29 September 2014

Sitting Still in a Plane Moving 400+ miles per Hour - Why People Are Unimpressed with Economic Progress

Evolutionary scientist Richard Dawkins argues that there was no first human. The reason? The change in any given generation was so imperceptible that what appears dramatic over millions of years seemed to fall within the range of normal variation. There was no baby born to early primates that looked more like modern man. The change was very slow and might have passed undetected by anyone generation in spite of the dramatic difference between early mammals and modern man. There are less dramatic examples in every day life. The hour hand on your watch moves, Dawkins says, but you won't see it. You will be old, eventually, but there is no one morning when you wake up old. One of the biggest obstacles to understanding evolution is that we can't even conceive of millions of years of time, much less how much change can play out within that huge window of time.

On a related note, studies have shown that many people can't really appreciate the impact of compound interest. If you put $10,000 into the account of your newborn grandchild and made 10% a year on that investment, by 50 that grandchild would have one million dollars. If you didn't give them the money until they retired at 67, they'd have $6 million. If you made them wait until 100 (assuming great gains in longevity), they'd have $137 million. The way that compound interest begins to escalate is hard to conceive, but of course it makes a dramatic difference in lifestyles for capitalist countries that make progress each year, even if that progress doesn't seem particularly dramatic at the time. 

And that might be one reason why people are so unimpressed with economic progress. At any given instant - any year or sometimes even decade - the progress we make may not seem impressive. Even if we're making the right moves, today doesn't seem any different from yesterday. 

We (rightfully) project the long-term impact of carbon emissions and what that will mean for global temps. That is sort of mind-boggling because it shows us the long-term impact of incremental change. But if incomes raise as much in the 21st century as they did in the last, median household income (adjusted for inflation) will be about $300,000, a projection as valid even if less bandied about.

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