Saturday, July 13, 2013

Hockey sticks and their consequences

Ever since its introduction into the global warming debate, the "Hockey Stick" chart has been used to demonstrate an unusual acceleration in an otherwise fairly constant and predictable measurement. Statisticians and probability mongers seek elegant answers for their infrequent occurrences - and usually will point out that the phenomenon is not sustainable. Much like the "sand pile' demonstration, and complexity theory, the exponential move up is followed by a dramatic "crash."

The first three charts below are ones I have chosen to illustrate the point. All involve economic metrics and their performances over time. What is similar to all is the early upward gradualism of the move, followed by a dramatic spike up, and, eventually, a chaotic plunge.

The fourth graph, however, taken from Visualizing Economics (a truly fascinating site for economic issues that date back millennia), shows the growth (?) of per capita income over 2000 years. If you connect the green dots, it, too, is in a hockey stick formation.

Here's another version (this going back another 1000 years):

Unlike the preceding charts which demonstrate a gradually rising trend, these measuring man's economic "progress," are very disappointing over very long periods.

Consider this: world per capita income in 1 C.E. was $467; in 1000, $453; in 1500, $566, in 1900, $873. So far, a really dismal demonstration of human progress. But in 1950, a substantial jump to $2113; followed in 2000 by an incredible, $6005. 

In 1900 years incomes increased a pathetic 87%. 

in the following 100 years the increase is a staggering 687%.  

As poor as the progress was in the first 1,950 common era years, Gregory Clark In his book, "A Farewell to Alms" suggests that:

"Life expectancy was no higher in 1800 than for hunter-gatherers: thirty to thirty-five years. . . . average welfare, if anything, declined from the Stone Age to 1800."

It gets worse:

"The poor of 1800, those who lived by their unskilled labor alone, would have been better off if transferred to a hunter-gatherer band."   

What makes the numbers for this period even more remarkable is that the world population went from 1.6 to 6 billion, a 375% increase. This would seem to indicate that four times as many people are now living at least twelve times better than their "year one" ancestors. The question on the table is not whether this growth can be sustained (it can't), but can any meaningful future growth be anticipated?

Or are we in for a violent contraction? Or, even worse, a reversion to the mean?  I don't pretend to know, but I'm very skeptical that the world's current personal, financial, agricultural, and political regimes are capable of instituting and maintaining fiscal discipline and balance. And if they are capable, do they have the courage?

On the contrary, most indications point towards continued hard times. But just as I'm sure the common man of the "Dark Ages" didn't realize his age was "dark," nor that the common man of the Renaissance realized his was an age of reemergence ("I've been down so long. it looks up to me"). The Age of Enlightenment? A popular descriptor which indicated that although poverty and starvation still ran rampant, man now had explanations for their frequent occurrences.

Few of us can state with authority where we are...although we have just recently finished with an annual celebration in which speakers of all stripes (and stars) assure us that "The best days of America are still ahead."  Baloney... or as Claire Booth Luce put it "...his global thinking is, no matter how you slice it, still 'globaloney.'"