Posts Tagged ‘The Wellbeing of Nations’

2015 Labor Day Post

September 4, 2015

Every Labor Day I go back to my boyhood and remember what future was predicted then for us to be enjoying today.  This was the fifties and at that time it was very unusual for mothers to work outside the home.  The basic prediction was that advances in technology would result in significant leisure time for everyone.   Back then no one dreamed of anything like a personal computer, the internet, iPADs, or wifi.  In other words, technology went far beyond what was imagined.  So I ask again, what I’ve asked in every healthy memory blog post for Labor Day, “Why Are We Working So Hard?”  Today both marriage partners are working.  The predicted increase in leisure time has not materialized.  And we in the US work more hours than those in most advanced countries.  Often this announcement is made with pride, when it should be uttered in shame.

Some of the answers to the question, “why are we working so hard,” can be found in the three immediately preceding healthymemory blog posts.  “The Wellbeing of Nations:  Meaning, Motive, and Measurement” explained why the primary metric for measuring economies, the Gross Domestic Product (GDP) is seriously flawed.  This metric fails to capture many factors that make for well-being and happiness.  Moreover, it requires that economies continue to grown and expand.  Eventually the capacity for growth of the GDP will be limited and the resources for continuing this growth will be depleted.  The blog post also explained that this is an extremely difficult topic and the work in this area is still in its early stages.  Nevertheless, it has begun, so let us hope it will continue.

The healthymemory blog post “Behavioral Economics”  reviewed how classical economics is based on the model of a rational human.  There is ample evidence that we humans are not rational.  Behavioral economics is devoted to identifying behaviors that lead to desirable outcomes.  Again, there is much work to do, but it least it has started.

The  blog post “Why Information Grows”  presents a novel view of what makes economies successful.  The answer is knowledge and know how.  Again, these ideas are very new, but they offer the potential to guide us in the right direction.

Labor Day is a holiday, but  unfortunately it signals the end of summer and the traditional time for vacations and recreation.  I would suggest that Memorial Day, a holiday for the somber remembrance for those who have died fighting for our country, be switched with Labor Day.  Then Labor Day would signal the beginning of vacation and recreation time.

Nevertheless, as Labor Day is a holiday, let us engage in a fantasy so we can enjoy the holiday.  First of all, there would be a heavy investment in education, which would be free at all levels.  Moreover, education would continue throughout our lives.  This provides both for personal growth and facilitates the advancement of new technologies.  There would be ample free time.  Medical care would be guaranteed and free so people would not need to work for medical coverage.  People could drop out from time to time so that they could simply enjoy leisure time.  They could take classes in anything that
caught their fancy and found to be enjoyable.   Retirement, per se, would become obsolete as people would continue to learn and grow throughout their senior years

© Douglas Griffith and healthymemory.wordpress.com, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.

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The Wellbeing of Nations: Meaning, Motive and Measurement

August 26, 2015

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.

© Douglas Griffith and healthymemory.wordpress.com, 2015. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Douglas Griffith and healthymemory.wordpress.com with appropriate and specific direction to the original content.