Tuesday, November 28, 2006

The End of Poverty - Chapter 2

The second post in a series of posts based on the book The End of Poverty.

Chapter Two – The Spread of Economic Prosperity
- The average income per person in Western Europe in 1820 was around 90% of the average income of Africa today. Life expectancy in Western Europe and Japan as of 1800 was about forty years.

- Global population rose more than sixfold in just two centuries, reaching an astounding 6.1 billion people. [image from Wikipedia]

- As of 1820, the biggest gap between the rich and poor – specifically between the worlds leading economy of the day – the UK and the world's poorest region – Africa, was a ratio of four to one in per capita income. By 1998, the gap between the richest economy – the US and the poorest region Africa had widened to twenty to one.

- Many people assume that the rich have gotten rich because the poor have gotten poor. In other words, they assume that Europe and the United States used military force and political strength during and after the era of colonialism to extract wealth from the poorest regions, and thereby to grow rich. This interpretation of events would be plausible if gross world product had remained constant, with a rising share going to the powerful regions and a declining share going to the poorer regions. However, gross world product rose nearly fifty-fold. Every region of the world experienced some economic growth, but some regions experienced much more growth than others. They key fact of modern times is not the transfer of income from one region to another; by force or otherwise, but rather the overall increase in world income, but at a different rate in different regions.

- The steam engine marked the decisive turning point of modern history. By mobilizing a vast store of primary energy, fossil fuels, the steam engine unlocked the mass production of goods and services on a scale beyond the wildest dreams of the pre-industrial era. Modern energy fueled every aspect of the economic takeoff [food production via chemical fertilizers, industrial production via steel, transport equipment, textile and apparels, etc.]

- Why did the industrial revolution happen in Britain first? 1: British society was open, more scope for individual initiative and social mobility. 2: Strengthening institutions of political liberty – free speech and open debate, personal property rights. 3: leading center of Europe’s scientific revolution. 4: geographical advantage in sea trade. 5: Britain remained sovereign, lesser risk of invasion. 6: Britain had coal.

- In Britain first, and then elsewhere, industrialization meant a shift of people from overwhelmingly agrarian activities to industrial activities, giving rise to urbanization, social mobility, new gender and family roles, a demographic transition and specialization in labor.

- I believe the single most important reason why prosperity spread, and why it continues to spread, is the transmission of technologies and the ideas underlying them. Even more important than having specific resources in the ground, such as coal, was the ability to use modern, science-based ideas to organize production. The beauty of ideas is that they can be used over and over again, without ever being depleted. Economists call ideas nonrival in the sense that one person’s use of an idea does not diminish the ability of others to use it well. This is why we can envision a world in which everybody achieves prosperity. The essence of the first Industrial Revolution was not the coal; it was how to use the coal. Even more generally, it was about how to use a new form of energy. The lessons of coal eventually became the basis for many other energy systems as well, from hydropower, oil and gas, and nuclear power to new forms of renewable energy such as wind and solar power converted to electricity. These lessons are available to all of humanity, not just for the first individuals who discovered them.

My thoughts:
1. The rate of population growth is just amazing isn't it? And if you look at some of the projections for the future [like this one], it's an even higher rate. And you thought the Mall was crowded last night...

2. I never realized what a huge turning point the steam engine provided for the world. One single piece of technology - phenomenal. Like the printing press, the Internet, the [fill in the blank...]

3. Speaking of technology, the last quote there is just amazing and worth repeating, "I believe that the single most important reason why prosperity spread, and why it continues to spread, is the transmission of technologies and the ideas underlying them." Sachs expands on the specific technologies later in the book, but this idea is huge - the idea that ending poverty is based on our understanding and ability to apply technologies in various environments. It also reminds me of the concept of context - the environment, culture, worldview, past behaviors - it all matters. Expand that just a bit and we could also relate the terms of leadership, indigenous, contextualization. And one more - the students we are calling upon to save the world need to be adept at technology and able to speak about that into someone else's life. Can you teach someone how to use Firefox, Facebook and IM? Can you set up a wireless network? Ever toyed with a water filter? Can you get up in front of your peers and speak? Are you a good teacher or writer?

If technology is the key to ending poverty, we should:
- Continue to encourage our students to be geeks [and I mean that term in the best way of course!]
- Give them opportunities to share what they have learned, in any capacity.
- Continue to build environments where they are encouraged to experiment, innovate and create.

[Related post - my notes from Chapter 1]

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