Tuesday, June 14, 2011

GDP, Going Further Back, Optimism Again

I earlier blogged about Why I am an Optimist. In that post I presented the following graph of GDP between 1930-2011:
My Per Capita, inflation adjusted GDP graph for 1930-2011.

I was fascinated by the exponential growth in GDP, even in inflation adjusted per-capita GDP, and craved more data. Since getting data from the future by Hepatoscopy failed (mostly because I couldn't find a good lamb to sacrifice and read its liver), I decided to take the more practical rout, and look further into the past instead. Granted, looking further into the past is usually not as exciting as looking further into the future, but we will take what we can get until we invent that pesky time machine.

In any event, I looked around the internet for some more data, and found this data, which I summarize in the following graph:
My Per Capita, inflation adjusted GDP graph for 1 AD - 2001 AD.

What interested me most about this data was that it indicates that for the last 2000 years, inflation adjusted, per-capita GDP has been growing at a super exponential rate. This means that not only is the GDP growing exponentially, but the rate at which it is growing exponentially is itself growing exponentially.

But what exactly does it mean for GDP to be growing at a super exponential rate?

What it means is that trade, specialization, technology, and automation have been making us all more productive and more wealthy. And it means that the rate at which have been making us more productive and wealthy has been increasing. And that the rate at which this rate is increasing has itself been increasing. All the wars, dark ages, inquisitions, famines, natural disasters, genocides, recessions, and depressions of the past 2000 years have only been minor bumps along the road to increased prosperity when viewed from the perspective of this 2000 year sweep of history.

What would it mean if this trend were to continue? We can only guess, but something like the end of scarcity, and the beginning of overwhelming world wide prosperity would be one such guess, and would be a reasonable one at that! Insuring that this outcome is actually produced will naturally require a certain amount of effort on our part, but I believe that that will be effort well spent.