Improving Free Market Economics, part 2
In part 1 (a LONG time ago), I argued that while free market economics are inherent in human society, and that free markets work well in facilitating trade, it also feeds directly into the Tragedy of the Commons which is increasingly affecting more and more things throughout both our individual experience and the world. The focus on individual profits trumps long-term disaster both large and small, even when we see the gaping maw of disaster bearing down on us. (Sadly, I failed to use the words "gaping maw" in part 1, but I would have if I had thought to.)
While capitalists measure a nation-state's economy using the Gross National Product, the Kingdom of Bhutan has a measure of prosperity known as the Gross National Happiness. This reclusive Himalayan country is slowly pulling themselves into the modern world (television and the Internet were prohibited up until 1999), but does not want to be caught up in the evils of capitalism. So, the King declared that it would routinely poll the population to determine its Gross National Happiness. Is this the answer to raw capitalism dragging the globe into the Tragedy of the Commons? Measuring happiness?
Ultimately, we all desire happiness. We want goods and services because we believe they will make our life happier in some way than we would be without them. Surely, no one buys a new TV because they think it will make them less happy. Isn't happiness, whether from physical necessities like food or from geek toys like iPhones, the ultimate market force?
It should be, but it isn't. How do you trade in happiness? You can't trade two units of happiness for a Coke. Besides, who would want to? The goal is to accumulate happiness, not barter it away for goods and services. However, I do willingly trade happiness to obtain goods and services which I believe will make me even happier in the end. Simply put, I go to work to earn money to buy food and iPhones, because I think I'll be happier that way than if I sat home without food or an iPhone.
Yet, money is not happiness. As I indicated in part 1, the capitalist emphasis on money is part of the problem, as it shifts emphasis away from the end goal of happiness. If money is always a middle step on the way to happiness, as capitalism preaches, then I will strive to make money instead of focusing on my actual end goal--happiness. Happiness cannot be monetized, even if capitalism tells us otherwise. The Kingdom of Bhutan appears to have it right.
But what if happiness could be monetized? A secondary "happy" economy could be imposed on top of the cash-based economy we know. Happiness invested in others yields more happiness for both the investor and the recipient. A company that sells a better product will not only yield happier customers but happier workers content with the knowledge that their work is doing more than padding the company's profits. Polluters might make a cash profit, but the happiness they destroy will cost them dearly in the end. It sounds wonderful, but how can you make an accounting of "happy credits" when they multiply with a smile and diminish with a cross word?
You can't, but you don't have to. Unlike property and wealth, happiness already exists inherently and accounted for in every person. The trick is to use that self-accounted happiness in every person to influence the cash-based economy.
And what a trick it is. Companies spend billions to convince us that we will be happier with a Ford than a Chevy, or a PlayStation over a Wii, and then they immediately jack up the price if we actually agree with them. Indeed, the system is stacked against the consumer, since the money and its resultant power lies with the companies. How can we possibly make them care about our happiness?
As the king of Bhutan realized, you have to change the system. Happiness is the focus in Bhutan, and so the system is designed--albeit without fully-free markets--to focus on happiness. In America, there are similar bright spots on the grim picture I've painted. Consumer safety is important enough to enough Americans that companies failing to safeguard it, such as Toyota and BP recently, are doomed to harsh consequences. As a result, the products we buy today are safer than at any other time in history, and the cost of that safety is passed along to the ultimate beneficiary--the consumer.
As an example of how things might be changed, polluters can't get away with polluting if they have to pay for the pollution in advance. If disposal costs are included in the product cost at the time of purchase and passed on to waste management facilities, then you wouldn't have to wonder how to dispose of your electronics safely. Recycling and safe handling of non-recyclables would already be in place when the you are ready to throw the product away. Over time, Dell would stop using as many cheap-but-toxic chemicals to make their products because the toxic disposal costs will make less toxic chemicals cheaper in the end. You'll pay more for your computer, but your taxes will go down and there will be less pollution. Lower taxes and less pollution increases happiness.
What I'm describing is still capitalism, but it more closely resembles the capitalism that free market believers espouse. The markets will solve their own problems, and the rest of society's problems too, provided that we make sure it's in their best interests to do so.
While capitalists measure a nation-state's economy using the Gross National Product, the Kingdom of Bhutan has a measure of prosperity known as the Gross National Happiness. This reclusive Himalayan country is slowly pulling themselves into the modern world (television and the Internet were prohibited up until 1999), but does not want to be caught up in the evils of capitalism. So, the King declared that it would routinely poll the population to determine its Gross National Happiness. Is this the answer to raw capitalism dragging the globe into the Tragedy of the Commons? Measuring happiness?
Ultimately, we all desire happiness. We want goods and services because we believe they will make our life happier in some way than we would be without them. Surely, no one buys a new TV because they think it will make them less happy. Isn't happiness, whether from physical necessities like food or from geek toys like iPhones, the ultimate market force?
It should be, but it isn't. How do you trade in happiness? You can't trade two units of happiness for a Coke. Besides, who would want to? The goal is to accumulate happiness, not barter it away for goods and services. However, I do willingly trade happiness to obtain goods and services which I believe will make me even happier in the end. Simply put, I go to work to earn money to buy food and iPhones, because I think I'll be happier that way than if I sat home without food or an iPhone.
Yet, money is not happiness. As I indicated in part 1, the capitalist emphasis on money is part of the problem, as it shifts emphasis away from the end goal of happiness. If money is always a middle step on the way to happiness, as capitalism preaches, then I will strive to make money instead of focusing on my actual end goal--happiness. Happiness cannot be monetized, even if capitalism tells us otherwise. The Kingdom of Bhutan appears to have it right.
But what if happiness could be monetized? A secondary "happy" economy could be imposed on top of the cash-based economy we know. Happiness invested in others yields more happiness for both the investor and the recipient. A company that sells a better product will not only yield happier customers but happier workers content with the knowledge that their work is doing more than padding the company's profits. Polluters might make a cash profit, but the happiness they destroy will cost them dearly in the end. It sounds wonderful, but how can you make an accounting of "happy credits" when they multiply with a smile and diminish with a cross word?
You can't, but you don't have to. Unlike property and wealth, happiness already exists inherently and accounted for in every person. The trick is to use that self-accounted happiness in every person to influence the cash-based economy.
And what a trick it is. Companies spend billions to convince us that we will be happier with a Ford than a Chevy, or a PlayStation over a Wii, and then they immediately jack up the price if we actually agree with them. Indeed, the system is stacked against the consumer, since the money and its resultant power lies with the companies. How can we possibly make them care about our happiness?
As the king of Bhutan realized, you have to change the system. Happiness is the focus in Bhutan, and so the system is designed--albeit without fully-free markets--to focus on happiness. In America, there are similar bright spots on the grim picture I've painted. Consumer safety is important enough to enough Americans that companies failing to safeguard it, such as Toyota and BP recently, are doomed to harsh consequences. As a result, the products we buy today are safer than at any other time in history, and the cost of that safety is passed along to the ultimate beneficiary--the consumer.
As an example of how things might be changed, polluters can't get away with polluting if they have to pay for the pollution in advance. If disposal costs are included in the product cost at the time of purchase and passed on to waste management facilities, then you wouldn't have to wonder how to dispose of your electronics safely. Recycling and safe handling of non-recyclables would already be in place when the you are ready to throw the product away. Over time, Dell would stop using as many cheap-but-toxic chemicals to make their products because the toxic disposal costs will make less toxic chemicals cheaper in the end. You'll pay more for your computer, but your taxes will go down and there will be less pollution. Lower taxes and less pollution increases happiness.
What I'm describing is still capitalism, but it more closely resembles the capitalism that free market believers espouse. The markets will solve their own problems, and the rest of society's problems too, provided that we make sure it's in their best interests to do so.