People Aren’t Happy, So Let’s Fix It With Taxes


The Economist this week is all about capitalism and happiness. One of the lead articles discusses the idea that greater societal wealth doesn't make people happy. Why? Because we don't really want stuff, we just want more stuff than our neighbors. We want to be better than our peers. People spend so much time trying to get stuff that they don't need, then wonder why they are so unhappy. The surprising suggestion from this article is that taxes can fix the problem. The even more surprising suggestion from this article is that these taxes are not meant to address inequality, but rather, to force the acceptance of elitism and societal hierarchy.

Think of the scramble for schools, Mr Frank says. Only 10% of kids can go to the top 10% of schools. In many countries, wherever the schools are good, the houses will be expensive. Thus parents who want the best education for their child must overwork to afford a house in a good school district. In doing so, however, they raise the bar for everyone else.

Is mutual disarmament possible? Not without government help, Mr Frank and Lord Layard argue. The exchequer should tax earned income heavily enough to deter one-upmanship, they say.

Despite appearances, this is not a naked example of punitive redistribution-the fiscal politics of envy. Mr Frank and Lord Layard do not want to level the social order. Their aim is much more conservative than that. Their taxes would leave the pecking order intact and envy undiminished. But people would be deterred from acting on the green-eyed monster. The problem these economists want to tackle is not inequality per se. It is that people don't know their place and scramble vainly to improve it. Carlyle, who thought man should content himself with being the worthy follower of worthy superiors, would no doubt have approved.

This is such an odd thing to read because taxes are usually proposed under egalitarian ideals. The assumption behind so much left-wing thinking is that we should all be more equal, despite being dealt different hands in the game of life, and playing the hand we have been dealt in different ways.

The article goes on to talk about unhappiness at work.

Not that Carlyle was workshy. On the contrary, he thought that work was the only lasting measure of a man. As he put it, whatever insight, ingenuity and energy a man had in him "will lie written in the work he does". And the "only happiness a brave man ever troubled himself with asking much about was, happiness enough to get his work done."

Economics, on the whole, disagrees. It thinks of labour as a chore. People sell it, at the expense of their leisure time, purely as a means to the end of consumption. Indeed, Carlyle first anointed economics the "dismal science" because liberal economists insisted that American slaves be free to sell their labour in the marketplace like everyone else.

As far as work goes, I blame much of the unhappiness problem on managers who are so damn disconnected from their employees that they don't channel them into doing work they like. When I go home, I sometimes read annual reports in my free time because I find them interesting. It is totally irrelevant to my job (and probably an indication I should switch to an investing related field some day), but it is *work* for some people. There are all sorts of other things, from programming to graphic design to organizing to quality control that are considered work in some contexts, but some people really enjoy doing them. Part of a manager's job is to get the most out of limited resources, and one way to do that is to understand those resources and, in the case of labor, channel people to do work that they really enjoy.

Anyway, click over and read the whole article. It's interesting stuff, and touches on some issues that aren't well explained by basic economic theory.

  • “channel people to do work that they really enjoy”…managers indeed should strive to do a better job at this. But flexibility is limited because so many people choose their careers based on extremely vague information about what the fields will be like and what they will pay. There are kazillions of people going to law school today because they can’t think of anything else to do. In 10 years, it’s going to be difficult for even the most talented managers to make good use of the unhappy ones and the ones who aren’t very good at law. The same is true in lots of other fields.

    Social prejudices play a strong role: there are probably lots of people who could be excellent (and financially well-off) salespeople, but never considered the possibility because of the image of Willy Loman.

  • J

    “The assumption behind so much left-wing thinking is that we should all be more equal”

    No, that’s the pitch behind so much (well, all really) left-wing thinking. But “man should content himself with being the worthy follower of worthy superiors” describes leftist objectives pretty much to the letter, though that mindset isn’t restricted to leftists.

  • This is exactly what’s happened in much of northern Europe: high taxes cement existing wealth hierarchies, because most taxes go after cashflow and not existing wealth. Since people can’t better themselves through wealth, they go into nonproductive areas like government.

    The Economist has been going downhill for the past few years, having bought into silliness such as global warming hysteria and lots of oddball excuses for confiscatory taxation. Taxes will kill your aspirations and force you to do stuff that makes you happy, thereby setting you free! Pass the bong, dood!

  • Rob
    A more vexing question would be hard to find. I believe you are on target; disconnected management is a terrible driver of unhappiness. This is where I would usually place a plug about how the Leadership Epidemic and the Convention Wisdom of the Leadership-Industrial Complex selling false leadership hope are the primary drivers behind this problem. However, I’m not sure that’s the answer. I have to agree with David Foster’s assessment; a lot of people are pursuing careers based on vague ideas about what it means to work in that field. I’ve experienced this myself in the three career paths that I’ve pursued. I was in my 30s before I found a rewarding professional calling. For me, I believe time and experience was the great arbiter in my finding the path that I’m on. In short, while I’m not fond of blame, in the case of happiness, I believe responsibility lies on the shoulders of all the participants, not just the leaders.
    Take care…

  • HotJavaJack

    “But people would be deterred from acting on the green-eyed monster. The problem these economists want to tackle is not inequality per se. It is that people don’t know their place and scramble vainly to improve it.”

    It is appalling to find that anyone believes that it is the role of government to legislate people’s avoidance of envy and of “knowing their place.” Ugh.