from the start of the Enlightenment in the 18th century. Debates on economic distribution and growth often contrast dividing a pie with baking a larger one (or as George W. Bush mangled it, “making the pie higher”). If the pie we were dividing in 1700 was baked in a standard nine-inch pan, then the one we have today would be more than ten feet in diameter. If we were to surgically carve out the teensiest slice imaginable—say, one that was two inches at its widest point—it would be the size of the entire pie in 1700.

Figure 8-1: Gross World Product, 1–2015

Source: Our World in Data, Roser 2016c, based on data from the World Bank and from Angus Maddison and Maddison Project 2014.

Indeed, the Gross World Product is a gross underestimate of the expansion of prosperity.⁶ How does one count units of currency, like pounds or dollars, across the centuries, so they can be plotted in a single line? Is one hundred dollars in the year 2000 more or less than one dollar in 1800? They’re just pieces of paper with numbers on them; their value depends on what people can buy with them at the time, which changes with inflation and revaluations. The only way to compare a dollar in 1800 with a dollar in 2000 is to look up how many one would have to fork over to buy a standard market basket of goods: a fixed amount of food, clothing, health care, fuel, and so on. That’s how the numbers in figure 8-1, and in other graphs denominated in dollars or pounds, are converted into a single scale such as “2011 international dollars.”

The problem is that the advance of technology confounds the very idea of an unchanging market basket. To start with, the quality of the goods in the basket improves over time. An item of “clothing” in 1800 might be a rain cape made of stiff, heavy, and leaky oilcloth; in 2000 it would be a zippered raincoat made of a light, breathable synthetic. “Dental care” in 1800 meant pliers and wooden dentures; in 2000 it meant Novocain and implants. It’s misleading, then, to say that the $300 it would take to buy a certain amount of clothing and medical care in 2000 can be equated with the $10 it would take to buy “the same amount” in 1800.

Also, technology doesn’t just improve old things; it invents new ones. How much did it cost in 1800 to purchase a refrigerator, a musical recording, a bicycle, a cell phone, Wikipedia, a photo of your child, a laptop and printer, a contraceptive pill, a dose of antibiotics? The answer is: no amount of money in the world. The combination of better products and new products makes it almost impossible to track material well-being across the decades and centuries.

Plunging prices add yet another complication. A refrigerator today costs around $500. How much would someone have to pay you to give up refrigeration? Surely far more than $500! Adam Smith called it the paradox of value: when an important good becomes plentiful, it costs far less than what people are willing to pay for it. The difference is called consumer surplus, and the explosion of this surplus over time is impossible to tabulate. Economists are the first to point out that their measures, like Oscar Wilde’s cynic, capture the price of everything but the value of nothing.⁷

This doesn’t mean that comparisons of wealth across times and places in currency adjusted for inflation and purchasing power are meaningless—they are better than ignorance, or guesstimates—but it does mean that they shortchange our accounting of progress. A person whose wallet contains the cash equivalent of a hundred 2011 international dollars today is fantastically richer than her ancestor with the equivalent wallet’s worth two hundred years ago. As we’ll see, this also affects our assessment of prosperity in the developing world (this chapter), of income inequality in the developed world (next chapter), and of the future of economic growth (chapter 20).

What launched the Great Escape? The most obvious cause was the application of science to the improvement of material life, leading to what the economic historian Joel Mokyr calls “the enlightened economy.”⁸ The machines and factories of the Industrial Revolution, the productive farms of the Agricultural Revolution, and the water pipes of the Public Health Revolution could deliver more clothes, tools, vehicles, books, furniture, calories, clean water, and other things that people want than the craftsmen and farmers of a century before. Many early innovations, such as in steam engines, looms, spinning frames, foundries, and mills, came out of the workshops and backyards of atheoretical tinkerers.⁹ But trial and error is a profusely branching tree of possibilities, most of which lead nowhere, and the tree can be pruned by the application of science, accelerating the rate of discovery. As Mokyr notes, “After 1750 the epistemic base of technology slowly began to expand. Not only did new products and techniques emerge; it became better understood why and how the old ones worked, and thus they could be refined, debugged, improved, combined with others in novel ways and adapted to new uses.”¹⁰ The invention of the barometer in 1643, which proved the existence of atmospheric pressure, eventually led to the invention of steam engines, known at the time as “atmospheric engines.” Other two-way streets between science and technology included the application of chemistry, facilitated by the invention of the battery, to synthesize fertilizer, and the application of the germ theory of disease, made possible by the microscope, to keep pathogens out of drinking water and off doctors’ hands and instruments.

The applied scientists would not have been motivated to apply their ingenuity to ease the pains of everyday life, and their gadgets would have remained in their labs and garages, were it not for two other innovations.

One was the development of institutions that lubricated the exchange of goods, services, and ideas—the dynamic singled out by Adam Smith as the generator of wealth. The economists Douglass North, John Wallis, and Barry Weingast argue that the most natural way for states to function, both in history and in many parts of the world today, is for elites to agree not to plunder and kill each other, in exchange for which they are awarded a fief, franchise, charter, monopoly, turf, or patronage network that allows them to control some sector of the economy and live off the rents (in the economist’s sense of income extracted from exclusive access to a resource).¹¹ In 18th-century England this cronyism gave way to open economies in which anyone could sell anything to anyone, and their transactions were protected by the rule of law, property rights, enforceable contracts, and institutions like banks, corporations, and government agencies that run by fiduciary duties rather than personal connections. Now an enterprising person could introduce a new kind of product to the market, or undersell other merchants if he could provide a product at lower cost, or accept money now for something he would not deliver until later, or invest in equipment or land that might not return a profit for years. Today I take it for granted that if I want some milk, I can walk into a convenience store and a quart will be on the shelves, the milk won’t be diluted or tainted, it will be for sale at a price I can afford, and the owner will let me walk out with it after a swipe of a card, even though we have never met, may never see each other again, and have no friends in common who can testify to our bona fides. A few doors down and I could do the same with a pair of jeans, a power drill, a computer, or a car. A lot of institutions have to be in place for these and the millions of other anonymous transactions that make up a modern economy to be consummated so easily.

The third innovation, after science and institutions, was a change in values: an endorsement of what the economic historian Deirdre McCloskey calls bourgeois virtue.¹² Aristocratic, religious, and martial cultures have always looked down on commerce as tawdry and venal. But in 18th-century England and the Netherlands, commerce came to be seen as moral and uplifting. Voltaire and other Enlightenment philosophes valorized the spirit of commerce for its ability to dissolve sectarian hatreds:

Take a view of the Royal Exchange in London, a place more venerable than many courts of justice, where the representatives of all nations meet for the benefit of mankind. There the Jew, the Mahometan, and the Christian transact together as tho’ they all profess’d the same religion, and give the name of Infidel to none but bankrupts. There the Presbyterian confides in the Anabaptist, and the Churchman depends on the Quaker’s word. And all are satisfied.¹³

Commenting on this passage, the historian Roy Porter noted that “by depicting men content, and content to be content—differing, but agreeing to differ—the philosophe pointed towards a rethinking of the summum bonum, a shift from God-fearingness to a selfhood more psychologically oriented. The Enlightenment thus translated the ultimate question ‘How can I be saved?’ into the pragmatic ‘How can I be happy?’—thereby heralding a new praxis of personal and social adjustment.”¹⁴ This praxis included norms of propriety, thrift, and self-restraint, an orientation toward the future rather than the past, and a conferral of dignity and prestige upon merchants and inventors rather than just on soldiers, priests, and courtiers. Napoleon, that exponent of martial glory, sniffed at England as “a nation of shopkeepers.” But at the time Britons earned 83 percent more than Frenchmen and enjoyed a third more calories, and we all know what happened at Waterloo.¹⁵

The Great Escape in Britain and the Netherlands was quickly followed by escapes in the Germanic states, the Nordic countries, and Britain’s colonial offshoots in Australia, New Zealand, Canada, and the United States. In a theory that could only have been thought up by an assimilated German Jew, the sociologist Max Weber proposed in 1905 that capitalism depended on a “Protestant ethic.” But the Catholic countries of Europe soon zoomed out of poverty too, and a succession of other escapes shown in figure 8-2 have put the lie to various theories explaining why Buddhism, Confucianism, Hinduism, or generic “Asian” or “Latin” values were incompatible with dynamic market economies.

Figure 8-2: GDP per capita, 1600–2015

Source: Our World in Data, Roser 2016c, based on data from the World Bank and from Maddison Project 2014.

The non-British curves in figure 8-2 tell of a second astonishing chapter in the story of prosperity: starting in the late 20th century, poor countries have been escaping from poverty in their turn. The Great Escape is becoming the Great Convergence.¹⁶ Countries that until recently were miserably poor have become comfortably rich, such as South Korea, Taiwan, and Singapore. (My Singaporean former mother-in-law recalls a childhood dinner at which her family split an egg four ways.) Since 1995, 30 of the world’s 109 developing countries, including countries as diverse as Bangladesh, El Salvador, Ethiopia, Georgia, Mongolia, Mozambique, Panama, Rwanda, Uzbekistan, and Vietnam, have enjoyed economic growth rates that amount to a doubling of income every eighteen years. Another 40 countries have had rates that would double income every thirty-five years, which is comparable to the historical growth rate of the United States.¹⁷ It’s remarkable enough to see that by 2008 China and India had the same per capita income that Sweden had in 1950 and 1920, respectively, but more remarkable still when we remember how many capitas this income was per: 1.3 and 1.2 billion people. By 2008 the world’s population, all 6.7 billion of them, had an average income equivalent to that of Western Europe in 1964. And no, it’s not just because the rich are getting even richer (though of course they are, a topic we will examine in the next chapter). Extreme poverty is being eradicated, and the world is becoming middle class.¹⁸

Figure 8-3: World income distribution, 1800, 1975, and 2015

Source: Gapminder, via Ola Rosling, http://www.gapminder.org/tools/mountain. The scale is in 2011 international dollars.

The statistician Ola Rosling (Hans’s son) has displayed the worldwide distribution of income as histograms, in which the height of the curve indicates the proportion of people at a given income level, for three historical periods (figure 8-3).¹⁹ In 1800, at the dawn of the Industrial Revolution, most people everywhere were poor. The average income was equivalent to that in the poorest countries in Africa today (about $500 a year in international dollars), and almost 95 percent of the world lived in what counts today as “extreme poverty” (less than $1.90 a day). By 1975, Europe and its offshoots had completed the Great Escape, leaving the rest of the world behind, with one-tenth their income, in the lower hump of a camel-shaped curve.²⁰ In the 21st century the camel has become a dromedary, with a single hump shifted to the right and a much lower tail on the left: the world had become richer and more equal.²¹

The slices to the left of the dotted line deserve their own picture. Figure 8-4 shows the percentage of the world’s population that lives in “extreme poverty.” Admittedly, any cutoff for that condition must be arbitrary, but the United Nations and the World Bank do their best by combining the national poverty lines from a sample of developing countries, which are in turn based on the income of a typical family that manages to feed itself. In 1996 it was the alliterative “a dollar a day” per person; currently it’s set at $1.90 a day in 2011 international dollars.²² (Curves with more generous cutoffs are higher and shallower but also skitter downward.)²³ Notice not just the shape of the curve but how low it has sunk—to 10 percent. In two hundred years the rate of extreme poverty in the world has tanked from 90 percent to 10, with almost half that decline occurring in the last thirty-five years.

Figure 8-4: Extreme poverty (proportion), 1820–2015

Sources: Our World in Data, Roser & Ortiz-Ospina 2017, based on data from Bourguignon & Morrison 2002 (1820–1992), averaging their “Extreme poverty” and “Poverty” percentages for commensurability with data on “Extreme poverty” for 1981–2015 from the World Bank 2016g.

The world’s progress can be appreciated in two ways. By one reckoning, the proportions and per capita rates I have been plotting are the morally relevant measure of progress, because they fit with John Rawls’s thought experiment for defining a just society: specify a world in which you would agree to be incarnated as a random citizen from behind a veil of ignorance as to that citizen’s circumstances.²⁴ A world with a higher percentage of long-lived, healthy, well-fed, well-off people is a world in which one would prefer to play the lottery of birth. But by another reckoning, absolute numbers matter, too. Every additional long-lived, healthy, well-fed, well-off person is a sentient being capable of happiness, and the world is a better place for having more of them. Also, an increase in the number of people who can withstand the grind of entropy and the struggle of evolution is a testimonial to the sheer magnitude of the benevolent powers of science, markets, good government, and other modern institutions. In the stacked layer graph in figure 8-5, the thickness of the bottom slab represents the number of people living in extreme poverty, the thickness of the top slab represents the number not living in poverty, and the height of the stack represents the population of the world. It shows that the number of poor people declined just as the number of all people exploded, from 3.7 billion in 1970 to 7.3 billion in 2015. (Max Roser points out that if news outlets truly reported the changing state of the world, they could have run the headline NUMBER OF PEOPLE IN EXTREME POVERTY FELL BY 137,000 SINCE YESTERDAY every day for the last twenty-five years.) We live in a world not just with a smaller proportion of extremely poor people but with a smaller number of them, and with 6.6 billion people who are not extremely poor.

Figure 8-5: Extreme poverty (number), 1820–2015

Sources: Our World in Data, Roser & Ortiz-Ospina 2017, based on data from Bourguignon & Morrison 2002 (1820–1992) and the World Bank 2016g (1981–2015).

Most surprises in history are unpleasant surprises, but this news came as a pleasant shock even to the optimists. In 2000 the United Nations laid out eight Millennium Development Goals, their starting lines backdated to 1990.²⁵ At the time, cynical observers of that underperforming organization dismissed the targets as aspirational boilerplate. Cut the global poverty rate in half, lifting a billion people out of poverty, in twenty-five years? Yeah, yeah. But the world reached the goal five years ahead of schedule. Development experts are still rubbing their eyes. Deaton writes, “This is perhaps the most important fact about wellbeing in the world since World War II.”²⁶ The economist Robert Lucas (like Deaton, a Nobel laureate) said, “The consequences for human welfare involved [in understanding rapid economic development] are simply staggering: once one starts to think about them, it is hard to think about anything else.”²⁷

Let’s not stop thinking about tomorrow. Though it’s always dangerous to extrapolate a historical curve, what happens when we try? If we align a ruler with the World Bank data in figure 8-4, we find that it crosses the x-axis (indicating a poverty rate of 0) in 2026. The UN gave itself a cushion in its 2015 Sustainable Development Goals (the successor to its Millennium Development Goals) and set a target of “ending extreme poverty for all people everywhere” by 2030.²⁸ Ending extreme poverty for all people everywhere! May I live to see the day. (Not even Jesus was that optimistic: he told a supplicant, “The poor you will always have with you.”)

Of course that day is a ways off. Hundreds of millions of people remain in extreme poverty, and getting to zero will require a greater effort than just extrapolating along a ruler. Though the numbers are dwindling in countries like India and Indonesia, they are increasing in the poorest of the poor countries, like Congo, Haiti, and Sudan, and the last pockets of poverty will be the hardest to eliminate.²⁹ Also, as we approach the goal we should move the goalposts, since not-so-extreme poverty is still poverty. In introducing the concept of progress I warned against confusing hard-won headway with a process that magically takes place by itself. The point of calling attention to progress is not self-congratulation but identifying the causes so we can do more of what works. And since we know that something has worked, it’s unnecessary to keep depicting the developing world as a basket case to shake people out of their apathy—with the danger that they will think that additional support would just be throwing money down a rat hole.³⁰

So what is the world doing right? As with most forms of progress, a lot of good things happen at once and reinforce one another, so it’s hard to identify a first domino. Cynical explanations, such as that the enrichment is a one-time dividend of a surge in the price of oil and other commodities, or that the statistics are inflated by the rise of populous China, have been examined and dismissed. Radelet and other development experts point to five causes.³¹

“In 1976,” Radelet writes, “Mao single-handedly and dramatically changed the direction of global poverty with one simple act: he died.”³² Though China’s rise is not exclusively responsible for the Great Convergence, the country’s sheer bulk is bound to move the totals around, and the explanations for its progress apply elsewhere. The death of Mao Zedong is emblematic of three of the major causes of the Great Convergence.

The first is the decline of communism (together with intrusive socialism). For reasons we have seen, market economies can generate wealth prodigiously while totalitarian planned economies impose scarcity, stagnation, and often famine. Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate information about need and availability far and wide, a computational problem that no planner is brilliant enough to solve from a central bureau.³³ A shift from collectivization, centralized control, government monopolies, and suffocating permit bureaucracies (what in India was called “the license raj”) to open economies took place on a number of fronts beginning in the 1980s. They included Deng Xiaoping’s embrace of capitalism in China, the collapse of the Soviet Union and its domination of Eastern Europe, and the liberalization of the economies of India, Brazil, Vietnam, and other countries.

Though intellectuals are apt to do a spit take when they read a defense of capitalism, its economic benefits are so obvious that they don’t need to be shown with numbers. They can literally be seen from space. A satellite photograph of Korea showing the capitalist South aglow in light and the Communist North a pit of darkness vividly illustrates the contrast in the wealth-generating capability between the two economic systems, holding geography, history, and culture constant. Other matched pairs with an experimental group and a control group lead to the same conclusion: West and East Germany when they were divided by the Iron Curtain; Botswana versus Zimbabwe under Robert Mugabe; Chile versus Venezuela under Hugo Chávez and Nicolás Maduro—the latter a once-wealthy, oil-rich country now suffering from widespread hunger and a critical shortage of medical care.³⁴ It’s important to add that the market economies which blossomed in the more fortunate parts of the developing world were not the laissez-faire anarchies of right-wing fantasies and left-wing nightmares. To varying degrees, their governments invested in education, public health, infrastructure, and agricultural and job training, together with social insurance and poverty-reduction programs.³⁵

Radelet’s second explanation of the Great Convergence is leadership. Mao imposed more than communism on China. He was a mercurial megalomaniac who foisted crackbrained schemes on the country, such as the Great Leap Forward (with its gargantuan communes, useless backyard smelters, and screwball agronomic practices) and the Cultural Revolution (which turned the younger generation into gangs of thugs who terrorized teachers, managers, and descendants of “rich peasants”).³⁶ During the decades of stagnation from the 1970s to the early 1990s, many other developing countries were commandeered by psychopathic strongmen with ideological, religious, tribal, paranoid, or self-aggrandizing agendas rather than a mandate to enhance the well-being of their citizens. Depending on their sympathy or antipathy for communism, they were propped up by the Soviet Union or the United States under the principle “He may be a son of a bitch, but he’s our son of a bitch.”³⁷ The 1990s and 2000s saw a spread of democracy (chapter 14) and the rise of levelheaded, humanistic leaders—not just national statesmen like Nelson Mandela, Corazon Aquino, and Ellen Johnson Sirleaf but local religious and civil-society leaders acting to improve the lives of their compatriots.³⁸

A third cause was the end of the Cold War. It not only pulled the rug out from under a number of tinpot dictators but snuffed out many of the civil wars that had racked developing countries since they attained independence in the 1960s. Civil war is both a humanitarian disaster and an economic one, as facilities are destroyed, resources are diverted, children are kept out of school, and managers and workers are pulled away from work or killed. The economist Paul Collier, who calls war “development in reverse,” has estimated that a typical civil war costs a country $50 billion.³⁹

A fourth cause is globalization, in particular the explosion in trade made possible by container ships and jet airplanes and by the liberalization of tariffs and other barriers to investment and trade. Classical economics and common sense agree that a larger trading network should make everyone, on average, better off. As countries specialize in different goods and services, they can produce them more efficiently, and it doesn’t cost them much more to offer their wares to billions of people than to thousands. At the same time buyers, shopping for the best price in a global bazaar, can get more of what they want. (Common sense is less likely to appreciate a corollary called comparative advantage, which predicts that, on average, everyone is better off when each country sells the goods and services that it can produce most efficiently even if the buyers could produce them still more efficiently themselves.) Notwithstanding the horror that the word elicits in many parts of the political spectrum, globalization, development analysts agree, has been a bonanza for the poor. Deaton notes, “Some argue that globalization is a neoliberal conspiracy designed to enrich a very few at the expense of many. If so, that conspiracy was a disastrous failure—or at least, it helped more than a billion people as an unintended consequence. If only unintended consequences always worked so favorably.”⁴⁰

To be sure, the industrialization of the developing world, like the Industrial Revolution two centuries before it, has produced working conditions that are harsh by the standards of modern rich countries and have elicited bitter condemnation. The Romantic movement in the 19th century was partly a reaction to the “dark satanic mills” (as William Blake called them), and since that time a loathing of industry has been a sacred value of C. P. Snow’s Second Culture of literary intellectuals.⁴¹ Nothing in Snow’s essay enraged his assailant F. R. Leavis as much as this passage:

It is all very well for us, sitting pretty, to think that material standards of living don’t matter all that much. It is all very well for one, as a personal choice, to reject industrialisation—do a modern Walden if you like, and if you go without much food, see most of your children die in infancy, despise the comforts of literacy, accept twenty years off your own life, then I respect you for the strength of your aesthetic revulsion. But I don’t respect you in the slightest if, even passively, you try to impose the same choice on others who are not free to choose. In fact, we know what their choice would be. For, with singular unanimity, in any country where they have had the chance, the poor have walked off the land into the factories as fast as the factories could take them.⁴²

As we have seen, Snow was accurate in his claims about advances in life and health, and he was also right that the appropriate standard in considering the plight of the poor in industrializing countries is the set of alternatives available to them where and when they live. Snow’s argument is being echoed fifty years later by development experts such as Radelet, who observes that “while working on the factory floor is often referred to as sweatshop labor, it is often better than the granddaddy of all sweatshops: working in the fields as an agricultural day laborer.”

When I lived in Indonesia in the early 1990s, I arrived with a somewhat romanticized view of the beauty of people working in rice paddies, together with reservations about the rapidly growing factory jobs. The longer I was there, the more I recognized how incredibly difficult it is to work in the rice fields. It’s a backbreaking grind, with people eking out the barest of livings by bending over for hours in the hot sun to terrace the fields, plant the seeds, pull the weeds, transplant the seedlings, chase the pests, and harvest the grain. Standing in the pools of water brings leeches and the constant risk of malaria, encephalitis, and other diseases. And, of course, it is hot, all the time. So, it was not too much of a surprise that when factory jobs opened offering wages of $2 a day, hundreds of people lined up just to get a shot at applying.⁴³

The benefits of industrial employment can go beyond material living standards. For the women who get these jobs, it can be a liberation. In her article “The Feminist Side of Sweatshops,” Chelsea Follett (the managing editor of HumanProgress) recounts that factory work in the 19th century offered women an escape from the traditional gender roles of farm and village life, and so was held by some men at the time “sufficient to damn to infamy the most worthy and virtuous girl.” The girls themselves did not always see it that way. A textile mill worker in Lowell, Massachusetts, wrote in 1840:

We are collected . . . to get money, as much of it and as fast as we can. . . . Strange would it be, if in money-loving New England, one of the most lucrative female employments should be rejected because it is toilsome, or because some people are prejudiced against it. Yankee girls have too much independence for that.⁴⁴

Here again, experiences during the Industrial Revolution prefigure those in the developing world today. Kavita Ramdas, the head of the Global Fund for Women, said in 2001 that in an Indian village “all there is for a woman is to obey her husband and relatives, pound millet, and sing. If she moves to town, she can get a job, start a business, and get education for her children.”⁴⁵ An analysis in Bangladesh confirmed that the women who worked in the garment industry (as my grandparents did in 1930s Canada) enjoyed rising wages, later marriage, and fewer and better-educated children.⁴⁶ Over the course of a generation, slums, barrios, and favelas can morph into suburbs, and the working class can become middle class.⁴⁷

To appreciate the long-term benefits of industrialization one does not have to accept its cruelties. One can imagine an alternative history of the Industrial Revolution in which modern sensibilities applied earlier and the factories operated without children and with better working conditions for the adults. Today there are doubtless factories in the developing world that could offer as many jobs and still turn a profit while treating their workers more humanely. Pressure from trade negotiators and consumer protests has measurably improved working conditions in many places, and it is a natural progression as countries get richer and more integrated into the global community (as we will see in chapters 12 and 17 when we look at the history of working conditions in our own society).⁴⁸ Progress consists not in accepting every change as part of an indivisible package—as if we had to make a yes-or-no decision on whether the Industrial Revolution, or globalization, is a good thing or bad thing, exactly as each has unfolded in every detail. Progress consists of unbundling the features of a social process as much as we can to maximize the human benefits while minimizing the harms.

The last, and in many analyses the most important, contributor to the Great Convergence is science and technology.⁴⁹ Life is getting cheaper, in a good way. Thanks to advances in know-how, an hour of labor can buy more food, health, education, clothing, building materials, and small necessities and luxuries than it used to. Not only can people eat cheaper food and take cheaper medicines, but children can wear cheap plastic sandals instead of going barefoot, and adults can hang out together getting their hair done or watching a soccer game using cheap solar panels and appliances. As for good advice on health, farming, and business: it’s better than cheap; it’s free.

Today about half the adults in the world own a smartphone, and there are as many subscriptions as people. In parts of the world without roads, landlines, postal service, newspapers, or banks, mobile phones are more than a way to share gossip and cat photos; they are a major generator of wealth. They allow people to transfer money, order supplies, track the weather and markets, find day labor, get advice on health and farming practices, even obtain a primary education.⁵⁰ An analysis by the economist Robert Jensen subtitled “The Micro and Mackerel Economics of Information” showed how South Indian small fishermen increased their income and lowered the local price of fish by using their mobile phones at sea to find the market which offered the best price that day, sparing them from having to unload their perishable catch on fish-glutted towns while other towns went fishless.⁵¹ In this way mobile phones are allowing hundreds of millions of small farmers and fishers to become the omniscient rational actors in the ideal frictionless markets of economics textbooks. According to one estimate, every cell phone adds $3,000 to the annual GDP of a developing country.⁵²

The beneficent power of knowledge has rewritten the rules of global development. Development experts differ on the wisdom of foreign aid. Some argue that it does more harm than good by enriching corrupt governments and competing with local commerce.⁵³ Others cite recent numbers which suggest that intelligently allocated aid has in fact done tremendous good.⁵⁴ But while they disagree on the effects of donated food and dollars, all agree that donated technology—medicines, electronics, crop varieties, and best practices in agriculture, business, and public health—has been an unalloyed boon. (As Jefferson noted, he who receives an idea from me receives instruction without lessening mine.) And for all the emphasis I’ve placed on GDP per capita, the value of knowledge has made that measure less relevant to what we really care about, quality of life. If I had squeezed a line for Africa into the lower right corner of figure 8-3, it would look unimpressive: the line would curve upward, to be sure, but without the exponential blastoff of the lines for Europe and Asia. Charles Kenny emphasizes that the actual progress of Africa belies the shallow slope, because health, longevity, and education are so much more affordable than they used to be. Though in general people in richer countries live longer (a relationship called the Preston curve, after the economist who discovered it), the whole curve is being pushed upward, as everyone is living longer regardless of income.⁵⁵ In the richest country two centuries ago (the Netherlands), life expectancy was just forty, and in no country was it above forty-five. Today, life expectancy in the poorest country in the world (the Central African Republic) is fifty-four, and in no country is it below forty-five.⁵⁶

Though it’s easy to sneer at national income as a shallow and materialistic measure, it correlates with every indicator of human flourishing, as we will repeatedly see in the chapters to come. Most obviously, GDP per capita correlates with longevity, health, and nutrition.⁵⁷ Less obviously, it correlates with higher ethical values like peace, freedom, human rights, and tolerance.⁵⁸ Richer countries, on average, fight fewer wars with each other (chapter 11), are less likely to be riven by civil wars (chapter 11), are more likely to become and stay democratic (chapter 14), and have greater respect for human rights (chapter 14—on average, that is; Arab oil states are rich but repressive). The citizens of richer countries have greater respect for “emancipative” or liberal values such as women’s equality, free speech, gay rights, participatory democracy, and protection of the environment (chapters 10 and 15). Not surprisingly, as countries get richer they get happier (chapter 18); more surprisingly, as countries get richer they get smarter (chapter 16).⁵⁹

In explaining this Somalia-to-Sweden continuum, with poor violent repressive unhappy countries at one end and rich peaceful liberal happy ones at the other, correlation is not causation, and other factors like education, geography, history, and culture may play roles.⁶⁰ But when the quants try to tease them apart, they find that economic development does seem to be a major mover of human welfare.⁶¹ In an old academic joke, a dean is presiding over a faculty meeting when a genie appears and offers him one of three wishes—money, fame, or wisdom. The dean replies, “That’s easy. I’m a scholar. I’ve devoted my life to understanding. Of course I’ll take wisdom.” The genie waves his hand and vanishes in a puff of smoke. The smoke clears to reveal the dean with his head in his hands, lost in thought. A minute elapses. Ten minutes. Fifteen. Finally a professor calls out, “Well? Well?” The dean mutters, “I should have taken the money.”