The Hockey Stick of Human Prosperity

In this series, Professor Don Boudreaux explores the question economists have been asking since the era of Adam Smith -- what creates wealth? On a timeline of human history, the recent rise in standards of living resembles a hockey stick -- flatlining for all of human history and then skyrocketing in just the last few centuries. Without specialization and trade, our ancient ancestors only consumed what they could make themselves. How can specialization and trade help explain the astonishing growth of productivity and output in such a short amount of time—after millennia of famine, low life expectancy, and incurable disease?

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The astonishing growth in prosperity in
the last two or three hundred years

is one of the greatest events of
humankind. Take the average human in say

the year 1000 BC. He's poor, fighting to
find food

and to fend off diseases. Fast forward 500
years to the time of classical Greece.

Still poor still hungry. How about another thousand years after that?

It's the dark ages. Wow. Still poor.

Then jump to the 18th century and forward. Things change rapidly.

This phenomenon is known as the hockey
stick of human prosperity. Take what is

surely one of the most important
measures human well-being:

life expectancy. Before the Industrial
Revolution

life expectancy was around thirty years.
Today

in the United States we expect to live
to be about eighty.

Prior to the industrial revolution one

in four kids would die before the age of 5.

Today in developed countries it is more like
one and two hundred.

Due to better nutrition we grow to be
four inches taller

than we were just two hundred fifty years
ago.

Remember this disease? No you don't, because
it was eradicated in

1977. Look around--you'll find a roof over
your head

and a hard floor under your feet. Most of
our ancestors with the huts with dirt

floors and thatched roofs.

Everything was infested with insects and
rodents.

Streets and alleys were open sewers.
There were none of these.

The filt was horrible and often toxic

Our ancestors ate gruel and wore the same
home-made underwear

over and over. Now even the least
fortunate Americans

typically have electricity running water
toilets

refrigerators televisions and yes cheap

washable underwear. Those of us who live
in modern industrial society

are incredibly, amazingly, off the charts
rich

compared to our ancestors and here's yet
another huge difference between us

and our ancestors. Before the Industrial
Revolution

people knew how to make from scratch many
other things they consumed.

They made a lot of their own clothing
grew most to their own food

and build their own dwellings.

Fast forward to today and believe it or
not

none of us is a hint how to make the
majority of the things that we consume.

Just getting ready in the morning
involves taking many trips around the

globe.

Take this coffee for example beans come
from

Guatemala and they were brewed in this
coffeemaker from Switzerland.

The container ship that carried the
beans was built in Korea.

It's insured by a company from London and
it's captained by Frenchman

who loves Turkish cigarettes. We've
transitioned

from each of us doing many things to each of us doing one thing.

Having a job only makes sense in a modern
world

where each individual typically does only
one type of work.

So while we mostly only produce one
thing

doing one job each of us now consumes a
whole bunch of products

that require a whole bunch of jobs to
produce.

The question where prosperity comes from
launched the field of economics.

It's why Adam Smith wrote the first book
in modern economics.

An inquiry into the nature and causes of
The Wealth of Nations.

Back in 1776 when he published it

Smith was trying to understand the
causes of modern prosperity that were

just starting to appear.

Poverty and starvation were still normal as
they had been from the beginning

but in the late 18th century for the
first time ever

the masses began to enjoy riches once
reserved

only for the nobility. It is this mass
prosperity that Adam Smith

sought to explain. Why was it happening?
What was causing wealth to move from being

the exception

to being the norm. Now look around try to
figure out what causes poverty

instead of what causes prosperity. You are
watching

Everyday Economics, a course where we use the
lens of Economics

to explore everyday questions. This
section is about

trade. In the upcoming videos we will attempt
to explain how trade

plays a role in our prosperity. You also
get to decide where the course goes.

Maybe you have some questions related to
trade that you've wondered about.

We'll cover the basics and then you tell
us what topics come next.