Humanity has been on a roll for some time. Don’t get cocky and expect to straight line the future, however. The population of the world was about 150 million in 1 AD. Since then, it has grown to 6 billion, qradrupling in the last century alone. World economic growth has been even faster than population growth. World GDP is over 20x what it was in 1900, as this chart shows:

Three interrelated creations of man have powered these impressive results over the last 130 years or so, as we have often previously discussed. They are capitalism, techlology/invention, and their godchild, the medical/pharmaceutical industry.

Technological advances, from the light bulb and telephone, to the car and airplane, to the transistor and internet, are discontinuities from life as previously known. So are penicillin, the C-section, Lipitor and MRI’s. So are innovations like the corporate org chart, capital and expense accounting, the experience curve, and consumer marketing. All these innovations constitute the infrastructure of wealth and longevity.

Within the general trend of increased global wealth and longevity are periods of decidedly negative impact as well. The Black Death of 1348 wiped out half of Europe, the 1918 influenza epidemic killed 30 million people, and World War II reduced the earth’s population by 2.5%. Mao and Stalin also killed tens of millions of their people. There have periods of economic death as well. The 75 years of the USSR’s existence comes to mind, and of course the Great Crash, when the Dow Jones Industrials went from 299 to 41, and a quarter of America went unemployed. We would note that few of these negative discontinuities were foreseen (heck, the New York Times may still think that the USSR was a model of economic success!).

We really don’t know what is going to happen in the future, in part because the West is fat, dumb and happy, and has been so for a very long time now, at least since World War II. So we do not know what will happen when the West, and other parts of the world, experience the inevitable and severe stresses associated with the massive discontinuities that inevitably happen from time to time. The West has been super lucky in that the post-WWII discontinuities have almost all been on the positive side so far. It would be a mistake to blithely extrapolate that endlessly into the future.

We see a number of stresses in the world at the moment. China’s miracle 20-year economic development is precariously perched atop a mountain of bad loans and a 70% dependency on exports. Western Europe faces an inevitable crisis in transfer payments as its aging population consumes the seed corn of future prosperity. And of course Islamic fundamentalism is the new Communism; its adherents want to create totalitarian states with an ideology sure to create economic ruin. People seem somehow to forget that the entire Arab world, minus oil, with its 500 million people, has a smaller GDP than tiny Finland, with 5 million souls. Sharia societies, like communist societies before them, have been to date entirely parasitic on the free, capitalist world for any economic benefits that they may enjoy.

As we say, we don’t know what is going to happen in the future. But we do know there will likely be some discontinuities of the nasty sort in addition to those positive ones that have so blessed humanity over the last century. And we do not know as well what will happen in the West’s burgeoning confrontation with Islamic fundamentalism. But it is too early to really know, because the stresses to date have been minor, compared to some of the serious stresses of the past at least. When some discontinuity seriously threatens the economic well-being of the West, only then, in our view, may we find out what has become of Western man.

This entry was posted on Saturday, September 2nd, 2006 at 9:21 am and is filed under China, EU, General, Iran, Religion, War, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.