The 7,500 calories in today's bag of flour would equal the diet of a four-person peasant family for a whole day; the difference is that it would take three days of medieval work to afford.
...By the bags-of-flour standard, we are some 430 times wealthier than our typical rural ancestors of half a millennium ago.
On December 11, 2002, Virginia Postrel, a Dallas-drawling libertarian who practices social science without a license (meaning that she lacks an advanced degree), noted for her weblog, or personal Internet journal, that she had just purchased a bag of flour for the low price of 69 cents. "I find that amazing," she said. It was a typical observation for Postrel, who writes a monthly column on economics for the business section of The New York Times and is the author of The Future and its Enemies and The Substance of Style. Postrel is a champion for the everyday benefits of capitalism, from the increased productivity attributable to Wal-Mart to the aesthetic qualities of contemporary toilet brushes.
Postrel's anecdote about cheap flour was read by Brad DeLong, a left-leaning, fully-accredited professor of economics at the University of California at Berkeley. It occurred to DeLong, an authority on the history of economic growth, that flour is unusual in that it reflects continuity with the past. Most goods and services today would not be recognizable to our medieval ancestors (what would they think of a computer or a cell phone?), and many of the implements of the pre-industrial era have no utility in the present. Flour can be used to make connections across the gap of time.
DeLong's analysis starts with the fact that in 1500 the average family lived not far above subsistence. They could do little more than feed themselves with their labor--DeLong estimates that three-fourths of what the medieval economy produced was foodstuffs. If 7500 calories represents subsistence for four people for one day, then it can be inferred that it took rougly three days for the family to work to produce that amount of calories, which are contained in one five-pound bag of flour.
DeLong then asks how much one would have to work today in order to obtain one bag of flour. He then notes that if today's family of four in the United States earns an average of $100 a day, then a day's pay can purchase roughly 145 bags of flour, which should be multiplied by three to obtain what could be produced with three days' labor.
I like to put it like this: in 1500, if you were the average laborer who worked three days, cashed your paycheck (so to speak), walked into the local Safeway (so to speak), and emptied your wallet, you could have walked out with one five-pound bag of flour. Today, if you work three days, and you spent three days' pay on flour, you could walk out of the grocery with 430 five-pound bags.
What was it that enabled us to get from the point where we had to work three days to produce one bag of flour to the point where three days' work yields 430 bags of flour? The best answer, to a first approximation, is that we learned how to do it. We learned how to grow wheat more efficiently, how to use machinery to harvest, how to build railroads and trucks to transport grain, how to use electric power and automation to manufacture flour, and how to manage logistics and inventories to deliver flour to the shelves of stores.
With this cumulative knowledge, we freed people from the farms. As recently as 200 years ago, over half of the American labor force was in agriculture. Today, just 2 percent of the population can produce enough to feed the rest, with food leftover for export.
From roughly 1800 through 1950, the excess agricultural labor pool came to the cities, where it became the manufacturing workforce. For the past fifty years, another labor migration has been taking place--out of the factories and into services, such as marketing and middle management. As with food, we continue to produce manufactured goods, but with fewer workers--the fraction of the population on the production lines has fallen dramatically.
The rest of this chapter looks at more issues concerning this growth process. How do economists measure economic growth, and what do these measures show about economic history? Where can we observe economic growth taking place today? What is the outlook for economic growth going forward? Why are some countries so backward? These are among the questions that will be tackled in the sections that follow.