We are all born into the world destined to die. Our reality is one in which pain is far greater than pleasure: you can scream for days in pain, but not ecstasy: the heights of pain far surpass those of please, and have far more endurance.
If there is meaning in this world it is not obvious, and the multitude of religions and philosophies, with their myriad different answers to “why are we here?” that we just don’t know. The message of religion and philosophy is “find meaning”, not “there is meaning” because their very multiplicity states clearly “we don’t actually know.”
All around us there is degradation, cruelty, misery and hopelessness. People living lives they hate, working all week for a few hours, desperately waitng on the weekend when they can be themselves. TGIF, and the near-universal hatred of Monday speak to what work is like in our society. A few, vastly privileged in the way that matters most, love their work, but that’s not the world most of us live in.
Illness and suffering stalk us, everything we care about will eventually pass away, the victim of the world’s cruelest joke of all: time.
In this world, a world which exalts suffering, we seem to go out of our way to make the world worse for each other. We live in chains we ourselves have forged: societies which are far crueler than they need be. Societies where most of us spend our days doing work that doesn’t need to be done, that helps no one, and in many cases which harms other people. We are stuck in a cycle of abuse, where we hurt each other, and then go on to hurt others. We writhe in fear at the meaninglessness of life, and if we find our bit of meaning in religion, philosophy or our tribe, we are happy to hurt as many other people as necessary to cling to our single spark of light.
One response to this is to say, “and so it is” and to be brutal and heartless and care only for a few around us, if even them. Live life, take what you can, enjoy it while possible, and when you die, at least you lived. Life is nothing but endless cycles of eating and being eaten, so make sure you eat, till the inevitable day you die.
Another is to simply accept what is: it is ordained by nature or God, or Karma, and so be it.
Another is to seek transcendence through mysticism, a path those who have not followed should not readily write off. Perhaps there is something beyond, and perhaps it can be found through esoteric discipline. Billions and billions have thought so, many have enlightened, and they were no stupider than we are.
Another is to embrace kindness: to scream against Nature and God, to say “just because it is so does not mean I have to accept it.” If violence and rape and greed are part of human nature, endless selected for by mindless evolution, why then so are kindness and compassion, and we can choose the latter and strive to make our time in the world as good as it can be for as many of us as possible. We do not need to be complicit in cruelty and suffering, but can make a choice otherwise.
This can be taken further, “nature made us thus but we do not have to accept it.” There is nothing divine, or sacred about physical processes or evolution, and if there is a God who made this vale of suffering, to hell with it. As our mastery of science and reality continues, why accept suffering, why accept death, why accept loss? Oh, eventually the universe will end, but why not seek to change ourselves such that we rarely die, we are not cruel, and we suffer less? The cry of the naturalist that we should accept our nature is not convincing to me. Why? To accept is to be complicit in all the evils of our nature.
However it happened, we have the ability to choose. What we are, what our world is, does not ultimately define us. Our choices to be complicit in suffering and cruelty, or to work for kindness and compassion: those define us.
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Is a society prosperous when everyone has an abundance of goods, the usual definition of prosperity? Are you prosperous if you have an abundance of goods, but no time to enjoy them? Are you prosperous if you have an abundance of goods, but you’re sick? Are you prosperous if you have an abundance of goods, but you live in an oppressive society? Are you prosperous if you have an abundance of goods but are desperately unhappy and feel you’ve wasted your life?
This falls flat: more goods don’t necessarily make us better off, nor more services. More foods that make us sick aren’t better. More health care doesn’t mean we’re healthier, it often means we’re sicker. More prisons mean our society is producing more criminals and more crime.
Just increasing economic activity doesn’t make people better off. It doesn’t increase prosperity.
Perhaps the best example is the change from hunting and gathering to agriculture. It would seem self-evident that learning how to grow more food would make us better off. In fact, however, moving from hunting and gathering to agriculture lead to worse lives for most people. People were shorter in most agricultural societies, which indicates worse nutrition. They suffered more from disease and had far more chronic health conditions. Most people also had less free time and didn’t live as long as the hunter-gatherers who preceded them.
Nor was this a short term decline, it lasted for thousands of years. Height is a good measure of nutrition, and we are still not as tall as our hunter-gatherer ancestors. Pelvic depth, which measures how easily women give birth has never recovered. Median lifespan was not higher for around 6,000 years. And even after it recovered, it declined again in large parts of the world. Members of the Hellenic world, from 300 BC to 120 AD, had longer lives than westerners before the 20th century.(1)
Our lives can get worse, and stay worse, for hundreds or thousands of years, despite having more goods.
If prosperity means having more stuff, but being sicker and dying sooner, do we want it?
A better definition of prosperity is about having, not more goods and services, but the right goods and services in the right quantity.
We should want goods and services that make us healthier, happier, smarter, more able to do great works and to live well. Instead of more work, we should want right work, enough work to make the right stuff, but not so much work we have no time for our loved ones, friends and doing the activities we love, whatever those might be. And, as much as possible we should want health instead of medicine and low crime rather than prisons.
All other things being equal more productive capacity is better. The more stuff we can make, in theory, the better off we’ll be. But in practice, it doesn’t always work that way.
Part of the problem is due to hierarchies and inequality. Inequality is undeniably bad for us. The more unequal your society is, the lower the median lifespan. The more unequal the society, the sicker, in general. More heart attacks, much more stress. The more unequal, the more crime. These links are robust.
The links run two ways. On the one hand, humans find inequality stressful. The human body, if subject to long term stress, becomes unhealthy and far more likely to be sick. People who feel unequal act less capable than those who feel equal. This is true for the rich and powerful in unequal societies and the poor. Everyone suffers. Though the poor and weak do suffer more, even the rich and powerful would be healthier and live longer in equal societies, most likely simply due to the stress effect.(2)
The second part is distribution, or rather, the question of who gets to decide the distribution. The more unequal a society, the less stuff the poor and middle class have, comparatively. Some technologies tend to lead to more inequality, some tend to lead to more equality. In most hunter-gatherer societies there isn’t enough surplus to support a class of rich powerful people and their servitors, in particular their servitors who enforce the status quo through ideology or violence. With little surplus, there is equality. This doesn’t mean hunter-gatherers live badly, most of them seem to have spent a lot less time producing what they needed than we do, they certainly didn’t work 40 hour weeks, or 60 hour weeks, closer to 20. (3) The rest of the time they could dance, create art, make love, socialize, make music or whatever else they enjoyed.
Agriculture didn’t lead immediately to inequality, the original agricultural societies appear to have been quite equal, probably even more so than the late hunter-gatherer societies that preceded them. But increasing surpluses and the need for coordination which arose, especially in hydraulic civilizations (civilizations based around irrigation which is labor intensive and require specialists) led to the rise of inequality. The pharoahs created great monuments, but their subjects did not live nearly as well as hunter-gatherers.
The organization of violence, and the technology behind it is also a factor. It is not an accident that classical Greece had democracy in many cities, nor that it extended only to males who could fight and not women or non-fighting males. It is not an accident that Rome had citizenship classes based on what equipment soldiers could afford: the Equestrian class was named that because they could take a horse to war. It is not an accident that the Swiss Cantons, where men fought in pike formation, were democratic for their time. Nor is it an accident that universal suffrage arose in the age of mass conscription.
When Rome moved away from citizen conscription to a professional army it soon lost its liberty. As we move away from mass armies it is notable that while we haven’t lost the vote, formally, the vote seems to matter less and less as politicians more and more do what they want no matter what the electorate might want.
Power matters for prosperity, the more evenly power is spread, the more likely a society is to be prosperous, for no small factions can engage in policies which are helpful to them, but broadly harmful to everyone else. Likewise widespread demand, absent supply bottlenecks, leads to widespread prosperity as well.
In the current era we have seen a massive increase in CEO and executive pay, this is due to the fact that they have taken power over the primary productive organizations in our society: corporations. The owners of most corporations, if they are not also the managers, are largely powerless against the management. It is not that management is more competent than it was 40 years ago, at least at their ostensible job of enriching shareholders, it is that they are more powerful than they were 40 years ago, compared to shareholders and compared to government.
Because increases in the amount we can create do not automatically translate into either creating what is good for us, or into relatively even distribution of what we create, increases in the amount we can create do not always lead to prosperity, and certainly they do not have to lead to widespread affluence. Productivity in America rose 80.4% from 1973 to 2011, but median real wages rose only 10.2% and median male wages rose 0.1%.(4) This was not the case from 1948 to 1973, when wages rose as fast as productivity.
Increases in productivity, in our ability to make more stuff, only lead to prosperity and affluence if we are both making the right stuff, and we are actually distributing that stuff widely. If a small group of individuals are able to skim off most of the surplus then prosperity does not result and if a society which is prosperous allows an oligarchy, nobility or aristocracy to form, even if such an aristocracy (like our own) pretends it does not exist, society will find its prosperity fading.
Creating goods that hurt people is not prosperity either. At the current time about 40% of all deaths are caused by pollution or malnutrition.(5) If someone you love has died, there is a good chance they died because we make stuff in ways that pollute the environment, or because the stuff we make, like much food, is very bad for us. Being fat is not healthy, and we have an epidemic of obesity. Even when we do not, immediately, die, we suffer from chronic diseases at a rate that would astonish our ancestors. As of the year 2000, for example, approximately 45% of the US population suffered from a chronic disease. 21% had multiple conditions.(6) Some of this is just due to living longer, but much of it is due to the food we eat, the stress our jobs inflict on us, and the pollution we spew into the air, land and water.
We should always remember this. Increases in productive capacity and technological advancement do not always lead to welfare and when they do, they do not have to do so immediately. The industrial revolution certainly did lead to increased human welfare, but if you were of the generations thrown off the land and made to work in the early factories, often 6 1/2 days a week, in horrible conditions, you would not have thought so. You were in virtually every way worse off than before being thrown off the land, and so were your children. A few industrialists and the people around them certainly did very well, but that is not prosperity, nor is it affluence.
Prosperity, in the end, is as much about power and politics as it is about technology and productive ability. The ability to make more does not ensure we are making the right things, or that the people who need them, get them. Productive capacity which is not shared is not prosperity.
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Ontario is considering tying minimum wage increases to the consumer price index.
This is an ok idea, but the CPI is systematically fiddled to decrease stated inflation, because a lot of costs are linked to it.
A better way is to link it to productivity increases.
But the best way is to link it to increases in the top 1%’s or the top .1%’s income.
(There are better ways in a different, fairer economy. The one I favor is to start it where the person who is at the bottom 10% is. From then on increase it by the average of non-fiddled inflation, average income, and the top 10%’s income.)
In the last two days, we’ve raised $2,000 in one time donations, and $105 in recurring donations (which count triple).
Thank you. I am humbled. Honestly, I wasn’t sure if we’d raise more than a few hundred dollars.
I’ve also put up a new piece on the four principles of prosperity, if you haven’t had a chance to read it yet.
All economic theories are statements about what sort of people we are, or rather, what sort of people we should be. Economics has homo economicus, economic man, the rational utility maximizer who always acts in his or her own interest. We know that humans aren’t rational and we know that we don’t always do what is best for us, or even know what it is, but economics stands, nonetheless.
Economic man is prescriptive: it is about how we believe we should act. In ordinary terms a rational utility maximizer is a greedy, selfish bastard: a functional sociopath. They are concerned with other people’s well-being precisely and only to the extent that that affects their own. That we strive to realize this philosophy in our society is obvious from a perfunctory look at how we run our primary economic institutions: corporations. Our society insists and has put into law that corporations be concerned only with profit and nothing else(x). Our culture celebrates greed, we declare that “greed is good”. We believe that if everyone acts selfishly, for themselves, in freely agreed upon contracts, no matter how unequal the power of the people entering into them “freely”, that maximum well-being will result.
It took a great deal of intellectual labor to make being a greedy selfish bastard intellectually respectable:
To a survival machine, another survival machine (which is not its own child or another close relative) is part of its environment, like a rock or a river or a lump of food. It is something that gets in the way, or something that can be exploited. It differs from a rock or a river in one important respect: it is inclined to hit back. — Richard Dawkins, “The Selfish Gene”, pg 66 (30th ann. edition)
If any civilization is to survive, it is the morality of altruism that men have to reject.
— Ayn Rand(x)Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. — Milton Friedman
And the theory has been put to the test. In Russia after the collapse of the Soviet Union western economists and development experts instituted it as shock therapy and the Russian population collapsed, the life span of Russians dropped, and happiness cratered for over a decade.(x) One of the harshest totalitarian states in history, and people were happier in it than what our free market apostles wrought.
Since the 70s or 80s, in most developed countries we have been slashing taxes, cutting social benefits, and extolling the benefits of free markets, by which we mean not free markets, but markets which the government does not work to keep either free or fair. The results are in: wages have stagnated, the rich have become the richest rich in world history, exceeding even those of the Gilded Age, and the developed world is in semi-permanent crisis, with Europe a shambles and America unable to produce good jobs and running record deficits. Food prices are soaring, energy prices are through the roof and the Middle East is in flames.
By their fruits you shall judge them and the idea that greedy people operating completely selfishly will lead to everyone being better off has produced its bitter harvest. This is not the first time it has done so. The famous economist of the Great Depression, John Maynard Keynes acidly quipped that “Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all. “*
The idea is absurd, and it has proved so in practice. The market, even the free market, properly understood, is powerful and prosperity requires it. But allowing unalloyed greed to be the principle that rules us, by which we run our societies, has proved disastrous, not just to our prosperity but to our liberty and to our democracy.
If we want more prosperous societies, which is to say, societies where affluence is widespread, we need to align our private morals and our public ethics. We cannot expect to exalt selfishness and greed and to always put ourselves and the few people we love first, second and last, and expect that miraculously, our worst of motives will lead to the best of results for people we don’t care about. We cannot put functional sociopaths in charge of our economic and political organizations and expect them to produce results which are good for anybody but themselves and the few people they need to keep happy in order to make themselves richer. We can’t expect widespread affluence when we tell ourselves that people are bastards who do, and should, look out only for themselves.
A society which creates widespread affluence must be based on four principles, and must elevate and honor people who embody those four principles.
Fairness. Everyone must be treated equally within the requirements of their needs. This does not mean being treated the same, a child with learning disabilities should not be treated the same as one who is gifted, but both should go to the same school system, and be treated no differently regardless of who their parents are or how much money they have. The wealthy and powerful must use the same institutions as the middle class and the poor for no system will work if it is not in the interests of the rich, powerful and influential that it does so.
Kindness. Instead of asking “What’s in it for me?”, we must ask that oldest of moral questions: “How would I want to be treated if I were them?” Kindness is not weakness, it is a refusal to allow yourself to become an evil person in response to evil. Finland, which treats its prisoners with kindness that astounds Americans, has ex-convicts who re-offend at half the rate of American prisoners(x). As justice must always be tempered with mercy, and mercy always tempered with justice, so kindness must be tempered with fairness. Being kind does not mean being a mark, it means giving people a chance, and treating them first with compassion.
Generosity. Greatness is not measured by what you have taken, by what you have hoarded, or by who dies with the most. It is measured by who has given the most and by who has made the most people’s lives better. The resources we have created are meant to be used; the more we share them, the more we make others’ lives better and the more they, in turn, can make our lives better. Happier, healthier, more affluent people are better for the economy and more fun besides. Economic cripples, unable to participate fully in society are in no one’s interest. Generosity, combined with the compassion which asks “what do they need?” helps everyone.
Future Oriented. The past gave birth to the present, which midwifes the future. The winners of the past, those who built the past, have their rewards in their time, but cannot be allowed to postpone the future till they can control it. Every society changes, or it dies. Every economic model must be modified in time. The old cannot insist that the world they grew up in is the world their grown children will live in.
These four principles can be embodied both by individuals and societies They are the characteristics of a generous dynamic society, in which everyone contributes, everyone cares and is cared for and everyone works to build the future. And they are not schizophrenic attributes: people can act this way in their individual lives. It is not required that people be kind and loving and generous to their family and friends, but ruthless and greedy in their business or political life.
We’ve given greed and selfishness a fair shot. More than a fair shot. More than a fair shot. We’ve destroyed uncounted lives and driven our own economies to the brink of disaster and then beyond. It is time to stop expecting that acting horribly will lead to good. It hasn’t worked and it won’t work. Instead it is time to try acting generously, kindly, and fairly. It is time to make sure that everyone shares in the wealth our societies are capable of creating. We should do this not just because the vast majority of us will do better, but because it is the right thing to do. It would be one thing if being bastards really did lead to the greater good and was a regrettable evil, but it isn’t. So, having exhausted every other option, perhaps it is time to, with a weary sigh, return to being good, to do unto our neighbors as they would have us do unto them.
It is time to be better people and to reap the rewards of doing so. It is time to correct those who prefer to be greedy, selfish bastards. It is time to return to affluence for all, rather than riches for a few. And it is time to end the rein of the greedy, selfish bastards.
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The simplest economic principle is this: people do more of what they’re rewarded for. Right now, I can no longer justify writing at this frequency and level for free.
Over the past few months I’ve written significant articles on ideology, climate change, the failure of the Netroots, mass psychology, why wages are stagnant, the surveillance state and far more.
I need to determine how much actual demand there is for these articles, and how much time I should spend writing them, so I’m asking you to donate if you find them valuable (and you can afford to; please never donate if you’re having trouble paying for food, housing or healthcare).
I’ll fundraise for two weeks at least. At the end, I’ll add up the subscriptions, divide the one-time donations by three, and use the amount to determine how much I write for the next three months, or more, if we do very well.
$0-$999 —I’ll write when the whim strikes. In the past that has meant that sometimes weeks have gone by between articles, and months between significant pieces.
$1000-$1999 I’ll average two significant pieces a week for three months: articles on important issues like how we came to this, how the world actually works, and how we can change the world for the better.
$2000-$2999 There will be something new to read every weekday for three months, barring unforseen circumstances like illness, accident, or unplanned travel.
$3000+ On average there’ll be more than one new post every weekday for three months, and often new posts on the weekend.
$More If we do very well, I’ll extend the $3,000 level for more months.
I’ve maintained these paces for years in the past, at BOPnews, The Agonist, and Firedoglake, while also being managing editor of the second two, so barring serious illness, there’s little risk I can’t deliver.
For individuals, I’ll mention two other donation levels. If you subscribe, when your monthly donations reach this level, they’ll apply:
$100 – Give me the ok, and I’ll dedicate an article to you, or to your designee, within reason (aka. no, no matter how much you give, I’m not dedicating an article to neo-Nazis or Goldman Sachs).
$500 – Email me and I’ll write an article on a subject we determine. I won’t write on anything, I have to have something useful to say, and you don’t get to determine what I write about a subject, but I’ll work with you. (This isn’t the same as commissioning a piece, if you want to do that, email me).
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I’ve been meaning to write about the fact that people don’t understand the lessons of Iraq, Afghanistan and Mexico for some time.
In simple terms: the US military, the most expensive, most powerful military in the world, lost in Iraq (they had to pay bribes to leave). They are losing in Afghanistan. In Mexico the state has been unable to control drug gangs. In Lebanon, the IDF, the most powerful military in the Middle East, was defeated by Hezbollah. Hezbollah also won the e-lint war against the IDF.
(Kicking this to the top again, I want more people to see it. – Ian)
Technology is not necessarily on the side of the great powers, of the big armies. IEDs are cheap, any halfway competent mechanic can make them with materials that are readily available even in Afghanistan. Weapons are widely available everywhere, and soon it will be trivial to 3D print most of them. Drones, which people are so scared of (with reason) are essentially remote controlled airplanes, they are not hard to make, and they will spread to guerillas, resistance movements, terrorists and so on.
These are, yes, terror weapons, as the US, in its use of bombing and drones, well understands. They are also area denial weapons, weapons that prey on the psyche of the opposition, leaving them no peace and quiet.
They are weapons whose widespread use can and will destroy nations by destroying the peace and stability required for prosperity and normal life.
But they are very, very effective. They will work in virtually any nation if a large enough portion of the population wants them to work.
Do not think that the more intelligent members of current elites don’t know this. They understand what many on the left don’t: that first world militaries can be defeated, have been defeated, and that it can happen in their own countries.
And I suspect they are very very scared. The surveillance state, routine assassinations by the executive, the loss of habeas corpus, and so on, are their response. Total surveillance, and the ability to take people out anywhere, any time, is their answer, which is why I keep saying that I will know people are serious about revolution when they take out surveillance systems as a matter of routine, when surveillance becomes ethically anathema.
Be scared, not because those on the left who insist that modern militaries are unbeatable and all anyone can do is supplicate the powerful are right, but because militaries are very fightable, but such fights leave countries in ruins. If the elites continue on their current course, in many first world countries, Iraq and Afghanistan and Mexico are the future. People with no future will fight, and too many people now know how this form of war works.
This is the future of war. If elites continue on their path of unaccountability, their insistence on destroying the future, and their crushing of prosperity, this is what will happen.
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Just another quick note: Bitcoins keep track of every single transaction. That information is filed into the bitcoin itself.
Do not think that this is anonymous money, it is anything but. You’re still best off using cash for anonymous transactions or buying one use cards, etc… for online anonymous transactions.
China got bitcoin right. It is a virtual good. You could just as easily use any other virtual good to transfer money out of a country, so long as there is a liquid market you trust.
I want to highlight two items relating to surveillance of people who dare resist the status quo. First, your cell phone:
The New York Timesreports that the Ukrainian government is using advanced surveillance technology to track protesters in the streets.
The Ukrainian government used telephone technology to pinpoint the locations of cellphones in use near clashes between riot police officers and protesters early on Tuesday, illustrating that techniques that can be used to target commercial information can serve law enforcement as well.
People near the fighting between riot police and protesters received a text message shortly after midnight saying “Dear subscriber, you are registered as a participant in a mass disturbance.”
The phrasing echoed language in a new law making participation in a protest deemed violent a crime punishable by imprisonment. The law took effect on Tuesday.
The device used in Kiev is most likely what’s known as an ‘IMSI catcher‘, which tricks cell phones into thinking it is a cell phone tower. Any phone within a certain distance of the device will therefore send identifying information to it, allowing the operator to automatically compile a list of every person nearby with a cell phone. The systems can also capture web, phone, and text content from mobile devices, as well as automatically serve content like text messages to every phone within range. For that reason, advertisers and corporations increasingly use them to target people with location-specific pitches for products and services.
Back in 2012, a security researcher in the United Statestold an audience of hackers in New York that the NYPD routinely used IMSI catchers at the Occupy Wall Street protests, enabling the intelligence division to keep nearly perfect records of every person in attendance.
Second, corporate infiltration of NGOs and protest movements:
Another estimateof the prevalence of corporate espionage–but perhaps a self-serving one–comes from Russell Corn, managing director of Diligence, a corporate intelligence agency. Corn says that “private spies make up 25 per cent of every activist camp. ‘If you stuck an intercept up near one of those camps, you wouldn’t believe the amount of outgoing callsafter every meeting saying, ‘Tomorrow we’re going to cut the fence’,’ he smiles. ‘Easily onein four of the people there are taking the corporate shilling.’”
I doubt it’s one in 4, but I bet it’s high.
Here is the bloody rule: if you are involved in these activities you either don’t take a cell phone, or you put it in a Faraday bag (I have just learned, joy, that taking the batteries out might not be enough, as there is a backup battery you don’t control, meant to avoid loss during battery changes and so on). In addition to being a tracking device you take with you, it is also possible to use your phone as a bug, to listen in remotely. Laptops are also problematic if they have a camera, can connect to the internet, or have microphone. At the least, keep them powered off.
The technological revolution did not happen unless you want everyone to know your business. There are times when you do, but if you don’t, turn this stuff off.
Next: infiltration. Assume that your movement is infiltrated. Figure out how to identify the moles. When you do, if you’re serious, you need to figure out a way to punish them so that whoever sent them won’t, or can’t, send more. I leave how to do that to the reader to figure out.
Next, forget democratic decision making when it comes to specific tactical decisions. One person should know what you’re going to do, and he or she should not tell ANYONE until just before it is to be done, and hopefully too late for effective counter-action.
Finally: assume surveillance. Learn how to obscure your identity, and learn where the blind spots of the system are. A lot of countries are making wearing masks during demonstrations illegal, but there are other ways. Again, I leave how to do this an exercise to the reader, but bear in mind, it doesn’t take much to screw up facial recognition, and gloves are still your friend, and not illegal.
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Modern economies are often measured in terms of Gross Domestic Product (GDP). Look up the definition of GDP and you’ll come up with something like this: a country’s GDP is the total value of all finished goods and services in a country in a year plus exports, minus imports.
Consider this, if a parent takes care of their children, is that included in GDP?
No, it isn’t.
What if the children are taken care of by a nanny or day care worker?
Then yes, it is part of GDP.
Either way the work gets done, the children are taken care of. But if they are looked after by someone who is paid for it, it’s considered economic activity and if not done for money, it isn’t considered economic activity. Studies show, and our own common sense tells us, that as a rule, children cared for by their own parents, especially when young, turn out better: healthier, less likely to commit crime later on, brighter, and so on. So, increasing GDP by paying to have children cared for reduces well being while increasing the size of the economy.
More money being spent, and more GDP, is not always good. Another commonly used example is that if a hurricane devastates a city, the rebuilding will increase economic activity, and GDP. This doesn’t mean we want hurricanes to wipe out cities. Keeping someone in prison costs more than sending them to university, that doesn’t, or at least shouldn’t, mean we prefer locking young men up to sending them to prison.
In the developing world GDP is often increased by moving from subsistence farming, which is to say, people growing their own food, to cash crop farming. Moving to cash crops, for various reasons, tends to push people off the land. They no longer grow their own food and now have to buy it. GDP increases because cash crops are sold for money, mostly to foreigners, and sometimes because a whole bunch of people now have to buy their food rather than growing most of it.
The theory behind this is that with the foreign currency earned by selling cash crops, the country can modernize, the displaced subsistence farmers will find jobs, and buy food. In practice, in many countries, the farmers have wound up in vast urban slums without jobs, food has to be imported from overseas, and what the UN euphemistically calls “food insecurity” spreads. There is a larger economy as measured by GDP, but more people are hungry, more people can’t support themselves, and malnutrition stunts the intelligence and growth of the generations to come.
Ironically, because there are only so many cash crops, and western “development experts” spent decades telling multiple countries to grow the same few crops, the price of the the crops often crashed. The end result of that was that countries wound up with trade deficits, and had trouble affording imported foods. (The IMF will then tell the government to stop subsidizing food. The result is predictable.) So you have the spectacle of Egypt, for millennia the breadbasket of the world, needing to import food, nor is it the only country which went from feeding itself to having to buy food. (check timing on this)
GDP is up, measurable economic activity is up, but much of the population is worse off, though certainly some people get rich.
Another way GDP and the money economy increased is through privatization. Imagine a road is sold to a private company. The people, in the form of the government, get a one time infusion of cash. The company receives an asset – the road, whose value comes from the ability to charge people to drive on it.
This increases the money economy in three ways:
- An asset can be borrowed against. The value of assets in the economy has just increased, and new capital can be raised by the owners of the road to do whatever they want with. This could be productive, investing in their business, or it could be used to pay the executives more money, or it could be used to buy back shares in an already existing company, raising share prices and increasing executive bonuses based on share price.
- If not already a public company, the company can sell itself either to other private investors, or by issuing shares to the public. If they raise more money doing that than they spent buying the road, then they have a surplus which they can use to pay themselves or invest in some fashion. They could buy another company, invest in the business itself, branch out (perhaps putting up stores on the road), and so on. Once those shares are issued, people who own them have an asset, and they too can borrow against that asset, often for many times what the shares are worth.
- The fees used to drive on the road. The road is an end product, this is GDP. The economy has increased in size.
All of this may sound good, but the price is obvious: people have to pay to drive on the road. While it’s strictly true that the public road was paid for, through taxes, that’s very different from having to pay a private company to drive a road. Because it is no longer free in daily practice, the road will be used less. Drivers will have to decide if the cost of driving on this particular road is worth it.
This will reduce economic activity. Say you were thinking of going out to eat. The cost is no longer gas+meal cost, it is now gas+meal cost+toll or perhaps the cost of taking roads which go to the same place, but less quickly. For some people, the cost will now be higher than the benefit. The restaurant loses a sale. So do other businesses.
By selling the road we have pumped up the economy in the short term, and created more assets which can be borrowed against (which is good if the money is used productively, but not if it isn’t) and we have given some specific people a way to make a profit in the future. But we have also reduced the benefits of the road for everyone else.
There are other types of privatization. Perhaps the government directly provides garbage pickup, using its own employees. Perhaps road repair, or police, or cooking food for troops, or car insurance, or the railways, or airports, or power generation, or clean safe water, or sewage removal and treatment, or parks.
Privatization can be good, there are services and goods which are better produced by markets, but widespread privatization is often a way of artificially pumping the private asset base of the economy. It looks good, it produces increased GDP and GDP per capita, but it often actually reduces welfare.
Privatization, then, often produces money and the chimera of economic growth, but not the happiness, sense of purpose and access to healthy levels of necessities which are supposed to be the purpose of growth and money.
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