Real Real GDP

Here’s a basic economics question:

  1. A woman in Coldwater, Michigan works 60 hours a week for $8.50 per hour ($510/week).
  2. Minimum wage is increased to $15 per hour.
  3. The same woman now works 34 hours a week for $15 per hour ($510/week).

Question: What happens to GDP?

  • Answer: Nothing.

According to economists, nothing changed because no new money changed hands.

  • That 26 hours per week goes into childcare and housework and, yes, leisure.
  • But GDP doesn’t change. So we think there’s no progress.

But I met that woman in Coldwater.

  • What changes is she gets to pick up her kids from school every afternoon.
    • She has time to help them with their homework.
    • She gets to spend quality time with her own mom.

She doesn’t want more money. She wants more time.

  • That’s the real value of a higher minimum wage.
  • Economists don’t optimize for free time because they can’t measure the value of it as easily as money.

Meeting her made me happy and sad and angry:

  • We met outside a political rally on a chilly overcast Thursday evening because on top of everything else she does each week she still finds the energy to participate in local politics.

She’s a hero and she deserves 26 more hours a week to do whatever the fuck she wants.

  • And I mean whatever she wants.
    • Because in addition to the extra time she’d be free to be a parent and activist, she might also get to sit on the couch for a couple hours and watch TV.
      • And that’s great too.
  • We need to start valuing free time in this culture.
    • And we need to stop judging people for caring about more than money in their lives.

It doesn’t matter what she does with her extra time.

  • Maybe she uses her free time to start a side business.
  • Maybe she uses it to relax.

What matters is she’s more free.

  • She’s happier because she controls more of her life.

We have to stop measuring progress by dollars generated.

We absolutely need a new science of progress.

  • This starts with understanding why the current measure of growth, GDP, is so broken.

We’re stuck running a paperclip maximizer where money is both the means and the end.

  • This has been great for industrial and technological progress.
    • It has now been assumed for centuries that this is the only progress we want.
      • How do we maximize other types of progress?

Capitalism’s reward function is broken.

  • We could patch over the problem with (a lot of) redistribution but we’re fundamentally headed towards the wrong terminal value.

What are the right terminal values?

  • Let’s go back to first principles.

What is the best measure of human progress?

  • How can we maximize total human benefit?
  • How do we also minimize individual human suffering?

“Life, liberty, and the pursuit of happiness” is a good place to start.

  • Abundance is the key to all three virtues.
    • Happiness is the hardest to deliver.
  • As life and liberty improve globally, happiness is increasingly our #1 priority.

This doesn’t mean we need to start obsessing over measuring happiness now.

  • Goodhart’s law works for hedonism too.
    • If we optimize for maximum joy as measured by brain activity, we’ll all end up hooked on heroin.

Humans are remarkably good at finding their own happiness if you just give us freedom.

  • And remarkably few people will end up hooked on drugs; surely better than in our current economic system.
Most people could be a lot happier. Let’s make Earth Utopic for all!

We need to help people be free to succeed.

  • Not just free enough to survive.

This will unlock the world’s Hidden Ambition.

  • Money is golden handcuffs that keeps almost everyone from doing what they really want to do.

What would you do if you won the lottery?

  • Most people wouldn’t just sit on the beach and do nothing.
  • You’d be free to try your biggest boldest ideas.
    • What if you lived like that today?

We need to free ourselves to reach our highest potential.

  • Most of what we dream of doing doesn’t cost that much money.
  • Our biggest barrier to ambition is ourselves.

We need more free and happy Ambitious Optimists.

  • I’m writing this book to inspire more ambitious people to take on the biggest challenges.

Real Real GDP is one of my solutions to the World’s Biggest Problems.

  • This idea is a work-in-progress. If you’d like to riff on it, hit me up @neilthanedar on Twitter.

Published by Neil Thanedar

Neil Thanedar is an entrepreneur, investor, scientist, altruist, and author. He is the founder & GP of Utopic, a pre-seed biotech VC fund investing in the future of science. He is also the founder & chairman of Air to All, a 501(c)3 nonprofit medical device startup, and Labdoor, a consumer watchdog with $7M+ in funding and 20M+ users. He previously co-founded Avomeen Analytical Services, a product development and testing lab acquired for $30M+ in 2016. He has also served as Executive Director of The Detroit Partnership and Senior Advisor to his father Shri Thanedar in his campaigns for Governor, State Representative, and US Congress in Michigan.