Wednesday, September 4, 2013

The Working Poor and 24 Loaves of Bread: or has the Industrial Revolution Wrought a Miracle?

Tintoretto, the Miracle of Loaves and Fishes (1545-1550)
When Jesus heard of it [the beheading of John the Baptist], he departed thence by ship into a desert place apart: and when the people had heard thereof, they followed him on foot out of the cities.   
And Jesus went forth, and saw a great multitude, and was moved with compassion toward them, and he healed their sick.  And when it was evening, his disciples came to him, saying, This is a desert place, and the time is now past; send the multitude away, that they may go into the villages, and buy themselves victuals.   
But Jesus said unto them, They need not depart; give ye them to eat.  And they say unto him, We have here but five loaves, and two fishes.  He said, Bring them hither to me.  And he commanded the multitude to sit down on the grass, and took the five loaves, and the two fishes, and looking up to heaven, he blessed, and brake, and gave the loaves to his disciples, and the disciples to the multitude.  And they did all eat, and were filled: and they took up of the fragments that remained twelve baskets full.  And they that had eaten were about five thousand men, beside women and children.
Matthew 14:13-21.

Prior to the industrial revolution, the multitudes lived on the edge.  Absent drought, famine, pestilence, or war, unskilled workers earned just a little more than what was needed for daily sustenance.  The industrial revolution, and the century and a half since, has freed the multitude from the cycle of population growth and famine.  How do we measure the progress?

Brad DeLong has reposted a discussion examining the explosive growth of economic productivity that happened in 1870.  He identifies 1870 as the hinge of the Industrial Revolution.   John Stuart Mills and Karl Marx thought about this in terms of how many calories of bread an unskilled laborer could earn at different times.  We've escaped the Malthusian trap that spawned such thoughts, but what does this thought experiment look like in 2013?  How many surplus loaves of bread does a minimum wage worker earn in a day?

Unless I'm completely missing something, the count is 24, and Brad's calorie count, below, is spectacularly off.

Here's Brad:
To put it another way: In 1870 the daily wages of an unskilled worker in London would have bought him (not her: women were paid less) about 5,000 calories worth of bread--5,000 wheat calories, about 2½ times what you need to live (if you are willing to have your teeth fall out and your nutritionist glower at you). In 1800 the daily wages would have bought him about 3,500 calories, and in 1600 2,500 calories. Karl Marx in 1850 was dumbfounded at the pace of the economic transition he saw around him. That was the transition that carried wages from 3500 calories per day-equivalent in 1800 to 5000 in 1870. Continue that for another two seventy-year periods, and we would today be at 10,000 calories per unskilled worker in the North Atlantic today per day. 
Today the daily wages of an unskilled worker in London would buy him or her 2,400,000 wheat calories. 
Not 10,000.  2,400,000. 
That is the most important fact to grasp about the world economy of 1870. The economy then belonged, even for the richest countries, much more to its past of the Middle Ages than to its future of--well, of you reading this. Compared to the pace of economic growth since 1870 and even more so since 1950, all other centuries--even the first-half of the nineteenth century that so impressed Karl Marx--were all but standing still. 
That is why there is a very good case that it is 1870 that is the most important historical axis on which the wheel of economic modernity, modern economic growth, the modern economy--whatever you choose to call it--turns.
But I think Brad's got that 2.4 million number wrong.  According to the U.S. Bureau of Labor Statistics, in July 2013, the price of whole wheat bread is $2.06/lb. [There are 453.6 grams in a pound]  A 38 gram slice of Oroweat seven grain bread contains 100 calories; a pound of this bread contains 1,192 calories.

So how many loaves (or wheat calories) does the federal minimum wage stuck at  $7.25/hr allow you to buy. Assuming 8 hours of work, a minimum wage worker earns $58 per day.  Assuming no deductions, except sales tax on the bread, this would buy approximately 25 one pound loafs of bread ..... or 30,205 calories.

Not 2,400,000.  30,205.

If it's true that in 1870 an unskilled worker would earn enough to purchase 5,000 wheat calories, or ~five loafs of bread (and I understand we are taking John Stuart Mills's word for it here), then the progress of a minimum wage worker in 2013 earning 24 surplus loaves of bread per day does not seem so spectacular.  The unskilled worker in 1870, after he ate one loaf to survive, had four left over to trade for shelter, and clothing,  a few lumps of coal, and some milk.  Today, a minimum wage worker--and in 2011 there were 3.8 million of them, or 5.2% of all hourly wage workers--has 24 loaves left over to trade for shelter, clothing, gasoline, car repairs, public transport, phone, computer, and a movie on Saturday night.

If we're thinking in terms of just surviving day-to-day until we run out of bread, then 20 additional surplus loaves is progress.  If we're thinking of 24 loaves of bread in terms of paying for shelter, clothing, phone, transport, television, radio, internet, books, movies, medical care, and children, then that is less than what Jesus managed with his five loaves in the desert.

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