Conscientious Financial Planning and Retirement Income Management | 201-741-9528
from Lonier Financial Advisory LLC, Osprey, FL

The World History of GDP

The World History of GDP

If you live in a place where the sky is truly dark at night, then you are likely aware of the virtues of stargazing, the mystery and awe that combine as you look for your place in the universe.

On the other hand, if you live where the 21st century does most of its business, near a sizeable city somewhere, then your night sky may not offer an opportunity for that perspective. You have to find your own place in the universe without a guiding star. It helps to have some sense of how we got here and where we came from.

In that spirit, these two charts from The Economist provide some perspective on the economic history of the past 2,000 years.

At a dinner during Nixon’s historic trip to China, Zhou Enlai reportedly said it’s too early to say when asked about the impact of the French Revolution. It turns out the quote was incorrectly reported, and that the subject was the student uprising in the Paris Spring of 1968, just four years earlier. But the old quote sticks because it has a larger ring of truth to it.

Squint at these two charts and you might get some glimpse of that. According to The Economist, 23% of all goods and services “since Jesus” were produced in this still young century—more than the first nineteen centuries combined.

[imageeffect type=”frame” width=”595″ height=”495″ alt=”” url=”http://www.lonierfinancial.com/wp-content/uploads/2012/12/WorldHistoryOfGDP.gif” link=”http://www.economist.com/blogs/graphicdetail/2012/06/mis-charting-economic-history” ]

 

The first chart above shows the changing “annual” split by country/region of economic output over 2,000 years, while the second below shows the % by century of the total 2,000 year output.

[imageeffect type=”frame” width=”595″ height=”335″ alt=”” url=”http://www.lonierfinancial.com/wp-content/uploads/2012/12/WorldHistoryofEconomicOutput.gif” link=”http://www.economist.com/blogs/dailychart/2011/06/quantifying-history” ]

 

Both make it clear that we are in a period of massive, global historic change. The last remaining medieval societies are undergoing rapid modernization. Economic and governance strategies that have worked for 50 or 100 years—some of which arose almost accidentally—are no longer working. Restructuring, de-leveraging, and uncertainty show little sign of ending soon. Willingly or not, we are borne along on a strong tide of change.

As the year winds down and planning for the next begins, perhaps spend a few moments to consider how best not just to survive the transformation all around us, but to flourish, next year and in the years to come. Enjoy the holiday season and much success in the new year.

— By Michael Lonier , RMA℠