Compound Economic Growth and Atlas
by Gary North
If you are still a taxpayer, you are Atlas. I am Atlas. There will come a time when Atlas will shrug. I have written about this before:
When will he shrug? Before I can answer this, I want to discuss another factor, compound economic growth
COMPOUND ECONOMIC GROWTH
As residents of the West, we all know about the effects of compound growth. Beginning around 1800, Great Britain and the United States began to experience 2% economic growth per person per year. This spread to Europe by 1820. This phenomenon has created a new civilization. Nothing like it was dreamed of in 1800. We live in a world that was literally inconceivable in 1800.
As I have written before, no economist has yet published a definitive book on why and how this began where it did and when it did. Prof. Dierdre McCloskey’s third volume of The Bourgeois Era is supposed to present the evidence for a unique thesis: a change in rhetoric regarding the legitimacy of wealth, beginning around 1600 in the Netherlands and spreading to the British isles by 1700. The thesis is plausible, but we need to see the evidence.
No one can perceive an increase of 2% per year. But, over time, he cannot miss the effects.
It was not clear to observers in Great Britain in 1820 that people were getting richer. Even in the early 1840s, this was not clear to critics of the Industrial Revolution, whether conservatives or radicals. But, by the great London exhibit in 1851, the intelligentsia knew. The man in the London street knew. The West had visibly entered a new era.
What is my point? This: in the early phase of any compounding process, the participants do not recognize the change. It takes time. Then, almost without warning, the results of the process become clear to almost everyone.