Chapter 8 THE PROSPERITY BLIP We are living during an era that will become known as the Prosperity Blip. The Prosperity Blip on the timeline of human existence looks just like that, a blip. An aberration, a deviation, an anomaly, a temporary variation, an unexpected change, a departure from the norm. A blip. Fueled by cheap oil, the Prosperity Blip started in the mid-1800s, and continues through today. It has been referred to by economists and theologians as the rise of unprecedented prosperity. It coincided with the beginning of the Industrial Revolution. Beyond an interesting cocktail party discussion, its effects and nuances will have a startling influence upon an event that I refer to as the Flashpoint. The two leading economic experts in the study of historical human prosperity are Brad DeLong and Angus Maddison. Both of these researchers have spent many years studying economics, and working on formulas to evaluate and compare economic prosperity over long time periods. This work is like putting together a puzzle of the same picture, using puzzle parts that are snapshots of the same location taken at different times. How do you compare prosperity in ancient Rome to prosperity in 21st Century Shanghai? The variables are astronomical, and the changes caused by inflation at different times make an “apples to apples” comparison nearly impossible. To level the playing field and try to compare historical economic prosperity, a concept known as “purchasing power parity” (PPP) has been developed by economists studying in this field. The researcher uses a fixed dollar amount at a fixed point in time, and the value of income at all other time periods is pegged to this number. Most experts agree that a subsistence level of income existed that was typical for hundreds of years prior to the Industrial Revolution. The two experts mentioned above have varying views of PPP, and using the measure of 1990 International Dollars (I$), have come up with different values for that subsistence level. Maddison suggests that I$400 was a typical subsistence level of living prior to the Industrial Revolution, whereas DeLong views historic subsistence level of living at I$90. Addison has studied prosperity back as far as 10,000 BC, while DeLong has focused on the past 2,000 years of mankind’s existence. Both researchers have analyzed annual per capita Gross Domestic Product, which is defined as the total market value of all goods and services produced annually. If you follow their analysis between the years 1600 and 2003, using the 1990 International Dollar standard discussed, what you find is that while they start at somewhat different levels, they both flatline until the beginning of the Industrial Revolution. There is a very
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