Don't keep up with the Joneses

Once a nation has filled its larders is there any point in getting richer? Prof. Andrew Oswald on ho

In espousing quality of life for his nation, French President Nicolas Sarkozy is rare. Most politicians think economic growth is what makes a nation happier.

"Britain is today experiencing the longest period of sustained economic growth since the year 1701 – and we are determined to maintain it," began Gordon Brown, then chancellor of the exchequer, in the first sentence of his 2005 Budget speech.

Now prime minister, he has gone on to act as though he still does believe that growth is vital. Yet Nicolas Sarkozy is right and Gordon Brown is wrong.

Today there is much statistical and laboratory evidence in favour of the following simple fact: once a country has filled its larders there is no point in that nation trying to become richer.

First, surveys show that the industrialised nations have not become happier over time. Random samples of UK citizens today report the same degree of psychological wellbeing and satisfaction with their lives as did their (poorer) parents and grandparents.

In the US, happiness has fallen over time. Strikingly, and for reasons we do not completely understand, white American women are markedly less happy than were their mothers.

Second, using more formal measures of mental health, rates of depression in a country like the UK have increased over the last couple of decades.

Third, measured levels of stress at work seem to have risen.

Fourth, suicide statistics paint a picture that is often consistent with such patterns. In the US, even though real income levels have risen six-fold, the per capita suicide rate is the same as in the year 1900 (though in the UK, more encouragingly, the suicide rate has fallen in the last century).

Fifth, climate change is another reason why we should turn away from fast economic growth as the ideal to be pursued.

Some of the world’s most creative academics have followed the seminal work of economics professor Richard Easterlin in California and have come up with evidence on why growth does not work.

One reason is that humans are creatures of comparison. Research last year showed that happiness levels depend inversely on the earnings levels of a person’s neighbours. Prosperity next door makes you dissatisfied. It is relative income that matters: when everyone in a society gets wealthier, average wellbeing stays the same. There is a kind of giant neutralization.

A further reason is adaptation. Experiences wear off. A joint intellectual effort by psychologists and economists has got to the bottom of the way that human beings adapt to good and bad events. There is still disagreement about details, but some researchers believe that there is close to complete adaptation to rises in income. Such hedonic flexibility also works downwards.

Those who become disabled recover half of their happiness by three or four years later. Yet economics textbooks still ignore such ‘habituation’.

A final reason is, as Daniel Gilbert at Harvard has shown, that human beings are bad at forecasting what will make them happy.

In laboratory settings, people systematically choose the wrong things for themselves.

Yet surely, it might be argued, what about skiing holidays, power showers, televised football matches, fancy wristwatches, car travel for all – are these not compelling evidence for the long arm of growth? Yes they are, but we need these because Mr and Mrs Jones have them, not because they make an intrinsic difference.

Economists’ faith in the value of growth is now diminishing. That is a good thing. I believe that in the long run these (still strange) ideas are unstoppable. The reason is straightforward: they are supported by the data.

Andrew Oswald began working on happiness data in the early 1990s. His current work lies at the borders of economics, psychology and medicine.

Andrew Oswald is professor of economics at Warwick University and an ESRC professorial fellow. He has won various awards for his research, including Princeton University’s Lester Prize
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The New Times: Brexit, globalisation, the crisis in Labour and the future of the left

With essays by David Miliband, Paul Mason, John Harris, Lisa Nandy, Vince Cable and more.

Once again the “new times” are associated with the ascendancy of the right. The financial crash of 2007-2008 – and the Great Recession and sovereign debt crises that were a consequence of it – were meant to have marked the end of an era of runaway “turbocapitalism”. It never came close to happening. The crash was a crisis of capitalism but not the crisis of capitalism. As Lenin observed, there is “no such thing as an absolutely hopeless situation” for capitalism, and so we discovered again. Instead, the greatest burden of the period of fiscal retrenchment that followed the crash was carried by the poorest in society, those most directly affected by austerity, and this in turn has contributed to a deepening distrust of elites and a wider crisis of governance.

Where are we now and in which direction are we heading?

Some of the contributors to this special issue believe that we have reached the end of the “neoliberal” era. I am more sceptical. In any event, the end of neoliberalism, however you define it, will not lead to a social-democratic revival: it looks as if, in many Western countries, we are entering an age in which centre-left parties cannot form ruling majorities, having leaked support to nationalists, populists and more radical alternatives.

Certainly the British Labour Party, riven by a war between its parliamentary representatives and much of its membership, is in a critical condition. At the same time, Jeremy Corbyn’s leadership has inspired a remarkable re-engagement with left-wing politics, even as his party slumps in the polls. His own views may seem frozen in time, but hundreds of thousands of people, many of them young graduates, have responded to his anti-austerity rhetoric, his candour and his shambolic, unspun style.

The EU referendum, in which as much as one-third of Labour supporters voted for Brexit, exposed another chasm in Labour – this time between educated metropolitan liberals and the more socially conservative white working class on whose loyalty the party has long depended. This no longer looks like a viable election-winning coalition, especially after the collapse of Labour in Scotland and the concomitant rise of nationalism in England.

In Marxism Today’s “New Times” issue of October 1988, Stuart Hall wrote: “The left seems not just displaced by Thatcherism, but disabled, flattened, becalmed by the very prospect of change; afraid of rooting itself in ‘the new’ and unable to make the leap of imagination required to engage the future.” Something similar could be said of the left today as it confronts Brexit, the disunities within the United Kingdom, and, in Theresa May, a prime minister who has indicated that she might be prepared to break with the orthodoxies of the past three decades.

The Labour leadership contest between Corbyn and Owen Smith was largely an exercise in nostalgia, both candidates seeking to revive policies that defined an era of mass production and working-class solidarity when Labour was strong. On matters such as immigration, digital disruption, the new gig economy or the power of networks, they had little to say. They proposed a politics of opposition – against austerity, against grammar schools. But what were they for? Neither man seemed capable of embracing the “leading edge of change” or of making the imaginative leap necessary to engage the future.

So is there a politics of the left that will allow us to ride with the currents of these turbulent “new times” and thus shape rather than be flattened by them? Over the next 34 pages 18 writers, offering many perspectives, attempt to answer this and related questions as they analyse the forces shaping a world in which power is shifting to the East, wars rage unchecked in the Middle East, refugees drown en masse in the Mediterranean, technology is outstripping our capacity to understand it, and globalisation begins to fragment.

— Jason Cowley, Editor 

Tom Kibasi on what the left fails to see

Philip Collins on why it's time for Labour to end its crisis

John Harris on why Labour is losing its heartland

Lisa Nandy on how Labour has been halted and hollowed out

David Runciman on networks and the digital revolution

John Gray on why the right, not the left, has grasped the new times

Mariana Mazzucato on why it's time for progressives to rethink capitalism

Robert Ford on why the left must reckon with the anger of those left behind

Ros Wynne-Jones on the people who need a Labour government most

Gary Gerstle on Corbyn, Sanders and the populist surge

Nick Pearce on why the left is haunted by the ghosts of the 1930s

Paul Mason on why the left must be ready to cause a commotion

Neal Lawson on what the new, 21st-century left needs now

Charles Leadbeater explains why we are all existentialists now

John Bew mourns the lost left

Marc Stears on why democracy is a long, hard, slow business

Vince Cable on how a financial crisis empowered the right

David Miliband on why the left needs to move forward, not back

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times