New Directions In Totalitarian Outreach

     [Owing to this important article on Congressional overspending, I’ve chosen to resurrect the following piece. It first appeared at Eternity Road, though I can’t remember exactly when. -- FWP]

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     Columnist Robyn Blumner cites a few choice notions from British economist Richard Layard's new book, Happiness: Lessons From a New Science:

     It turns out, according to the author, that people measure success by looking at those around them. Keeping up with the Joneses is killing our inner peace. Even as we acquire luxury items, the other guy has more. Layard calls it a "hedonic treadmill."

     But there are other forces at work beyond our own affluenza, including the government's approach to the people it serves. When a nation embraces a culture of community well-being over a "you're on your own" attitude, happiness gets spread around. "Our fundamental problem today is a lack of common feeling between people --- the notion that life is essentially a competitive struggle," Layard says. He points to the Scandinavian countries as among the happiest because they "have the clearest concept of the common good."

     Layard endorses the high tax rates of these nations as a way to reduce overwork, making it less valuable. It also has the added benefit of giving government the resources to provide a broad array of social services that tend to make people's lives more secure, such as universal health care.

     And high taxes reduce income disparities, leading to a general sense of relative well-being. Layard says that studies find that the more equally a nation's income is distributed, the higher the level of average happiness. He is not talking about communism, but a shrinking of wealth disparities.

     No, Ma'am, he's talking about communism. He's using "a shrinking of wealth disparities" as a stalking-horse, a utilitarian lure with which to lead people into taking the claims of early Marxian communist theory seriousy -- even though in no country that has experienced communist rule has "a shrinking of wealth disparities" actually taken place.

     There are so many logical and rhetorical problems with Layard's thesis that it would be impossible to cover them all in a single essay, even at your Curmudgeon's habitual excessive length. But it's vital that at least the most important ones get a cursory evisceration.

     First, there's the hedonic treadmill. Now, this is an important line of thought, one not to be dismissed lightly simply because it's used by some as a bludgeon against "consumerism" and capitalism in general. But the hedonic treadmill is only a worthy concept when seen in its appropriate context: the passage of the years of an individual life.

     For the treadmill to catch at Smith's ankles, he must insist on perpetuating all his pleasures and diversions as he ages, rather than slough the pleasures of youth while adopting new pleasures and diversions as appropriate. For it is the multiplication of pleasures, all contending for space on Smith's agenda, that pulls the hedonic treadmill's belt. But since the typical man does, albeit with some regret, relinquish the pleasures of youth when the time comes to do so, he remains able to walk at a comfortable pace; the treadmill does not snare him. And our friend Smith is nothing if not typical.

     Layard's use of the hedonic treadmill is tendentious; he wants us to see it statically, as a trap that arises from increases in wealth and that's not countervailed by any other dynamic. Yet we all age. More, even the pleasures of youth change over time, as anyone who can remember how different the diversions of the Sixties were from those that the young enjoy today would realize at once. Time permits nothing to stand fast; it's ludicrous to imagine that our frivolities would be exceptions.

     Second, there's nothing but opinion behind the assertion that "people measure success by looking at those around them." Some undoubtedly do, but these are probably the least happy of all persons. They've relativized and externalized their desires; their wants are no longer their own. In effect, their sole motivation is the assuagement of their envy. But your Curmudgeon has known thousands of persons in his half-century on this ball of mud, and can only think of three to whom the charge would stick.

     A nation whose citizens are mainly actuated by envy is one which will experience no significant advancement. Its members will spend as much time (or more) trying to retard one another's gains as they'll spend working on their own fortunes; this is the logical consequence of a relativized desire system. History provides numerous examples of such societies -- and all the Twentieth Century's experiments in income-leveling, including all the Communist states that have passed into the dustbin of history, are among them.

     But the crown jewel of absurdity, the acme of counterfactual contention, is here:

     Layard endorses the high tax rates of these nations as a way to reduce overwork, making it less valuable. It also has the added benefit of giving government the resources to provide a broad array of social services that tend to make people's lives more secure, such as universal health care.

     Seldom have so many nonsensical notions been crammed into a fifty-word paragraph. Let's go through them in detail.

     High tax rates do not reduce overwork. They deprive the worker of a part of his incentive to work more; this is true. But Americans' interest in increasing their hours was no less during the days of our highest marginal income tax rates than it is under the much lower ones of today. They merely added another item to their agendas: tax minimization, whether by contriving clever bartering schemes, earning part of their incomes "off the books," or outrightly lying to the IRS about their deductible expenses.

     More, Layard's argument for high tax rates combines all the following:

• The revenue funds "a broad array of social services";
• Those services "make people's lives more secure";
• The above, combined with the destruction of incentives to earn more, is what people would really prefer if they could get in touch with their inner Rousseau.

     Every word of this contention is demonstrably false. When tax rates rise past the Laffer crest, the marginal revenue they garner becomes negative. Thus, there is no net financial gain to the State from the elevation of the rates past that point. The Reagan anti-tax revolution of the Eighties established this beyond any possible counter-argument:

Fiscal Year	Federal Receipts, $Billions
1980	517.1
1981	599.3
1982	617.8
1983	600.6
1984	666.5
1985	734.1
1986	769.1
1987	854.1
1988	909.0
1989	990.7
1990	1073.5

     Thus, despite the "heartless" Reagan tax cuts -- the Kemp-Roth rate reductions of 1981 and the Packwood tax reform act of 1986 -- federal revenues soared by 107%. Congress overspent the funds gathered, but in doing so did not provide any more social services than in previous decades. Indeed, federal social services remained close to constant in proportion to the populations served. However, something did increase rather dramatically: federal expenditures on the salaries and perquisites of federal employees:

Fiscal Year	Federal Employment, Thousands	Federal Wages Disbursed, $Billions
1980	2987	58.0
1981	2909	63.8
1982	2871	65.5
1983	2878	69.9
1984	2935	74.6
1985	3001	80.6
1986	3047	82.6
1987	3075	85.6
1988	3113	88.8
1989	3133	92.8

     Thus, while the federal workforce expanded by 4.8%, federal wages paid increased by 60% -- and every other cost account tied to federal employment increased in proportion. Perhaps those federal employees felt that their lives had become more secure, but it's doubtful that their increased prosperity had that effect on anyone else.

     With particular regard to the myth of "universal heath care," which pops up at each debate over the proper extent of government benevolence like a toadstool after a rainstorm, it is also demonstrably the case that in every country whose health care system has been nationalized under this pretense, the State has had to disguise the failure of the system as best it could by erecting a multi-tier scheme of service, under which persons unfortunate enough to be on a lower tier are compelled to wait or accept low-grade service while those in a higher tier are served with something approaching efficiency and efficacy. The stories from the old Soviet Union are legion; they're matched, in horrific quality if not in mere quantity, by the stories emanating today from France, Canada, and Britain. Socialized medicine leaves people to die rather than admit that its "universality" is a sham. This cannot be squared with any interpretation of "making people's lives more secure."

     Lastly, Layard's claim, in Miss Blumner's words, that:

     [H]igh taxes reduce income disparities, leading to a general sense of relative well-being. Layard says that studies find that the more equally a nation's income is distributed, the higher the level of average happiness.

     ...requires something more than "studies" for its substantiation. "Studies" about "well-being" and "happiness" are the most easily manipulated things in the world. They can be framed to produce whatever conclusion the "researcher" desires to reach. There are no metrics that can accurately and reproducibly capture happiness or well-being. All we have to go on is the observable behavior of people in the environments they choose for themselves from the available options. What we can observe with little effort is this:

1. No matter where in the world we look, other things all being equal, people prefer to have more money and more choices of goods from which to select.
2. As long as the possibility exists, they'll work more to get it.
3. The population flow between nations where the State tries to impede private profit and material gain by taxes, regulations, and the like, and nations where the State puts fewer and lower such barriers in the citizen's way, is heavily from the former to the latter, often despite great hazards to life and limb in the journey.
4. The most viciously invidious societies known to history have been those where the State's exactions were the highest. Individuals became obsessed with what their neighbors had managed to retain and amass. They often succumbed to the seductions of the State to become informants for it -- in hope of material reward.

     Thus, our verdict on Layard's contentions must be that they're contrary to both good sense and everything we know about the behavior of real human beings. If he's sincere, he's fatally unintelligent, naive, or ill-informed. If he's not, then he's just one more Marxist trying to seduce the unwitting into donning communist shackles. In either case, he deserves no respect whatsoever. But that's a judgment that applies to many an "economist" from the formerly-Sceptered Isle, which has been cranking out the preponderance of the Western world's Marxist polemicists with economics degrees since before World War II.