This excellent text is by two researchers in England, Paul Allin and David J. Hand. It is written in the spirit of Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, which is usually abbreviated as The Wealth of Nations. Smith is commonly regarded as the father of capitalism. Although this is true, he is misrepresented by many politicians. Smith was concerned with increasing the wellbeing of nations and their inhabitants. Smith wrote an earlier book titled The Theory of Moral Sentiments. He argued that moral sense was based on mutual sympathy, a term best captured today with the concept of empathy. Smith advocated progressive taxation, in which the wealthier paid a higher percentage of their income to taxes than the poor. Often politicians argue for a “flat tax” for simplifying the tax code. Progressive taxation is not responsible for the complexity of the tax code, but the many specific benefits and costs written into the tax code are. The Gini coefficient is an index of the spread of wealth in an economy. And healthier economies require that wealth be distributed among the citizens of a country. As one Texan put it, “Money is like manure; it’s no good unless it is spread around.”
The authors note, “It looks as if the capitalist business model has evolved over the centuries into one that relies on population growth and expects economic growth.” Clearly, this is a model for ultimate disaster. There is no doubt that capitalism has been a success, but it is time for fine-tuning. There have been several healthy memory blog posts wondering what has become of all the leisure time that was promised to be available today. When I was a child few mothers worked. Today, everybody works, and for longer hours. Why? John Maynard Keynes envisaged a time in which increased leisure time would enhance the quality of life for all. Why has that time not arrived?
I believe that if Adam Smith were alive today he would have joined Allin and Hand in authoring The Wellbeing of Nations, or would have written his own complementary volume. The starting point for this volume is that Gross Domestic Product (GDP), although important, should not be the primary metric for economies. Previous healthy memory blog posts had described the metric of Gross National Happiness (GNH). Although this is a promising start, the problem is quite complicated. It requires a variety of disciplines such as the social sciences and statistics that had either not yet developed or were still in the early stages of development when Adam Smith lived.
Although I am praising this work, I am not recommending that you read it. It is technical and complicated. For most of us understanding that this is a problem that needs to be addressed and is being addressed is enough. However, if you are interested in the topic and are willing to expend the effort, this is an excellent text that cites many references and resources.
I do not mean to imply that a the solution to this problem will be easy. One must always be aware of the dangers of unintended consequences. When a psychologist who won a Nobel Prize in Economics, Daniel Kahneman, was asked about the speed of research and progress in this area, his advice was that it be slow and reversible. That is, provisions should be made so that any mistakes could be easily reversed.
As the immediately preceding blog post, the Automation of Journalism suggested, many skilled jobs might disappear. Now the disappearance of jobs could be good, if they resulted in increased leisure time where people could enjoy themselves and pursue their interests. However, if significant proportions of the population become alienated, there will be trouble indeed. As was mentioned at the outset, capitalism is in need of fine tuning.
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