Category: Economics

Today’s Graph: US Real GDP per Capita


The data was from here

US Real GDP from 1870 to 2017, adjusted to 2012 prices.

Looked at as a whole America is not poor and America is not particularly short of money per person compared with previous decades. I know that is, on one level, an unremarkable thing to say but there has been such a long running campaign that somehow modern nations ‘can’t afford’ schools, healthcare or infrastructure spending that is it worth noting that technically ‘per person’ the US has never been richer. The issue is not the total divided by the population but the distribution and the unwillingness of the wealthy to pay taxes to support the fabric of the country that makes their wealth.


This graph is from here showing the same thing but on a post-WW2 timescale (grey areas are dips in GDP).



Dragons and wealth inequality

I’m sure this must have been discussed before but I’m too lazy to look on a cold morning.

Dragons of the Smaug-Tolkien variety must have some interesting economic impacts. Smaug hoards gold and jewels in vast quantities. Notably, Smaug (and presumably other gold obsessed dragons) know specifically what they have hoarded. When Bilbo steals one of Smaug’s treasures, the dragon notices that it is gone. So Smaug’s lair isn’t like Scrooge McDuck’s vault full of coins – the dragon is hoarding possessions rather than coinage or more abstract tokens of wealth. That’s not to say some of a dragon’s gold isn’t in the form of coins but clearly, the dragon wants the coins for their own sake and not as a unit of currency. Each piece of the dragon’s hoard is uninterchangeable. Furthermore, a dragon has nothing to spend his wealth on – there aren’t dragon shops and the dragon’s interaction with other species is one of eating them or burning them to a crisp.

So when a dragon hoards gold, the gold is removed from the economy. The dragon doesn’t spend any of it and hobbits-with-rings-of-power aside, none of its gold is removed. Assuming gold and silver are important units of exchange in fake-medieval fantasy worlds, this hoarding by dragons would have a deflationary impact. The dragon’s hoard is a reduction in the money supply and the value of gold increases as a result. An increase in the value of gold amounts to a reduction in the relative value of, say, beetroot. That is bad news for farmers who also have to contend with their livestock being eaten by the dragon.

According to this website, the total above-ground stocks of gold by the end of 2017 was 190,040,000 kilograms. The density of gold is 0.01932 kilograms per cubic centimetre which gives 9,836,438,923.395445134575569 cubic centimetres of gold. That sounds like a lot but it is just under 10 thousand cubic metres, which still sounds like a lot but 10 thousand cubic metres is basically a cube 21.5 metres along each dimension. About 300 shipping containers would carry the lot (assuming they can take the weight).

Here’s Tolkien’s picture of Smaug with his hoard:


Now, I don’t know how densely packed that pile of gold is. I assume there’s a lot of jewels in there and gold cups, vases or boxes that would take up some extra volume. Even so, that is a LOT of gold. Say…about 10 shipping containers full? Let’s say, all those goblets and jewels etc fluff up the pile to twice the size they would be if it was pure gold and call it 5 shipping containers of gold and presumably there’s even more gold we can’t see in the picture.

The point being, when I say a dragon’s hoard would have an economic impact, it would be a significant economic impact. Smaug’s hoard would be a significant chunk of the current world’s gold reserves.

When a dragon dies (courtesy of heroes equipped with a black arrow and advice from birds or from natural causes like a bad case of dragon-flu) the economy would be flooded with gold. Massive inflation would result as the price of gold plummets relative to the price of beetroots.

Now let’s say you are a monarch. If you are a feudal monarch then a decrease in the value of your gold due to a dead dragon would not be good but the price of the beets (turnips, mangel-wurzels etc) grown by your serfs would increase so maybe it would all balance out. If your kingdom is mainly independent farmers (as depicted in the Shire) then your wealth declines sharply as it is mainly gold and property. Property values are also decreasing as more land becomes safe to inhabit without a dragon flying by occasionally and burning everybody to death. So the monarch’s wealth declines relative to that of the free peasantry.

The Shire’s post-feudal class structure would have a similar dynamic. The wealthier hobbit families would have some of their wealth in the form of gold coinage. Poorer farmers would have few savings and their fortunes would be tied to each year’s crops. The flood of gold post a dragon’s death would make the value of crops increase as the value of gold decreased – reducing wealth inequality in the Shire (at least for a period of time).

Kill enough dragons and a dragon-slaying hero would seriously destabilise the economy but in the direction of reduced wealth inequality. Put another way, dragon-slaying would be a revolutionary act.

[ETA: On Twitter, Chris Neill pointed me to this article that covers much of the same ground by Frances Woolley ]

(W)Right Confusion


Not John C Wright trying to sniff out social justice narratives.

There is a very odd review of Bat Girl Year One on Hugo Award Nominated* John C Wright’s blog here Did I say odd? I meant to say predictable. He dislikes it because he smells feminism – who’d have thought feminism might turn up in a story about young woman who decided to fight crime dressed as bat? Well I am confident that anybody paying attention can spot most of the flaws in what Wright wrote.

My attention was drawn to this interesting paragraph though:

The difference between the Leftist and the Conservative worldview is that we Conservatives think the world is imperfect, and that all choice have sacrifices, all purchases have prices, and (this side of the grave) there ain’t no such thing as a free lunch. Conservatives believe in economics, that is, prioritizing scarce resources. Leftists believe in heaven on Earth, when can be controlled as soon as man is perfected by education, eugenics, an modern science. Like Cargo Cultists, the Leftists believe endless wealth pours from nature without limit or let, except that the evil rich blockade the outpouring of free goods into their own coffers, and prosper from the poverty of the masses. They believe in the opposite of economics.

Which, as with much of Wright’s output causes me to pause and consider how it is possible to be a professional writer with such little insight.

  • Is the difference between Conservatives and Leftists that Conservatives think the world is imperfect and Leftists don’t? No, indeed obviously not. In general leftists are looking for social and economic change which is absurd if they think the world is currently perfect. Leftists don’t think the world is perfect and indeed spend a large amount of their time pointing out what they find wrong with it. Conservatives can have a radical side too, so I’ll grant that despite their tendency to want to keep things how they think they might have once been is not neccesarily based on the notion of the world being perfect as it is.
  • Wright recovers a bit by shifting to the notion that leftists believe in Heaven on Earth – i.e. what he is actually trying to say is that Leftists believe the world (or people) are perfectible. That is a much better point and it is a shame he led with such an obvious misstep. It is true that idealism and utopianism are common among the left but even then a more pragmatic current has historically been present on the left – essentially aiming for an optimal society rather than a perfect one. Hence most of the modern left believes in some kind of egalitarian compromise with market economics and even the Marxist thinking that held sway over much of the left during the 20th century in one form or another tended to reject utopianism.
  • The other point is a doozy: “Conservatives believe in economics, that is, prioritizing scarce resources” Seriously? Many on the right in Western society believe in free-market economics to some degree but that isn’t universal (e.g. Wright’s freind and publisher Vox Day is a critic of free market economics). However even if we accept that somehow Conservatives are the ones who believe in economics (despite some very odd economic theories gaining traction in the US right from a confused version of supply-side economics to an infatuation with the gold standard), this belief is very much predicated on precisely IGNORING that some resources are effectively finite.
  • Most importantly the lesson from economics that conservatives seem to keep ignoring precisely because it is inconvenient is the issue of the Tragedy of the Commons and the problem that a supposed free market has when dealing with externalities. There is a reason why many economists favor a Carbon Tax as the most efficient way of reducing emissions of greenhouse gases and there is a reason why many conservatives oppose it. When faced with this dilemma of reality getting in the way of the pursuit of money it is noticeable that conservatives have developed an amazing power to ignore reality, physics, chemistry, the temperature record and economics.


[*courtesy of the puppies]