Friday, December 31, 2010

Beware of Governments Pushing 'Happiness Indices'

With 2011 about to arrive, the global population confronts a fearsome mix of problems not the least of which are: further raids by the bond market pirates demanding "austerity and sacrifice" to reduce national deficits, an accelerated pace of climate change (which we're now getting a preview of with mammoth storms rampaging from the California coast all the way to the eastern U.S.) that will usher in new climatic horrors this spring and summer, and a spiking commodities market that may include $5 a gallon gasoline alone in the U.S. by late next year - thanks to the widening mismatch of resources vs. demand from increasing population.

In the U.S., meanwhile, the new year will be beset with calls to pare back Medicare - and instead make people use limited "annual vouchers" , as 10,000 baby boomers per day hit the magic 6-5 starting next month, and which will likely (if we believe the deficit hawks like Peter G. Peterson) "bankrupt" it by 2017. And, of course, there are the continued manic calls to cut Social Security - starting with eliminating or adjusting its COLA (cost of living allowance) and then making other cuts down the road.

And in the midst of such a parlous confluence of forces, what do we find? Well, according to a recent Financial Times article ('A Measure of Cheer', December 28), many Western leaders and their governments working on a "happiness index" based on the belief that a nation's well being must be gauged on more than GDP. Well, in a way I definitely agree- concurring with Eco-economist Herman Daly who first developed the "Index for Sustainable Economic Welfare".

For example:

We see the "unemployment rate" declining, but forget that this may well be due to more unemployed dropped from the BLS stats after 6 months.

We look at utility bills, but don't recognize that unlisted in them is the damage to our water, forests, air etc. Those externalities again. How much of a cost to put on forests (which absorb CO2), or clean air? Who knows, but some guestimate is needed.

We look at nursing homes and the number there, and those paid to care for them. But we blithely ignore the more than 12 million people that are cared for by their own families, without remuneration!

We behold productivity increasing but don't realize that has nada to do with work, or labor - but rather corporations reducing their costs (increasing "efficiency") by moving jobs to cheaper places offshore, like Bangalore.

We focus on tax cuts at the "growth end" but forget that there has never been any proof that tax cuts cause job growth. And even if they did, the degenerate effects are ignored - e.g. continued collapse of the infrastructure because no tax dollars are going to maintain it.

When all our water mains have burst, along with the sewer lines, and bridges -roads collapse, will the public works effort finally get onto the GDP radar? Doubtful!

All of these factors can skew the GDP to artificially higher values, once ignored. Daly noted that the concept of the GDP was developed to help steer the US economy out of the Great Depression, and through World War Two. It was for another time and place, and is no longer relevant to this time and place. It needs to be dunned and ditched in favor of the Index of Sustainable Economic Welfare.

Why do this? Frankly, because I don't trust any one or any government that pushes an "index of happiness" or "index of life satisfaction". It reeks of hooey and BS, apart from being suspiciously redolent of PR, and we know that PR think tanks and their ancillary networks were created (originally by Edward Bernays who wrote 'Crytallizing Public Opinion') to manipulate the mass mind. Recall it was Bernays in his definitive work 'Propaganda' who wrote:

"The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government, which is the true ruling power of our country"

So, pardon me if I prefer to be a "cognitive outlaw" (the name for those who don't easily accept PR) and opt to be my own person, thinker and not one of the sheep.

But we are veering away from the issue at hand. In the FT piece, mention is made of a number of high profile Western leaders - from Barack Obama, to Nicholas Sarkozy to the UK's David Cameron, whose "mission to make gross national happiness" has made the Himalayan mountain kingdom of Bhutan a trendsetter.

The FT notes Cameron is the latest to take up the cause, saying Britain "needed to look for alternative measures that would show national progress and 'not just by how our economy is growing'".

Well, I guess so! Especially after Cameron and his nitwit austerity henchmen and collaborators have just seen mass riots in London (in one case getting close enough to terrorize Prince Charles and Camilla) because he torpedoed the nominally free education that had applied to the UK's universities - and now demands prospective students pay nearly $14,000 a YEAR! A plan that effectively denies the mass of capable secondary students there a college education. Oh, and we won't even go into how his austerity plan is gauged to cut Britain's National Health Service and pensions!

In this expected economic cut throat landscape, he can afford to pump and hype the benefits of national gross happiness. My question is this: How much free "soma" is he prepared to distribute to all the austerity-afflicted UK's citizens to ensure they're so numb (and dumb) that they aren't aware of what they've been deprived of?

The FT at least notes that "some analysts believe each politician has his own motives" which is generous. So I will offer mine: because like the bunch of Neoliberal skunks that they are (all hostage to big business and the pseudo-free market), they want a dubious option to excuse them from the REAL responsibility of protecting their citizen's economic welfare. A vacuous "happiness index" or some equivalent, thereby provides them with a cheap fig leaf : basically a cost-free way to substitute actual economic support.....with hot air and Pollyannish pap pushed by a coterie of amoral pseudo -scientists pursuing the elusive "science of happiness"(sic).

A graphic from the FT (shown) is instructive here. It is claimed it depicts relative national measures of life satisfaction vs. GDP, using two different axes for the latter (GDP per person on a linear scale (left) and GDP per person on a logarithmic scale (right).) The GDP values are given in increments of thousands ('000) of dollars. If we casually inspect the two graphs we see that in each case Denmark comes out on top (and this isn't surprising because they have a generous secular welfare state which uses the tax commons to ensure no one does without), and indeed 64% in a recent survey (ibid.) describe themselves as "very satisfied" compared to only 16% in France. (Probably taken right after Sarkozy pushed through the increase in France's retirement age - now making Frenchies work two years longer for basic benefits).

The U.S., interestingly, is almost on a par with "middle income" nations such as the UK and Brazil and this brings up the famous "Easterlin Paradox" - postulated by Richard Easterlin in 1974, which says that within any society richer people declare higher satisfaction with their lives, but as an aggregate, richer societies seem no more satisfied than middle income ones.

Well, truth be told this isn't a real paradox at all! Obviously the wealthiest in a nation will have many more choices - which is really what life satisfaction is about. They have the choice, for example, to eat highly nutritious meals prepared by their servants, as opposed to grabbing burgers & fries from Mickey D's, or to buy the best possible vehicle for their needs, while an unemployed ordinary plebe in the U.S. may have to settle for a junker. They can afford the best health care, including having personalized physicians at their beck and call - while an older ordinary retiree must rely on Medicare and hope to hell congress doesn't cut physicians' payments by 23% - as almost happened this past year.

Anyway, given the wealthiest 2% control some 65% of the wealth-income in a rich nation like the U.S., and the remaining 35% of income has to be split amongst the remaining 98%, of course the satisfaction index will level out. In middle income nations, instead, the taxation is progressive enough to provide the means to live in some quality for all. People will not earn whopping remuneration, but no one will have to eat out of dumpsters either.

In an inset box in the FT article, a much more sane alternative is mentioned, proposed by Prof. Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi. What they want is a measure similar to Daly's for Index of Sustainable Economic Welfare but with more emphasis on net national income, which includes the deterioration of buildings, plant and other infrastructure.

This is totally rational since, believe me, when your water mains rupture and sewers overflow from lack of maintenance, getting dysentery or typhoid does not an addition to happiness make! It makes sense then, to assert that if the total market value for a given DOW high mark is say, $4 trillion - then the cost of repairing the infrastructure (say $2 trillion) be subtracted from it. This way, people don't let wealth images go to their head. They can't have an absolute wealth - no matter how high the DOW, unless they take into account how much they also have to pay to repair broken infrastructure that supports that wealth (e.g. if most highways fall into disrepair because of pot holes and other problems, transporting food and goods will become much more costly. Share values will plummet for those goods as people choose cheaper alternatives, and in particularly more locally grown commodities).

Like Daly, Stiglitz et al also want to ditch economy-wide measures (like GDP) in favor of the distribution of consumption and income - while noting that the consumption of finite natural wealth today (like trees, water, minerals) leaves less for the future. In this sense, their measure is very analogous to Daly's ISEW. They also want to add the amount of leisure time, since that would shed light on the extent to which people enjoy the fruits of their labors. Americans chronically don't do well in this department, since many top earners barely garner even 10 days a year vacation time, while in Denmark and many other industrial nations, it's at least 1 month.

The bottom line here is simple: NO subjective vaporous or vacuous psychological smiley index ought to replace actual physical inputs and variables which do show the latitude for citizens' choices in a world made increasingly brutish by scarcity and ever higher demand(because human numbers are outstripping the ability of the planet to support them - especially with potable water). This, despite the fact that many psychologists are now so bankrupt of mission and substantive research topics (having made their Diagnostic and Statistics Manual almost useless from overkill via manufactured "aberrations") that they now purport to have a "science of happiness". I don't think so! Not if you can't measure it in any empirical way. Even the UK's Cameron at least got this much right when he was quoted in the FT:

"You cannot capture happiness on a spread sheet any more than you can bottle it".

So true. So, in the coming year let's just all be aware (using our highly-tuned BS-meters)how, where and if politicians are trying to pull one over on us, by offering some airy fairy blandishment or "index" to substitute for our hard-earned Medicare, Social Security .....and healthy ecological support (as opposed to gas wells in our backyard).

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