By Carl Milsted, Jr.

Does money buy happiness? The communitarians say no, or, at least, they say that additional money beyond a rather low threshold of basic needs buys very little. More to the point, they say the tremendous increase in national income has bought very little happiness compared to the happiness lost due to a breakdown of our communities. And I tend to agree with them.

However, I would question how tremendous the growth in per person income really is. Sure, as measured by GDP divided by population, people are way wealthier than they were one or more generations ago. We can see this wealth all around us: faster computers, bigger houses, SUVs instead of automobiles, better air conditioning, more restaurants, more tropical fruit, less smog, etc.

All this is true, but we must not be bedazzled by the numbers. Not all is linear. And there are hidden losses of effective income that don’t show up in the GDP figures.

Take computers, for instance. My 2.4 GHz computer has a clock speed 40 times faster than my first Wintel box, a 60 MHz Pentium. However, the programs I use do not run 40 times faster. Boot up time is similar. Microsoft Word runs maybe two or three times faster. Internet surfing is definitely faster, but it is nowhere near the 5 megabits per second advertised by my cable company. It can still take half a minute to resolve an IP address – a time comparable to the dialup days.

There are many technical reasons for these disappointments. Spam clogs the Internet. Virus protection software uses up the CPU. A modern CPU has a much longer pipeline (think having an assembly line for doing math) than an old Pentium; when operation B depends on the result of operation A, we have to wait for this longer pipeline to clear. (Imagine a car assembly line where you sometimes have to wait for a car to finish before starting the next car.) Finally, modern software is much more loosely written. Much of the speed of modern processors is wasted running poorly optimized code.

I apologize for getting so technical, but sometimes it requires a bit of digging deeper to compare the effective income of different eras. And this pattern holds for many areas of the economy.

Take cars. They last longer, accelerate faster and get better mileage. However, they are also smaller, and much harder to repair. Once upon a time you could get a station wagon which carried as much as a modern large SUV. And that station wagon handled much better: smoother ride, quieter, and no roll-over risk.

Or take food. Calories are way up. Eating out is commonplace. Tropical fruits are abundant at temperate zone grocery stores. Fresh lobster is available a thousand miles from Maine. On the other hand, most of the produce is overly hybridized and raised on chemicals. You have to go to a farmer’s market or grow your own if you want a real tomato. I haven’t tasted a real peach in years. (Remember real peaches – those fruits with fuzz on the outside, red fiber around the seed, and real taste?) Much of the salmon is farm raised, with nutritional characteristics far different from the wild variety. The conditions under which food animals are raised are not polite dinner conversation. That foamy product referred to as “bread” bears scant resemblance to what people once baked for themselves. And don’t get me started about margarine vs. old fashioned butter…

I could go on, but let’s go back to bread. Once upon a time, most Americans baked their own bread. It was fresh, with no preservatives, and tasted wonderful – and that’s before the fresh butter was added. The same goes with most baked goods. It’s pathetic what often passes for a cake or cookie these days. In general, a much larger fraction of production was done at home than today, and the quality was usually far higher than what lies on most store shelves.

And this is a major problem with using GDP to measure national prosperity. GDP measures money. If Couple A opts for a single income lifestyle with one spouse doing lots of production at home, such as cooking, while Couple B opts for a two income lifestyle, with less home production and more purchased services such as eating out, Couple B contributes considerably more to GDP. But Couple B may not more prosperous. You have to go to a fairly expensive restaurant to match the quality of food made from scratch with ingredients from the local farmer’s market. And it takes very expensive daycare to match the quality of child rearing possible by a stay at home parent.

To properly use income figures between eras, we would need to estimate the monetary value of products and services made at home. And to compare accurately, we would need to value those products to comparable products on the market today. Yesterday’s garden produce should be measured against today’s organic market. Yesterday’s homemade food should be measured against the fresh made products at organic grocery stores. Home child rearing should be compared to modern daycare facilities which have a very high staff to child ratio.

Don’t get me wrong; I am not trying to play grumpy old man here. National prosperity has increased. In some areas the level of prosperity has increased tremendously: number of television channels, quality of television picture, quality of care for the mentally retarded, prevalence of air conditioning, and much more. But there are areas where prosperity has decreased, where many have forsaken quality for economy.

So when asking about the effect of wealth on happiness, we do need to be careful when measuring wealth. And this applies to personal decisions as well as for policymaking. If that shiny new car and high definition television aren’t buying you the happiness you expected, look carefully at what you have scrimped on to afford these modern goodies.

Carl Milsted is a senior editor for The Free Liberal.