Bangladesh Is Poorer Than America in 1911

A blog about business and economics.
May 2 2013 12:09 PM

Bangladesh Is Much Poorer Than America Was in the Gilded Age

I wish Paul Krugman would provide the text that goes with the slides from his lecture on the "Problems of Globalization" (PDF) but they're fascinating.

The last one puts Bangladesh's GDP per capita in the context of American history. It's common to compare Bangladesh to America's own sweatshop era in the late-19th century, but Krugman shows that Bangladesh is actually much poorer than that.

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Just by looking at broad statistical aggregates, the cause seems to be extraordinarily low living standards in rural Bangladesh. Fully 45 percent of the the Bangladeshi labor force is employed in the agricultural sector, but it only generates 18.4 percent of the country's overall economic output. Agriculture is a "special" kind of economic sector because labor productivity in agriculture tends to decline as you crowd more and more people onto finite land. In America, relatively small numbers of farmers plow vast fields with the assistance of machines. In rural Asia, people engage in endless hours of backbreaking labor with few tools on small plots of land. Going way back, America has always been rich in land taken from Native Americans, and that set a "floor" for urban misery that was probably higher than what you'd see today in Bangladesh.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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