Did you ever wonder about economic growth? Take the time to question your assumptions on economic growth and how it effects you? Thomas Homer Dixon has and what he says is quite interesting. From The Upside of Down pages 192 – 193.
“One might even say that we’re collectively fixated on maintaining growth. But this is a curious fixation because beyond a certain point – a point many of passed long ago – the higher incomes that growth produces don’t make us any happier.
When psychologists have questioned people over the years about how happy they are, they’ve found that people in rich countries are on average no happier today than people were in the 1970’s of even the 1950’s. During the intervening decades we’ve become far richer. In the United States, personal income (in constant 1995 dollars) more than doubled between 1957 and 1998. But over this period the percentage of people who said they were “very happy” actually declined slightly. Notes the American Psychologist David Myers, “We are twice as rich and no happier.” And when we look at countries around the world, we find that happiness is correlated with income up to about $10,000 to $13,000 per person annually, but beyond this threshold the correlation vanishes.
Money, in economists’ terminology, produces “diminishing returns” of happiness. Once our basic material needs are satisfied, it turns out, we don’t need more money to be happy, but we do need loving families, supportive social relationships, absorption in a satisfying activity, a sense of purpose in our lives, novelty and security from catastrophic threats to our income and health.
So, if above a relatively modest threshold, greater material wealth doesn’t make us happier, why do those of us who are already well off in rich economies work so hard to get more of it? Psychologists and behavioural economists have offered a range of answers to this question. Some say we’re stuck on a “hedonic treadmill”: our aspirations tend to exceed our income, and as our income rises, our aspirations rise in lockstep. Others stress that our happiness is partly a result of our relative social status because human beings naturally compare themselves with other people. We’re all trying to at least keep up with Mr.Jones next door. If our yardstick of comparison is income, a higher income makes us happier only if it goes up relative Jones’s income. But because Jones is working as hard as we are, nobody gets ahead, and no one feels any happier. We are, essentially, in an unwinnable income race with other people.
These theories may explain why most of work so hard to get ahead economically, and why all this effort doesn’t make us happier, but they don’t really address the deeper conundrum that’s our central concern here: why do our politicians, policy makers, economists, and public commentators remain so fixed on maintaining economic growth even when higher incomes don’t make us happier?“
Thank you Mr. Dixon. The next paragraphs in his book, (which I recommend you read) deal with answers to this problem given withing the contextual frame of capitalism. As THD is very thorough with his prescriptions let me offer my insights in addition to his.
If we need a rather modest amount of goods/income to be happy should we not support a system that focuses on building and developing society in ways that will make us more creative, productive and happy. Let’s look again -
Once our basic material needs are satisfied, it turns out, we don’t need more money to be happy, but we do need loving families, supportive social relationships, absorption in a satisfying activity, a sense of purpose in our lives, novelty and security from catastrophic threats to our income and health.
So, once the bases our covered we need things that don’t revolve around acquiring wealth. Here is where I would propose that economic systems that promote and focus on the welfare of society really shine. More egalitarian societies realize what THD has pointed out and consciously distribute their resources to make society a better place to live because they pay attention to all the factors that contribute to making our lives a happier worthwhile experience.
So things like Universal Health Care, Guaranteed Income, Old Age Security, welfare, social programs are necessary and vital parts of resilient, functional society.
Makes sense, no?