Deepak Chopra’s Economic Nonsense

Deepak Chopra is a medical doctor from India who has written extensively on spirituality and has done much fine work in body-mind medicine. Through his many popular books and television appearances, he has become one of the most recognizable figures in the modern new-age movement. Like many in that movement, he understands little about economics; and because of that ignorance, he helps to spread beliefs that harm the very things he claims to support.

Listen as Chopra talks in a very soothing voice to a fawning interviewer at CNN Money. A theme throughout his recent interview is that we need to enter an age where the economy is “wisdom-based.” Presumably the wisdom is to be provided by him and those he agrees with.

Early in the interview, Chopra complains, “Of the 2.2 trillion dollars that circulate each day less than 2% go to provide goods and services for humanity, the rest is speculation, money making money for people who have lots of money.”

Chopra’s implication is absolute nonsense. The bulk of transactions that occur in modern financial markets are essential to a healthy and vibrant economy. Chopra’s numbers are about as meaningless as numbers that say that farmers receive only a small percentage of the food dollar. A farmer does receive only a small percentage of the food dollar because the middleman that the farmer sells the food to, the shipping company that transports the food, the manufacturer that processes the food, and the supermarket that sells the food are as essential to feeding the public as is the farmer. Centuries ago, the farmer received 100% of the food dollar as he sold directly the consumer. However, both the farmer and the consumer were much poorer than they are today. And with that poverty, a much higher percentage of the world’s population went hungry.

Specialization is one of the key ingredients of a modern economy and so are modern financial markets. Eliminate specialization and eliminate modern financial markets and I assure you that there would be a very small market for Chopra’s books. We would all be back to subsistence living.

Later in his interview, Chopra claims, “If we use money wisely we can get rid of war, terrorism, social injustice.” This is about as trivial a statement as saying that if we use food wisely, we can get rid of obesity. But Chopra is not talking in such trivial terms—the unspoken premise of his statement is the totalitarian view that “wise” people should direct us in the “wise” use of our money.

Still later in the interview, Chopra describes how he is helping Frito-Lay switch to selling nutritious food. Again, nonsense. Frito-Lay is indeed improving their offerings in the supermarket, but this has everything to do with changing demands on the part the consumer—it has nothing to do with Chopra. If Chopra showed up in 1960 asking Frito-Lay to sell more nutritious food, he wouldn’t get through the front door. But again, his false claim reinforces the belief that “wise” people, such as he, should direct the economy.

Chopra then claims, “The purpose of business has always been to improve value for the shareholder but now the purpose of business is to nurture the needs of society.” However nice the sentiment, again, this is nonsense.

There have always been only two ways to earn profits. One way for a business to earn profits is to satisfy the most urgent needs of the consuming public better than another business does. This is the entrepreneurial way of earning a profit. And the interesting thing about the entrepreneurial way of earning profits is that the interests of the shareholders and the interests of the consumers they must serve are one and the same.

However, this harmony of interests frequently breaks down because of the second way to profits, that is, the political means to profits. Instead of serving the consumer, a firm lobbies government for a subsidy, a tariff, or other measures that prevent competition. In that way, the link between the interests of the shareholders and the interests of the consuming public is broken.

Thus, we really don’t need Chopra pronouncing which firms are “nurturing the needs of society.” We need government to stop protecting businesses from competition. When that happens, all businesses will compete to “nurture the needs of society.” Chopra can stick to what he does best; there are many individuals who benefit from Chopra’s body-mind medicine. Chopra does not need to expand into areas about which he knows nothing.

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15 Responses to Deepak Chopra’s Economic Nonsense

  1. Godfather says:

    Great Post!

    Godfather (theslowbleed.com)

  2. E says:

    Why do you listen to this guy? Here’s a statistic for you, “of all the Chinese food consumed every day, 12% of it is appetizers… the rest — a full 88% — is for the sole purpose of generating profits.”

    Great.

  3. E,

    I do have respect for some of his work in medicine and similar views are expressed by many all the time. In fact, to many educated individuals Chopra’s economics views make perfect sense. In part that explains why we are in so much trouble as a nation.

  4. Lily says:

    Well, he (CHOPRA) got you thinking about a solution to “nurture the consumer”, which is a step in the right direction for you money minded folks. 🙂 What’s wrong with using money wisely? sounds like you need to work for solutions and stop trying to justify the evils of capitalism.

  5. Jim D says:

    Sounds a lot like Chopra think we should be ruled by something akin to Plato’s philosopher-kings. Funny thing about “wise” (and by implication successful) people in business is that they are simply the crest of a wave. We see the pretty white foam on top, but the real power is the enormous swell of water. The wise merely ride the wave of consumer want and need–the unwise (like Chopra’s economics) get crushed beneath it.

  6. Kevin says:

    The old American way: Adapt. Innovate.
    The new American way: Vegetate. Legislate. Sue.

  7. Lily,

    I appreciate your comments. Actually, I didn’t have to think of a solution–entrepreneurs already are forced to use money wisely and nurture the needs of the consumer. What evils are you referring to specifically?

    Jim and Kevin,

    Thank you for your wisdom.

  8. E says:

    I’m with Prof B. What part of capitalism doesn’t “nurture the consumer”? Let’s take GM as an example, which is going into the tank because they bet their business strategy on trucks and gas engines. You want to talk about consumers pushing requirements downrange — GM sales are off for the whole year. May was a disaster in sales. Meanwhile, Toyota is seeing robust sales because they decided that hybrids and fuel saving engines are the future. Honda just built an electric car. Poor GM… GM now has a market cap below $8.5B. GM bet wrong and, now because of consumer demand, June sales are going to be down 28%. GM burns cash at a rate of $1 billion a month. Deutsche Bank estimates GM will consume $19 billion in cash over the next two years. Since it began the second quarter with $23.9 billion on hand… GM is in alot of trouble. It didn’t “nurture the consumer” (by either polling the market or doing proper research) so it may be time to say good-bye to Big GM as we know it. Little GM will be hobbled and hamstrung for years (when they go to borrow money, maaaaaaaaaan are the interest payments going to be huge — upwards of $1B year).

  9. Frank v2 says:

    E,
    I love your car example. Interestingly enough supply and demand does seem to work, and hard in this case. Try buying a Toyota Prius right now: the waiting list is back! (http://www.hybridcars.com/decision/return-prius-waiting-list.html )
    You can’t give an SUV away right now, and GM is going to pay dearly as a result. And I LOVE Chrysler’s $2.99 a gallon response to the problem campaign that is currently running. (http://www.chrysler.com/en/refuel/ ) Are people that naive that they would fall for a promotion like this, and really believe that they are not paying the full price of gas in lieu of the discounts that they are giving up on the purchase / financing costs of the new vehicle? If they do, then they are subscribing to short term gain for long term pain. And don’t come crying to the government, the oil companies, etc. when gas hits $10.00 a gallon, which it will. Rather than trying to force consumers into vehicles that we really don’t need or want, the manufacturers should be releasing fuel efficient cars. Oh, let me augment that thought: we WANT the SUV, we just don’t want to pay to operate it. But if I could get that big box on wheels AND get 50 miles to the gallon, boy would we all be happy. But, that is at the moment, not a likely prospect. So where is Chrysler’s response to the Prius? Or GM or Ford’s response for that matter? What needs to happen is the former “Big Three” need to respond to what the market wants. Unfortunately, what the market wanted 12 months ago was the big gas burning vehicles. And now we don’t. But shame on the car companies for not recognizing that the game was going to change. Toyota and Honda figured it out. The Prius has been on the market for several years now. And again, where are the domestic manufacturer’s solutions to the fuel-efficiency problem? GM has a number of European vehicles that do sip fuel; how hard would it be to build those here? Ahhh, supply and demand. The current demand is for small cars. Our current supply is in gas guzzlers. Until the supply shifts to accommodate the demand, the Prius will be expensive, and the SUV relatively inexpensive. And the government should not bail out an ailing GM, Chrysler or Ford. Let’s let the market do what the market needs to do. And the I-wanna-be-an-economists should return to their day jobs, and not make silly unfounded statements about how to “fix” things. Unless they can come up with a way that we can get gas down to 1.99 gallon again, then everyone would be happy. But that is not going to happen. But hey, an SUV does make a wonderful tool shed when parked in the back yard. Put two together and you’d have a workshop!

  10. E says:

    Thanks Prof B. Another piece of advice is to hold off buying a Winnebago right now. I know, I know… you feel me on this, since Lily’s probably looking to buy one right now. Winnebago Industries just reported that third-quarter profit plummeted 73% due to high gas prices. Winnebago earned $3 million (10 cents a share) in the three months ended May 31, with operating losses of $6.9 million. I know, this stuff is better than what you get at Christmas… so thank me later.

    (Who’s Master of the Obvious?)

  11. igli1969 says:

    Spirituality, like hard-headed economic calculation, has its place. Problems arise when either is used in the other’s domain. Whether in Jim D’s example of Plato, the medieval church’s “just price,” or modern-day “gurus” proclaiming how we should spend our money to save the Earth, the connecting thread is that some people want to tell other what to do. Some of them are just bullies; others honestly believe that their self-perceived moral and intellectual superiority entitles, nay, demands, that they should run things for the greater good. (Sorry for the foul language! 😉 ) The latter are the far more dangerous, as they cannot be either persuaded nor threatened to stop, as they believe theirs is a duty to help the unwashed masses to better themselves.

    As several have pointed out above, the free market will provide for the optimum allocation of resources over the long run, as long as the philosopher-kings don’t screw things up. I don’t expect spiritualists to be well-versed in economics (though it would be nice if they weren’t negatively versed), nor do I expect an entrepreneur to be highly spiritual. The only example I can think of immediately of an organization that combines (alledged) spiritual uplift and sharp economic calculation is the Church of Scientology. And we know what a spiffy group of people that is.

    Chris C.

  12. Chris,

    At the heart of free-markets is a profound spiritual truth–namely in order to get we must give first. Entrepreneurs must give first in order to get later, while those who choose the political way to wealth want to get without giving.

  13. Terri Lloyd says:

    I saw that interview and didn’t come away with that at all. Interesting how we see what it is we want to see. I once heard a philosopher say that the enemy of truth is convictions. What I got from the interview was something else entirely. I believe it had to do with the state of well being as a market trend and a corporate cultural shift. But I guess something like that blows in the face of conventional wisdom, eh?

  14. Terry,

    I agree with you on both counts– corporate cultures and consumer preferences are shifting. Both are very welcome trends. I also agree with you that we all see the world through our filters.

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