The Economist is highly respected for its news and analysis of the economy, but often strays away from its mainline, free-market theme in an attempt to create a more visible and sensitive image for the journal. In my opinion, these little side adventures don’t turn out too well because the magazine is always promoting an ideological point of view of a free market economy, which often shields them from getting at the essence of the story. They have written on things such as the evolution of the suit and the dangers of medieval warfare. These articles probably serve their readers well for one evening at the bar, and perhaps that is the intent. This unabashedly right wing, pro-free market economy magazine often has difficulty getting to the heart of a story because they have a hard time dealing with large concepts such as human needs, redistribution of the wealth, economic justice, social inequality and rarely do they admit that countries with more socialized democracies are doing better than we are here in America. I used to subscribe to the journal, a gift from a friend and when the one year gift subscription ran out, I re-subscribed for a couple of years, but gradually ran out of patience with the articles and the journal’s main emphasis. Now I only read it when others write articles based on those in The Economist. Recently Eric Alterman, writing in American Progress (an excellent source of information by the way) writes about one of the articles which appeared in the traditional year-end, double issue of 2010.
The subject of the cover story article was “happiness.” By investigating recent research into happiness, they discovered that people generally become happier after age 46 than before. And, since the average age of people in the world is 47, the average person should be happy. They imagine that the concept of happiness is like the U-turn in the pipes underneath your kitchen sink–you go down for a while, then make a U-turn at 46 and start to feel better about life. This seems to occur no matter what your economic conditions is, so the obvious solution for addressing sadness is to wait until you turn 46 and everything should get better. So that seemed to be the emphasis of the article–if you’re unhappy, just wait, you will make the kitchen sink U-turn and things will get better. How reassuring. The article goes on to talk about other factors forming happiness, including neuroticism and extroversion, the polar ends of the happiness scale, with extroverts generally happier. And they mention other factors that include gender (women tend to suffer more from depression), external circumstances and, as mentioned previously, age. Education is one of the “external circumstances;” it makes people happier, but that may be because educated people are, on average, more wealthy.
But, putting aside age-related happiness, and focusing on one of the more obvious sources of happiness–that of money–is where we see The Economist begin to lose its bearings as it so often does when viewing topics through an ideological lens (as if the same factors worked in every culture–an unproven hypothesis). Europeans believe that growth-oriented, free-market economies got it all wrong–their system of social democracy is far superior and they have data to prove it. In fact, in America, we provide some of the data that helps make their case through our poverty rates and income inequality. Europeans often cite such data from America as evidence for strengthening their approach. Evidence that money is not the entire source of happiness also comes from data gathered by The Economist. Hong Kong and Denmark have similar income per person levels, but Hong Kong’s average life satisfaction score is 5.5 on a 10 point scale, while that of Denmark’s is 8, significantly higher. The Economist’s unwavering commitment to the free market economy makes it impossible for them to define why there is a difference in the life satisfaction scores, when the income level is about the same. Writer Eric Alterman has less difficulty in providing a more objective appraisal and suggests that the life satisfaction score of Denmark puts them ahead of Hong Kong because it’s a better place to live. If you have ever been to the two countries, you shouldn’t have any difficulty understanding Alterman’s conclusion.
In making comparisons between Hong Kong and Denmark, The Economist forgot to mention that there might be something in the way that public support is offered that helps create a more satisfied population in Denmark when compared to Hong Kong. Alterman points out that there is no mention in the article that Denmark spends nearly one-third of its gross domestic product on government-run benefits and taxes its citizens at an equivalently high rate. In recent years, the top bracket in Denmark is more than 60%, roughly about the place where we were before Ronald Reagan. With these revenues, the state pays nearly 5 percent of GDP on the unemployed and as much as 2 percent on “flexicurity,” or labor market programs to help retrain workers who have been displaced. In contrast, the United States pays just 0.16 percent, which is, by quite a margin, the lowest level in the Organization for Economic Co-operation and Development or OECD (Western economies). As a result, the unemployment rate is much lower in Denmark than it is in the United States. Denmark’s “quality of life” index is higher than that of America, with advantages like universal health care, day care and an extremely low rate of poverty that’s not even 1/4 of what we have in the United States. They have learned how to build a country for all of its citizens, not just those at the top. In America, most of us live such that the very wealthy have in fact most of the country’s wealth.
Alterman states that “American journalists tend to treat inequality as a fact of life. But it needn’t be. In 2009, the average income of the top 5 percent rose. Everybody else’s fell, furthering a 40 year trend during which the share of total income going to the wealthiest 1 percent of Americans has risen from about 8 percent during the 1960s to more than 20 percent in 2011.”
“U.S. income inequality outpaces that of every other advanced industrial nation–never mind Denmark. That puts us in the same category with miserable places like Turkmenistan. Authors Jack Hacker and Paul Pierson point out that these changes have resulted from deliberate decision-making in congress, whose members’ elections are funded by the same wealthy folks enjoying all the benefits.”
“Since the late 1970s, they note, Congress has cut tax rates on the highest incomes over and over, together with capital gains and estate taxes. It has also made it more difficult for unions to organize and extract a fair share of the profit pie for workers. At the same time, Congress has loosened federal oversight and restrictions on banks and other financial players. It repealed the Glass-Steagall Act in 1999 to allow the creation of global megabanks like Citigroup and JP Morgan Chase that are “too big to fail” and hence too big to behave responsibly with their investors money.” In short, the Danish score well on this test for reasons that those writing in The Economist are unable to concede or describe. Their contentment comes from the fact that they live in a society where everyone has an education, opportunity and have pay for retraining, funded by government, should they lose their job.”
So in the meantime, we can’t even be honest about the kind of country that gets generated by the social democracies of Europe. Our news media, describes Europe as a bunch of countries that are on their last legs financially because of too many social programs. Yet these programs produce a country that has a far higher index of social success than we do and they tend of have export economies because the same people stay in their jobs for life and get better and better at what they make. In this country, people have multiple jobs before they are thirty and this mobility of our work force means that we don’t make very many things that other people want to buy. In the meantime, we can’t decide whether a country like China, which owns a large fraction of our debt, is an enemy or friendly competitor. If it’s the latter we had better fix a lot that’s broken about the social fabric of our country.
RFM
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