Let’s step back for a minute and look at the broader picture. According to scientists, radiometric dating puts Earth at
about 4.54 billion years old. Set against this timescale, humanity’s time on the planet is but an eye blink. Modern man is believed to have been around for 200,000 years, but what is referred to as history amounts to only a few thousand years of squabbles and clashes, of trade and migration, and of exploration, exploitation and innovation.
For much of this, life resembled Thomas Hobbes’ description as being “nasty, brutish, and short.” Child mortality rates were high and death came early even for those that survived. In Classical Rome, life expectancy at birth was
10-20 years with evidence partially based on Ulpian’s Life Table, an ancient Roman annuities table. If an individual survived to age 10, then life expectancy was about another 35 years.
What is astounding is that over the millennia, the income of almost every person that has ever lived amounted to borderline poverty, what the World Bank now puts at $1.90 a day. Allianz economist Michela Coppola explains how exceptional our era is in terms of the health and wealth of populations.
Diving into the rich Angus Maddison database, she notes that if the GDP per-capita growth achieved over the past 2,000 years was depicted in a 24-hour clock, “80% would occur in the last 40 minutes before midnight.” She warns, however, that this prosperity cannot be taken for granted. The two factors that underlined the economic success of western countries – productivity and demography – are now undermining it.
Renowned economist Sir Tony Atkinson also notes how exceptional our times are – in terms of inequality. While 12.7% of the world’s population, 829 million people, live in extreme poverty, that’s actually the lowest share in history. In recent decades, the percentage was 37% in 1990 and 44% in 1981, but even as tens of millions of people were being raised out of dire poverty, the disparity between the haves and have-nots has widened.
In 1820, an average inhabitant in the richest regions had a GDP per capita three times higher than those in the poorest. By 2001, the ratio was 18 to 1. Such high levels in inequality have been building for 25 years,
Sir Tony told PROJECT M, but it is only now that people are realizing. “I think we are facing problems with the cohesion of society,” he somberly warns.
This is one challenge that must be faced in the future. The inadequate response to the last global financial crisis will be another, Barry Eichengreen from the University of California states. Part of an exclusive interview, he talks in the Q&A about parallels between the most recent crisis and that of the Great Depression and how the past influences the present – sometimes by people choosing the wrong lessons to learn from.
“We have avoided a depression like the 1930s, but have ended up doing too little to stimulate recovery and too little in terms of financial reform to prevent another crisis,” Eichengreen says. Is time on our side in either of these two issues? Who knows, but time will flow on regardless of how humanity handles them.
How have people been trying to influence risk and fate since ancient times? How were the Laws of Probabilities and the Law of General Average discovered?
5000 YEARS OF RISK
Need for certainty in a chaotic world has been a key in the development of civilization. Insurance has helped provide it. Ancient Babylonian traders first sought to decrease risks by paying extra sums to cancel loans should shipments be lost. Later, in ancient Greece and Rome, guild members supported each other through mutual funds. Throughout history, names such as Benjamin Franklin, Edmond Halley and mathematicians Blaise Pascal and Pierre de Fermat have been critical in the development of insurance. And insurance has been there to help recovery in disasters ranging from the Great Fire of London to Hurricane Katrina.