A better measure of economy.
GDP counts whats made, nobody asks whether its useful.
TLDR:
- GDP is a shit way to measure economy for the average person. It counts something fluid, not whether anyone got better. Yet everyone obsesses with magic number.
- Income is shit too. You earn a lot but live paycheck to paycheck – are you really wealthy? It’s this income, gonna stay with you forever?
- The better question: how much does the median person actually hold, now and realizable within a year or so.
GDP measures your country as a whole. It does not care about where people are living, how well off they are, how really they feel, how many options they have, how free they are to make choices, to move away, and so on.
But most importantly, it is something of a number that is way too much independent of how you are positioned in that economy.
Measure something anyone can relate
I have a solution for it. If you start to measure how much a person owns. Not just makes income, but really owns, whether it is static or income generating assets or something else. What they own in terms of things they can liquidate or take money from.
Income is water into a bucket. You can earn a lot and still live paycheck to paycheck. High earn with zero hold means the bucket has holes.
Two properties required. First direct control of it. Second you can liquidate it. Which means it is more closely associated with physical goods or securities or similar assets that you have first direct control of, second you can liquidate.
So the new metric would be how much the median person owns in terms of dollar equivalent. Like you have a house, you are wealthy in that matter. You have a lot of stocks, you are wealthy in that matter. You have parts of the businesses, you are again wealthy. Or you have a thousand of gold bars in your basement, again you are wealthy. Or you have income generating asset which you again control.
Expertise might become less relevant or the idea of it changes, and expertise might not be as reliable as you think it is, so it could not be stored as wealth, but rather as your fluid ability to utilize it for income or with combination with other assets to generate income or wealth. And it also excludes any kind of intellectual property because that goes to shit again also. Still, not all IP is out, but ones that you can actually realize.
Average as math is very wrong here to apply. Targets median wealth, not mean wealth. One billionaire drags the mean and brings back the same GDP flaw.
Why this fix fits – the economy looks different now
Ok, basically everyone walks around GDP like it is the scoreboard, but that is not only just not stuff being made, but also includes the amount of bullshit produced, which does not indicate even the real amount of exports, whether they are useful.
Why I am thinking that now? Of course because of AI. Somebody gave me a hint that if amount of sold tokens, amount of data sensors built and GPUs, that does not indicate that the work being done, the work being printed, are actually anywhere useful. That because you spent electricity does not indicate that you are advancing anywhere. You could just spend it for bullshit, of course. For entertainment.
There is growing disconnection between whether the paid actually equals anything. Entertainment gives you growth of human satisfaction, but now we are in the era of abundance, where first, you do not even have to pay for it. And second, that does not mean anyone actually getting satisfied.
Problem with GDP is who measures it and how. How do you measure something that technically does not work, technically getting paid, but the work of it being done potentially has zero value? You have a lot of GPUs sitting there doing something, computing something, but somebody paying for it, somebody paying for water, electricity, somebody bought them and operates them. And you have a customer. But does that really produce anything valuable?
Ok, also consider the job displacement means that income as a metric becomes less relevant than overall the sense of the job market becomes very weak and what job is and what do you really even need the jobs in the era of automation and whether anything of it makes sense starts to disappear.
You could not just bind income to actual GDP goodness because you could have your wage grow 2x but the company making 10x out of you just because you are now augmented and all that crap.
Problem, what I say, that if you start to measure economy as a whole, plus always compute, plus the job displacement also, plus that something else I possibly do not know about, plus additions that nobody really knows how much it really affects economy and whatnot.
Everyone argues about the economy, but nobody has any idea what is going on. You see 5 different forecasts every day, completely different. While I propose something really measurable. If you reduce the time decay bullshit to more about assets you directly control, can realize, then it becomes more realistic metric than all of your GDP crap.
Consider that all IP protection would be disappearing anyway. Because everyone can make your competition real quick in time. You cannot just patent shit away. You cannot hope that nobody invents the same. You cannot hope that anyone makes the same. Because now everyone has access to powerful AI. So the asset becomes the speed of realization. As long as you control it and keep it proprietary, until it gets copied, you can count it as an asset. But not for long. This weighs heavily on the physical assets, assuming many assets that are not physically scarce are now in greater danger of not being able to realize. Like if you have some tech startup, it is in danger. You might see it now, but it is the same as income. It is something fluid, which again shows you that you cannot just rely on GDP to make sure that your startup is going to be profitable in the long run. Still everything has a melt rate, but to measure this is also kind of pointless as everything has. It is even more fair when you start to count the median wealth as it decouples how people are really well off versus some magic number that tells how economy is going.
None of these fucking metrics indicate whether people are actually getting better.
Why this metric is good – what it prioritizes
It decouples the state and the human and measures different metric instead. Is human living in this state getting better or not? Which also means you should not rely on GDP as a place to choose to live. You should consider wherever you would be flourishing.
Because we also imply that you have assets, you can liquidate and move away. But it measures not only whether you have immigration of net worth humans going inside or getting them outside, but also whether anyone really prospers in their capital in your place.
It is also a metric how much means of production you have, which is more important in the future, where robots and machines would be the stuff that makes other stuff. So owning something becomes even more important than everything, every economy getting completely bonkers, and the previous value of human labor now becomes less in many areas.
I do not think it punishes non-liquid, because liquidity is possibly way too strong word for it. It does not mean it has to happen instantly. Just over 10 years migration is also enough to showcase the tendency.
If you think it is neutral, on one hand you have a level of long-term investment, which shows you the general tendency. And the second metric shows you the market churn, like how much a live market is that you can realize any assets relatively quickly, whether it is a short or long-term one. It also sneaks into the capital mobility here, which again is a value judgment of whether you have friction in that matter.
And what I like about that is that it covers quite a wide range. It covers both capacity and freedom of individuals to accumulate wealth. It assigns a relative value of that wealth by biasing it towards something physical and more stable, but without still omitting that part where the goods are still changing in value all the time. Your assets are still fluid in a sense, but you still own them. You still own and have ability to manage them. And it clearly shows you the level of poverty which prevents people from voting with their feet.
But also important that it directly implies that the freedom of capital is essential. The whole metric of it is the capital that you can liquidate and utilize. And if you cannot do that, that means your market is rigid, your market is illiquid, your market is not free-flowing, where goods can be moved rapidly enough, meaning that they cannot be evaluated at their current cost or something. And that without essential component of ability to move the capital, all this capital becomes worthless anyway.
When I say the good metric is how much the median person really owns, implying direct control and the ability to sell it and have physical cash, it implies heavily that your economy is good as much as how much the median person holds in literal value to their name. It implies directly anti-concentration as a measure. It clearly devalues the value of economy when it is concentrated. Which goes nicely along with fuck all those big banks, big tech, grabbing all the cash we have.