Economic Growth: Can You Give an Answer a Five-Year-Old Could Understand?
When I teach undergraduate labor, I lecture on “Why the Standard Story of Labor Is Wrong.” Here’s the standard story, according to me:
1. In the days before the minimum wage, unions, etc., life was terrible for workers because employers paid them whatever they felt like paying them.
2. But then government became more progressive, and changed the laws.
3. Life is now better for workers because employers’ greed has been tamed.
Does anyone really believe such a silly story? Well, a couple days ago, I came across a perfect example while reading If You Lived 100 Years Ago to my kids. After going into grisly detail on the harsh living conditions of the poor (and the opulence of the rich), the book ends with the question “When Did Life For the Poor Get Better?” The book’s answer:
Not all rich people were selfish. Many cared about the poor. A newspaper reporter, Jacob Riis, wrote a book called How the Other Half Lives. Riis’s photographs showed people living and working in miserable conditions. Men and women who cared about the way the poor lived began to work for changes.
They started settlement houses where poor people had classes in health and education. The poor could even take baths in bathtubs! They could listen to music and see paintings.
In the 1900s, laws were finally passed to protect children. New laws said all children under the age of fourteen had to go to school. They were laws that called for better housing, safer foods and medicines, shorter working hours, and improved public schools. Things began to look up for many people.
In short, life got better for the poor because of philanthropy and regulation. Economic growth? Higher labor productivity? Negative side effects of labor market regulation? Blank out.
In fairness, the next paragraph says:
More people of the middle class began to enjoy new inventions, such as washing machines, that made their lives easier. More and more people bought furniture and clothing made in factories.
But the process of economic growth and rising labor productivity that made these advances affordable to more and more people? No mention.
Now you could say that the Standard Story of Labor is simply easier to explain. Maybe so, maybe not. So, dear readers, here’s my challenge: In the comments, can you write an economically sound answer to the question “When Did Life For the Poor Get Better?” that a five-year-old could understand? 150 words or less!
I’ll read the best one to my sons on Monday morning.