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The United States economy is a subject that is very much on the mind of Americans today. It’s also a very obviously influential part of the world; the American consumer market, for instance, often sets trends around the world.

Let’s take a look at the history of the United States economy. How did the American economy become as big and influential as it is today? We begin two hundred years ago, in 1800. Note that the next post will look at three specific moments during the American economy.


More below.

This picture comes from the website gapminder, maintained by a Swedish professor. I have previously used this website to compare North Korea’s development with South Korea’s, here. That post has a good summary of what this graph is saying:

Gapminder shows graphics of different levels of every imaginable type of statistic amongst the world’s varying countries.

This is the most basic graph: it shows wealth and health…The y-axis is life expectancy. The left axis is income per person (in dollars adjusted for inflation and purchasing power parity) put on a logarithmic scale (so that the difference between $1,000 and $2,000 is just as important as the difference between $10,000 and $20,000; this makes comparing things much easier). As one would expect, wealthier countries generally have higher life expectancies.

So this is the world in 1800, more than two centuries ago. Let’s take a look at what happens next:
The United States does pretty badly this generation; it basically ends up making no progress economically nor in terms of health.

Nevertheless, even as early as 1800 and 1820 the United States is one of the world’s wealthiest and healthiest places. A lot of economic analysis has been done on how America became so wealthy. Well, the answer is that the United States always has been this way, as this graph indicates. Even during the colonial era the English colonists enjoyed arguably the highest living standard in the world.

Let’s look at what happens in the next twenty years:
This is the era of Andrew Jackson, and the United States makes progress during these years. The economy grows, although life expectancy does not.

Again, the United States is on top of the world in 1840. There are, however, two European countries (or orange circles) that have been consistently ahead of America since 1800. What countries are these? Well, the bigger circle at the very right is the United Kingdom. It’s unsurprising that the United Kingdom is the world’s wealthiest country during this period, considering that it’s at the forefront of the Industrial Revolution. The smaller circle is the Netherlands.

What happens next?
Well, America’s economy grows at the fastest rate yet. The antebellum era apparently is quite good for the United States economy. Life expectancy, however, remains flat.

While economic growth has been steady during these sixty years, life expectancy has stayed flat. Here the weaknesses of gapminder come into play. One should realize that gapminder is not the literal truth; it’s a graphic that does its best to resemble reality.

This graphic is as reliable as the data it’s based off of. In my analysis on North Korea and South Korea, there was a huge problem for North Korean data – it didn’t exist or was false. So basically the entire North Korean graphic was a model using artificial numbers created by the authors of gapminder.

The economic data for the United States derives from a study titled Macroeconomic Crises since 1870. The authors of that study have created a dataset for their study. This is what gapminder uses. In general, it’s quite reliable; United States economic statistics are the best and most comprehensive in the world, even today.

On the other hand, let’s take a look at life expectancy during the Civil War and Reconstruction era:
The destruction of the Civil War doesn’t stop the United States economy from growing yet again. On the other hand, common sense indicates that life expectancy fell during the Civil War. After all, more Americans died in the Civil War than in any other war in American history – and America’s population in 1860 was a lot smaller than the population today. What gives?

Well, the life expectancy data comes from several sources. From 1989 to the present, gapminder uses US Census Bureau data. From 1933 to 1988 the Human Mortality Database is used. From 1901 to 1932 the Human-Life Table Database is used. From 1880 to 1900 Professor James Riley’s compilation of life expectancy estimates (from over 700 sources) is used.

And what about from 1800 to 1879? Well, here the authors use a simple model. A very very simple model. They assume that all countries go through a health transition, and that the United States had not undergone this transition from 1800 to 1879. So gapminder sets United States life expectancy as 39.41 years for this entire 80-year period.

By 1880, the United States has caught up with the United Kingdom. Out of all the countries in the world, only Australia is wealthier. On the other hand, Americans are generally in worse health than the wealthiest European countries.

Here’s the United States as a new century dawns:
With a new dataset in use and the advent of new medical technologies, American life expectancy jumps enormously. On the other hand, the economy doesn’t do that great. It’s commonly said that during this era the United States undergoes industrialization and becomes a world power.

One reason for American power is due to the population increase, fueled by immigration. The United States population is on par with most big European states during this period. It seems that a lot of the expansion of American power in this time is based on population growth; progress in living standards isn’t exceptional. Despite this, the United States has become the world’s richest country.

This continues during the Gilded Age and World War I:
The Gilded Age is commonly thought of as the time when the United States really became a great power. The population and life expectancy increase is impressive (note that the outlier in terms of low life expectancy is the year 1918). Yet there’s an awful amount of economic backsliding and economic crisis during this period.

In relative economic terms, however, the rest of the world has been doing even worse. This is mostly the result of World War I. American living standards are squarely ahead of everybody else in 1920, although once again American life expectancy is somewhat subpar.

Then comes the Great Depression. Did that knock the United States off its track?
Kind of. Life expectancy continues to improve, but again the improvement in living standards isn’t great. Indeed, this whole era from 1880 to 1940 features regular economic crisis and chaotic patterns in economic growth.

Nevertheless, the United States is still very wealthy and fairly healthy in 1940.

Let’s take a look at World War II:
Here a new pattern sets in. Unlike the previous 80 years, the United States economy starts growing at a steady rather than chaotic rate. Life expectancy also increases, but by a lesser extent. There’s a huge economic boom during the war years and – surprisingly – no drop in life expectancy during the war.

The ’50s and ’60s are commonly and nostalgically seen as the time when the United States was on top of the world, and this picture provides good evidence. Economically the United States is ahead of everybody else to the greatest extent in its history. On the other hand, the Soviet Union does have a bunch of nuclear weapons pointing at the United States. People tend to forget that fact.

So what happens during the Vietnam War and oil crisis?
Well, the economy does pretty well, although it slows down during the latter period. Life expectancy is the opposite; it slows down during the first part and then increases during the second part of these two decades.

After a great economic boom, the rest of the West and Japan have almost caught up to the United States. In a sense, things are back to normal. In another sense, America’s allies are closer to its economic living standards than at any other time in history.

Then come the Reagan and Clinton years:
The pattern here is quite similar to that from 1960 to 1980. Both living standards and life expectancy increase slowly but steadily.

Again, the rest of the First World is nipping at America’s heels. Yet only four tiny countries are actually richer than the United States. As is historically the case, life expectancy in these countries is higher than in the United States.

And finally, the past decade:
It’s a pretty terrible decade; the United States basically goes nowhere.

Strangely enough, however, the picture looks pretty similar to that in 1980. Despite a decade of terrible American economic growth, the rest of the First World hasn’t surpassed the United States. Right now a total of eight “countries” are wealthier than the United States: Brunei, Hong Kong (China), Kuwait, Luxembourg, Macao (China), Norway, Qatar, Singapore. As throughout history, American health is relatively worse.

There are several patterns throughout this analysis. Relatively speaking, the United States has always been at the top. It’s always been wealthier than almost all other nations. On the other hand, the United States has also always had relatively low life expectancy for its living standards.

The United States has also always grown at a slow but steady rate. There are periods of slower growth (such as in the early twentieth century) and periods of faster growth (such as in the middle of the twentieth century). But the growth is always there.

Finally, ever since World War II there has been a cluster of First World countries just behind the United States. This cluster of countries, however, has never actually caught up. I am quite curious to see if that day will ever come. Will countries like France, Germany, Japan, and the United Kingdom ever actually surpass the United States?


Originally posted to Inoljt on Fri Feb 22, 2013 at 02:17 AM PST.

Also republished by Community Spotlight.

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Comment Preferences

  •  Interesting! (3+ / 0-)
    Recommended by:
    jlms qkw, LillithMc, thomask

    Despite all the drama, I'm glad I was born in America.

  •  Tipped & rec'ed (2+ / 0-)
    Recommended by:
    jlms qkw, bfitzinAR
  •  The North American continent (9+ / 0-)

    especially the central section currently referred to as The United States of America has, even after centuries of extraction, more get-at-able natural resources than anywhere else on earth.  That was and is the basis of our "exceptional" wealth.  Basic greed and stupidity is the reason health didn't keep up with wealth - and is the reason why sooner rather than later we will lose that status as we extract/destroy what's left.

    •  American exceptionalism (6+ / 0-)

      Dont forget that we also had essentially unlimited land for most of our history. Its much easier to develop society when you can just give somebody a few acres for their livelihood (stolen from the Indians, but that isn't germane here). Most of the rest of the world had centuries to build their fuedal fiefdoms so that there wasn't much land left for commoners, and some were too dense even otherwise.

      Of course, this doesn't work as well in an industrial society where livelihoods don't necessarily come from farming, and even less in today's post-industrial economy. The tragedy of our time is that we haven't made the logical transition from giving people an acre of land to giving people what they need to get today's jobs, and even the few proposals to improve our human infrastructure never get enacted.

      •  once people producing things (1+ / 0-)
        Recommended by:

        became "labor" - just another interchangeable component to be gotten as cheaply as possible and discarded at will - another "natural resource" provided by nature for the enrichment of the "right" people - there is no more consideration of what's best for those people.  Or even subsistence for those people.

  •  I saw a TED talk with this same chart... (3+ / 0-)

    Your focus on the US is really interesting. Makes one realize that "today isn't so special" as people often want to believe.

    What's really interesting is what's happened to the rest of the world since ~1960... this was the focus of the TED talk. It's a pretty positive message that everything is headed in a good direction. Even Africa is getting there.

    Of course, life expectancy & income are not the sole measures of world progress/health, but still...

    Freedom isn't free. So quit whining and pay your taxes.

    by walk2live on Fri Feb 22, 2013 at 10:39:18 AM PST

  •  Interesting, but (1+ / 0-)
    Recommended by:

    it could really use more "why" to better understand the "what".

    ¡Cállate o despertarás la izquierda! - protest sign in Spain

    by gjohnsit on Fri Feb 22, 2013 at 11:43:48 AM PST

  •  GIGO (0+ / 0-)
    Nevertheless, even as early as 1800 and 1820 the United States is one of the world’s wealthiest and healthiest places. A lot of economic analysis has been done on how America became so wealthy. Well, the answer is that the United States always has been this way, as this graph indicates. Even during the colonial era the English colonists enjoyed arguably the highest living standard in the world.
    Standard of living and life expectancy for whom?
    Indigenous peoples? Humans held in bondage?

    The 1800's data isn't merely estimated, it's totally skewed.
    It is complete bullshit. And the starting point of this analysis presumes that our exploitative origins are an appropriate place to begin.

    The U.S. hasn't simply had phenomenal access to resources, in large part because it was (and is) willing to destroy existing native cultures (and whatever is near those resources) in pursuit of those resources and simply in pursuit of land, it also built immense amounts of structural (and ordinary financial) wealth through the exploitation of slave labor at home and abroad. That wealth wasn't simply agricultural, nor was it destroyed in 1861-1865, and many of the policies the power brokers of our government and big business have served to insure that there remains a pool of slave, or near slave, workers globally in order to drive the production of wealth (which is the source of increased life expectancy) for the elite class.

    That this has had a net positive impact on the "mean" life expectancy/average income in the U.S. says nothing about the places where the data speaks volumes about inequities, or where the absence of data (or its ability to consider certain groups as subjects rather than objects) indicates inherent inequity.

    Try clicking around here

    And note that the life expectancy for a Native American in California is over 15 years longer than one in South Dakota. So "average" can hold a whole lot in terms of relative measures.

    None of the "analysis" in this diary really explains:

    How did the American economy become as big and influential as it is today?
    Nor, given the limitations of the both the data and the framing, does it support the conclusions of the "next post".

    With deep apologies to the diary author, and in spite of my critique, many thanks. You got me thinking.

    Do not be overcome by evil but overcome evil with good. ~ Romans 12:21

    by Mickquinas on Fri Feb 22, 2013 at 12:49:58 PM PST

    •  It is true that the median is much better for (0+ / 0-)

      income. For instance, I've seen a statistic that says the median person in the Netherlands is better off than the median person in the United States, although the American mean is much higher.

      The problem, of course, is that there's no way you're going to be able to get that data for the 19th century. So we have to go with what we got.

      by Inoljt on Mon Feb 25, 2013 at 03:21:23 AM PST

      [ Parent ]

  •  GDP per capita (1+ / 0-)

    tells us nothing about median income, or the standard of living enjoyed--or endured--by the average citizen.

    "A lie is not the other side of a story; it's just a lie."

    by happy camper on Fri Feb 22, 2013 at 01:55:21 PM PST

  •  Will countries like France, Germany, Japan, and UK (0+ / 0-)

    Ever catch up?

    Not in our lifetimes.

    There is an agricultural and natural resource advantage that the US has that other countries simply don't. In a sense we are an exceptional nation, but just exxceptionally lucky that we have the combination of ideal geography and population to always be among the richest nations

    The life expentancy thing, on the other hand is entirely a self-inflicted wound based on poor healthcare, poor habits, a gun fetish, and this absurd aversion to communal action.

    That's the way it is, folks

    An empty head is not really empty; it is stuffed with rubbish. Hence the difficulty of forcing anything into an empty head. -- Eric Hoffer

    by MichiganChet on Fri Feb 22, 2013 at 02:15:25 PM PST

  •  Despite recent sebacks in the life expectancy (2+ / 0-)
    Recommended by:
    IreGyre, Noodles

    of the non-rich, I would bet that in the next thirty years there would be another worldwide leap upward as the raw science behind genomics, diagnostics, bioinformatics, stem cells, 3D printed organs, etc. converge and ramp up to mass-scale technologies.

    Pour yourself into the future.

    by Troubadour on Fri Feb 22, 2013 at 03:11:55 PM PST

  •  Excellent work! Thank you very much. n/t (0+ / 0-)
  •  Had to check Canada's (1+ / 0-)
    Recommended by:

    wealth is always a little less.  But life expectancy always a little more.
    Same for UK.

    "The only person sure of himself is the man who wishes to leave things as they are, and he dreams of an impossibility" -George M. Wrong.

    by statsone on Fri Feb 22, 2013 at 07:57:43 PM PST

  •  Honesty in Advertising! (0+ / 0-)

    Those aren't pictures.  They are graphs.

    "Truth and love will overcome lies and hatred.” Vaclav Havel

    by dharmasyd on Fri Feb 22, 2013 at 08:11:08 PM PST

  •  Amazing! (0+ / 0-)

    You did a really great and thorough job with this. Interesting stuff!

  •  The slight spike around the 1920-40's (1+ / 0-)
    Recommended by:

    Could be explained by the advent of antibiotics and vaccinations, sterile procedures (particularly during childbirth).

    Does the life expectancy data you've cited include infant mortality?

    I think a more telling index might be one that shows Gini index, union membership and life expectancy.  I wonder how those data lines would correlate.

    On a final note-
    The introduction of high fructose corn syrup as a substitute for sugar into the American diet began around 1980.  Also, partially hydrogenated oils as a texturing agent, and finally loads and loads of salt.

    All in an effort of satiety, replacing the evil "fats" that were believed (and still are) causative of the explosion in heart disease.

    Sorry to go off on that near hijack.
    But I think we might all agree, that underlying inequality is what drives these horrible numbers.

    The US historically exploits some new immigrant base of the population. The total wealth of the nation rises, but the data hardly ferrets out the fact that, that wealth has almost always landed into the hands of the few.  With perhaps exception to the period 1940-1970-s.

    Where is Anarchy, when you need it?

    by Boberto on Sat Feb 23, 2013 at 08:46:10 AM PST

  •  Life expectancy is particularly interesting (0+ / 0-)

    The proportion of the population with life expectancy between 25 and 35 was huge back in the 1800's. Now the lowest life span is around 48 with a large majority of the population life expectancy being 60 or greater.

    Love = Awareness of mutually beneficial exchange across semi-permeable boundaries. Political and economic systems either amplify or inhibit Love.

    by Bob Guyer on Sat Feb 23, 2013 at 04:47:09 PM PST

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