Wednesday, March 6, 2019

Commentary: 'How to Truly Measure Standards of Living' by Aaron Clarey

Economics has one goal in mind - to maximize standards of living.  This noble and never-ending goal sits at the heart of economics and has, by consequence, driven the majority of financial decisions made by government, corporations, academia, and other institutions (at least nominally anyway).  Our decisions are to get us out of poverty, increase our incomes, extend our lives, and drive towards the unattainable goal of unlimited wealth so that at some point in the future we attain a "Star-Trekkian" future where money is eliminated because wealth is infinite.  And it is in this pursuit of unlimited wealth, the economics profession has settled on a measure by which we measure standards of living today - GDP or "income" per capita.

GDP per capita is simply the entire economic production of a nation divided by its population. The measure is very simple since it takes all the "stuff" we make in an economy and divides it by the number of people who will consume it as it is "stuff" that matters and not money.  Some times this causes confusion because your modern day college graduate and American sheep can't understand why money has no value and it is only "stuff" that does.  These are the same people who cannot explain why we "can't just print off more money."  So we dumb it down for these plebs by renaming the metric "income per capita" so they can focus on the money and not the underlying production.  Regardless, the modern standard we use to gauge living standards remain "GDP per capita."

There is, however a problem, and one I've argued before - Just how much "stuff" does one need?


As technology advances, economies become more efficient, and capitalism delivers to every practical whim and desire of people, the marginal utility we derive from perpetually increasing and varied selections of "stuffs" goes down.  And while the majority of American sheep are obsessed about buying Ferraris, granite counter-tops, and the latest in 40-Something-New-York-Spinster-Hand-Bag-Fashion, minimalists have long ago made the philosophical epiphany that none of these things do much to technically increase standards of living, let alone happiness in life, above and beyond their basic, mundane counterparts.  A used Kia Rio will deliver the exact same amount of transportation as a Ferrari.  A Wal-Mart handbag will deliver the same amount of utility and fashion as a Nordstom's purse.  A healthy home cooked meal will deliver the same nutrition as a $50 sushi dinner.  And a small, humble mother in law apartment, the same lodging as a pimped out $700,000 suburbanite McMansion.  When you add it up, the vast majority of people's incomes are spent on things that do NOTHING to increase standards of living, but rather feed their vanity, ego, pride, and arrogance.

Of course, I'm a free market economist.  Who am I to judge how and why people spend their money?  If somebody is willing to blow $200,000 on a Women's Studies Degree at Macalaster College, who am I to argue whether he or she got their money's worth?  If a young, impoverished black gentleman wants to piss away his money on some "tricked out rims," can I argue he could have spent that $4,000 better?  And if Madison and Thadeus want to blow their money on an overpriced McMansion, it's not my right to judge, even if they can't afford to retire.

But for those of us with our heads out of our asses, yes, the majority of money now being spent does nothing to improve standards of living. Matter of fact, the majority of spending harms people's long term standards of living in that it's mostly debt-spending.  So for the few of us who live in the real world and are interested in economics a new standard of living metric is needed and called for.

May I introduce "The Percent of Life Lived Free?"

As we asymptotically erode poverty, hunger, strife, and economic hardship away, the amount of "things" we own become increasingly worthless.  Yes we need food.  Yes we need transportation.  Yes we need lodging.  And I will even admit the occasional indulgence in renting a Ferrari or eating sushi is called for in life.  But soon (I would argue today) most everybody has all their material needs satisfied.  You're not starving.  You're not homeless.  You're not even uncomfortable.  The "biggest problem" you face in life is that your dad didn't buy you the latest iPhone as you major in Sociology at Middlebury.  So if material things no longer matter, nor determine true standards of living, what does?

Time.

Specifically time lived free.  And not just the nominal amount of time you lived free, but what percent of your total time on this planet you lived free.

Take for example, Steve Jobs. That man was infinitely rich, estimated to have had a net worth of $10 billion.  I say "had" because he died in 2011 at the age of 56.   Thusly, he epitomizes the merit and worth of using a metric such as "The Percent of Life Lived Free" measure.

First, he shows how material or financial wealth is a completely worthless measure.  The net worth of your average American is $100,000.  Steve Jobs' net worth was 100,000 times that.  Do you honestly think Steve Jobs lived a life 100,000 times better than you?  Like the sports car he drove was 100,000 times better than the Buick you or I drive?  Or the food he ate at fine dining establishments was 100,000 times better than the Subway sandwich we ate today?  That his toilet or his toilet paper was 100,000 times better than yours?  Be you Bill Gates, Warren Buffett, Bob Bobson or Jerome Jeromeson we all come out of the gate with the same 74 years of life expectancy, and barring poor health or truly tragic circumstances, our lives on the grand scheme of things are on par with one another.

Second, speaking of tragic circumstances, look at what all that money did for Steve Jobs as he passed away from cancer at 56.  This harshly and starkly reminds us that while you're obsessing about your car payments or wifeypoo is obsessing about living in a posh neighborhood or junior is obsessing about having the latest iPhone, realize wealth doesn't ultimately determine how much of the world's most important commodity you get - time.  Yes, on average you can expect to have 75 incredibly short years on this planet if you're a male and 83 if your female.  But if you have bad genetics, poor health habits, or just plain get hit by a truck, the amount of that precious commodity can be snuffed out in a nanosecond even if you do have the latest in New York Spinsterwear-Fashion or you are Jeff Bezos himself.  And since all your material needs are met on this planet, the only logical conclusion is to put "time" at the absolute top of your priority list and "things" at the absolute bottom.

Finally, what did Steve Jobs do with his precious 56 years of life?

One could argue revolutionize the world.  Drastically increase and improve people's standards of living.  Employ thousands of people.  And all these things are true.  But what did Steve Jobs get to do with his own life for Steve Jobs?

The answer is "work."

Steve Jobs worked his entire life.

Tragically, this is like the cop who gets killed 2 years before retirement.  He busted his ass off all those years.  Working the night shift.  Going through training. Putting his life on the line.  And just before he's about to actually retire and start living life for himself - blamo.  Dead.  Game over.  No more quarters.

Both men are saints and martyrs of sorts in that they served society.  But they tragically did nothing for themselves, save slave away for others.  And this introduces the most vital part of "The Percent of Life Lived Free" measure - freedom.  What percent of your already-bought-and-paid-for-by-technology-and-capitalism-life did you live free?

Admittedly, unless you're Mark Dayton, nobody can live their life 100% free.  You have to at least work a modicum of hours to generate the income needed to support yourself and afford yourself a life.  But you should minimize this as much as possible so you spend the majority of your time living life instead of working for it.  And here Americans are in desperate need of an economic spanking epiphany because almost like an addict, they seem hell-bent on enslaving their entire lives away to unnecessary materialism.

The first thing to setting yourselves free and drastically increasing your standards of living would be to stop going into debt by buying egregiously stupid things.  

What are these "egregiously stupid things?"  

Most things you conformist sheep go into debt for.

McMansions you can't afford.  Cars you can't afford.  Designer and brand name clothes you can't afford.  And let's not forget our millennial brothers and sisters - incomprehensibly stupid college degrees you can't afford.

Out of the $14 trillion in household debt, I would conservatively estimate $12 trillion of it is on vanity, pride, egotism, and other forms of "egregiously stupid things."  And if you were to simply not borrow this money in the first place, you would not have to be a slave for literally decades of your life just to pay for the compounded interest on these debts.

The second thing, stop being careerists.

To this day the greatest scam ever pulled on humanity was convincing women that work was good.  That paying taxes was great.  Going into debt so you can be a slave to an employer was what gave you value in life.  And to hell with the husband and the children.  Those Jimmy Choo shoes are worth your $175,000 in student loans, the $3,000 a month New York apartment, and the 2 hour commute.  To be intellectually honest, men also fall for this, but our roles have been traditionally to be the bread-winner and so pursuing a career or being a careerist made a little more sense.  But here again, men are equally stupid to borrow money for a sports car, a boat, an MBA, and a "sweet apartment near downtown where all the action is."

Regardless, the point is, whether it is debt that forces you to be your employer's slave, or leftist propaganda that fools you into thinking being a careerist-slave is what gives you value in life, you're still a slave.  You're still WORKING AND NOT HAVING FUN.  You're Steve Jobs pissing away your life on a career and not enjoying your rapidly dwindling life  For example at this moment right now Sheryl Sandberg (COO of Facebook) is no doubt making billions I will never have.  But she is stuck in an office, a meeting, dealing with some incompetent managerial problem of the day, and is never untethered from her phone.  But after I'm done writing this piece (which took two hours), I'm going to do what I did yesterday - golf, eat a good meal, go for a hike, hang out with some friends and podcast with some buddies.  Oh, and I'll probably live just as long too.  But even if I didn't.  Even if I died tomorrow.  I lived a higher percent of my life free, doing what I wanted, than pretty much all of the world's billionaires combined.


And finally, "how are the children?"  As people put money, careers, and material things above everything else in life, they damn their lives to debt, toil, slavery, and work.  But in doing so, not only do they damn themselves to waste their lives, they pass up on the most important thing in life - other people.

The most tragic example of this is parents who outsource their kids to daycare and school.  Not only does this empirically prove they love their careers and themselves more than their own children, they are passing up on the only thing that can truly give them value in life - other people.  Admittedly, it is awesome working 2-4 hours a day, from restaurants, bars, and cafes, only to knock off at 1PM to golf, ride motorcycles, adventure, hike mountains, and frankly, do whatever the hell I want to do.


But like everything else, novelty wears off even the most exciting of hobbies because all hobbies are finite.  Humans and the human mind are not finite.  They are infinite. They change and evolve and challenge and debate and everything else only humans can do which make them the only things you can truly love and cherish in life, giving life its ultimate value.  And preferring things, money, stuff, McMansions, careers, education, debt, and yourself over other people is not only foolish, it is hands down the quickest way to ensure your standards of living are as low as possible.  Therefore, I contend maximizing "The Percent of Life Lived Free" by spending time with loved ones (and your own interesting hobbies of course) and AS LITTLE AS TIME AS POSSIBLE AT WORK is not only the future of standards of living, but is so today...if you so choose.

Of course, this little article is not going to outgun the trillions of dollars spent annually by advertising agencies, the government, the education industry, Hollywood, and other American institutions, causing you to start valuing your time over things.  And it's certainly not going to convince the mass of American sheeple to start valuing other people over themselves.  But it doesn't have to.  This article was written for intelligent people who want to think critically about life and economics and truly enjoy their time on this planet, however long or short that may be. And if you simply get rid of your stuff, spend within your means, put the love of your fellow man ahead of things, and avail yourself of the time you've been granted on this planet, I can guarantee you will not be on your deathbed wishing you spent more time with your kids...instead of being alone because you outsourced them to a nanny.
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Editor's note: This article was originally run at Captain Capitalism and has been republished with permission.