Showing posts with label free to flourish. Show all posts
Showing posts with label free to flourish. Show all posts

Friday, July 19, 2019

Where can we find answers to the most important questions about freedom and flourishing?

People who visit this blog sometimes ask for more signposts to help them find my answers to the most important questions about freedom and flourishing. In the past my response has been to suggest that they read my Kindle ebook, Free to Flourish, which is available for an extremely modest price. However, my thinking has moved on in some respects since that book was published in 2012. So, this post identifies what I see as the most important questions and provides some links to indicate where answers can be found.

  1. What is the purpose of life? The answer that Aristotle gave around 350 BC sets us on the right track. Happiness (human flourishing) is the purpose of human existence. Individuals flourish as they actualize potentials, including the potential for self-direction, that are specific to the kinds of creatures that humans are. The best summary of my views on the nature of happiness and human flourishing is still to be found in Chapter 2 of Free to Flourish.
  2. Is there an ethical proposition that is relevant to all aspects of our lives? I agree with the view of Douglas Den Uyl and Douglas Rasmussen in The Perfectionist Turn, that “the existential fact that we must make something of our lives” is of fundamental importance. Interpersonal relations are also important, but don’t enter all aspects of our lives. See: Does the I-You relation enter into every aspect of the moral life?
  3. How can you become a better person? To bring some abstract philosophical ideas down to earth, I have considered how a hypothetical person attempting to make something of his life might answer if asked whether he is a good person. A central part of his answer is that becoming a good person is like playing cards well: “He says that rather than bemoaning the fact that you have not been dealt a better hand, it is better to maintain good humour and focus on how best to play the cards you have been dealt. You never think of cheating and you avoid playing with people who cheat. You like to win, but you participate mainly to enjoy the social interaction. Playing the game is also a learning experience. You learn how to perceive opportunities, develop strategies, cooperate with others, and to win and lose graciously. As you learn to play well you become a better person”. See: How can we know what we ought to do?
  4. Should we be motivated by mutual benefit in our interactions with others?  Robert Sugden observes in The Community of Advantage that when individuals participate in market transactions it is possible for them to be motivated by mutual benefit. They may see virtue in voluntary transactions that enable people to get what they want by benefiting others, rather than purely personal benefit, or the potential to use proceeds for altruistic purposes. Sugden points out that being motivated by mutual benefit is consistent with Adam Smith’s famous observation that we do not rely on the benevolence of shopkeepers to provide us with the goods we need. The shop keepers don’t sacrifice their own interests to provide us with goods, but they may act with the intention of playing their part in mutually beneficial practices. See: Do you acknowledge a personal responsibility to seek mutual benefit?
  5. Is human flourishing primarily about psychological health, capability or opportunity? In a post addressing that question argue that all three aspects of flourishing are relevant if we are considering the extent to which particular individuals – our relatives, friends and acquaintances - are flourishing. However, from a public policy perspective, attention should focus primarily on the opportunities available for people to live the lives they aspire to, because government policies impinge greatly – often negatively – on growth of opportunity. 
  6. Why do you consider freedom to be integral to human flourishing? There are two reasons: a) Individual humans have potential for self-direction and cannot fully flourish unless they are free to manage their own lives and accept responsibility for their actions. As Douglas Rasmussen and Douglas Den Uyl point out, recognition of individual liberty is necessary to ensure that individuals can flourish in diverse ways without coming into conflict. Chapter 3 of Free to Flourish still provides a reasonable summary of my views. b) Good societies that provide conditions favourable to individual flourishing are characterised by individual freedom. As discussed in Chapter 6 of Free to Flourish, freedom provides the basis for peacefulness and individual opportunity, which in turn enable a greater degree of economic security to be sustained. As discussed in Chapter 7, economic progress – the growth of economic opportunities supporting individual flourishing – is attributable to advances in technology and innovations that were made possible by economic freedom and supporting beliefs, ideologies and social norms.
  7. What is the greatest threat to the ongoing expansion of opportunities for individual flourishing in coming decades? In Free to Flourish I argued that the failure of democratic governments to cope with their expanding responsibilities poses the greatest threat to the ongoing expansion of opportunities for human flourishing in coming decades. I maintain that view.  It seems to me that, over the next 20 years or so, people in Western democracies are likely to suffer to a greater extent from the consequences of an explosion in public debt than from climate change. See: How can we compare climate change and public debt risks? Nevertheless, I acknowledge that climate change could possibly pose a serious threat to civilization and argue that we should not ignore the risk of catastrophe even if we think the most likely outcome is benign. I have argued that climate change policies should focus to a greater extent on choosing the lowest cost methods of reducing the risk of catastrophe. See: What is the appropriate discount rate to use in assessingclimate change mitigation policies?
  8. Will it be possible to avert democratic failure, and if not, is there a basis to hope ongoing human flourishing will be possible? Since writing Free to Flourish I have become more pessimistic about the potential for citizens to unite to restore better norms of political behaviour in the western democracies. However, I now see a basis for hope that the faltering institutions of representative government could one day be replaced by superior institutions. Blockchain technology and smart contracts may have potential to enable people to act together to produce some public goods cooperatively without central government involvement. See: Where did I go wrong in writing about the greatest threat to human flourishing?

Saturday, October 27, 2018

Why don't all sides of politics agree to pursue Wealth Plus?

It would be great if the major political parties in all countries of the world were to pursue Wealth Plus as a national objective. However, I don’t think that is likely to happen soon, even in the wealthy countries that have implicitly pursued similar objectives in the past.

Wealth Plus is the objective advocated by Tyler Cowan, in his recently published book, Stubborn Attachments: A vision for a society of free, prosperous, and responsible individuals. Tyler defines Wealth Plus as:

‘The total amount of value produced over a certain time period. This includes the traditional measures of economic value found in GDP statistics, but also includes measures of leisure time, household production, and environmental amenities, as summed up in a relevant measure of wealth."

Tyler also suggests that we should aim to “maximize the rate of sustainable economic growth, defined in terms of a concept such as Wealth Plus”. He suggests that we should think more broadly about economic growth as an ongoing self-sustaining process that produces goods that contribute to human welfare, rather than in terms of growth in GDP as conventionally measured.

I think the objective that Tyler is writing about could better be described in terms of pursuing growth in opportunities for human flourishing – growing opportunities for people to live the lives that they aspire to have. I prefer that terminology partly because it fits neatly with the view I expressed in Free to Flourish that good societies are characterised by widespread opportunities for human flourishing. In my view, progress is movement toward better societies, with growing opportunities for human flourishing.

An emphasis on human flourishing raises a question, touched on in an appendix, of why human flourishing should be prioritized above the flourishing of non-human lives. One good reason is that flourishing humans show greater consideration for non-human lives than do humans who are struggling to survive. Discussion about what constitutes ethical behaviour toward non-human lives is a feature of modern life in prosperous countries. More fundamentally, if ethical behaviour is intrinsic to human flourishing – as Aristotle argued persuasively long before modern psychologists took up the idea - then human flourishing must encompass ethical behaviour toward all other living creatures.

Tyler makes a strong case that we should care about the well-being of people in the distant future just about as much as we care about the well-being of the current generation. His argument is based partly around the implications of discounting the value of future human lives. Under any positive discount rate, one life today could appear to be worth as much as the entire subsequent survival of humanity if we use a long enough time horizon for the calculation.

The argument for using a low discount rate seems to me to have considerable force when we are considering the benefits of public investments to protect future generations from potential catastrophes. As previously discussed on this blog, that argument is pertinent in considering what discount rates should be used for public investments to avert or mitigate climate change risks.

I am not persuaded by Tyler’s argument that the well-being of future generations isn’t adequately considered today in the choices “we” are making about “how rapidly to boost future wealth”. The “we” Tyler is referring to is the collective “we” that makes public policy choices. As I have previously suggested, the argument that positive externalities cause free markets to produce too little economic growth does not appear to have any more merit than the argument that negative externalities cause free markets to produce too much economic growth. Tyler hasn’t persuaded me that government intervention can improve on the growth outcomes of the savings and investment decisions made by individuals and families in a free market.  

In any case, the choices that governments make about “how rapidly to boost future growth” seem to be largely implicit rather than explicit. Boosting economic growth may be a motive for public investment in research and some forms of education, but I can’t think of many other examples. Perhaps what Tyler has in mind are the choices that governments make that unintentionally reduce the rate of economic growth. For example, he notes that when government spending is cut, investment spending is often the first area to go while entitlements for the elderly remain intact.

Tyler is on firm ground in arguing that the strengthening of good institutions today can be expected to provide benefits for centuries into the future. There is strong historical support for the view that growth promoting institutions and a history of prosperity tend to have enduring effects.

Tyler suggests that three key questions should be elevated in their political and philosophical importance, namely:

1.       What can we do to boost the rate of economic growth?

2.       What can we do to make our civilization more stable?

3.       How should we deal with environmental problems?

He goes on to observe:

“The first of these is commonly considered a right-wing or libertarian concern, the second a conservative preoccupation, and the third, especially in the United States, is most commonly associated with left-wing perspectives. Yet these questions should be central, rather than peripheral, to every political body. We can see right away how the political spectrum must be reshaped to adequately address these concerns. Politics should be about finding the best means to achieve these ends, rather than disputing the importance of these ends."

I agree that is what politics should about, but I am not optimistic that political leaders can pursue those ends diligently, even if they can be persuaded to embrace them. Liberal democracy has been weakened in recent decades by widespread failure to adhere to the norms of self-reliance and reciprocity that underpin it. As predicted by James Buchanan (see this post for explanation) failure of the liberal democracy is becoming increasingly likely as a higher proportion of the population becomes dependent on government, and voters increasingly seek to use the political process to obtain benefits at the expense of others.  

It is difficult to escape the conclusion that we are heading toward a tragedy of democracy. When interest groups view the coercive power of the state as a common pool resource to be used for the benefits of their members, the adverse impact of tax and regulation on incentives for productive activity produce outcomes that a detrimental to just about everyone. The process seems to be intensifying with the fragmentation of broad interest groups supporting the centre left and centre right of politics.

As Henry Ergas has noted recently, with particular reference to Australia, it has become “increasingly difficult for “catch-all” parties — as both our main parties have been — to position themselves in such a way as to aggregate a winning coalition. The concept of the ‘average’ or ‘median’ voter, which used to help orient the parties’ choices, has lost its substance, as has the notion of ‘the centre’. (“The Australian”, 25 Oct. 2018).

Similar problems are evident in other mature democracies. The process of fragmentation of broad interest groups has accelerated in many countries over the last decade or so as innovations in the social media have greatly increased the power of the rabid sports fans of politics - aptly referred to by Jason Brennan as Hooligans. Hooligans tend to seek out information that confirms their pre-existing political opinions and ignore or reject information that contradicts those opinions. They tend to communicate in echo chambers that reinforce their outrage when the leadership of the major parties is unresponsive to their concerns.

In some countries we are seeing ill-informed Hooligans taking over major parties and the reins of government. In other countries splinter parties comprised of Hooligans are attracting supporters away from major parties and making it more difficult for them to pursue coherent policy agendas. No matter which way it is happening, the growing political influence of the Hooligans makes it increasingly difficult for political leaders to pursue Wealth Plus, or any goals relating to the future well-being of the broader communities who elect them.

As more people come to recognize that liberal democracy is confronted by deep problems, perhaps some of them will attempt to make concerted efforts to reform political institutions so that they produce better outcomes. However, it is not obvious what reforms would stop the rot or how reforms could be achieved. A major economic crisis might help to focus the minds of responsible political leaders, but it could just as easily further strengthen the hands of the Hooligans.

I now think the best hope for future generations lies in the potential for new technology to enable people to circumvent the obstacles created by the Hooligans of national politics. As Max Borders has suggested (see discussion on this blog here and here) technological innovations provide us with the potential to “reweave the latticework of human interaction to create a great reconciliation between private interest and community good". The social singularity has potential to enable people to enjoy growing opportunities to live the lives that they aspire to have.

Monday, March 20, 2017

Is the cycle of political complacency beginning to turn in the United States?

The villain in Tyler Cowen’s latest book, The Complacent Class: The self-defeating quest for the American Dream, is “us”. Tyler is writing about America, but much of what he has written is relevant to other high-income countries. The problem, as Tyler sees it, “is that peace and high incomes tend to drain the restlessness out of people”. Many people have become complacent – “satisfied with the status quo”. Most people don’t like change much and “they now have the resources and the technology to manage their lives on this basis more and more, to the country’s long run collective detriment”.

Tyler has not persuaded me that complacency is a problem of itself. It would be nice to be able to feel more complacent. (According to Tyler’s questionnaire - international version here - I am a striver: “You embrace newness, but you need to strive harder to break the mold”.) As I see it, complacency only becomes a problem when people are complacent about things that they have good reason to be alarmed about.

Tyler provides a fair amount of evidence that Americans have become more complacent. For example:
  • ·         People now switch jobs less frequently.
  • ·         Geographical mobility has declined.
  • ·         There has been a decline in start-ups relative to total business activity.
  • ·         There are fewer unicorns (miracle growth firms).
  • ·         Market concentration has risen.
  • ·         There is more pairing of like with like e.g. people are choosing marriage partners with similar education levels, and housing is more segregated by income and race.
  • ·         Upward mobility in income and education has stopped rising.
  • ·         People are now more inclined to stay at home and use delivery services.

That is all very interesting. It changes my perceptions about America. I have to get used to the idea that Americans are no longer as mobile and innovative as they were a couple of decades ago. But that does not necessarily mean that complacency is a problem. If peace and high incomes have made Americans more complacent, isn’t that a good thing? There is not much point in striving for more of anything once you are satisfied with what you have already. How is complacency leading to bad outcomes?

When Tyler looks in detail at some of these changing characteristics, he points to the failure of political decision-making to cope with interest groups seeking to protect themselves from change. How does complacency come into that? The NIMBY advocates who are using their political muscle to protect their interests against higher density building can hardly be described as complacent. The people at Donald Trump’s rallies who are supporting his policies to protect jobs - by reducing immigration and constraining import competition - do not seem complacent. The complacency must lie with the general public, who are not yet sufficiently outraged by the stasists to cast their votes for candidates who will constrain their political influence.

Tyler’s discussion of declining geographical mobility provides a good example of political market failure. He points to research showing potential for a substantial increase in GDP if more people were to move from low-productivity cities to high-productivity cities. Regulatory constraints prevent this from happening:
“Residents in Manhattan, San Francisco, and many other high-productivity locales just don’t want all of those new people moving in, and so they have passed overly strict building and land use regulations or in some cases they have limited infrastructure so that adding more residents just isn’t practical. Without good bus or subway connections, for instance, a lot of neighbourhoods just don’t work for people with jobs downtown”.

Tyler uses the terms ‘stasis’ and ‘dynamism’ quite frequently in this book, but I couldn’t find any reference to Virginia Postrel’s pathbreaking book on this topic, The Future and Its Enemies, published 18 years ago (my discussion here). I would have been satisfied with a footnote to explain how Tyler’s views build on, or differ from Virginia’s views. Similarly, it would have been nice to see a footnote discussing the affinity between Tyler’s views and Mancur Olson’s argument that stable societies tend to accumulate distributional coalitions that slow down their capacity to adopt new technologies and reallocate resources. See: The Rise and Decline of Nations.

Early in the book Tyler suggests that “the growing success of the forces for stasis” are linked to complacency. That argument has most force it the final chapters of the book where he discusses politics.

Tyler makes the point that much of the U.S. federal government budget is locked in to spending programs that are politically untouchable. Political change occurs at the margin and is the result of complex battles among interest groups, political manoeuvring and use of public relations campaigns. The Trump administration is unlikely to change this situation much. The pre-allocation of tax revenues will ultimately become unsustainable:
“At some point this country will face an immediate crisis, and there won’t quite be the resources, or more fundamentally the flexibility to handle it”.

Tyler presents a view about the tendency of governments to take on more responsibilities than they can cope with effectively that is similar to the view I expressed in Chapter 8 of Free to Flourish. I argued that there is a growing gap between the expectations that many people have of what democratic governments can deliver and what they are capable of delivering.

However, Tyler seems to present a more optimistic view of the ability of western democracies to reform themselves rather than to collapse and to be replaced by authoritarian regimes. That is just my impression. I find it hard to point to particular passages that support that view. The scenario that Tyler presents of a possible future that would be more dynamic does not feature less dysfunctional government, although smaller government may be implied.

Although I'm not sure why, after reading the book I was left feeling hopeful that the cycle of political complacency has reached its peak and that, over the next few years, American politics might become less shrill and more focused on problem solving. Perhaps the actions of the Trump administration will further erode political complacency in ways that will lead to a public reaction favouring a more constrained role for government. So, democracy will probably survive in the U.S. I’m also reasonably confident that a fiscal crisis in Australia will eventually result in rule changes needed to make democracy sustainable in this country. I’m less complacent about the future of democracy in some of the countries of southern Europe. 

Tyler Cowan has provided some grounds for optimism in a recent Cato article entitled "Between authoritarianism and human capital". An extract:

"So we’re going to see a kind of intellectual war, and possibly war in other, more violent forms too. That war, using that word in the broadest sense possible, will be between today’s amazing accumulated stock of human capital — and the emotional momentum behind authoritarianism, which is encouraged by the political fraying that stems from underlying fears of disruption.
Right now, I’d still put my money on the positive side of talent and human capital. But in recent times, I can’t say I’ve seen the odds moving in my favor."

Sunday, October 11, 2015

Is human well-being subjective or objective?

I usually try to begin the discussion of topics on my blog by explaining why the question and my answer might be of interest to potential readers. That is difficult this time because I am attempting to answer the question in the hope that doing so will help me to become less confused about the topic. However, confusion about subjectivity and objectivity seems fairly common - particularly so among economists - so hopefully what I am about to write will have a potential audience of more than one person.

In Free to Flourish I wrote:
“Observers can clearly make judgements about the extent that individual humans are flourishing or languishing in much the same way as they can make such judgements about plants and animals. In the case of humans, however, the subjects are capable of telling an observer how they feel about their own lives and their opinions usually deserve more respect than those observing. For example, it may appear obvious that people with poor physical health or very low income have a low quality of life, but if the individuals concerned feel content, what right has any observer to imply that they do not know how they feel?
As noted previously, individual flourishing involves a variety of factors including emotional wellbeing and life satisfaction, as well as more objective factors such as physical health, education and wealth. The relative weights any individual gives to these factors reflect personal preferences. …

If we were to substitute community values for personal preferences we would be at risk of attempting to measure the extent that an adult is flourishing according to values that he or she does not agree with. That would certainly be inappropriate.” (Chapter 5).

I stand by what I wrote. (At least I did earlier in the day when I wrote the preceding sentence.) 

Does that mean that I believe human well-being is objective or subjective? The first sentence in the quote implies that well-being is objective. Are the sentiments in the final paragraph of the quote consistent with those in the first sentence?

Before reading the first part of Well-Being: Happiness in a worthwhile life, by Neera Badhwar, a philosopher, I believed that well-being is subjective. Now I am fairly sure that there are objective standards of well-being.  (Many of the relevant issues are also discussed by Neera Badhwar in an article published last year.)

The problem is conceptual. My previous view that well-being is subjective was based on the view that it must be because it contains important subjective elements. That seems to have been the view of the welfare economists who declared interpersonal comparisons of utility to be impossible. It is also the view of the philosopher, Wayne Sumner, who suggested that the term ‘objective’ be reserved for the view that well-being is simply a matter of meeting certain objective standards, regardless of the individual’s emotional condition and her evaluation of her life.

At this point I recall a discussion a long time ago with an economist who pointed out to me that people often make interpersonal comparisons of utility - so we can hardly claim that such comparisons are impossible. In our everyday lives we often make judgements about whether other people are happy or sad, satisfied or unsatisfied with their lives, whether they feel that they are achieving anything worthwhile and so forth. Those judgements are based on what people say and do. They are often ill-informed, but that does not necessarily mean they are not objective. 

I suspect that it is only in their professional lives that economists have ever refrained from making interpersonal comparisons of utility. These days, many economists (self included) view the subjective ratings that individuals place on their happiness, satisfaction with life etc. as objective evidence pertaining to important aspects of their well-being relative to other people.

Neera Badhwar suggests that we should view theories of well-being as objective if they make objective worth essential to well-being. She argues that for individuals to be flourishing their lives must be supremely desirable and worthwhile, and therefore eminently worth living. They must not only meet the individual’s own standards of worth but be able to pass muster according to objective standards of worth.

The author argues that objective well-being requires self-direction:
the idea of objective well-being is perfectly compatible with the idea that objectively worthy lives can take many different shapes depending on the interests, opportunities and abilities of the individual and, in fact, must take a shape that both suits the individual’s own psychological nature and meets her standards to count as a life of well-being”. (p 8)

Neera Badhwar answers those who argue that objective theories of well-being are paternalistic by pointing out that theories of well-being in themselves do not tell us to promote other people’s well-being, let alone to promote our conception of their well-being.
That is consistent with the position that I have previously taken that “the case for individuals to be responsible for their own lives does not necessarily rest on each individual being the best judge of what is good for himself or herself”. In my view it rests on the proposition that adult humans cannot fully flourish unless they accept responsibility for their own lives. (Free to Flourish, Chapter 3.)

Coming back now to the last paragraph of the quote at the beginning of this post, if I now accept that a flourishing life must pass muster in terms of objective standards of worth, can I still maintain that it is inappropriate to measure the extent that an adult is flourishing according to values that he or she does not agree with? 

I don’t think so. I can acknowledge that objective standards of worth are relevant, whilst also urging researchers to accept the implications of the fact that “community standards” can be controversial. But that does not mean that it is never appropriate "to measure the extent that an adult is flourishing according to values that he or she does not agree with". For example, it is appropriate to assert that it is not possible for slaves to flourish, even though it is possible that an individual slave might claim that freedom has no value to her.

Sunday, September 28, 2014

What does it mean to be thriving?

I am asking myself that question because I am trying to come to grips with the findings of the new Gallup-Healthways Global Well-Being Index.

The methodology of the index looks like a sensible way to assess the extent to which people are thriving in different countries. Surveys are used to obtain subjective data relating to the following five elements:
  • Purpose: liking what you do every day and learning or doing something interesting every day
  • Social: having supportive relationships - someone who encourages you to be healthy and family and friends who give you positive energy
  • Financial: having enough money to do what you want to do and not being worried about money
  • Community: liking where you live and having pride in your community
  • Physical: feeling active and productive, and that your physical health is near perfect.
When I look at the results, however, I wonder whether the new Gallup-Healthways index actually measures the extent to which people are thriving.

The top ten countries in the index are as follows:
  1. Panama
  2. Costa Rica
  3. Denmark
  4. Austria
  5. Brazil
  6. Uruguay
  7. El Salvador
  8. Sweden
  9. Guatemala
  10. Canada.

When Scott Sumner looked at that ranking he wasn’t surprised to see some of the countries of Latin America do well, but he was shocked to see Sweden bracketed by Guatemala and El Salvador.  His comment:
“Just to be clear, I’m NOT saying that the people in those two countries are not just as happy as the Swedes; for all I know they are happier.  I have no idea how to measure happiness. But if you are talking about country rankings, people are going to assume you are making some sort of statement about socio-economic/political systems.  And if a large share of the people in these highly successful societies are risking murder, rape and dying of thirst in order to flee to a country where they don’t speak the language, so that they can get jobs cleaning toilets or picking vegetables in the hot sun all day long, then I have to wonder whether these rankings actually mean much of anything”.

Gallup’s potential net migration index suggests that large numbers of people who live in Guatemala and El Salvador would indeed prefer to live elsewhere. Recent surveys suggest that while about 28% of the population of Guatemala would prefer to live elsewhere, the corresponding figure for El Salvador is about 33%.

In Free to Flourish I made the point that if you want to measure the quality of different societies it makes more sense to attempt to define the characteristics of a good society and attempt to measure the extent to which societies have those characteristics, rather than to attempt to infer the quality of a society solely from happiness indexes. Nevertheless, it comes as a surprise when a high proportion of the population is assessed to be thriving in societies from which large numbers of people wish to migrate to seek better opportunities.

When I set out to find out the reasons for the results obtained by Gallup-Healthways my first thought was that it might reflect the method used to rank countries. The criterion used is the percentage of the population that are thriving on the basis of three or more of the elements defined above. However, when I constructed an index by averaging the scores on all five elements (giving thriving a rating of 3, struggling a rating of 2 and suffering a rating of 1), El Salvador remained in 7th place and the ranking of Guatemala remained fairly high (falling from 9th to 14th).

My second thought was that people would be unlikely to give equal weight to the five specified elements in assessing the quality of their lives. In order to assess what weights might be appropriate I used regression analysis to explain the old Gallup thriving index in terms of the five elements of the new index. The old Gallup index is based on the Cantril methodology under which survey respondents are asked to evaluate their own lives relative to the best and worst possible life. Under the old Gallup index the percentages of the population assessed to be thriving in El Salvador and Sweden were 36% and 68% respectively.

There is a problem with the use of regression analysis to obtain weights because the old and new indexes relate to surveys taken years apart, but that seemed to me to be a minor problem by comparison with use of equal weights.

The results of the analysis suggest that it might be appropriate to give a weighting of 40% to Purpose, 30% to Financial, 30% to Physical, and zero weight to Social and Community. The rankings on that basis are:
  1. Panama 
  2. Sweden
  3. Denmark
  4. Austria
  5. Costa Rica
  6. Canada
  7. Netherlands
  8. Iceland
  9. Mexico
  10. El Salvador

At this point I have to acknowledge that the high rating given to El Salvador is unlikely to be a result of the methodology used for ranking, or failure to weight elements appropriately.

No matter how I look at it, the people of El Salvador seem to be highly positive about their lives. This is consistent with the results of other Gallup surveys which have shown that the people of El Salvador experience a great deal of positive emotion.

The problem is that while it is good to have positive emotional states or positive states of mind, thriving involves more than that. From observed behaviour it is obvious that humans see their ability to thrive as related to objective circumstances such as incomes, life expectancy and education – which are reflected in the UN’s Human Development Index (HDI) – as well as to their emotional states.

Anyone interested in identifying the countries in which people have the best opportunities to thrive might find the following chart of some interest.

Monday, April 14, 2014

Can the industrial revolution be explained by the "cool-water condition"?

In my last post I discussed how Christian Welzel’s book, Freedom Rising has reinforced me in the view that the story of human flourishing is all about emancipation. As people obtain more action resources (wealth, intellectual skills and opportunities to connect with others) they tend to adopt emancipative values and to engage in collective action to attain more civic entitlements. Life provides greater opportunities for most people as this process occurs.

Before proceeding further it may be worth noting that there is evidence that poor people in low-income countries place value on economic freedom and the right to express their opinions e.g. the survey evidence by Deepa Narayan, Lant Pritchett and Soumya Kapoor discussed by William Easterly in The Tyranny of Experts, p 150 (which was reviewed on this blog a few weeks ago). It is hardly surprising that poor people do not like governments stealing their property or impeding their endeavours to earn more income and then telling them to shut up when they complain. Humans don’t have to become wealthy before they perceive that they have natural rights that should be respected.

In this post I consider whether or not Freedom Rising provides a satisfactory explanation of the conditions that got the ball rolling toward improved civic entitlements by enabling people to achieve higher material living standards, first in western Europe and then in many other parts of the world. It is important to have an understanding of the factors that led to the industrial revolution in order to consider whether a reversal of those factors could cause the processes of emancipation and human flourishing to be interrupted.

Professor Welzel identifies an environmental condition, the cool-water (CW) condition, as the source of the expansion in action resources associated with the industrial revolution. The CW condition is a combination of moderately cold climates, rainfall in all seasons, and permanently navigable waterways. These conditions are important because cool temperatures diminish infectious diseases, decelerate soil depletion and diminish physical exhaustion from work; continuity of rainfall improves land productivity and keeps water sources healthier; and permanently navigable waterways are a lubricant for economic exchange. Under the CW condition, soil is arable without irrigation, small farming households can work relatively large sections of land on their own, there is no need for extended families with many children to provide labour, and families do not have much need for community support. The CW condition enables people to have water autonomy – it prevents a central power from monopolising access to water as a means of controlling people.

 The development of urban markets occurred late in the CW societies, but once urban markets emerged in the CW societies of western Europe, the CW conditions made those societies more vibrant by generating “derivative autonomies, such as autonomy in marketing one’s skills, ideas and produce – the engine of technological advancement”.

It seems plausible to me that the CW conditions improved the odds that the industrial revolution would occur in western Europe rather than in some other part of the world at a comparable stage of technological development, e.g. China. My problem is that narrowing the source to western Europe provides, at best, a partial explanation. Why did the industrial revolution begin in north-western Europe rather than, for example, in south-western Europe?

If we want to answer that question then it seems to me that it is useful to look at economic history and, in particular, the works of people like Joel Mokyr and Deidre McCloskey. I suppose it is predictable that I might take that view since that is the approach taken in Chapter 7 of my book, Free to Flourish, and in posts on this blog (for example here and here).

Joel Mokyr has suggested that the industrial revolution should be referred to as the industrial enlightenment. He argued in The Enlightened Economy that a sustained period of industrial innovation was made possible because the “legitimisation of systematic experiments carried over to the realm of technology”.

Deidre McCloskey presented her views about the importance of value change as follows:
In particular, three centuries ago in places like Holland and England the talk and thought about the middle class began to alter. Ordinary conversation about innovation and markets became more approving. The high theorists were emboldened to rethink their prejudice against the bourgeoisie, a prejudice by then millennia old. … In northwestern Europe around 1700 the general opinion shifted in favour of the bourgeoisie and especially in favour of its marketing and innovating. … People stopped sneering at market innovativeness and other bourgeois virtues …”.

In Free to Flourish I concluded my discussion of drivers of opportunity in the following terms:
“This account of the historical drivers of opportunity underlines the importance of economic freedom in determining the advance of technology and innovation. Yet, the ongoing expansion of opportunities depends on much more than just formal rules and economic incentives. It also depends importantly on beliefs, ideologies and social norms.
One implication is that inter-personal trust and supportive public attitudes toward commerce need to be recognised as important factors influencing the growth of opportunities. Another implication is that the economic freedom necessary for ongoing growth of opportunities cannot be sustained unless prevailing beliefs, ideologies and norms are supportive.

The relationship between prevailing values and economic freedom seems to me to be a topic worth exploring further. It would be interesting to see to what extent emancipative values are correlated with values that support economic freedom. Are emancipative values protective of economic freedom, or is there reason to be concerned that such values are leading to increased pressure for “entitlements” that threaten economic freedom and hence the further growth of action resources?

Tuesday, March 25, 2014

"What's gone wrong with democracy?"

That was the title of an essay published in The Economist a few weeks ago.

For the most part I think the essay is quite good. That judgement wouldn’t surprise anyone who has read my book, Free to Flourish because the main points in the essay are similar to those in Chapter 8 of my book. The biggest challenge to democracy comes from the tendency of governments to overreach – by creating entitlements that they cannot pay for, or by waging “wars” that they cannot win “such as that on drugs”. The solution lies in finding ways to ensure governments and electors accept appropriate restraint.

However, the essay has got me thinking that there is something odd about the argument that democracy is such a good thing that it needs to be restrained in order to be preserved. I suppose what we might be saying is that democracy is, in some respects, like wine - it is good, but you can have too much of it. If that is what we are saying then we should probably admit that we view democracy as a means to achieve more fundamental objectives, rather than as an end in itself. If we think it is possible to have too much democracy we must be saying that too much democracy would conflict with some fundamental objective that is important to us.

The introduction of The Economist’s essay suggests reasons why people prefer “rules-based democracy” to “corrupt, abusive and autocratic governments”. But, why do we need reasons? If a “rules-based democracy” enables us to avoid or remove corrupt and abusive government, that would have to be better than living under corrupt and abusive government. The end we want to achieve is to enable corrupt and abusive governments to be replaced peacefully. Democracy provides a means to that end. The fact that the democratic systems used in southern Europe don’t seem to have been capable of replacing corrupt governments with non-corrupt governments might suggest to us that those systems of government are deeply flawed.

The reasons given in the essay as to why people prefer democracy are as follows:
“Democracies are on average richer than non-democracies, are less likely to go to war and have a better record of fighting corruption. More fundamentally, democracy lets people speak their minds and shape their own and their children’s futures”. 

Perhaps those are reasons why many people say they prefer democracy, but it is far from clear that democracy causes all those things to happen. The assertion that “democracy lets people speak their minds and shape their own and their children’s futures” seems to me to be more a statement of what should happen rather than what actually happens.

Democracy requires that candidates for election have sufficient freedom in presenting their views to enable electors to choose between them. That doesn’t necessarily mean that democracy “lets people speak their minds”. For example, just last year, the former Australian government was proposing to introduce laws that would make it illegal to, among other things, “offend or insult” people on the basis of their “political opinions”. People elected to power via democratic processes do not always support free speech.

Similarly, the idea that democracy lets people “shape their own and their children’s futures” seems to me to be more a statement of what should happen, than a statement of what actually happens. Governments have become far more involved in shaping the lives of people since the advent of democracy. The governments that are attempting to shape the lives of people through their wars on drugs, alcohol, tobacco, gambling and, more recently, fat and sugar, are democratic governments.

When we ask ourselves what has gone wrong with democracy, we tend to begin by convincing ourselves that democracy is good for us because all other systems would be worse. We then proceed to worry that the self-destructive tendencies of democracy are becoming more evident and to consider how democracy can be constrained in order to be preserved. The message is important, but is complicated.

We might have more hope of moving toward a better system of democratic government if we were to adopt a more straight forward approach. What I have in mind is that we should approach the issues by considering the characteristics of good government and how our existing systems of government would need to be modified to have those characteristics to a greater extent.

At this point I might be well advised to elaborate what I mean by good government and then spend the next few years researching what others have written about the characteristics of good systems of government. But the essential characteristics of a good system of government seem fairly obvious. It would:
  • defend the lives and property of individuals and their right to live as they please, provided they do not interfere with the similar rights of others;
  • ensure widespread opportunities for individuals to flourish by using their personal resources for purposes they value in mutually beneficial endeavours with others; and
  •  provide a mechanism for peaceful removal and replacement of governments that do not defend individual rights and ensure widespread opportunities for individual human flourishing.

So, how can we move further toward a system of government that has those characteristics?

Sunday, January 26, 2014

How do peaceful societies come about?

Although this blog is still taking a long holiday, I want to write about this issue now because I have been turning it over in the back of my mind for a few months.  

A good place to start might be to think of a poor country, or even a developing country, with a law and order problem. In this country, the people who can afford to do so live behind high fences and they are protected by security guards. The rest of the population are highly vulnerable to criminal activity of many kinds. Crime has a dampening effect on all forms of commercial activity that cannot be adequately protected by high fences and security guards. For example, any economic activity involving road transport to and from the rural areas, where most people live, is constrained by the high risk of banditry by people living near the roads.

So, what should be done about this? The main options that seem to come up in public discussion are:
  1.  Promote higher ethical standards by encouraging increased religious observance.
  2. Deter crime by ensuring that criminals are more frequently caught and punished.
  3. Make a life of crime a less attractive option to potential criminals by promoting more widespread economic opportunity.

I don’t hold much hope for the first option. Church attendance is at record levels in the particular country that I am thinking of.  My reading of history also suggests to me that religion is not enough to promote peacefulness.

In my discussion of “the drivers of peacefulness” in Free to Flourish I wrote:
“Adherents of the major world religions all subscribe to a vision of ethical behaviour corresponding to the golden rule of treating others as one would like to be treated. It would seem reasonable to expect that followers of those religions would always have obtained satisfaction from acting in accordance with this ideal. Yet, this was not sufficient to bring about an outbreak of peacefulness outside of religious orders.
Why not? We would need a model of moral progress to answer that question. Such a model would specify that the way people behave and how they perceive themselves depends on the incentives in the environment in which they live. If they believe that people outside their family group or tribe are not to be trusted, they will not risk attempting to engage with them in cooperative ventures or mutually beneficial exchange. If they believe that the incentives in their environment favour predatory behaviour, they will tend to adopt a sense of personal identity that enables them to feel comfortable with such behaviour despite paying lip service to higher ideals.
A model of moral progress would recognise that the emergence of governments that showed greater respect for the rights of citizens ameliorated a major threat to life and property. It would recognise the importance of the emergence of mechanisms for contract enforcement in both promoting trustworthy behaviour and encouraging greater trust of strangers. This, in turn, enabled mutually beneficial exchange involving larger groups of people.”

That way of thinking emphasizes that the peacefulness of societies depends to a large extent on the attitudes of individuals and groups. Perceptions of incentives are important not just in affecting the expected rewards from crime relative to alternative pursuits, but also in influencing the perceptions that individuals have of themselves. 

So, we should be thinking about the impact that interventions might have on attitudes rather than just about altering incentives. Devoting more resources to fighting crime will not necessarily have much impact if perpetrators perceive themselves to be justified in their actions and are supported by their relatives and the community groups to which they belong. A post I wrote last year about crime in Tipperary, Ireland, at the beginning of the 19th Century illustrates the problem.

However, that doesn’t answer the question of what can actually be done to help induce a transition from a situation in which incentives tend to favour predatory attitudes and behaviour to one in which incentives favour productive activity and market exchange. Some would argue that more government spending to expand the police force is the only practical option. After all, the societies that have made the transition to peacefulness in the past have achieved the desired outcome by investing vast amounts of public money in protecting property and deterring crime, haven’t they?

Actually, when we look at the history of Britain, peacefulness didn’t happen quite like that. In his book, The Enlightened Economy, Joel Mokyr points out that the Hobbesian view that order can only be achieved through firm third-party (i.e. government) enforcement was not true of Britain in the 18th Century. Large parts of Britain were virtual “lawless zones” and in others, legal practice often deviated considerably from the letter of the law. Enforcement was largely a private enterprise with the courts at best serving as an enforcer of last resort. There was no professional police force. Daily law enforcement was in the hands of amateurs and part-time parish constables. Justice had to rely to a large extent on volunteers, local informers, vigilante groups and private associations specializing in prosecution of felons. Private law enforcement remained of substantial importance until well into the 19th Century (pages 376-379).

Mokyr argues that the economic system functioned because the crucial economic actors – merchants, craftsmen, bankers, farmers etc. – were bound by moral codes of concern about their reputations. (I wrote more about that here, as well as in Free to Flourish.) There were credible signals that property rights would be protected, even though such signals were, for the most part, not sent via government law enforcement agencies.

So, what does all that mean for promoting law and order in poor countries in which economic development is being held back by criminal activities? The only insight I have to offer is that history seems to support the view that economic opportunity holds the key to peacefulness. 

If you want to start a virtuous cycle where peacefulness supports the growth of economic opportunity, you first need to have sufficient numbers of people who are able to perceive of opportunities to engage productively in mutually beneficial activities, and hence, to want to live in peace. If politicians want to help (a big ‘if’ I know) they should be thinking about what they can do to encourage the relatives of people with predatory tendencies to engage productively in mutually beneficial activities. For example, if the risk of banditry is making it too costly for farmers to send their produce to market then, perhaps, there might be some way to get the some of the relatives of the bandits productively engaged in the transport of goods, perhaps even as security guards.  Anyhow, that might be an option worth thinking about as an alternative to expanding police numbers. 

Tuesday, October 15, 2013

How does 'democratic failure' threaten progress?

In Chapter 8 of my book, Free to Flourish, I suggested that the greatest threat to human progress over the next few decades is that democratic governments will not be able to cope with their expanding responsibilities. I noted that increased public disorder is already evident in Europe and is likely to become more widespread as people become increasingly aware that governments cannot deliver on the promises they have made.

There is a risk that failing democracies will be replaced by authoritarian regimes that have little regard for human rights. Even if democracy limps on, however, over-expansion of the responsibilities of government seems likely to bring progress to an end in many societies.
Progress ends at the point where societies cease to be able to offer expanding opportunities for individual human flourishing.

From an economic perspective, the most obvious threat to progress posed by expansion of the responsibilities of government has to do with the economic costs of high levels of government spending, high taxation and excessive regulation. Government spending has to be paid for sooner or later by collecting revenue from citizens and (as every economist should know) the economic cost of taxation rise disproportionately with tax revenue. There are also economic costs associated with forms of government spending and regulations that divert resources to less productive activities or weaken incentives for efficient resource use. As a general rule, the further the activities of government extend beyond core functions in which government has a comparative advantage, the more likely it is that progress will be stifled.

However, that kind of analysis understates the threat to progress posed by expansion of government responsibilities because it assumes that governments act in the interests of the broader community and that all governments have competence in taxing, spending and regulating to pursue agreed objectives. Democratic processes may reduce some of the problems of such government failure, but democracy doesn’t provide much assurance that governments will pursue objectives that are in the interests of the vast majority of citizens, or that the activities of government will be undertaken efficiently. Democracy doesn’t prevent voters from developing inflated expectations of what governments can do – politicians often encourage inflated expectations in competing for votes. Democracy doesn’t ensure that individuals have the opportunity to discover and pursue whatever it is that enhances their own wellbeing and the responsibility to manage their own lives; it doesn’t prevent people from being relieved of important responsibilities – such as education, health care, saving for retirement. Democracy doesn’t prevent governments from becoming captive to interest groups in industry, the community and the public sector, and to pursue the interests of those groups at the expense of the rest of the community. The absence of market disciplines in the public sector makes public sector activities particular prone to corruption and inefficiency, even in democracies.

As a consequence of such democratic failure there is a tendency for the responsibilities of government to expand until economic disaster threatens. The point at which this occurs differs greatly between countries, depending on the extent of corruption and inefficiency. For example, Greece was well on the way to an economic crisis before its government spending as a percentage of GDP reached levels comparable to those in Sweden, which is often held up as a prime example of a country with big government.

Another symptom of democratic failure is difficulty in changing course when disaster threatens. Again, a comparison between Sweden and Greece is appropriate. When disaster threatened in the early 1990s, Sweden was able to introduce reforms to contain the growth of government spending, reduce marginal tax rates and regulate more efficiently. Despite the high level of government spending in Sweden - still around 50 per cent of GDP – there is some prospect that opportunities for individuals to flourish will expand over time in that country. Gallup poll data suggest some increase in average life satisfaction in Sweden over the period from 2005-07 to 2010-12 and that Swedes are optimistic that their lives will improve further over the next five years.

By contrast, Greece has shown much less ability to introduce the reforms needed to avert economic disaster, even though successive governments in that country have known that public debt problems were looming since before 2001, when Greece joined the Eurozone. The consequence has been a fall of about 20 per cent in Greece’s GDP since 2008. The average unemployment rate in Greece has been about 28 per cent this year and youth unemployment over 60 per cent. Over the period from 2005-07 to 2010-12, average life satisfaction in Greece declined from 6.3 to 5.4 (on the Cantril scale in which the ‘best possible life’ is given a value of 10 and the worst possible life a value of zero). Greeks have become pessimistic about the future – the average Greek expects life to get worse over the next five years.

It would be nice to be able to contrast the experiences of both Sweden and Greece with those of a country that can be held up as a model of ideal democratic governance. Unfortunately, no country comes to mind. Institutional innovations have resulted in improved policy outcomes in some countries, but I don’t think any one country deserves to be held up as a model of ideal governance.

The growth of inflated expectations of what governments can do seems to be a common pattern throughout the democratic world. It is also common for responsibilities of government to expand until crisis threatens.

As we have seen, what happens at that point is of critical importance. If policy reforms are introduced to contract the responsibilities of government, that enables opportunities for individual human flourishing to expand over the longer term. If reform is too little and too late there is the prospect of following Greece down the path toward widespread misery. Unfortunately, a Greek tragedy may await many countries, particularly in Europe, where democratic failure seems to have become too deeply entrenched for substantial reforms to be implemented.

Tuesday, October 8, 2013

How should virtue ethics be applied in the pursuit of happiness?

Jeffrey Sachs has described his essay, ‘Restoring Virtue Ethics in the Quest for Happiness’ as highly speculative. That description is apt in my view, even though the idea of restoring virtue ethics does deserve serious consideration. (The essay was published recently as Chapter 5 in the World Happiness Report 2013.)

Jeff begins by establishing that before the modern era, virtue and happiness were seen to be inextricably intertwined. Happiness was seen to be achieved by harnessing the will and the passions to live the right kind of life. He goes on to argue that, over several centuries, virtue ethics has largely been replaced by utilitarian considerations, resulting in greater hedonism and consumerism.

I agree that people have come to think of happiness as being largely about feelings – about pain and pleasure, or positive affect and negative affect, rather than about tranquility, equanimity or spirituality. And, for many people, the pleasure of immediate consumption seems to have encroached upon the virtue of prudence.

Jeff takes this argument much further. He suggests that in the early decades of the 20th Century (the Roaring 20s) ‘America slid into an ethos of ‘hyper-commercialism, untethered by ethical, religious, or philosophical constraints’. He suggests that since then the prevailing ethos has been that happiness ‘was more and more to be found in personal wealth, pure and simple’. He follows Wilhelm Ropke in suggesting that the ubiquity of advertising and the other ‘dark arts of persuasion’ are undermining social values and ethics. He also shares Ropke’s concerns that financial innovations are undermining the fragile restraints that induce households to save for the future.

Jeff argues that hyper-commercialism is the dominant ethos in the United States today. He also claims:
‘Hyper-commercialism has failed to lift average US happiness for more than half a century, even as per capita income has tripled. In Figure 2.3 of this report, the US ranks just 17th in happiness, though it has a higher income per capita than the 16 countries ahead of it, with the exception of Norway’.

However, I don’t think Jeff has established that hyper-commercialism is the dominant US ethos. It seems to me that what Jeff describes as ‘hyper-commercialism’ is normally referred to in less inflammatory terms as ‘materialism’ - a preoccupation with or emphasis on material objects, comforts and considerations at the expense of spiritual, intellectual, or cultural values. Whereas hyper-commercialism is linked exclusively to commercialism, materialism could have a number of different causes. Businesses certainly try to tempt people to buy the things they sell, but they were not alone in encouraging materialism. The 20th Century was also prime time for industrial and political movements which promoted materialism by encouraging people to agitate for improvement in the material conditions of their lives. Practitioners of the politics of envy have been active in America in encouraging people to become discontented, even though they have been less successful than in some other parts of the world.

The idea that materialism has become dominant seems to me to understate the ongoing influence of ethical constraints and non-commercial values in the United States. Views about anti-social behaviour have moved in favour of greater government regulation, and opportunistic and untrustworthy behaviour is widely discouraged. Moralists and even some entertainers preached against materialism during the 20th Century, as in earlier periods. Their view has gained impetus in recent years as scientific evidence has emerged that people whose main goal in life is to become wealthy tend to become unhappy if they fail to attain that goal.

Jeff also seems to have overlooked the possibility that people might have chosen to become more materialistic in their outlook even in the absence of urging by commercial and political interests. Is it not possible that we have come to want the material objects that make our lives more comfortable and provide us with better travel and communication possibilities as they have come into existence and as we have come to learn how they can improve our lives? My casual observations suggest that it is possible. For example, when I visited Bhutan it seemed obvious to me that many of the people who live there still want access to the material objects of the modern world, even though they have been exposed to little advertising.

The evidence that Jeff cites of no increase in average happiness in the US for more than half a century is contradicted by evidence from the Pew Research Center and the Gallup Organisation that since 1964 the proportion of Americans saying that their life today is better off than five years ago has generally far exceeded the proportion saying that their life today is worse than five years ago. It seems to me that the latter surveys are more reliable because they require respondents to evaluate their current and past lives on a directly comparable basis.

The point that Jeff makes about average happiness in the US ranking below that of some countries with lower incomes invites an inspection of the reasons why the US ranking is lower, to see whether they provide support for speculations about hyper-commercialism. I don’t see any obvious evidence in support of Jeff’s speculations in Figure 2.3 (to which he refers in the passage quoted above). Perceived levels of social support and generosity are comparable to those in the highest ranking countries. The Figure suggests that the areas in which the US performs more poorly than the highest ranking countries are perceptions of corruption and freedom to make life choices – which are not linked in obvious ways to hyper-commercialism. Further research is required to understand why people in the US perceive corruption to be high and their freedom to be restricted.

It is fairly clear from what I have written that I disagree with a fair amount of the reasoning by which Jeff comes to the view that virtue ethics should play a larger role in the quest for happiness. Nevertheless, I agree with him that we should be seeking some kind of ethical consensus as a guide to public policy. In Free to Flourish (and on this blog) I have suggested that the concept of a good society – a society that is good for the people who live in it – could be a useful focus for thinking about this issue. I have suggested that there would be widespread agreement that a good society would have three important characteristics:
·         a set of institutions that enable its members to live together in peace;  
·         widespread opportunities for its members to live long and healthy lives, and to pursue their economic, educational, cultural goals; and
·         a degree of security against misfortunes such as accidents, ill-health, unemployment and environmental disasters. 

Finally, I agree with Jeffrey Sachs’ suggestion that more attention should be given to monitoring individual norms regarding honesty, trust and other aspects of virtue ethics. The state of the social fabric is clearly of fundamental importance to the pursuit of happiness.