Were average incomes in Australia far behind those in Britain a century ago?

In his book, “The moral consequences of economic growth”, Benjamin Friedman claims:
“A century ago, Britain enjoyed the highest per capita income in the world, while southern European countries like Italy and Spain were far behind, as were distant parts of Britain’s own empire like Canada and Australia” (p300).

It is not clear where Friedman obtained his information about Australia, but it is almost certainly wrong. By most accounts, Australia had the highest per capita income in the world during the late 19th century. Research suggests that in the early years of the 20th century Australia’s per capita income was still at least on par with that in Britain, if not still slightly ahead. One set of estimates suggests that Australia’s per capita income was 2.8 percent higher than Britain’s in 1901 and 16.3 percent higher in 1911. Another set of estimates suggests that Australia’s per capita income was 11.2 percent higher than Britain’s in 1901 and 3.9 percent higher in 1911. (See: Stephen Broadberry and Douglas Irwin, ‘Lost exceptionalism? Comparative income and productivity in Australia and the UK, 1861-1948’, The Economic Record, September 2007.)

Why does it matter whether or not average income in Australia was as high as that in Britain a century ago? If this was just about past glory it seems to me that it would just be a suitable topic for discussion at the local pub. It would matter no more than, say, the relative merits of warm and cold beer, or the relative merits of cricket pitches in England and Australia.

The reason why it should matter to Australians whether our per capital income was as high as Britain’s a century ago is because this is the base from which we assess the performance of the Australian economy during the 20th century. If Friedman was correct, then Australia’s relative economic performance during the 20th century would not look so bad. In reality, however, Australia’s economic performance throughout most of the 20th century was just about as pathetic as that of Britain. In my view the relatively poor economic performance of both countries, compared to the United States, can be attributed largely to economic policy failures.