when money dies the nightmare of the weimar collapse

Provided, of course, the country continues to grow at the same pace. A few years after that, incomes will be at advanced economy levels. This means that if a country starts off with per capita income of $500, and grows by about 10 percent a year, incomes can reach $16,000 in just about 35 years. So if a country is growing at 10 percent, its standard of living will double in about 7 years. This rule says that you can calculate the number of years it will take to double living standards by dividing 72 by the average growth rate. The basic arithmetic behind convergence is simple. This potentially epochal process is the subject of Michael Spence’s remarkable new book, The Next Convergence. What was once the privilege of a favored few will become commonplace for many. If these trends continue, we will witness, in our lifetimes, a third historical swing: a renewed convergence of living standards. More recently, the two most populous countries-China and India-began to grow at rates close to 10 percent. After 1950, some countries, mainly in Asia, that had been lagging behind started growing at unprecedented rates, about 7 percent per year, enabling them to start closing the gap with the advanced economies. Then the course of history suddenly swung again. By 1950, the world was a profoundly unequal place. The rest of the world, more than four-fifths of humanity, remained mired in the agricultural past.

But this transformation occurred only in a few places, essentially in Europe, nations of European descent, and Japan. The Industrial Revolution propelled a remarkable and sustained rise in living standards, first in Britain, then elsewhere. Then, in the 1700s, came the first sudden swing in the course of economic history. For thousands of years, living standards displayed no truly long-term trends, nor any great variation from country to country. If so, we will be witnesses to an extraordinary event, one that has happened only twice since the beginning of mankind. We may be standing on the hinges of economic history. The Future of Economic Growth in a Multispeed Worldįarrar, Straus & Giroux, New York, May 2011, 320 pp., $27.00 (paper).

When money dies the nightmare of the weimar collapse