Every economic transition benefits the few. Only some economic transitions benefit the many.
We wouldn’t want to do without economic progress, but not every economic transition is progress.
The first major economic transition happened when the economy was still very primitive. Two million years ago, Homo erectus came down from the trees and stood up on two legs. (You can tell how primitive the economy was by the fact that Homo erectus never licensed his name to any of the pharmaceutical companies who advertise to men on Fox News.)
Becoming bipedal was a splendid economic advance for our ancestors. It allowed them to walk to places where there were good things to eat and run back with their arms full. Unless they fell over. Which is what happened to the members of Homo erectus who aren’t our ancestors.
I’m guessing there was what economists call a “Pareto distribution” – an 80%/20% split – among Homo erectus. (Click here for more on Pareto and his principle.) One out of five was walking around looking for good things to eat. Four out of five grunted, “Standing up is too hard.” They sat back down… and were eaten by saber-toothed tigers.
At about the same time that we started to stand up, we also started to make stone tools. The “Paleolithic Age” was another major economic transition. Stone axes, stone knives, and stone spearheads allowed us to hit, stab, and poke things.
But, again, I’m guessing that paleo-technology baffled many cavemen. Try it yourself: Make a sharp stone knife blade by knocking it against another. Having much luck? Me either.
If you and I had been around back then, the things that got hit, stabbed, and poked would have been us.
The next important economic transformation was around 12,000 years ago. During the “Neolithic Revolution,” agriculture began to replace hunting and gathering. This would seem to have been a win/win development for everyone – just sit there and watch the corn grow.
Wheat, rye, and maize don’t kick or bite or charge you with big horns. They can’t run away. And they don’t try to fool you when you’re gathering them the way delicious-looking deadly nightshade berries do.
But, as the prestigious British journal New Scientist says, “Decrease in physical stature and health in transition from hunter-gathering to agriculture is well-documented.”
Turns out Neolithic farmers were smaller, weaker, less resistant to disease, and they died a lot more.
Besides, where’s the fun in sitting there watching the corn grow? I’m for hunting some deer with my Remington .30-06 semi-auto. We’ll gather a few six-packs on the way home.
Slavery also caused an economic transition, and how brilliant it must have seemed. You used to have to work. Now somebody else has to work. And it’s free. Well, almost. You’ve got to provide straw pallets, dole out thin gruel once a day, and give the slaves an occasional break to drink out of a mud puddle.
It was a brilliant innovation – unless you were a slave. And that was fairly likely. Historians estimate that, in the first century BC, between 35% and 40% of the people in Italy were slaves.
The ‘Industrial Revolution’ was great for everyone… everyone, that is, who was rich already.
And free slave labor also didn’t make things easier for the working-class Romans citizens, the plebeians. The Imperial Minimum Wage was, basically, 0.
I suppose the plebs could have attempted to undercut that… “I’ll bring my own straw pallet, bowl of thin gruel, and mud puddle.” But…
When the Roman Empire fell and the Middle Ages came along, the plebeians were economically transitioned into serfs, villeins, and other forms of peasantry. This at least got them outdoors and into the fresh air, delving and spanning on the large manors of feudal barons.
Baronial manors were an efficient economic institution, at least compared to rapine and pillage, the other economic institutions of the era.
The Medieval peasants, however, did not seem to have been very grateful for this economic efficiency. There were violent peasant uprisings in AD 841, 928, 1277, 1323, 1343, 1358, 1381, 1382, 1401, 1409, 1437, 1441, 1450, 1453, 1462, 1478, 1485, and 1498.
The only economic good news for ordinary people during the Middle Ages was the Black Death. It did have adverse effects, killing between 30% and 60% of Europe’s population in the 1300s. But consider the benefits: Upward pressure on wage rates and benefit packages resulting from supply-side labor market shortfalls.
The discovery of the New World meant a literal economic transition. The Spanish transitioned an estimated $530 billion in silver and gold from the Western Hemisphere to Europe.
Since there were only about 90 million Europeans at the time, this meant that each of them got $5,888.88 apiece and everybody was rich… or so simple arithmetic would tell us.
Simple arithmetic would also tell us that the people who lived in the New World lost $530 billion, and modern research indicates that European diseases killed as many as 90% of them. If you were a surviving Native American, you were a rounding error. And broke, too.
But the “Industrial Revolution” was great for everyone… everyone, that is, who was rich already. They were selling the coal from their estates, boiling steam at their factories, and spinning cotton in their mills. We were mining the coal, shoveling it into boilers, and working as child laborers on the looms.
Eventually, of course, the Industrial Revolution was great for everyone. Microwave ovens for rich and poor alike!
And the scientific knowledge and technical expertise that resulted from the Industrial Revolution led directly to The Transition we are experiencing now – the “Digital Revolution.”
This may be the most significant economic transition since we came down from the trees.Will it benefit the few? Will it benefit the many?
We’ll use me as an example of the many and Mark Zuckerberg as an example of the few. How have we been doing, comparatively?
Let’s start in 1987. That was when Time named the Personal Computer its “Man of the Year.” We’ll count 1987 as the beginning of the Digital Revolution.
In 1987, I was a freelance magazine writer with an uncertain income stream. I owned a small (mortgaged) house in the country. I had about $20,000 equity in the house, maybe $10,000 in the bank, and an old pickup truck. My net worth was about $31,500.
In 1987, Mark Zuckerberg was three. I think we can calculate his net worth (assuming a piggy bank) to have been in the low one figures.
The Digital Revolution has now been going on for 30 years.
I am a freelance magazine editor with an uncertain income stream. I own a large (mortgaged) house in the country. I have three children in private schools and an old pickup truck. My net worth (adjusted for inflation) is… about $31,500.
Mark Zuckerberg’s net worth is $72.3 billion.