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"Seek not to peer into men's souls" Samuel Brittan: Talk at John Smith Institute 30/04/03 We must all by now be familiar with the "Europe isn't working" campaign emanating from Government and opposition alike, based on the recent relatively slow growth of output and employment in "old Europe" (mainly France and Germany). We will hear a good deal more when the euro assessment is published. This campaign has been queried by Adair Turner, the former director of the CBI. He asks perfectly legitimately whether the recent published economic indicators, on which British politicians are so fond of gloating, reflect a genuine superiority of UK performance or whether they reflect different social preferences on matters such as leisure versus take home pay or security versus increases in income. Or do they reflect distortions in social and economic arrangements which discourage entrepreneurship and keep out of employment people who would rather work given the opportunity? Whether or not we agree with his answers, he poses the right questions. The happiness brigade are entirely right to query the emphasis on growth and productivity at all costs as the goal of national policy. But I am afraid I cannot accept their preferred alternative. Maximising the number of people who tell opinion pollsters that they are happy, satisfied with their lives or some such wording, is just as ridiculous an aim. To begin with, it reflects a fundamental conceptual error. An Oxford philosopher, Gilbert Ryle, in a famous book published half a century ago (The Concept of Mind) argued that enjoyment was not a subjective state of mind but a disposition. If somebody digs his garden whenever he has an opportunity, becomes irritated if called away to do something else and looks for opportunities for this form of exercise, he can be said to enjoy digging. There are not two activities: digging and a separate feeling in the head. Ryle did not say the last word, but was a good deal nearer the mark than somebody who stops you in the street with a clipboard and asks how happy you are. Happiness, like economic growth or even personal health, is best achieved as a by-product of other activities. Anyone who wants to study the arguments against a simple-minded happiness version of utilitarianism, which I have no time to give in full, should read or re-read the Aldous Huxley novel Brave New World, published in 1932. In his dystopia people were conditioned from an early age to accept a chosen role in life; and any signs of unhappiness were countered by the compulsory administration of soma pills. One argument against such pills was given by John Stuart Mill nearly a century before the novel appeared. "It is better to be Socrates unhappy than a pig happy." If we really had that choice I would want to pause before responding. But in fact we do not, happily so. As far as I know there exists no pure happiness drug without debilitating after effects. The whole debate has an interesting intellectual history. The reputed founder of utilitarianism, Jeremy Bentham, believed in maximising some happiness meter. A cat purring would be deemed to be happy. Subsequent economists moved away from such inquiries and looked instead at the choices and preferences of people as revealed in the commercial and political market places. Some libertarians welcomed the move for more than technical reasons. For instead of peering into people's souls, policymakers were merely asked to do what they could to increase the range of choices open to people and to remove obstacles to their self realisation. I have called this doctrine choice-utilitarianism. It sounds terrible jargon; but all it means is to satisfy as many as possible of people's choices as revealed in the market, the ballot box and elsewhere. If a family decides to spend an increase in cash income on installing central heating and air conditioning, without having to sacrifice anything else, then that family is said to be better off. We do not ask whether it is happier than it might have been ten years ago when it may never even have heard of these luxuries. People are treated as if they are the best judges of their own interests. But in contrast to the questionnaire approach, it looks at what people do rather than what they say. Policies are chosen which open up the maximum of opportunities and the minimum of restriction in making use of them. There is however one important exception. Intrusive preferences relating to other people should go out of the window. According to one typical formulation due to the late Nobel Prize winning economist, John Harsanyi, "all clearly anti-social preferences, such as sadism, envy, resentment and malice should be excluded from the social utility function". Opportunities depend on real income and wealth, defined quite subtly to take account of leisure, the quality of the working environment and many other things. It is far from the desire to maximise GDP at all costs. This GDP worship is what I have often called lumpen economics -- lumpen was the term of Karl Marx for the least enlightened section of the proletariat who did not know their own interest. GDP is one indicator of welfare, which is probably much more important for Third World countries emerging from poverty than it is in the West. But any competent undergraduate knows that this measure leaves out a lot. An obvious example is the value of work done by women in the household. Nor do conventional measures of GDP take into account bads such as pollution or destruction of the countryside. There have been many attempts to provide alternative or supplementary measures. These are very important, but some of them are highly politically charged, containing items such as 'inequality', which depend very much on the political outlook of the person devising the index. It is best to keep such alternative indices as simple as possible. The World Bank Human Development index contains only GDP, life expectation and literacy. This is simple, relatively non-controversial and an improvement on GDP alone. Its glaring deficiency is that it makes no allowance for leisure. If the same GDP can be achieved with half the working hours then it clearly is an improvement in the standard of living. A rough and ready way through this, without over-complicating index might be to substitute GDP per hour for plain GDP. I have no real objection to David Halpern's paper, which is a useful survey of the field. But I did object much more to the way that professor Richard Layard jumped in with policy conclusions in his three recent lectures at the LSE. Layard's own conclusions from his happiness studies point to a very familiar statist and egalitarian agenda. He estimates that if my income increases, the loss of happiness to everyone else through jealousy and envy offsets some 30 pc of my own gain in happiness. He accordingly proposes a marginal income tax of 30 per cent as a kind of pollution levy. Presumably this in addition to existing taxes, although he does not make it entirely clear. If so, this leads to cent a combined 60-70 pc marginal tax rate altogether. Layard positively embraces the work disincentive effects as an offset to present day materialist obsession. In my view we should stick to the traditional justifications for taxation without claiming that it is not merely a necessary evil but that we ought to be happy to pay it. I much prefer the approach of Richard Reeves of the New Economics Foundation who writes (Its not the Economy Stupid) that the solution to our psychological problems "is not to try and tax ourselves into a happier state. It is to alter our system of values such that envy, greed, and status-seeking are reduced." Altering values is a tall order; but at least we should not try to satisfy those unworthy of respect. A more detailed statement of my case can be found in my Templeton lecture, "Happiness" is Not Enough, 22/11, 2001. For a more fundamental treatment see 'Choice and Utility', Chapter 3 of Capitalism with a Human Face, Harper Collins, 1996.
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