This is the title of a post by Brad Delong (Professor of Economics at Berkeley), about Buying Power of 14th Century Money, posted by Will Mclean at A Commonplace Book — Deeds of Arms and Other Matters Medieval and Otherwise, 3 July 2008. As the economy slides backwards, it is important to remember how far we have come. Almost every American is rich compared to the average person of 1776 — and perhaps even richer than almost everybody in the 14th century.
“What was 14th century money worth in today’s dollars? That’s tricky, because it depends on what you were buying. In the second half of the 14th century, a pound sterling would support the lifestyle of a single peasant laborer for half a year, or that of a knight for a week. Or it could buy…”
- “Three changes of clothing for a teenage page (underclothes not included), or
- twelve pounds of sugar, or
- a carthorse, or
- two cows, or
- an inexpensive bible or ten ordinary books, or
- rent a craftsman’s townhouse for a year, or
- hire a servant for six months.
“It should be obvious from the above list that the conversion rate depends a great deal on what you buy. A husbandman or yeoman servant spent most of his budget on food and clothing, which have become relatively cheap since the industrial revolution. For that basket of goods, a pound sterling might buy $300 worth of goods today.
“On the other hand, a knight or noble might spend half of his income on servants, and much of the rest on handmade luxury goods, things that were relatively cheap then and expensive today. For that bundle of goods, a pound might buy $3,000 dollars worth of goods today.”
Another post about the comparison of past costs with ours today: One Hundred Interesting Mathematical Calculations: Number 16: How Rich Is Fitzwilliam Darcy?, 13 November 2003 — The comments are esp fine! More comments on this are at this follow-up post.
Update: making this even clearer is “The Singularity in Our Past Light-Cone” by Cosma Shalizi (asso professor of Statistics at Carnegie Mellon).
For more information
Posts about the singularity:
- Good news: The Singularity is coming (again), 8 December 2007
- What comes after the Consitution? Can we see the outline of a “Mark 3″ version of the United States?, 10 November 2008
- Everything written about the economic crisis overlooks its true nature, 24 February 2009
- A look at the new world – after the downturn, 19 March 2009
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This answers the extremists on the left and right who see european history, either the capitalist engine of it, or the democracy-theme of it, as leading us farther away from some golden age in the past. In fact, though, Marx argued that capitalism was a necessary and desirable step in the development of human society, although beset with contradictions which would eventually destroy it.
Otherwise, I don’t get the point of this post. Sure, “we”, as individuals, and merely in the physical sense, are better off than our grandparents. We live longer, eat better, are freer to move about and act in unconventional ways. African-Americans living in ghettos are better off than slaves. However, well-being is not merely about physical survival but intangible things like relative power, status, education and culture, freedom in relation to other members of society, and general security. A peasant had a certain kind of security in the protection and occasional munificence of his lord. A lot of Americans, not to mention several billion less fortunate citizens of the globe, lack even that security today.
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Fabuis Maximus replies: The extent of our progress is shown by your statement “well-being is not merely about physical survival but intangible things”. Take away the former and you would no longer worry about the latter. This site is littered with comments that show little or no awareness of how far we progressed in the past 500 years; people lost in fantasies about the wonderfullness of the pre-modern era — in which most people lived at the bare
sustenencesubsistence level.Excellent commentary on the essential irrelevance of Marxism today. Every age has its own “singularity” myth, or its own “golden age.” Utopia, whether past or future, is (was) not for everyone. Green leftists want to kill off most humans of Earth to make their own utopia of the future. They are using monstrous government to achieve the end.
Humans seek out their own well being by way of work, thought, and trade. Leftists wish to abolish trade in order to substitute their own “enlightened leadership and guidance”. Seneca longs for the security of the lord, while overburdened taxpayers long for the freedom of smaller government.
“overburdened taxpayers long for the freedom of smaller government.” (M is Dead)
Europeans generally pay higher taxes and get better health care, longer vacations, and a more secure retirement, than Americans. Americans are “overburdened”, but not by taxes. Would you really prefer to live in a society without modern transportation infrastructure, publically sponsored medical research, public universities, publically mandated environmental and workplace standards, uninspected agricultural products, commercial products untested for safety, every airport its own air traffic control system, etc?
Your taxes support the public commons, which in turn make possible private initiative.
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Fabius Maximus replies: That seems a bit too simplistic, ignoring important elements of the transaction: price/value, and the voluntary/involuntary nature of the exchange.
Are the services we receive worth 1/3 of our income (including all taxes)? To say that I would not like to live in Tombstone or Dodge City does not mean that I consider fail any payment for better governmental services. For a specific example, something like 1/3 (or more) of education spending (ex college) goes for administration.
This is important as the exchange of money for government services is involuntary, which makes it more susceptable to dissatisfaction than commercial exchanges.
All those ‘response’ articles say that it’s hard to hire a body servant. For one, it isn’t, at all; if you want someone at your beck and call, you can hire former elite soldiers as bodyguards, nurses to follow you around, personal chefs to cook your meals, and really just about anything. For the most part, we’ve found that it’s more efficient to just have a market of specialists available to be hired for a particular task (instead of a having a mechanic, you have a phonebook). For two, most of the things you would need a servant for on a daily basis such as washing clothes, cooking meals, taking care of your horses, gathering firewood for the evening fire, etc. are taken care of by modern technology.
FM: “people lost in fantasies about the wonderfullness of the pre-modern era — in which most people lived at the bare sustenence level.”
Me: As far as I know people in the East didn’t live “at the bare sustenance level” during the periods you mention in this post, and much before that.
FM: “The extent of our progress is shown by your statement ‘well-being is not merely about physical survival but intangible things.’”
Me: Intangible things have always been valued. This definitely didn’t happen in the last 500 years, though the type of ‘intangible things’ valued are different amongst different peoples and ages.
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Fabius Maximus replies: First, my spell-checked changed the text. I meant “subsistence”, not “sustenance”. Anyway, it’s not my field, but I believe the base of society — which was the vast majority — did live at the bare subsistence level, in the sense of living with little in the way of surplus food, energy, or reserves. That made life difficult, and left them vulnerable to even slight unfavorable changes (e.g., climate, plague). This is a broader usage then the technical definition of subsistence economy). Although some groups in the Middle East met even the narrow definition — such as Bedouins and shepards.
Mr Richman , look after your horses yourself and they will give you more .
In terms of “Going beyond Keynes”, I think this post hits on an important aspect of what has gone wrong in our finance sector. Much of our valuation methodology, especially for the purpose of trading, is purely relative. How much is this asset worth? “Well, compared to what?” comes the instant reply. It seems our calculus is geared well to the task of finding relative values, but the normative value is frustratingly free-floating. Attempts to anchor our currency to Gold, or something “real”, keeps coming up as a symptom of this problem. The Austrian school is back in vogue a bit for this very reason, I think.