Organized Crime

CHAPTER48 Will Socialism Make You Happier? The Trojan Horse of “Happiness Research”

Now that no thinking person believes that either socialism or government interventionism can do anything but destroy prosperity, totalitarian statists around the world are changing their tune and saying that prosperity doesn’t really matter after all; what matters is how happy we are. And, they say, that is what government can be really, really good at—making us happy. Consequently, they argue, there should be no more limits on governmental powers, for limiting governmental powers will limit our very happiness.

This is the theme of a United Nations-commissioned “World Happiness Report” edited by leftist academic Jeffrey Sachs of Columbia University in 2012. The report cites the tiny country of Bhutan as being the first to adopt a “gross national happiness” index (in 1972). Among the things that the United Nations apparently believes makes the Bhutanese people especially happy is their government’s national dress code and its institutionalized employment discrimination against residents who are not native-born Bhutanese. The United Nations report also cites Greece as one of the happiest countries on earth despite the fact that when the report was published the Greek government was bankrupt and there were riots in the streets of Athens over that fact.

A large body of academic literature has sprung up in the area of so-called “happiness research,” and is being used to make the case for a return to socialist central planning. The research is based on several assumptions that were long ago discarded by the economics profession as dangerous nonsense. The assumptions are that “utility” or one’s perceived wellbeing is “cardinal” or measurable; that interpersonal utility comparisons can be made; and that it is possible to derive an objective and measurable “social welfare function” or “happiness index.”

Having long ago given up on the argument that socialism is superior to capitalism in terms of the organization of production and economic activity, some “happiness” researchers now assert that affluence is actually a “disease” that generates mass unhappiness in a society. There is even a pseudo-scientific book on the subject entitled Affluenza. rr

The assertions about the supposed ability of happiness researchers to finally measure utility simply ignore all the reasons that have been accepted for decades by the economics profession as to why utility is “ordinal” instead of cardinal and not measurable. As Murray Rothbard wrote in an article entitlted “Toward a Reconstruction of Utility and Welfare Economics”:

The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. . . . This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis.

Rothbard continued to explain the folly of relying on public opinion surveys, as opposed to the actual demonstrated preferences of economic decision makers by saying the following:

One of the most absurd procedures based on a constancy assumption [i.e., the assumption that people never alter their preferences] has been the attempt to arrive at a consumer’s preference scale not through observed real action, but through quizzing him by questionnaires. In vacuo, a few consumers are questioned at length on which abstract bundle of commodities they would prefer to another abstract bundle, and so on. Not only does this suffer from the constancy error, no assurance can be attached to the mere questioning of people when they are not confronted with the choices in actual practice. Not only will a person’s valuation differ when talking about them from when he is actually choosing, but there is also no guarantee that he is telling the truth.

It is unlikely that “happiness” researchers administer lie detector tests to their questionnaire respondents (not that lie detector tests are one hundred percent accurate).

The one economist who is arguably the leader in the field of happiness research is Professor Bruno Frey of the University of Zurich. When your author asked him at a conference in Prague in 2008 about the age-old criticisms of replacing actual demonstrated preferences with questionnaires, his response was that his data are “no worse” than GDP data. He did not answer the question, in other words. But in fact, much of the happiness research data are much, much worse.

European socialists (Frey is not one of them) outside of the field of economics have gone even further with their happiness research. A European bestseller is a book entitled The Spirit Level: Why Equality is Better for Everyone, by Richard Wilkinson and Kate Pickett. This book is a perfect example of the misuse of statistics by two British epidemiologists. It is an abuse of statistics because the entire book is a fishing expedition for simple correlations between the degree of material inequality in a country and myriad other variables. The authors do not even attempt multiple regression analysis; instead, they present contrived statistical correlations implying that greater material equality (presumably caused by more massive income redistribution by European welfare states) supposedly leads to improvements in community life, mental health, drug use, physical health, obesity rates, intelligence, teenage births, recycling, violence, imprisonment, social mobility, dysfunctionality, anxiety, and self esteem. One critic of this research mocked its “if you torture the data long enough it will confess” methodology by publishing a chart showing a positive correlation between recycling rates and suicide rates and concluding that the more one recycles, the more likely one will commit suicide.

According to Wilkinson and Pickett’s “research,” the happiest people on earth during the twentieth century must have been the citizens of the Soviet empire, including all of the Eastern and Central European communist satellite countries in the post-war era, for “equality” was always the chief goal of all forms of socialism. As F.A. Hayek commented in The Road to Serfdom, the end of socialism was always egalitarianism; only the means changed over time, beginning with government ownership of the means of production and transforming to income redistribution through a welfare state and a “progressive” income tax.

These happiness researchers never make any mention at all of the well-documented pathologies created by welfare statism, such as the destruction of the work ethic, family breakup, the growth of dysfunctionality caused by a welfare state that removes people from the working population, etc.

Bruno Frey is not known as a socialist, but in a June 2002 survey article on happiness research published in the Journal of Economic Literature entitled “What Can Economists Learn from Happiness Research” (with Alois Stutzer) Frey and Stutzer celebrated what they believe to be a resurrection of the social welfare function idea. In the article they wrote that “It seems that, at long last, the so far empirically empty social welfare maximization . . . is given a new lease on life.” They cite “research” that claims that although income has increased dramatically since World War II, “happiness” has not. Their implication is the nonsensical notion that work, savings, investment, and entrepreneurship—the ingredients of economic prosperity—do not produce happiness, yet human beings continue to strive mightily, day in and day out, to succeed at these tasks.

Socialists always embraced the ideas of a social welfare function and interpersonal utility comparisons because they argued that if the government plunders a more affluent person and gives some of the money to a less affluent person (keeping a share for “administrative expenses), then “social welfare” can be increased. This was supposedly because of the economic law of diminishing marginal utility. An affluent person has a lot of money, therefore, he places a relatively low marginal or additional value on the last dollar earned. A poor person who does not have much money, on the other hand, places a relatively high marginal value on having another dollar. Therefore, the argument goes, (legally) robbing a rich man of a dollar my cause him to lose say, only one “util” of utility, whereas giving that dollar to a poor man might increase his utility by say, ten utils. The end result is a net gain of nine utils, or an increase in “social welfare.” The economics profession long ago abandoned such nonsense, but Frey and Stutzer seem excited over the prospect of resurrecting the social welfare function idea disguised as a “happiness function.”

Another absurd conclusion of the “happiness” literature that is documented by Frey and Stutzer is the notion that “wealthier people impose a negative external effect on poorer people but not vice versa. The supposed “negative external effect” is the envy by poorer people. But it has always been true that intellectuals, not the poor, have been the chief advocates of egalitarianism. Most poor people want to become richer. It is the intellectual class that is so often obsessed with envy and hatred of people who are more financially successful than they are. That they can manipulate survey questions that are used to make it appear that this view comes from “the poor” and not themselves does not make this statement untrue.

Moreover, welfare parasites do in fact impose very real negative externalities on their more hard-working and productive, taxpaying hosts who are plundered by the state in the name of welfare statism.

Frey and Stutzer also claim that Keynesian central planning may also be bolstered by happiness research. During the 1970s the academic economics profession largely abandoned Keynesianism when it failed to explain “stagflation” or the simultaneous increase in both inflation and unemployment. Keynesians never did come up with an explanation based on any Keynesian economic model. The old, so-called Phillips curve model, which was used to make the argument that government spending could “purchase” lower unemployment at the expense of more inflation, was dead.

Frey and Stutzer seem quite excited over the prospects for a resurrection of the Phillips Curve central planning apparatus based on happiness research. “If unemployment rises by 5 percentage points,” they wrote, “the inflation rate must decrease by 8.5 percentage points to keep the population equally satisfied.” The false assumption in this statement is that it is possible after all for government to alter inflation and unemployment rates in some kind of pushbutton fashion.

Happiness research also informs us that “welfare payments should be increased to compensate for a larger family,” they write, “so as to maintain the subjective well-being of the family.” Again, there is no mention of the harsh negative effects of welfare statism on the work ethic, the family, self esteem, etc. Nor is there any mention of the effects on the happiness of the plundered taxpaying class that must pay higher taxes to finance a bigger welfare state. To happiness researchers, affluence is a disease, so the less affluence the healthier is “society.”

Frey and Stutzer also call work effort, savings, investment, and entrepreneurship “socially wasteful” if it all results in some people becoming more successful than other people. “The high-income recipients, as winners of these races, should be more heavily taxed,” they write. “Raising everybody’s income does not increase everybody’s happiness,” but improving one’s income “in comparison to others does,” they conclude. It is not a surprise that Frey and Stutzer also remark that the lifelong socialist John Kenneth Galbraith might be considered to be the “father” of happiness research.

Many of the pseudo-scientific sounding conclusions of happiness research are extraordinarily simple minded and downright comical. Consider the following examples from the Frey/Stutzer article:

•“Persons with higher income have more opportunities to achieve what they desire.”

•British lottery winners . . . reported higher mental wellbeing the following year.”

•“There is more to subjective wellbeing than just income level.” Something no one has ever disputed.

•“On average, persons living in rich countries are happier than those living in poor countries.” Therefore, we should tax the rich countries and send the money to the governments of the poor countries, every happiness researcher would conclude.

•“Happiness of unemployed persons is much lower than that of employed persons.”

•“Experiencing unemployment makes people very unhappy.”

•“Freedom and happiness are positively related.”

•“Happy people smile more during social interactions.”

•“People receiving an inheritance reported a higher mental wellbeing in the following year.” Shocking.

•“Persons with higher incomes . . . can buy more material goods and services.” Shocking.

An excellent critique of happiness research is a book by Christopher Snowdon entitled The Spirit Level Delusion: Fact-Checking the Left’s New Theory of Everything. The author concludes that:

Apologists for Marxism have made myriad excuses for their ideology’s failure to provide the same standard of living and liberty as was enjoyed in capitalist nations. Until recently, few have been so brazen as to claim that lowering living standards and curtailing freedom were the intended consequences, let alone that people would be happier with less of either. In that sense, books like The Spirit Level represent a departure for the left. Limiting choice, reducing wealth and lowering aspirations are now openly advocated as desirable ends in themselves.

Thus, “happiness research” is part of a crusade to persuade the public that poverty and servitude to the state are superior to prosperity and freedom. It is a new version of what twentieth-century communists referred to as “socialism with a smiling face” during the last, dying days of totalitarian communism.