There is one aspect of human progress that we don’t consider or appreciate: the switch that humans made from being merely a series of generations to becoming a civilization. As Douglas Adams of The Hitchhiker’s Guide to the Galaxy pointed out, there are those who think that the switch was a mistake. But the rest of us should ponder the issue more closely. The switch came when our forebears learned to write things down – things that we can understand without having to learn them again and again from first principles. The libraries are full of the wisdom of the ages – and, inevitably, full of the stories of the wrong turns that humanity had taken.
It is that mistake that Mark Bittman, the food writer, makes in his new book Animal, Vegetable, Junk:
And if you look at a chart of health care costs versus food costs, it’s perfect like this. As food costs go up, healthcare costs go down. And as food costs go down, health care costs go up. So cheap food, that’s a direct correlation. Cheap food has had a terrible impact on public health.
Bittman’s observation is correct, and first principles are an excellent start to the process of logical deduction. But it is also an appalling place to end the process of thinking. True, we don’t all have to stand on the shoulders of giants and reach further and higher than the pebbled seashore, but those previous generations of billions did contain some bright people who did think about the problems of the human condition. Some of them even came up with interesting answers.
The economist looks at Bittman’s statement and notes that healthcare is a luxury good – as our real incomes rise we spend more of our incomes upon it. Food is an inferior good – as incomes rise a smaller portion of total income is spent upon it. As our incomes rise, the portions that we spend on different things change. This is the same insight as Maslow’s Pyramid that denotes the hierarchy of human desires. As we satisfy our desires on the lower level of the pyramid, we allocate more of our rising income to the upper levels of the pyramid. This is what those definitions of luxury goods and inferior goods mean.
We can also look at this issue at a societal level. In medieval Europe, it was necessary for 90 percent of the population to be farming in order to feed 100 percent of the people. Now we can accomplish the same trick with only 2 percent of humanity standing around in muddy fields. That means that we now have the human labor to staff the healthcare system – the 12 percent or so of the American workforce that currently do work in that sector. It’s only when we’re spending fewer of our economic resources on food that we can even have health care. Or think about it this way: if you don’t spend any money on food, in about 60 days, you won’t need any health care either. Have enough food, and you’ll survive long enough to desire some health care.
Bittman is entirely correct that there’s a causal relationship between food and health care spending – he’s just leaping to the wrong conclusion as to what that relationship is. It isn’t that our food is making us ill, thus requiring healthcare. It’s that we’re richer, and thus our spending patterns have changed.
Back in the early 1960s, when the American economist Mollie Orshansky defined the U.S. poverty level, she made a quick observation. Families spend about one third of household income on food. So, find out the cost of a cheap but adequately nutritious diet, triple it, and that’s the poverty line. That was meant to be just a quick and easy measure to use for a year or two while something more sensible was worked out. Sixty years later, we’re still using it – Milton Friedman did say there’s nothing so permanent as a temporary government program. Today American families spend a little under 10 percent of their income on food – and that includes eating out, something the poor of the 1960s didn’t do, and even the middle class did only very rarely.
The U.S. healthcare spending has gone from 5 percent of GDP in 1960 to 18 percent today. But not, as Bittman seems to think, because our food is making us sick – we live longer, healthier lives now. But because the reduction of our expenditure on food allows us to spend more on health care. Or, in another but equivalent formulation, we are richer, and therefore the portions of income we spend on different things have changed. We spend more on luxury goods and less on inferior goods. However tautologous that argument is, it is still true, and one of the proofs that we are richer is that spending patterns have changed.
Living standards are better today because we can get that worn-out hip replaced and treat the diseases that killed our forebears. It’s not just that technology has advanced so that we know how to do things; it’s that progress in reducing the cost of food relative to incomes has meant that we have the economic room to be able to do these other things.
With reference to Bittman, the important thing is that our civilization already knows all of that, even if not every member of the civilization does. Which leaves us with a little tip; human progress is building upon those achievements of the past and not making the same old mistakes all over again. Which does rather require the study of what the wisdom of the ancients was.