Over the last 5 years credit cards have gone from swipe – to chip – to touch.
And I have to wonder. Does anyone actually give a shit? Did anyone ask for this? It got me thinking about how our economy allocates resources.
And perhaps, perhaps, there are times that the market doesn’t do the best job of allocating resources to maximize happiness.
In the swipe to chip to touch case, think of the amount of intellectual resources and money that went into this revolutionary innovation (revolutionary in the same way as automated trash can lids). I bet our financial institutions spent a few billion dollars on this. On top of that, we took thousands of the most brilliant human minds and had them dedicate several million (give or take) hours to this.
So as a species, as a society, we decided to invest some billion dollars and million hours of our best minds to go from swipe to chip to touch.
I don’t think it’s that radical to say that maybe, this wasn’t the best use of resources. Hell I’m not even saying we should have given that money to the poor or tried to cure malaria. We could have a built a bunch of water parks for all I care. Just about anything could have made us happier.
Before you write me off as some bong-ripping hippie or neo-Marxist, know that I support capitalism and the free market.
But I’d like to propose that we could do a tad better when it comes to happiness. I know that nowadays to even suggest the status quo isn’t perfect is enough to have you lampooned as communist, socialist, or whatever other –ist the political pundits can pull out of their asses.
But as someone who holds dual degrees in Economics and Happiness Studies, I believe that we can have a capitalism that makes us all a whole lot happier. That’s what this essay calls for.
I present two questions: Why focus on economics? And – What are we optimizing for? Then I suggest some areas of improvement for a happier capitalism that I think most folks can agree on. That don’t involve over-regulation (or hippie communes and communist revolutions).
Why economics?
My freshman year of college I took microeconomics with a world-renown behavioral economist.
The textbook for the course was Economics is Everywhere. I, like any other sane college freshman, never read the textbook. But I got the gist – it was full of everyday examples of economics lessons. Why do gas prices change? Why is college so damn expensive? Why is social media so addictive?
Almost everything can be explained by economic forces… Economics is everywhere.
In practice, the “economic” system is really an amalgamation of social, cultural, political, and economic forces. I call this our ideological consensus. It’s basically the rules of the game for society. Murder is not allowed. Starting companies is allowed. Selling dangerous stuff is sometimes allowed (depending on who you know and how much it pisses of the government). And so on.
If we are fish, then our socio-economic-political consensus is the ocean we swim in.
Over time the economic part of this mixture has taken on greater influence than the others. The economic ideals of free market, competition, and growth now color the conversations around culture, politics, and even social life. In many ways it seems that capitalism – what was once a purely economic construct – is now the source of all norms and cultural values.
If you’re willing to examine your everyday life and expectations, you’ll find that our economic system is the source of just about everything. Why do you get up and go to work M-F? Why do you have a mortgage and bills to pay? Why is it a bad idea to give away all your money? Why is stealing not allowed?
What we take for granted as natural – or sort of default status quo – is actually a product of our economic system. Anthropologists like Richard Robbins point out hunter gatherers aren’t driven by wealth accumulation, capital, and wage-labor. These norms are human inventions.
In our rules of the game metaphor – we decided to play our game in a simulation where individuals are primarily defined by their relationship to the market and the goal is to accumulate profits.
This in itself is not a criticism of our economic system nor is it to say we shouldn’t have some ideological consensus. But it’s more about calling attention to it. It’s like when David Foster Wallace’s fish reminds the other fish that they are, in fact, swimming in water. I’d use a comparison to Keanu Reeves seeing the Matrix here – but I don’t want to seem like a lunatic.
The point is if we examine our reality, the fundamental force that shapes our life (aside from genetics and parents) is our ideological consensus and economic system. So if we’re interested in happiness and wellbeing this is the place to start.
What are we optimizing for?
Having established the consequence of economics in shaping every part of our lives, it seems like a good time to ask the very scientific question – “what the f–ck are we doing?”
What’s the point of all this? This being the sum total of human activity…
Granted that’s a tough question, but I say happiness is the final answer. It’s the fundamental point. It’s what we all want. It’s the real reason for everything we do…
Why do I want to make money? Why do I want to be successful? Why do I want to be able to go to the store and buy things? To be happy.
I argue that claiming anything else as the fundamental point of our human activity is probably mistaking means for an end. Lest I remind you that we’re sitting on a god damn rock floating in infinite darkness. What, besides the quality of our life, could possibly be the point? So as we think about our economic system and ideological consensus, the real focus should be optimizing for happiness.
A desire for happiness is also at the root of our economic aspirations. Why do we want to increase GDP? Why do we want technological progress? Again, those goals aren’t bad. But why do we want them?
Implicit in our obsession over them is that they’re going to make us happier and better off (or at least a large percentage of us). Increasing GDP for GDP’s sake is like asking the guy who now works 60 hours instead of 50 why he does it. He exclaims “I increased my productivity 20%!”
For what?
What this dumbass has in common with more intelligent folks like you and I, is that in today’s economy we often make the same mistake. It’s not about growth or productivity – it’s about happiness… Remember what are we optimizing for?
Regardless of which side of the aisle you’re on, we should agree that the point of all this is happiness. If a candidate were to campaign with an economic policy “guaranteed to reduce happiness” surely we wouldn’t vote for him or her regardless of party.
Now we can debate the nuances of how to generate more happiness, sure. But if we can clarify and unite around happiness as the goal – what we really want. That is a tremendous step in the right direction.
Capitalism for happiness…
“I’m all for capitalism at its purest, but it requires capitalists acting like human beings first…” – Mark Cuban
I don’t envision the end of capitalism..
I see a more intelligent capitalism: a capitalism that doesn’t spend money like a 13 year old who has never been told “no”, a capitalism that answers – what do we really want?
I see capitalism as a tool to make us happier.
Again this doesn’t mean burning things to the ground. It doesn’t necessarily mean massive redistribution of wealth. It starts with not being idiots.
An intelligent capitalism would temper the ridiculous excesses that we see in our current system. And allocate resources towards things that make us happier.
Think of the swipe to chip to touch example. Or the following:
- P&G spent $108 million last year advertising toilet paper.
- In 2017 fidget spinners (remember those) brought in about $2.6 million per month.
- Americans spend an average of $80 billion per year on the lottery.
All this seems – to put it softly – “a less than ideal allocation of resources”.
The first step in improving this would be to make happiness an explicit goal for policy and business thinking. I’ve been through undergraduate business school, ran a fintech startup, and worked as a consultant and a manager in a massive industrial company. It’s not that happiness is overlooked. It’s not even on the agenda!
Of course companies pay lip service to this. And there’s an obligatory lecture on business ethics in every capstone business course that basically amounts to “doing illegal things is wrong”. But in probably 85% of cases, trying to actually optimizing around happiness for employees and stakeholders is enough to get you laughed out of the room. Fortunately, there are more and more exceptions to this with folks like MUD/WTR CEO Shane Heath (his story) and Dan Price (his profile).
Policy seems to suffer from a similar blindness. Politicians strive for growth and economic prosperity above all else. They campaign on appeals to greatness, power, and progress. Their quality as a leader is primarily gauged by economic fluctuations over which they have no actual control.
The first step towards a more intelligent economy would be an economy predicated upon happiness. That doesn’t mean it has to be the only goal. But it should at least be on our radar. We need adopt happiness as an explicit goal in our policy and business decision making. Optimistically, this will help us reframe our economic approach lead to more happiness (and less f—king fidget spinners and extravagant toilet paper ads).
As we place greater value on happiness I believe it will drive the kind of change that Mark Cuban is talking about (yes, that’s notorious anti-capitalist commie and billionaire Mark Cuban). Again it’s not that radical to suggest that we’ve gone a little too far in the direction of intense competition and material excess. Values like compassion, respect, and altruism are not inherently anti-capitalist.
We can have a capitalism predicated upon being human beings first. We can have a capitalism based on compassion and cooperation in addition to healthy competition. We can have capitalism that promotes happiness – for one and for all.
Let’s change the conversation and reframe our thinking. Let’s optimize for happiness.