What is college? What is health care?

The problem with “free college” is: What is college?

The problem with “healthcare is a right” is: What is healthcare?

I know, I know. The only “sophisticated” answer is that these things just go without saying. Who asks that? We just all know what these things are, right? Its not that hard.

But these questions are so key, so central. They begin and end the debates. If something is a right what is that a right to? What, exactly, should we expect from these rights?

Start with college. If it ought to be free, then what counts? What institutions? What formats? Who decides? And what happens when college just isn’t the best way to get educated or learn a trade? Certainly this will happen one day—just a few generations ago almost no one went to college, and those who did had quite a different experience than students today. Were they exercising this same right back then? When college changed, and when it changes again, will we still have a right to a free version of what existed before, when we thought up the right in the first place?

Now to health care. What is for me health care is not for you health care. I often go to the beach to clear my mind. It’s the healthiest thing I do each week—a true medicine for my body and spirit. Without this, my mental health would suffer. Others, however, find no such cure there. Others turn to other activities, and some to drugs—legal and illegal. For them, this is health care.

Health care. Care of health. Wellness maintenance. Body optimization.

(Already the problem emerges.)

Health care is not some coherent, boxed-up good. It’s not a cut-and-dry service. What counts as health care today—massages, chiropractic, Xanax-before-the-dentist—did not count just a few years ago. Insurance didn’t cover. Many common modern-day treatments, or the causation between treatments and wellness—didn’t even exist.

The questions, then: Did our grandparents have a right to the services we claim today are “health care?” A right they simply could not exercise because the suppliers of that right did not yet exist? And do individuals have any say about what, for them uniquely, constitutes a health care good or service?

No, you say. This is ridiculous, you say. I’m being unnecessarily difficult, you say.

I won’t concede that. My question is eminently fundamental. If I have a right to free college, what is college? If I have a right to health care, with is health care?

Facts don’t speak for themselves

Facts don’t speak for themselves.

Whenever anyone says they are “fact-checking” something, don’t believe it’s some sort of litmus test on the validity of what someone says. It’s just another way of framing assertions about the world, and it’s usually devoid of serious critical thinking about the topics at hand.

For example, when Donald Trump said the inner cities have never been worse, it’s probably possible to show that’s not the case. Maybe the murder rate is lower than it was in 1961. Or the jobless rate is lower than it was in 1958. Or the poverty rate is lower than it was in 1979. Whatever.

Media outlets love to do this—point out little “facts” that show Donald Trump is wrong. “Fact-check.”

But when Trump says the inner cities have never been worse, he doesn’t mean literally worse on every measure. He doesn’t even mean worse on most measures. He means that from his perspective, and (he probably thinks) from the perspectives of many other people, the inner cities have never been worse. It’s all a matter of perspective.

If I say my life has never been worse, who is to tell me I’m wrong? If I feel that way, it’s true. My friends can say, “Look, you’re making more money now than you ever have.” Or “Your new baby is happy and healthy – things have to have been worse.” But those things are just facts. Facts alone carry no weight. Facts must be interpreted. That’s the point of debates.

The inner cities have never been worse. That’s not a statement of fact. It’s a statement of opinion. And everything we say is a statement of opinion. Even facts like “the earth is spherical” are meaningful only insofar as they inform some further claim we’re trying to make (what’s the point of just saying “the earth is spherical”?).

Trump’s opponents try to damage him by pointing out these little facts that he supposedly gets wrong. But the problem for her is that 1) Trump doesn’t care, and 2) neither do his supporters. What Trump and most people care about that the inner cities are horrible and hellish. That’s it. Pundits hold up little flashcards showing him to be wrong, but he’s only wrong insofar as people don’t agree with him. For the media to prove him “wrong” in this regard, they essentially need to convince people that inner cities are not horrible. That’s a tough battle to fight.

Some lessons here for you, as you try to win debates and negotiations in your own life and work:

  • Focus on what your opponents believe and frame facts in that way.
  • Pose your arguments not in terms of this-is-true-about-the-world-and-you-simply-cannot-not-believe-that, but rather in terms of this-is-how-I-and-others-feel. The latter is more powerful than the former.

The Shortcomings of GDP as a Measure of Economic Growth

This article is one of the most popular thing I’ve ever written. I published it five years ago on an economics blog, and it’s been viewed almost 70K times since then. Average time on page is more than six minutes.

It’s nothing fancy. Explains the shortcomings of GDP as a measure of economic growth simply and concisely. There’s of course much more to be said on this topic, but republishing my old piece in its entirety here.

A recent Washington Post article reports that GDP has seen a recent uptick. While such news is most likely indicative of economic progress, this is not always the case. National output is not synonymous with the social economy, and as such, should always be evaluated with a critical eye.

Prior to WWII, there was very little collection of aggregate macroeconomic data. The Keynesian revolution shifted policymakers’ goals, however, and they began to more highly value a measurement of output in order to better “manage” the national economy. Thus, GDP was increasingly seen as a way to measure whether the “target” growth rate was being achieved. But the GDP possesses some serious shortcomings as a measure of economic growth, and should not be relied upon as the sole means of determining the health of an economy. As longtime BEA head warns, figures like GDP “are eminently useful in macroeconomic analysis if they are not regarded as a precision instrument and…may be lethal if they are.”

In short, GDP can be defined as the market value of current, final, domestic production during a specific interval of time. This means that all production is summed in terms of their market prices, only the value of final goods is included (as opposed to including the value of all intermediate sales), and only the output of productive factors located in a particular nation is counted. Already, some of the shortcomings of GDP as a measure of social welfare can be inferred, but I will highlight a few of them below.

Perhaps the most significant shortcoming of GDP as a measure of economic growth is its inclusion of government spending alongside other voluntary market transactions. This detracts from GDP’s usefulness as a measure of economic growth because government expenditures are not necessarily beneficial to social welfare, or at least not as beneficial as their cost would indicate. Indeed, there is no way to measure the value of a government service in terms of other goods because the transaction is coerced: it is not undertaken voluntarily by between contracting individuals in order to satisfy their ends and therefore increase their total welfare. Rather, money is coerced from private individuals who may indeed utilize the services provided, but may not have purchased them if they had the opportunity to opt out. The price for government services is not set by the market, and thus the calculation of their value is marked by a significant measure of arbitrariness.

GDP also fails to discount those economic activities that do not directly raise individual welfare. Military spending is the most obvious example of such an activity. While defense services may be seen as necessary to allow other economic activities to flourish, they are not valued for their own sake. Thus, if a nation’s GDP increases by 15% over the course of two years because of increased military spending, that does not mean that such a nation is consuming and investing more. As Roy Webb puts it: “Citizens of a nation that is able to obtain adequate defense for 1% of GDP can consume and invest more, thus having a higher standard of living, than citizens of a nation with the same GDP who had to spend 10% of GDP for defense.”

Another shortcoming is GDP’s failure to account for productive non-market activities. A mother raising a child, for example, is an extremely important activity. But it is not something that is paid for or provided on the market. Thus, such activity is not accounted for in the GDP. This might seem like an insignificant point, but many non-market activities can increase social welfare, and the aggregate of all productive non-market activities is certainly significant–indeed, GDP does not account for any unpaid work whatsoever, no matter how productive.

Yet another shortcoming is that certain destructive events or activities can increase GDP while decreasing overall welfare, making the GDP an inaccurate gauge of social welfare. A massive hailstorm that creates demand for thousands of new roofs and windows in a particular region, for example, is not an economically beneficial event (if you don’t believe me, read about the Broken Window Fallacy on our common economic fallacies page). But it would have the effect of increasing GDP, as millions would be spent on acquiring these goods and services.

Here is another way to think about that last point. Consider divorce, which causes an immense amount of emotional strife for those involved. A high divorce rate is something almost no one considers beneficial. But divorce is expensive, and creates thousands of jobs for lawyers, judges, and other legal mediators. If the divorce rate were to increase by 10% one year, this would increase GDP. Overall welfare (which is determined by subjective preference and is thus immeasurable), however, would almost certainly decrease significantly.

Here is a real-life illustration of the above shortcoming. While the Soviet Union saw massive increases in GDP between 1970 and 1980 (from $430 billion to over $900 billion), the average life expectancy of a Russian male over the same period actuallydecreasedAlcohol abuse was rampant, infant mortality began to climb, and the crude death rate reversed its previously downward trend. Perhaps the Soviet Union was producing more, but quality of life and overall social welfare definitely took a hit in 1970s Russia. For a visual representation, see my (somewhat crude) chart below:

The above shortcomings are only a few of the many problems with GDP. Needless to say, the figure should never be relied upon as an accurate assessment of economic growth. It certainly has its uses, and by no means would I advocate abandoning the figure altogether. But as with any other index, one must be cautious when using the figure to make judgments about the economic health of any nation. Frank Shostak has an excellent analysis of GDP that I highly recommend to anyone interested in understanding more fully the uses and shortcomings of the GDP figure.

“Life” during Irma

Hurricane Irma has come and gone. Left some significant damage to property here in Jacksonville. Huge flooding downtown. Our condo had a bit of water get into one of the bedrooms (not sure how) and our lawn is littered with roofing shingles, but unscathed otherwise.

Here’s a photo of the statue “Life” in Memorial Park, here in Jacksonville on the St. John’s River. The river flooded the park right up to the foot of this statue. Amazing shot!

And finally, here’s a 9/12 clip from USA Today about Irma clean-up here in Jacksonville.

Thoughts as Irma approaches…

I live in Jacksonville, FL. New here—moved in February from Washington, D.C. Irma will be here on Monday.

Friends and family text almost hourly. They want to know how we’re doing. I appreciate that, and my answer is always going to be YES: We’re going to be ok, because we’re doing what we’re supposed to do and we believe in something bigger than all this.

I do wish, though, that as much concern was shown for the 1,000+ people who died in flooding in Bangladesh this past summer (my friend Gret Glyer told me of this the other day—I had no idea). Irma may kill dozens, even hundreds. But thousands of families have lost loved ones in Bangladesh over the past few months—more than any hurricane will ever do in the U.S.

And those people don’t have air conditioned homes that will turn back on a few days after the storms pass. Or cars that can move their families to safer places. Or nice schools with football teams and cheerleaders and bands that will be back at it in the following weeks.

I don’t want to demean anyone’s concern for me of for the victims of Irma. It’s truly a historic storm. But we also live in amazing times—storms have little power over us. Frankly, my life next week might hardly be affected. My home, my stuff, my family—none of it is going anywhere.

It’s a funny thing. People look forward to Irma. They talk so much about it—how they’re scared, worried, anxious—because they are actually excited. Of course they don’t want their home to be damaged, or anyone to get hurt, but if they’re talking about this, they probably don’t truly believe something terrible is going to happen to them. Those who really do believe that are doing other things in the days before the storm—they have no time to tweet about their anxieties every few hours.

Maybe I just don’t understand what it’s like to be in a hurricane. And I do appreciate the concern for me and my family. But I’m willing to bet that, media hype aside, there’s less reason to worry than what you’ve told yourself.

(On that note, you should really try never to worry about ANYTHING.)

I’ll close with another pitch for DonorSee—want to make a real difference in the lives of people facing terrible disasters? Go here and donate to someone in need. You’ll feel great about doing it, and you’ll make a real difference.

Me at FEE: DonorSee & the Cajun Navy

I got published today. FEE again. Topic: DonorSee—one of my favorite apps.

DonorSee is a realistically hopeful app. Glyer believes in the eagerness of people to help one another and uses the power of real-time video to make that happen. In that way, it relies on the same goodwill that underlies the sharing economy—trust in each other, and faith that continuous feedback loops will reward good, honest work.

But DonorSee is also a reaction to the grossly ineffective and corrupt “big charity” model that has the giving industry stuck in the twentieth century. While we can tip our Uber drivers directly and in real-time, we send aid to hurricane victims through massive, archaic organizations—thousands of employees, some paid millions annually, who all sit together in a neighborhood of limestone buildings just north of Capitol Hill.

Gret Glyer (founded DonorSee) is what I like to call a “doer.” He’s someone who’s seen a problem and is actually fixing it. Not trying to fix it. Not explaining how it should be fixed. Not raising awareness so that, somewhere, someday, something might be done about it by someone. He is actively solving the problem every day.

This always involves starting a business. A venture. A risk-laden enterprise that requires a big chunk of your time and energy. Many simply don’t care enough to risk this much, even for causes they claim to support—noble causes that everyone can agree on. Frankly, I know almost no one who walks the walk like this.

Reminds me of something I read on Medium the other day—an excerpt from Nassim Nicholas Taleb’s new book, Skin in the Game:

Finally, when young people who “want to help mankind” come to me, asking: “What should I do? I want to reduce poverty, save the world” and similar noble aspirations at the macro-level. My suggestion is:

1) never engage in virtue signaling;

2) never engage in rent seeking;

3) you must start a business. Take risks, start a business.

Yes, take risk, and if you get rich (what is optional) spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move these kids away from the macro, away from abstract universal aims, that social engineering that bring tail risks to society. Doing business will always help; institutions may help but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming).

Risk is the highest virtue.

“Business” is not some option for your life. A career choice you may or may not make. It is life, if you intend to accomplish anything lasting, anything worthwhile.

Take a risk. Start a business. Model Glyer—he lived for three years with the world’s poorest people in Malawi. Came back to the US and did exactly the thing he knew needed to be done to help the people in Malawi, and elsewhere, who lack the most basic provisions of life. It involved taking risk and starting a business, not petitioning others to fund an unsustainable charity simply because they ought to. You ought, as he did, to consider not just what’s right, but reality.

What will work? What will solve the problem you think really needs to be solved? Ask this question in a vacuum at first—ignore context or what other people tell you they are trying to do about it (because probably what they’re doing isn’t working if you still see a big problem there). Find your answer, and do that thing. Adjust your circumstances accordingly.

You’ve probably been taught to do things the other way around. Find the path of least resistance, given your context and what others are doing, then make your decision. That’s a fast track to nothing.

Real “doers” do what needs to be done. The rest follow.