Richard Layard, author of “Happiness: Lessons from a New Science”, has written an article for The Times entitled “Be happy, pay more to the taxman”, an article of immediate interest to me. In it, Layard states that surveys in the United Kingdom and the United States reveal that, despite unparalleled economic growth, as a society we are no happier than we were 50 years ago. He contends that this “challenges our most basic assumptions about the goals of society and our personal life.” Essentially, he questions the value of the capitalist free market.

His main answer to the question of just WHY people are still unhappy, despite having more money, is that people are “comparing their incomes with those of other people. They are trying to keep up with the Joneses. But in a richer society the Joneses are richer also, and it is impossible for the average person to raise his relative position. So the attempt at relative betterment fails. The effort devoted to it is a total waste in terms of the satisfaction generated. People would have done better to spend the time with their families and friends than in trying to achieve the unachievable.” But Layard doesn’t stop there. He goes on to say that, because taxes discourage work effort, and because, by the above logic, making too much effort at work is “pointless”, then taxes “are helping create a balance between work and private life.” They are helping us to be happy, ultimately. According to Layard, we have in the tax system “a less invasive mechanism [than French-style regulation of hours] which helps to preserve a balance of sanity in the way we spend our time.”

I have the following points to make in response to Layard’s article.

1) I disagree with his analysis of the reasons for the results of this research. What we have found is that people say they are not particularly happy, despite having more. Layard says that this is because, even though THEY have more, the Joneses have more too, and this upsets them. I’m not so sure about that. Layard is intimately linking the amount of money that people have with their feeling of happiness, without checking to see what other factors are present in that assessment. He assumes that people will be happier NOT working as hard and spending more time with their families. He clearly hasn’t spent a lot of time with some folks’ families! It is a fact that people who spend time OUT of work experience a much higher degree of unhappiness on average than those who work (according to a Rueters Health survey conducted in late 2000). My point is that there are many contributing factors to our sense of satisfaction in life: love, hobbies, eating habits, past-times, sex drive, religious belief, career, even exercise (although the latter has not played an important role in the happiness of this author). To so intimately link wealth and happiness is a convenient way to make a point that excuses, among other things, the excessive taxation Layard describes…. but doesn’t accurately portray the whole picture. Layard himself admits later that “wealth has quite a small effect”, but fails to make the prescribed conclusion – that people should not be pushed in ANY particular direction by the system as regards to how much they work or do not work. That is dictated by how much they need to earn in order to provide for themselves and their personal ambitions.

2) It does not follow that because competition can be stressful or even contain moments of unhappiness at times that it is inherently overall an undesirable thing. Competition is engrained within us all for a very good reason. Without it, most natural incentives to succeed would not exist. Our most basic human survival instincts are based on competition. There are many more benefits to competition than there are negative side-effects. I challenge Layard to step back in time 50 years and find out if he would be any happier without such a competitive economy. Competition keeps prices low, keeps work dynamic, gives us better products, allows more people to enjoy them, encourages teamwork, drives creativity and thereby inspires millions who enjoy the results immensely. It is erroneous to assume the validity of any argument that so easily blames competition for unhappiness. One may as well say that the unfairness inherent in the fact that others are better looking is responsible for unhappiness – the answer is not to stop caring about personal appearance, it is to compete to the best of one’s ability. And there is MORE that can be done about career than there is about looks! Again, if Layard took an honest look at the whole picture, there would be much less to complain about.

3) Layard falls into the same trap as socialists: the ‘money pot’ fallacy, which assumes that there is only a limited amount of money that must be shared around. He says “a society based on getting ahead cannot be truly happy, for as many get behind as get ahead.” This is simply not the case. There are not a limited amount of positions or pots of gold. Wealth must be created, as can be seen from the California economy here compared to the South African economy: observe an area with similar amounts of natural resources and population…. the only difference is the competition which has inspired people in California to CREATE their positions, to CREATE their wealth. Capitalism has always been principally about one thing – finding new ways of making money by selling a new product, or an existing product in a way or in a market or for a price that nobody else is. And, yes, the people I have encountered on a daily basis here in California are generally happier for it, in my experience. The answer? More capitalism, not less.

4) It is simply not in the remit of government to interfere in the ways suggested by Layard. To increase taxation in order to discourage work is not only irresponsible and counter-productive, it is immoral. Stealing someone’s property seems an odd way of making them happier. To ban advertising aimed at children under 12 so that they feel less incentive to want things they can’t have when they get older is a bizarre suggestion based on flimsy evidence and faulty logic. This one-size-fits-all approach is the result of an erroneous view of society: it sees society as a collective to be manipulated. It is not: ‘society’ is a convenient way of saying ‘millions of interoperating, fully autonomous, independently rational INDIVIDUALS.’ It is not only erroneous but fundamentally arrogant to attribute to one person or group of people the ability to accurately designate the chief aims of other people – let alone a measure to FORCE them to comply. As Thomas Paine once famously said, “That government is best which governs least.” Whether or not anything Layard says is correct or not (I think not), measures to interfere in the ways that human beings voluntarily cooperate fall outside of the remit of government. Government is not about social engineering, it is about protecting liberty.

This article was about social engineering. There are many things I wish I could force other individuals to do…. but it is outside my sphere of control, and it should be outside everybody’s. If only people like Layard could understand that. As fellow libertarian blogger Stephen Graham (grumpy-young-man.blogspot.com) has said: “This article was basically a puff-piece pile of pseudo-politico-psychology that is best left on a dusty shelf and forgotten.” I think that sums it up.

So why do people say they are unhappy? Well, there is something of a malcontent in us all. It has a negative effect and a positive effect. The negative effect is that it can cause people to undervalue those things that are thereby taken most for granted: their families, their property, and a hundred other things. The positive effect is that it can drive them to create for themselves something better – and, if they are sensible, they will learn from every failure and celebrate every success.

And they will be fundamentally happy to enjoy the whole process.

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John Wright