Wonderful Consequences of Economic Growth
In a nine-minute video, Swedish statistician Hans Rosling, who died in 2017, shows just how dramatic the washing machine was to his family. It freed his mother to do other things and his grandmother found it so fascinating that she just sat and watched it perform its tasks. In one of my classes at the Naval Postgraduate School in the late 1990s, I was laying out the data on the entrance of women into the US labor force after World War II. A particularly curious student asked me why that had happened, and I pointed to washing machines, driers, automatic dishwashers, and a range of labor-saving devices that had freed up time mainly for married women. I also referenced a chapter of Robert Caro’s magnificent first book on Lyndon Johnson, The Path to Power. The chapter, titled “The Sad Irons,” told of the incredibly taxing work women in the Texas hill country did to wash laundry before they had electricity: hauling water uphill from a well, hauling wood to burn in a stove, firing up the stove in the middle of hot summers to heat water, and keeping it fired up to heat irons to press shirts. Washing machines were a huge boon to families, especially to women.
This is from David R. Henderson, “What Causes Economic Growth?” Defining Ideas, June 16, 2002.
An example of a more recent major breakthrough is Zoom. Zoom has made it so much easier for large groups to communicate remotely. Last fall, I gave a speech in Washington in which I asked the audience of about fifty to raise their hands if they used Zoom a fair amount. Virtually every hand shot into the air. I then asked them to raise their hands if they valued it a lot. Almost every hand stayed in the air.
On this point about Zoom, I didn’t put in the article, because it didn’t nicely fit, the reason I had raised the Zoom example. I was giving a talk to a number of Republican politicians and wanna be politicians who tended to be pro free market but at that point in the talk were pushing back on my pro-immigration views. I asked them if they knew how many times Eric Yuan, the creator of Zoom, had applied to immigrate to the United States before finally getting permission. Of course, they didn’t know. Why would they? I pointed out that it took him 9 tries. I asked if any of them would have wanted it to be easier for him and people like him. Some of them did.
One last excerpt:
What has been particularly important for poorer countries since World War II has been a substantial reduction in trade barriers. Moving toward freer trade causes people to produce the items in which they have a comparative advantage and buy other items from lower-cost producers in other countries. In “Does Trade Reform Promote Economic Growth? A Review of Recent Evidence,” a 2019 PIIE study, Dartmouth economist Douglas A. Irwin, arguably the leading trade economist in the United States, shows that between 1983 and 2009, developing countries dropped their average tariff rate from over 35 percent to about 10 percent. He reports on a range of studies whose answer to the question in the title is “yes.” In a table in the article, Irwin cites studies that find anywhere from a 1 percentage point increase in annual growth up to a whopping 2.7 percentage point increase in annual growth due to reductions in trade barriers. Either of those annual increases, over a decade, leads to a major increase in economic well-being.
Read the whole thing.