It’s Not About GDP

I’ve been thinking lately about GDP, and common ideas of economic progress more generally.

I just attended an event about the causes of and cures for poverty in the poorest countries.  So much of the discussion utilized comparisons between countries based on measures of GDP, GDP growth, and the like.  The more I thought about it, the less sense this made.  Not that GDP doesn’t decently correlate to overall wealth, opportunity, and progress – it does – but that it does less and less as technology and markets change.  GDP charts would fail to show, for example, the tremendous progress made in many poor countries by the fact that nearly everyone now has access to cell phones.  In fact, GDP does a bad job at measuring the progress of information/communication/data in general.

Consider MOOC’s and the abundance of free online learning.  Since the education industry is a chunk of GDP, putting it all out there for free can actually bring GDP numbers down, even as human well-being and human capital increase.

Think about other areas of misleading measures.  What you can do with a computer or smart phone in terms of sending data across the globe means fewer freight ships, the things easily measured in GDP calculations, but not less progress and opportunity.

Automation, information technology, decentralized networks, open-source…these make the world better and increase human flourishing, though they don’t do much for old-school metrics like employment and GDP.  Being listed as on the payroll of a company doesn’t always equal being better off (depending upon what else you might be doing of course), and having a larger number of physical objects to count doesn’t either.

For this reason, I don’t take much stock in those who lament slowed economic growth and fear it will bring an end to the complex market systems in countries like the US.  We used to consider farming the only thing that really mattered for economic well-being.  Then manufacturing.  As machines can do more of both of these, we humans can be redeployed in myriad ways previously unimagined.  Think about all the micro entrepreneurship going on today.  Think of crowdfunding for one-off projects.  I know authors who probably aren’t technically “employed” most of the time, if at all, and don’t produce GDP enhancing widgets, but they live wonderful lives by pitching book ideas on kickstarter, raising the money, travelling the world, doing the writing, and selling ebooks.  They may make aggregate data appear we’re economically worse off, but they’d rather not trade their life for one hoeing rows or assembling buggies.

The fact that no one quite knows how to calculate the value of the internet and other information age technologies probably causes us all to underestimate just how well-off we are today, and how bright the future is.  It’s the perfect time to seize the opportunity and do something new.  Carpe diem.

Why I Don’t Care About Income Inequality


In the 1980’s if I told you for only a few hundred dollars anyone could have a $1 million asset in their pocket you’d call me crazy.  But here we are.

The chart above (actually a picture of a chart taken with my iPhone and uploaded to this blog with an app to further emphasize the point) is from the book Bold: How to Go Big, Create Wealth and Impact the World by Peter Diamandis and Steven Kotler.  It illustrates why I think worry about and policy efforts aimed at changing differences in income between rich and poor are dumb, destructive, and miss the point by being stuck in a dead paradigm.

The above chart only scratches the surface.  It’s hard to comprehend just how much wealth (not income) we have today compared to 20, 30, or 50 years ago, let alone a century or two ago.  Anyone who complains that income gaps are growing misses the miracle under their nose of wealth exploding, and more accessible to individuals at any income level than ever before in human history.  50 years ago, it could take a hefty sum to launch and run a basic advocacy organization, for example.  You would need a secretary, long-distance phone line, office space, filing cabinets, a travel agent, a print shop that you’d have to visit to approve runs of literature (at least several thousand at a time), space to store them, shipping cost, etc. ad nauseum.  Today you can setup a WordPress website, bid out for design work on Fiverr or 99 Designs, get VistaPrint to run a few hundred after proofing a digital copy, book your own travel, store your own files, run email campaigns with MailChimp, etc. ad nauseum for a few hundred bucks.

Anyone can write and record songs, publish books, start businesses, sell goods and services, learn anything in the world, or meet people across the globe for free or close to it with a phone and some WiFi.  These things are equally accessible to rich and poor.  Wealth – as measured in opportunities and fulfilled desires, the real end of money – is greater than ever and flatter than ever.

The biggest obstacles are those erected by the wealthy to stymie competition from upstarts taking advantage of all this accessible capital.  Licensing requirements, regulations, wage laws, tax laws, immigration restrictions, intellectual monopoly status on non-scarce resources, and subsidized education and idleness are the biggest hurdles to the poor seizing the newly available wealth and creating a better life.  It’s not about income or even net worth.  It’s about what you can do and the value you can create and consume.  The chart above and the world around us indicate that there has never been a more broad and deep spread of wealth.

GDP doesn’t matter.  Neither does income.  Opportunity matters.  Value matters.  Times have never been better across the board, which is exactly what most threatens those precariously perched at the perceived top.  Don’t worry about them.  Let the doomsayers and wannabe warriors of equality clamber for an illusive goal that doesn’t make anyone better off.  Take advantage of the exponential growth in opportunity all around you.