Arnott: Demographics And The New Normal

September 10, 2013


Halley's work is particularly important for our purposes because, according to Ciecka [2008], "the Breslau data had the property that annual births were approximately equal to deaths, there was little migration in or out of the city, and age-specific death rates were approximately constant; that is, Breslau had an approximately stationary population." Therefore, it gives us a relatively precise picture of what steady state looked like before the Industrial Revolution.7

Figure 1 shows a plot of various demographic profiles in five-year age groups, including the one drawn from Halley's life table (his is the red line, which we refer to as "Brutish & Short"). Not surprisingly, mortality rates were much higher than those we're accustomed to today. In particular, infant mortality was so high that we observe a kink in the plot right after age group 0-4.8 For instance, at birth, life expectancy was only 24 years. Of those who made it to age 1, half made it to age 33. Of those who reached 33, half made it to 59. Half of these died by 71. Half of the rest made it to 77. Half again made it to age 81. And so forth.9 The biblical "threescore and ten" only applied to those who never got ill or had a serious accident.

For obvious reasons, demographic evolution happened hand in hand with the Industrial Revolution, whose early seeds were sown in the 18th century. To cite only a few of the innovations, Jethro Tull invented the mechanical seed sower, vastly improving agricultural productivity; James Watt developed the first efficient steam engine; Edmund Cartwright built the first power loom; and Eli Whitney invented the cotton gin.

The pace of innovation accelerated in the 19th century, with Robert Fulton's steamboat, Faraday's electric motor, the steam locomotive, photography and the telegraph, in just the first half of the century. In less than a generation, the world was transformed. In 1830, the quickest way to convey a message from one place to another was on horseback; by 1844, less than a generation later, some communication was already taking place at the speed of light.

In the second half of the century, we saw the invention of the sewing machine (it's easy to underestimate the importance of this apparatus!), the elevator, a cost-effective steel-making process (Henry Bessemer), dynamite (Alfred Nobel), the telephone, the phonograph, the light bulb, the radio and, for the health-conscious, pasteurization (courtesy of Louis Pasteur), the X-ray and aspirin.

Even so, despite two centuries of remarkable innovation, life remained "nasty, brutish, and short." By the beginning of the 20th century, median life expectancy remained less than 50 years throughout the developed world, and mean life expectancy was even a notch shorter.10 At the same time, fertility rates for women of childbearing age averaged roughly six children or more, all over the world.

This means that the typical family had a half-dozen or more children, many of whom didn't survive to adulthood; and two parents, one working and the other, of necessity, exclusively focused on child-rearing. That's one worker supporting a family of eight. "Dependency ratios" were awful, though there were typically no surviving senior citizens to support. Preoccupied by onerous responsibilities, the average worker was hard-pressed to focus on developing productivity enhancements or technological innovations.



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