That’s the Ford Model T. The fanciest car that you, as a fairly well-off American, could have bought in 1925 — the year it went on the market. Pretty neat, eh? Well, not as neat as a present day BMW or Jaguar, or Benz, or even any average sedan or SUV. No billionaire of 1925 could have bought a Honda CRV even.
Just a 100 years ago, even billionaires could not afford any of the gazillion things we average folks can order from the comfort of our bedrooms and have it delivered the next day. We are immensely richer than even the richest emperors. The Palace of Versailles, the principal royal residence of France from 1682, under Louis XIV, did not have air conditioning or refrigerators. No telephones. No surround sound, no 4K UHD video system. Not even ice cream in summer. I am richer than Louis XIV. [See note 1.]
I’ve been arguing that there exists a past date (Date1) such that even the richest people of Date1 were poorer than the poor of the present, and that there will be a future date (Date2) such that the richest people of the present are poorer than the poor of Date2. The averages of the distributions of wealth across time keeps diverging, until at some point, some distributions don’t overlap at all.
Here’s what I mean. Imagine a distribution (Dist1) with a mean of 10, and low value of 1 and high value of 20. And another distribution (Dist2) with a mean of 100, low of 25 and high of 200. These two distributions don’t have any overlap. Dist1 can be thought of as the wealth distribution in the year 4000 before the present; Dist2 for the wealth distribution of the present. Note that the variance has also increased Dist2, indicating greater inequality.
Here’s another way to think about the progress in material well-being that has been achieved. Which of the following options would you choose:
- You have your annual income of $60k with no restrictions on what you can buy with it.
- You have $1 billion in your checking account but you can only buy stuff that was available prior to 1919. Nothing that was invented/created after 1919 is available to you at any price.
If you choose option 2, you will be pathetically poor compared to the average schmuck in the developed world of today. No movies, phones, music, fine clothes, no antibiotics, primitive transportation, no fancy cars, no air travel, no air conditioning — the list is nearly endless. You would not even be able to buy a Ford Model T (there were none in 1919). But you today can buy this BMW M5.
 By our standards, the palace was filthy. “What did the other thousands of people of Versailles use for their toilets? One option was of course the major hallways where people would squat in the dark corners and use as their toilet.” [Source: The Toilets (or lack of) of Versailles.]
13 thoughts on “Wealth and Poverty — Past, Present and Future”
Regarding the 2 options, option 2 is the far better deal if you value freedom.
Option 1, $60K/year with no restrictions on what you can buy, is the sure way to a life time of wage and debt slavery/serfdom! With 60K/year, you sure are not going to be able to afford a decent car or a decent house without going into huge debts.
With option 1 on the other hand, it is easy to buy enough real estate and high dividend earning stocks. This will ensure a lifetime of high income, since in most countries, passive income from rents, interest and dividends was (and is, except maybe for brief periods) not taxed any higher than hard earned wages. In fact, with lobbyists to insert subtle loopholes in the tax code and clever accountants to exploit them you can make your tax rate 0%! As a rich woman (Leona Helmsley) famously said: “Only the little people pay taxes”.
Assuming there are no estate taxes (which too can be arranged with a billion dollars), it ensures that your children are born free too and therefore you have eternal freedom. None of the modern conveniences enhance life enough to justify generations of wage slavery.
I would have all the time I need to go trekking, hunting, meeting and talking to interesting people, learning, thinking and inventing stuff and not to mention spending quality time with family and friends. All of these activities are way more satisfying.
Be careful what you wish for Engr. Ravi.
You would be operated with no anaesthesia should you get injured by a wild boar in your hunting trip.
If you are in 19th century England, you better hurry up with your enhanced social interactions with family and friends as you have only 40 years to live.(average).
One gentleman below commented on the joys of spending time with multiple mistresses. I wish him all the good luck with his syphilis. You see the medicine got invented only in 20th century.
“One gentleman below commented on the joys of spending time with multiple mistresses. I wish him all the good luck with his syphilis….”
While sure STDs were rampant back then, obviously most monarchs had the luxury of picking the best unless they patronised bordello incognito(which happened). I just mentioned a major component of lifestyle preference of many males.
As I said before, humanity will enter a new phase should nuclear fusion, affordable androids, in-vitro meat… become reality.
Actually the militant feminists are campaigning to ban ‘sexbots'(which still are in a primitive stage of development)on the excuse such ‘sexbots’ could encourage child sex abuse, believe it or not.
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I think you missed the whole point of the restriction of not being able to buy anything that was produced post-1919 with your billion dollars. The point being made was that even with any amount of money, you simply could not buy so many useful/necessary/life-critical things (which any average person can buy in 2019) in 1919. Life was more Hobbesian then — nasty, solitary, poor, brutish and short.
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I don’t think I missed your point. To put my own point of view more succinctly: the rich of yesterday were better off than the poor of today, since they were truly free. Despite all the modern technological conveniences that today’s poor have access to, they and their children will be lifelong wage slaves.
Let me try again. Tell me, would you rather be the richest guy in 1000 BCE or the average Joe Schumck in the year 2019, or even a poor Bihari?
Would you rather be a multi-billionaire in 2011 and die at an early age due to an incurable cancer, or would you be the average fellow in the year 2050 when medical science has advanced enough to cure that type of cancer?
You are missing my point. The point is that the rich of sometime in the past (the exact date does not matter) were worse off than the poor of today; and that the poor of the future (the exact date does not matter) will be better off than the rich of today.
You are fixed on the “wage slavery” bit. The schmucks — the wage slaves of today — are better off than the Roman emperors.
In a very important sense, even the richest, most powerful people of the past did not have the conveniences of life that common people have today.
Here’s a story. It’s about a 16-year old boy named Calvin. The year was 1924. Calvin got a blister on his toe, and it got infected. He got blood poisoning. Suffering immensely, he pleaded with his dad to make him well. His dad could not do anything even though he was the president of the United States. All that was needed was some antibiotics. Yet President Calvin Coolidge was powerless because the penicillin that could have saved his son was not discovered until 1928, and not generally available until the 1940s. Calvin Coolidge, Jr., died within a week from the infected toe.
Anywhere you look, across the board the world is getting faster, cheaper, better.
Thanks for the classification Prof. Atanu.
I get your point, yes today’s poor are better off in some ways than yesterday’s richest and must powerful. But, your argument is similar to what southern plantation owners used to say in the late 1850s: “These negroes are far better off as slaves here than as hunters or whatever they were in west Africa, since they have clothes, access to western medicine, bread and above all the Bible”.
First of all, I am not a professor. So unless you mean it sarcastically, it is not warranted.
You draw a parallel between my simple observation (that the world is improving monotonically over large time spans) and the arguments from slave owners justifying their inhumanity. Nice try but no reasonable person would equate the two. It’s simply wrong.
You really, truly, seriously need to understand the distinction between justificatory statements (action A is justified by proposition P) and a simple proposition. Proposition P may or may not be true. If P is false, then action A is not justified. A simple proposition may be true or false. Simple proposition: “It is raining.” It is either raining or not. No action is implied that needs to be justified. Now if someone claims “You must take an umbrella because it is raining” then, the truth value of the rain claim will affect whether you are justified in taking the umbrella or not.
Just incidentally, I am curious about this. You appear to be interested in the subject matter of my blog. But you also appear to be quite unable to follow my reasoning on this simple proposition that the world is getting better. Is there a psychological barrier that prevents you from acknowledging that fact? Do you think it is false that the world is getting better?
You’re correct from a certain view point but ultimately it’s a matter of choice of ‘life style’, to put it mildly. One can tell a poor (3rd worlder particularly):
You don’t need to envy the lifestyle of French kings like Louis XIV or Louis XVI who
–lived in palaces stocked with art treasure beyond your imagination,
–had hordes of servants
–had the option to have multiple mistresses
–moved around in golden carriage
–Feasted whatever takes your fancy
Well, in comparion,
–You’ve no quillotine chopping block waiting for you
–You’ve electricity, electric bulbs, electric fan or even air-conditioner
–You’ve a cheapo cell phone and even internet connection
–You can move around in a cart drawn by draft animals or scooters
–You’ve access to vaccines and rudimental modern medicine
Some historians still debate on the necessity of the French revolution.
Marie Antoinette actually could’ve told the hungry French poor that:
1)Well, you’ve neither bread or cake but be reminded that you’re no longer hunters/gatherers like your ancestors once were. If you prefer to hunt, you could use muskets instead of spears.
2)Make fun not revolution, just go to a near-by comedie threatre.
3)To hell with the ‘Enlightenment’ ; the bourgeoisie(petty or not)&peasantry should obey the RC clergy(VERY SPIRITUAL) and the aristocracy (ordained by God).
Unfortunately Marie Antoinette lacked clairvoyance. She should’ve told them ‘You people are proto-communists..’
That’s all well and good for someone living in Singapore, which, for all intents and purposes is Malaysia’s commercial district. Malaysia must not be such a bad place to live either, considering they are smart enough to take the help of the other ASEAN countries when dealing with the Chinese government.
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