Here is fellow emergent ventures recipient Alexey Gurzey on the Venture Stories podcast talking about the declining relevance of GDP:
If you think about someone really rich, worth billions of dollars, they have a child who has some terrible incurable disease. They would probably give away all their wealth in order to have their child cured, but you can’t really do this. You can’t spend $5 billion and get a cure. People have tried and failed repeatedly, like for Alzheimer’s — we still have no idea what’s going on.
On the one hand, someone with $5 billion is incredibly rich, but at the same time, if you think about someone in 2050 when this disease is cured and it’s included in standard healthcare package. Basically everyone has access to this cure. If this person is middle class, clearly they’re still much poorer than this billionaire in 2020. But they are able to get this thing that a really rich person isn’t able to get for $5 billion. In some way, their ability to get services is much higher than this person with $5 billion. I don’t think we have a way to value such things.
There was a lot more of interest to how science gets funded. But I wanted to quote this section because — of course — it made me think about innovation in defense acquisition. People like to equate budgets with military capability. More money, more stuff. But military capability is not about more stuff, but different stuff. Like a cure for cancer, there’s really no price you can put on it.
If a contingency happens to occur, for example, a child getting terminal cancer then a billionaire parent would spend the entire fortune for a cure. But the money is really of no use if there was no cure in sight. Similarly, if a military opponent gets an asymmetric superweapon before you do, then $700+ billion or even trillions would be rendered useless. You can massively scale up the current force with incremental improvements, but that may be more cannon fodder.
So what is the “value” of an F-35 or a Constellation-class frigate? It’s not how much it costs to bend the metal. It’s only that if there’s no better weapon concept to fulfill an operational role (and in any case, there could be process improvements). But from the future view of a person with a better concept, they would find it silly to bend metal in that way. How do we bring those people with future views into the present at the fastest rate possible?
That’s a nice lens for thinking about how it is far more important to get the culture of technology and warfighting progress right than it is to worry about the amount of funds available. The amount of funds is important for near term scaling a force structure. But over the long term, culture provides the exponential gains. Hopefully that gives some hope those who see doom from a potential decline in DoD funding.
End note: I was surprised Alexey didn’t address the usual defense of GDP, that if internet goods are valuable but free, that it shows up in higher prices people are willing to pay for internet access, or for everyday items because costs are funded through ads, or whatever else. Somewhere, that value is captured in GDP. I don’t quite buy that, because other prices should be regulated by market competition — the companies receiving the spillovers aren’t making super profits. Or are they?
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