Why I’ll take economic growth over ‘happiness’ any day

1. James Pethokoukis @JimPethokoukis

President Trump has promised he’ll boost economic growth. “Tremendous” growth, to be specific. In that way — and maybe no other — he’s like every other politician. Here’s what politicians don’t do: They don’t say Americans are plenty rich. They don’t say faster economic growth is unimportant. They don’t say, let’s just focus on redirecting the wealth we already have to the 99 percent, or the 90 percent, or the bottom half. Even inequality-obsessed Bernie Sanders touted a plan to accelerate economic growth.
But maybe American politicians are behind the global curve. Left-wing French presidential candidate Benoît Hamon has attacked the “myth” and “quasi-religion” of “infinite economic growth.” Politicians with similar beliefs will surely point to research suggesting a disconnect between economic growth and happiness, such as the just released World Happiness Report 2017. The study is based on an annual survey of 1,000 people in 150 nations who are asked to rate their happiness levels on a scale of zero to 10.

Credit: Twenty20

One of its highly touted findings is that the world’s “happiest” nations — such as Norway, Denmark, and Switzerland — have been growing more slowly than the world as whole, including the number 14-ranked U.S., in recent years. The report’s authors fully embrace the goal of pushing “happiness” as the best measure of social progress rather than the “tyranny of GDP.” And as economist Jeffrey Sachs writes in the report: “The predominant political discourse in the United States is aimed at raising economic growth, with the goal of restoring the American Dream and the happiness that is supposed to accompany it. But the data show conclusively that this is the wrong approach.”
But is that what the data show, really?
The whole thing seems a little weird when you take a closer look. The happiest countries aren’t just slower growers, they’re way smaller, too. The average population of the countries ranking higher than the U.S. is 11 million, with the top five averaging just five million. The happy places kind of look like niche outliers, especially the culturally similar Nordics. If the U.S. were compared to the European Union as a whole — two big, diverse regions — the happiness rankings would be much closer. After all, the U.S. is happier than the five largest European nations of Germany, France, the United Kingdom, Spain, and Italy.
Also, when you look at the politics of those super-cheery countries, things don’t look much different than the supposedly miserable, growth-preoccupied U.S. People over there want growth to be faster and incomes to rise more quickly, too. For instance, top-ranked Norway has a parliamentary election in 2017, and a key issue is how the various political parties would “tackle weak economic growth and unemployment,” according to one analysis. Maybe the average Norwegian doesn’t realize they’re plenty rich enough. Even Sachs’ report shows per capita GDP growth to be an important factor in explaining national happiness.
The real problem, though, is the entire idea of drawing broad, cross-country conclusions from these subjective, survey-driven happiness indexes. Those Scandinavians may be pretty happy, but they also have high suicide rates. Or maybe they just have low expectations and are easily pleased? On the other hand, Americans are demanding, complain when dissatisfied, and, by the way, also produce the hard-driving entrepreneurs like Steve Jobs and Bill Gates who push the technological frontier so Europe doesn’t have to.

Happiness economics is based on the idea that once you achieve a certain wealth level, more wealth makes you no better off. But economic growth isn’t just about more and better stuff. It’s also about how rising prosperity can create more opportunity to live a life of deeper human flourishing. High incomes “may not buy happiness with life in general, but it gives individuals the opportunity to be healthier, better educated, better clothed, and better fed, to live longer, and to live well,” write the researchers of Measuring Happiness. Just ask the two billion humans pulled out of extreme poverty in recent decades about the importance of economic growth.
But growth isn’t important just for developing economies. If the U.S. economy had grown as fast in recent decades as it did in the immediate postwar decades — even assuming rising inequality — the typical U.S. household would be $30,000 richer, according to a 2015 Obama White House report. So maybe a fancier car, but also more opportunity to move to a city with better job prospects, travel the globe, or educate ourselves.
Economic growth may not be sufficient to creating a better world for more people, but it sure seems necessary.