Increased productivity make us all richer




It’s a constant source of joy, what the Guardian manages to worry about. Our latest giggle at their expense is over their concern about something economists have been saying for some centuries now: inequality in income or wealth is caused by differences in productivity.

The newspaper’s worry was provoked by an interesting paper that was trying to estimate past wealth inequality.

The researchers used a reasonable enough, if not entirely perfect, measurement method: comparing the relative sizes of houses. It is not a great stretch to think that those with larger ones would be wealthier than those with smaller.

So a look at what immediately post-agricultural revolution people were living in should give you a good estimate of wealth inequality. From our distance of 6,000 – 8,000 years, it’s probably as good as any other method. And the researchers found that inequality was higher than it had been in earlier hunter gatherer societies – not an unexpected result.

It’s the why which is important though. Those who employed the new-fangled draught animals were able to farm more land and better, making themselves richer in the process. At which point, the economists come in: a degree of inequality is what makes the world go around – or at least what makes it advance.

The rise in inequality immediately following the discovery of booze (there’s a significant line of thought that it was gaining the barley to make beer, not bread, that first drove agriculture) was the result of some using the available resources more productively than others. And, as we might put in the modern world, the more productive get richer.