"From the desk of Jane Galt:
Happy are they who redistribute their income
Mark Kleiman argues that my posts below imply support for Robert Frank's thesis that we should enact a liberal income redistribution scheme, because money doesn't buy happiness above a certain low income threshhold.
No, no, a thousand times no. I have been distinctly underwhelmed by Robert Frank's work, which argues from happiness research to conclude that--shockingly!--it proves scientifically that we should adopt the political platform that Mr Frank just happens to have believed in before he wrote the book.
Now, I am not as hostile to happiness research as, say, Will Wilkinson. I am willing to posit that status-seeking expenditure, on things like houses too big for a normal family to regularly use all the rooms, or expensive cars when the owners are not the kind of people who particularly care for driving or auto mechanics, does indeed strike me as a collective action problem. (A collective action problem is one where all the individuals in a group would be better off, say, striking to get more wages, but because they are only better off if everyone does it, they generally take another course of action acting alone.) Everyone buys expensive goods in order to signal their status to the community, but because status is a zero-sum game--one person must lose status in order for another to gain it--these are wasted activity from the point of view of the group; there is no net gain in happiness from all that expenditure.
But while to a liberal that implies that we should take some of that money that isn't producing any happiness and give it to others, to a conservative this points up the essential futility of income redistribution. Since you will be redistributing the money without redistributing the status, you'll produce no net gain in happiness. The average welfare mother in America has better health care, entertainment, food, shelter* and clothes at her disposal than the Rockefellers did at the turn of the last century.
You could give welfare mothers in New York City $1000 more a month to spend on housing, and they would still live in exactly the same crappy apartments they now occupy, because there is no more housing being built, and with a 2% vacancy rate, landlords can afford to be choosy about their tenants. That's why they're all herded into government housing projects. And in my experience, admittedly limited, public housing tenants complain about two things that no amount of money will fix absent major institutional changes (most of which would be opposed by the left): having the government for a landlord (imagine trying to get your pipes fixed by the DMV) and the other tenants, many of whom are criminal or antisocial, and tend to destroy both safety and the physical plant of the housing project.
Similarly, let me posit that any fashion trend, automobile, restaurant, or what have you, that is adopted by the poor will rapidly become a low-status item among higher income quintiles. SInce Robert Frank's writing implies that the physical objects do not actually make anyone happier, why should we give the government massive intrusive powers in order to give the lower quintiles objects which will not confer upon them the status that the objects are purposed for? Why, indeed, should welfare cover anything but enough food to keep you from being hungry, enough shelter and clothing to keep you from being cold? Our pioneer ancestors managed to live full and happy lives on such a regime.
What about those intangibles that could make us all so much happier: income security and increased leisure?
I have several problems with this. For starters, while I think that people spend a lot of money that doesn't make them happier, that doesn't mean I think that no spending makes people happier. My high speed internet connection, for example, makes me materially happier than I used to be, because it has enabled me to discover a community of people that I never would have met otherwise. A tired mother getting off her feet at an Arby's while the kids toss french fries at each other is certainly happier than she would be making mac-and-cheese for the zillionth time at home. Robert Frank (and Mark Kleiman's post) implies that there are certain activities and professions that are more worthwhile than others, and that we should design the economy in order to push more people into those things. But this presumes that Mr Frank (or any technocratic planner) has the ability to correctly identify the right activities. I am deeply sceptical of this--and I am certainly not going to hand that sort of power over to anyone based on studies who data comes from self-reported surveys, a notoriously unreliable data source.
Because I don't know which new technologies will make people happy, and which ones will merely enable them to waste more of their hard-earned money, I want the economy to sort that out, not some exquisitely educated clown like me. And while Mark Kleiman apparently thinks that following Robert Frank's suggestions would have no impact on GDP growth, I vehemently disagree.
Take income security. Now, believe you me, if anyone knows how much it sucks to have your carefully planned life overturned, it's me. I didn't just watch my city blow up due to 9/11; I saw my career and my relationship with my then-boyfriend implode, leaving me, at the age of 29, living with my parents and doing clerical work. If you had asked me beforehand if I wanted to buy insurance against just such an eventuality, I would have paid a pretty penny to avoid it.
But I would have been wrong. That was undoubtedly the worst period of my life, made even more dreadful by a growing fear that it would never end, and my life would be ruined. But the loss of everything I had counted on was what enabled me to take an enormous risk: becoming a journalist. I never would have dared to do something so insane if I'd had a cushy job. And that was possibly the best thing that ever happened to me.
The overwhelming majority of people simply will not reach their potential without the fear of catastrophe dogging their footsteps. There are some standouts; perhaps Mr Kleiman is among them. But there's a reason that I have produced a lot of stories on the world economy, and almost nothing of the novel I've wanted to write for years: I have a demanding editor who controls my paycheck demanding regular work out of me.
I don't mean to paint some Rebecca-of-Sunnybrook farm picture of the world, where suffering always spurs innovation, and risk is always rewarded. Some people whose expectations go awry never do get back on their feet. But most people whom I met have managed to pull together fuller, richer lives after the disaster pared their life back to essentials. And if the possibility of failure weren't real, the impetus to rise above wouldn't be, either. Guaranteeing people that their living standard can never really fall strikes me as a very bad idea.
Would leisure be bad for the economy? Well, it seems to me that France's experiment has revealed that mandating more leisure would, at the very least, be bad for full time employment. And the availability of full-time employment is one of those things that happiness research suggests does make people happier. At the upper reaches of the professional scale, it would also be bad for innovation. You can split a waiter's shifts pretty easily, but you cannot get as good as a result by splitting a lawyer's work in half and assigning the two halves to two different lawyers. That's because the true work--the reason you need a lawyer and not a paralegal--takes place in the lawyer's head, where all her knowlege about the case swims around together and forms connection between the various facts of the case. That's the main reason that big law firms don't have many part-time associates, and partners don't get to take it easy once they've got it made.
What about income distribution? I've said before that I think the supply-siders who argue that lowering our marginal tax rates will raise revenue are full of bunk. But that doesn't mean that I believe the Laffer Curve doesn't operate anywhere. High taxation has a pretty high deadweight loss, and given that the Fortune 500 is increasingly composed of people who earned, rather than inherited their money, I think it's inadvisable to risk it with the really large government taxation and regulation plans that would be necessary to bring Mr Frank's plans to fruition.
In sum, just because I think that people spend money on things that don't really make them happier doesn't mean I want the government to step in and make them stop, especially when so many of the prescriptions are potentially so harmful. Nor do I agree with Mr Kleiman's claim that individuals really can't deal with the vicissitudes of life; a middle aged man who loses his job could deal quite well if he'd been saving 25% of his salary. That he has failed to save adequately does not instantly present to me either a moral or a utilitarian case for rectifying his failure, particularly since doing so will encourage other people not to invest in their future. (I'd certainly vote to keep him from starving, but not to replace all his lost income). That is why I encouraged individuals to look hard at their spending to eliminate the things that do not truly make them happy, rather than calling for government programmes. They're in the best position to actually know what they need.
*Yes, the Rockefellers had a lot more space, and marble floors to boot. But would you rather have a big house with marble floors, or a little apartment with central heating, air conditioning, and indoor plumbing? I know which one I'd pick.
Posted by Jane Galt at December 16, 2005"
janegalt.net |
