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No, what you have just described is the epitome of increased productivity and therefore increased GDP. In fact, productivity gains are the primary contributor t

No, what you have just described is the epitome of increased productivity and therefore increased GDP. In fact, productivity gains are the primary contributor to rising standards of living (higher GDP per capita). Take self-driving cars. Sure, one might fixate on the fact that car manufacturers will lay off workers and that cab/truck drivers will lose their jobs. But that's a very narrow way of viewing things. If self-driving cars save 20 minutes in each American's day (commute, going out, filling up the tank), we're looking at more than 11,900 human years saved each day, just in the US. This figure doesn't even include the fact that when you are in the car you can do work or read while the car is driving itself. And we haven't even looked at: 1) health benefits from lower air pollution, 2) cheaper and more efficient transport of goods everywhere (lower costs for every type of good), 3) more efficient allocation of real-estate (no parking garages in the middle of the city), and 4) numerous other effects I am probably leaving out.

yesbabyyes 14y ago
You mention improvements such as lower air pollution. We don't measure that in GDP today. That's kind of my point. If we internalize externalities, then all of the effects I am talking about will also contribute to GDP. But the way we measure GDP today, it looks like growth is slowing. Indeed, some people, even in this community, feel we are working too many hours for little reason. If we are to make truth of that, and work less with more meaningful things, then that too would decrease GDP. But it would presumably increase well-being. So what I propose is that we start measuring external costs, add them to the price of goods (so the price better reflects the real cost), and we won't need to fill every space with advertising to keep up consumption. If you want to read more about these ideas, and others perhaps more radical, I can recommend this book of all my heart: http://sacred-economics.com/ http://sacred-economics.com/ Edit: Perhaps the self driving cars were my weakest example. In my mind, the most clear example is that of the free software movement. It's just a massive gain for everybody, built collaboratively. And it took off just as Bill Gates became the world's richest man off software. In a free software economy, that kind of market capture is radically different.
- brianchu 14y ago
  Again, things are not as clear as you try to paint them. Better health leads to more productivity and higher GDP because instead of sitting in a hospital, being miserable at home due to disability, or dying prematurely, you are productive, working, and consuming. Working less does not necessarily drop GDP if it is offset by an increase in productivity. If I work 8 hours with 1 unit of GDP/hour, that is the same as working 4 hours with 2 units of GDP/hour. Are you saying that free software lowers GDP? That connection is by no means clear cut. Again, we can potentially see productivity gains in terms of lower costs across the board. I do not (and never did) disagree with you that GDP doesn't cover every metric that ought to be measured (i.e. happiness). I'm correcting you because I think your economic reasoning is flawed for most of your examples. And as it stands, trying to measure "well-being" and quantify that value in terms of prices is so utterly nebulous as a concept as to be nearly impractical. Who would set and enforce the price? How would you even begin to convert happiness to money? EDIT (reply to below): First, there is no question that premature death will negatively impact GDP. Furthermore, health problems that don't lead to a hospital stay but lead to general disability will drag down productivity. Furthermore, while in the short term a hospital stay in of itself (lets say, a $100,000 bill for lung cancer) will increase GDP by the bill ($100,000), that money partly comes out of savings that would be spent anyway in the long term. And the ability for someone to create value as a productive worker/consumer is still severely curtailed as a result. And while I'll concede that reducing hospital stays in of itself has a negative effect to GDP, improvements in health end up being net positive for GDP. As for the larger philosophical question of GDP. Who is "we"? The economy will optimize for itself (higher GDP) because that is how a market economy is set up. And a market economy is not set up to optimize for anything other than growth/money (money representing economic value). As for "people," people, society, and governments routinely already optimize for other things.
  - yesbabyyes 14y ago
    Again, things are not as clear as you try to paint them. I might say the same thing to you. Your miserable person in a hospital might actually count towards GDP, for instance. I'm sure you're familiar with the broken window fallacy, and to me, it still seems to run wild. Regarding your last paragraph, I think we are getting to the crux of the problem. What is the purpose of optimizing for GDP if it can't encompass what's important? It might not even be correlated. So I propose we change the incentives and optimize for something else than "growth", as it were.
j_jochem 14y ago
Saving time does not equal an increase in productivity. Self-driving cars might save 20 minutes, but this translates into an increase in actual worker productivity (causing an increase in GDP) only if those 20 minutes can then be spent doing additional work that would otherwise not have happened. This requires "work that may be done" to be elastic. Elastic in this context would mean that any free 20-minute interval can be turned into profitable work output. In my experience, workload does not scale this way.
- sergiosgc 14y ago
  Don't miss the other end of the transaction. If the 20min are used spending money (consuming) this also increases GDP.

yesbabyyes 14y ago

You mention improvements such as lower air pollution. We don't measure that in GDP today. That's kind of my point. If we internalize externalities, then all of the effects I am talking about will also contribute to GDP. But the way we measure GDP today, it looks like growth is slowing. Indeed, some people, even in this community, feel we are working too many hours for little reason. If we are to make truth of that, and work less with more meaningful things, then that too would decrease GDP. But it would presumably increase well-being. So what I propose is that we start measuring external costs, add them to the price of goods (so the price better reflects the real cost), and we won't need to fill every space with advertising to keep up consumption. If you want to read more about these ideas, and others perhaps more radical, I can recommend this book of all my heart: http://sacred-economics.com/ http://sacred-economics.com/ Edit: Perhaps the self driving cars were my weakest example. In my mind, the most clear example is that of the free software movement. It's just a massive gain for everybody, built collaboratively. And it took off just as Bill Gates became the world's richest man off software. In a free software economy, that kind of market capture is radically different.

brianchu 14y ago
Again, things are not as clear as you try to paint them. Better health leads to more productivity and higher GDP because instead of sitting in a hospital, being miserable at home due to disability, or dying prematurely, you are productive, working, and consuming. Working less does not necessarily drop GDP if it is offset by an increase in productivity. If I work 8 hours with 1 unit of GDP/hour, that is the same as working 4 hours with 2 units of GDP/hour. Are you saying that free software lowers GDP? That connection is by no means clear cut. Again, we can potentially see productivity gains in terms of lower costs across the board. I do not (and never did) disagree with you that GDP doesn't cover every metric that ought to be measured (i.e. happiness). I'm correcting you because I think your economic reasoning is flawed for most of your examples. And as it stands, trying to measure "well-being" and quantify that value in terms of prices is so utterly nebulous as a concept as to be nearly impractical. Who would set and enforce the price? How would you even begin to convert happiness to money? EDIT (reply to below): First, there is no question that premature death will negatively impact GDP. Furthermore, health problems that don't lead to a hospital stay but lead to general disability will drag down productivity. Furthermore, while in the short term a hospital stay in of itself (lets say, a $100,000 bill for lung cancer) will increase GDP by the bill ($100,000), that money partly comes out of savings that would be spent anyway in the long term. And the ability for someone to create value as a productive worker/consumer is still severely curtailed as a result. And while I'll concede that reducing hospital stays in of itself has a negative effect to GDP, improvements in health end up being net positive for GDP. As for the larger philosophical question of GDP. Who is "we"? The economy will optimize for itself (higher GDP) because that is how a market economy is set up. And a market economy is not set up to optimize for anything other than growth/money (money representing economic value). As for "people," people, society, and governments routinely already optimize for other things.
- yesbabyyes 14y ago
  Again, things are not as clear as you try to paint them. I might say the same thing to you. Your miserable person in a hospital might actually count towards GDP, for instance. I'm sure you're familiar with the broken window fallacy, and to me, it still seems to run wild. Regarding your last paragraph, I think we are getting to the crux of the problem. What is the purpose of optimizing for GDP if it can't encompass what's important? It might not even be correlated. So I propose we change the incentives and optimize for something else than "growth", as it were.

j_jochem 14y ago

Saving time does not equal an increase in productivity. Self-driving cars might save 20 minutes, but this translates into an increase in actual worker productivity (causing an increase in GDP) only if those 20 minutes can then be spent doing additional work that would otherwise not have happened. This requires "work that may be done" to be elastic. Elastic in this context would mean that any free 20-minute interval can be turned into profitable work output. In my experience, workload does not scale this way.

sergiosgc 14y ago
Don't miss the other end of the transaction. If the 20min are used spending money (consuming) this also increases GDP.