I owe a debt to Michael Adams who responded to an earlier blog about the central role America has played in the explosion of modern global commerce. Mr. Adams sent me to a book by Jane Jacobs called Systems of Survival. I have always loved Jacobs' writings, she is still an influential mind.
In her Survival book, Jacobs does an excellent job of distinguishing the ethics of commerce from that of government. Everything she writes is clear and explicit. However it applies to the period before 1800, maybe because she worked in Canada which is not part of the modern industrial explosion (Canada is nearly all extractive). When we get to the modern commercial world we need to add the other element of my blog headline: meritocracy. The replacement of tribes and families and hereditary hierarchy are central to our modern prosperity and technology.
In my mind my addition of meritocracy to Jacob’s list of commercial elements was still not sufficient to explain our global prosperity. I finally had to add another element to my list to distinguish the world of 1800 from the world of 1900. Speed and cost in moving heavy loads.
This video of downtown San Francisco in 1905 is what stimulated my thinking. Nearly everything is at the speed of a fast walking person. When I was a child, cable cars only stopped at a few locations, otherwise men jumped on and off the moving car at about 9 miles per hour. That was the speed of everything downtown. Today it is still about the same speed except for the underground rail line.
When did the world outside of downtown change? It came with the steam driven railroads dating from 1850. Speed picked-up with autos, ships and trucks in about 1910. Then again with airplanes in the 1950s at the same time freeways came into regular use. The final uptick in speed and weight came with 18 wheel trucks, cargo containers and the complete FedEx and UPS systems in the 1980s.
I see this increase in speed as a function of weight and cost. A man can carry 60 pounds for 4 miles in an hour at $12 current dollars. That is 1.25 pounds per mile per $1 per hour.
A horse pulling a wagon is 1,000 pounds for 6 miles in an hour at the price of one man at $12 and one horse at $1.40 per hour. That is 167 pounds per mile at $13.40 per hour, or 12.5 pounds per mile per $1 per hour. The horse and wagon are about 10 times more efficient.
Rail freight costs about 80 pounds per mile at $1 per hour. A rail car goes about 30 miles in an hour. The rail is faster and costs one 6th the amount of a cart and horse.
It is this considerable decrease in transport cost from 12.5 pounds per mile per $1 per hour for a cart and horse to 80 pounds per mile at $1 per hour.
In 150 years we have reduced the costs of cargo by a factor of 6.4. It now costs less than 16% of what it did then. That steady reduction in the cost of goods dramatically increased the size of markets, reducing the costs of production too. Transport costs declined and increased market size and that in turn reduced the costs of production. Our modern commercial bounty owes much to this specific transport technology.
Air freight express is 3 pounds per mile at $1 per hour. Air freight goes about 350 miles in an hour. While air freight is only a little more efficient per mile per $1 than a man walking with a back pack, we wouldn't be eating strawberries from Chile if we waited 15 months for men to carry them to us.
I must now add transport efficiency to the panoply of factors giving us the modern world.
Also a note. Our dense urban areas have not benefited much from the transport efficiency factor. I can run across San Francisco in about twice the time it takes to go by car.