Happy nations don't focus on growth | Hacker News Reader

Happy nations don't focus on growth

bloomberg.com

160 pointssmollett56 comments

The nations mentioned are some of the most advanced in the world, and their lower-than-world-average GDP growth is being used to show that "it's not all about wealth". I don't think this article makes a very good point.

Exactly. This is a classic case of a confounding variable. The happiest nations are also the richest ones. The richest ones have lower growth than developing nations precisely because they are the richest: developing nations can achieve growth by increasing their literacy rates, building infrastructure, and making other capital expenditures (e.g. farming equipment, high-tech machines for factories). The richest ones already have all of that, so their growth needs to come from elsewhere.

In economics terms:

Y = f(A, K, L).

That is, GDP is a function of Capital (K), Labor (L), and a catch-all of technology (A).

Developing countries can ramp up any of these 3 easily, especially technology "A" by transfering/adopting technologies that exist elsewhere. The richest countries can't do that since they should be at the forefront of technology.

The attribution of the Solow Residual to "technology" is grossly misplaced and very poorly founded.

Roughly 98% can be attributed by primary energy consumption. A fact mainstream economists seem to be at pains to deny.

R.U. Ayres, Charles A.S. Hall, and numerous others have repeatedly derived this relationship, and with a pretty consistent value.

That's because a lot of technology is coming up with new ways of using energy to do useful things. See: light bulb, internal combustion engine, etc. And a lot of technology is new methods that reduce the cost of building these energy-consuming devices allowing us to produce more of then for cheaper (and more of them then consumer more energy).

I feel like you are trying to say "no, it's just consuming more energy. It's not 'technology'". But I think you've missed the point. We can't just dump more coal and oil onto a field and burn it and expect that energy to increase production. We need "technology" to turn it into something useful.

Sure, but:

1. Those new ways of using energy themselves are highly dependent on energy-intensive factors as inputs. Steel, aluminium, copper, electronics, reliable power inputs, control systems, etc., are all the products of high-energy outputs.

When you realise that the Watt steam engine revolutionised manufacturing based providing a net total of 500 prime movers of about 10 HP each net power output, you start to recognise just how energy-contrained economic activity was.

2. The Solow Residual is, quite literally, just that. It's a statistical residual. Solow himself describes it as "the measure of our ignorance". Again: there is no basis to attribute it to "technology". Other than it forms an economically convenient theory.

3. The research I've mentioned is far more specific -- rather than just run a regression of capital vs. labour and handwave a declaration that All That Is Unexplained Shall Be Termed "Technology", it specifically considers the role of other factors, including energy. And, again: shows that that accounts for up to 98% of the residual -- an insanely high fit.

So long as we're talking factors of production, I've just learned, reading of and from Alexander Hamilton Church, who more-or-less invented cost accounting, that through about 1900, only labour was considered as a factor of production.

Somewhat amusingly, his discussion of factors other than labour focuses, almost exclusively, on the ability to supply mechanical power through engines. Go figure. 1910.

https://en.m.wikipedia.org/wiki/Alexander_Hamilton_Church

https://archive.org/stream/productionfacto00churgoog#page/n1...

Happy people don't focus on earning more money for exactly the same reason - they already have enough to not worry about their base needs.

The thing is that grown up countries still focus on employment to distribute wealth, and to get that employment they need to grow.

So we are consuming useless things to keep useless jobs and maintain a growth that doesn't make us more happy.

I really don't think that this article makes a very good case for nations to focus on happiness over economic growth. It is apparent that the nations that the article states are the happiest are highly developed nations which have had decades of growth which has given them the means to keep their population happy. With regard to the point about China's growth, I believe that given how rapidly China is growing, there will be a significant lag between the rate at which GDP grows and the time when the Chinese people begin receiving the benefits of this growth.

Of course, general well-being is a better metric of whether the incumbent gets voted in than economic growth in developed countries because well-being is far more tangible to the common man than the abstract concept of economic growth. OTOH, in a developing country, I'd argue growth is a better indicator of the probability that the incumbent will win since developing countries have growth rates which are in general far higher than developed, and since these high growth rates result in visible, tangible changes: bridges get built, schools are opened, and people get jobs.

Perhaps, the new thesis of the article should be that developing nations should focus on economic growth, while developed ones should focus on the happiness of their people.

I read a similar things a few weeks ago. They were saying that the U.S. (government through laws and legal system) centered on "fairness" up until recently. Sometime after WWII the focus changed to Economics and growth. I'm guessing it was saying this is the cause of crazy inequality and "the jobless recovery."

I'm not sure I buy all of it (the U.S. wasn't really a world power prior to the world wars, so they'd be dismissing that and other gains if it was their whole premise), but like this article, something to think about.

That's somewhat misleading in 1800 the US population hit ~5.24 million vs England's ~9.2 million, it had more than doubled over the prior 30 years. Economically and Militarily England was much further ahead. But, unlike Europe the US's wars of conquest and genocide where mostly vs the Native Americans. Consider, Ohio only joined the Union in 1803.

By 1870 the US GDP PPP(98,374) was at near parity with the UK (100,180). https://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_(P... and had a slightly larger population.

Around the mid 1800's the US was clearly a world power, but in the way Germany is today. Big enough to have real impact, but not a super power.

Thanks for the background. That's why I thought it was interesting but had some skepticism and want to look more into it. I don't think the average person (including myself) knows enough about our history to be able compare things 50-100 years ago in the US to now. I remember hearing the US has benefited quite a bit by having oceans between us because after the World Wars we didn't have our cities destroyed. I believe that's one reason New York became a financial hub, picking up the slack from London.

Is it a fair comparison to say a more egalitarian policy made us "happier" when we still had segregation, women couldn't vote, and much smaller welfare/social services?

> we didn't have our cities destroyed

We also were able to sell arms to the allies for two world wars. At the end of WWII we had 80% of the world's gold reserves. This meant that during the Bretton Woods conference, when a bunch of treaties were drafted to require the use of "gold-convertable currency", that was effectively the US Dollar...so they just put "US Dollar" in the final language for clarity and made USD the global reserve currency among other things.

What use is power if it doesn't make you or your descendants happy?

How is being a world power a gain, if, by doing it, you sacrifice the very tenets that your country was founded on?

What use is power if it begins the process of curtailing freedoms and privacy for the minorities and majority (respectively), all the while aggravating the problem by funding problematic groups (causing a feedback loop)?

Ehh, I wasn't saying being a world power is an excuse for concentrating power at the top. It was a more to show how it's hard to compare because so much has changed in the US since before WWI. Back then most people were considered poor and we had no social services or welfare to speak of, the "middle class" wasn't a thing yet, we still had segregation, and women couldn't vote.

Fairness in an economic sense is often difficult to pin down; americans often focus on employment rather than eg distribution of wealth.

> They were saying that the U.S. (government through laws and legal system) centered on "fairness" up until recently. Sometime after WWII the focus changed to Economics and growth.

I absolutely agree with this. Considering the history and how we used to run public schools, it seems almost obvious.

American nationalism was at an all-time high during World War 2 and we rode that straight into the Cold War... 50 years of anti-soviet propaganda and public discourse, riding the post-WW2 American economic boom and global "anti-communist" imperialism. For an entire generation community-oriented principles, egalitarianism, collectivist ideas, and far-left leaders were demonized as Soviet sympathizers, replaced with rah rah unregulated capitalism, Ayn Rand-ian individualist, and military might.

If you've ever wondered why many modern American Christians blatantly disregard the liberal social aspects of Jesus/the Bible, look no further. WW2's morale-boosting propaganda morphed into a cancer of civil discourse, deeply coupling nationalism with the perceived indisputable success of American capitalism.

Consider these two points: * The Cold War started 70 years ago, and formally ended 26 years ago * 2016 Trump / Sanders popularity, bucketed by age: http://www.msnbc.com/sites/msnbc/files/age_of_voting_groups_...

American society takes time to change because our 2-party system is dominated by unengaged voters, the uneducated electorate that votes without thinking about it... heavily influenced by the world they grew up in, and what they were taught from k-12. When many election results are +/- 5%, moving the average 10% in one direction has long-term consequences.

It's worth thinking about how our 17 year-old "War on Terror" will continue to change society...

So, what was the first Red Scare, Sacco and Vanzetti, or the Scopes Trial in the 20s about then? Many of the things you attribute to the Cold War-era were present in the 1920s USA. The biggest difference was isolation.

What's the difference? The first Red Scare was 3 years of isolated domestic violent agitation, and public response was largely focused on those agitators. The second Red Scare was a 50-year ideological war that saturated the nation, a generation raised demonizing concepts as "un-American" before becoming the teachers and politicians of their children. It takes time heal from that dogma.

You seem to be overlooking the fact that, thanks to "that dogma", America is not a part of the Soviet Union today.

Can anyone explain the downvotes? I am not saying that the pro-American propaganda was the only factor that decided that in the end US prevailed over USSR, but it's undeniable that it did contribute.

Down votes are meant to self-moderate against non-contributing content (shitposts), up votes are for content that inspires discussion, and not voting is for everything in between.

Immature people can't debate, so they express disagreement with down votes. Reddit was ruined by this, I'm sad to see civil immaturity spreading to HN.

I suppose down votes could be replaced with a "flag post", and a consensus driven moderation pool... or maybe reducing the weight of a down vote based on the voter's ratio of votes to posts (penalizing the non-contribution judgement of non-contributors).

Are you familiar with the phrase "cutting off the nose to spite the face"? Dogmatism is a fear-induced lobotomy, intentionally unlearning and stigmatizing certain solutions to problems... if dogma fatally poisoned American democratic capitalism, then our victory was pyrrhic at best.

In fact, dogma is antithetical to both capitalism and democracy, which assume an ideal rational populace. A rational society strives for improvements. They would have invested in more socratic education, deeper rational thinking, and an open fair evaluation of ideas. Ideas that pass rigorous evaluation hold merit and warrant experimentation. If aspects of communism could improve parts of our society, we should use them.

Dogma is indefensible, and I feel like that point should be self-evident on HN. Successful startups don't copy history. We solve problems by forming rational strategies based on data and logic, chasing "impossible" ideas because they are good and work. We understand that processes and technology are tools, a means to an end... why would socioeconomic theory be any different?

And anyway, America was never even close to becoming part of the Soviet Union. Nuclear annihilation was the big risk, but dogma does not work against ICBMs.

> And anyway, America was never even close to becoming part of the Soviet Union. Nuclear annihilation was the big risk, but dogma does not work against ICBMs.

Not necessarily. The communist ideology was so appealing to the people (and the USSR so good at spreading it world-wide, via various channels) that, if not for the radical anti-communist steps, it's not impossible that USA would have its own communist revolution (orchestrated from Moscow and led by the local "useful idiots"), like so many other countries.

More broadly, I don't think that being in an open conflict with a world super power is the best time for rational reflection. Notice how democratic countries suspend most of its values during the war (i.e. they can take your property if it'll help the war effort, they'll put you to jail if you refuse to fight etc.) - they're just impractical when under attack.

Why do you think communism was so appealing? Years of hostile discussions left both business owners and laborers at odds. Greedy companies refused to lower profits, and labor felt they deserved an equal share - especially after the world wars.

Ultimately, it's American business owners that were responsible for the rise of revolutionaries in the US. Early on, corporations restricted the political rights of labor unions while buying their own politicians. When laborers demanded fairer working hours, better working conditions, and fairer wages, businesses refused to compromise. When peace fails, people are left with the choice of abandoning hope or fighting towards revolution as a last resort. The USSR simply amplified existing legitimate anger.

I want to point out that the mainstream labor resistance was not about communism; citizens were fighting for equality and fairness within capitalism. The press always misuses scary words like "communism", in truth social ownership was secondary to being treated humanely. The government could have easily kicked out the USSR by stepping in as a mediator between business owners and employees.

> More broadly, I don't think that being in an open conflict with a world super power is the best time for rational reflection. Notice how democratic countries suspend most of its values during the war (i.e. they can take your property if it'll help the war effort, they'll put you to jail if you refuse to fight etc.) - they're just impractical when under attack.

Hahah, what? We don't suspend our values during war. Drafts fall under the social contract, all citizens are expected to defend the nation if called upon. The IRS always seizes property due to tax evasion. Industries always remain in private hands, we set production quotas because profit is not a right. We have interned people during war, but that's an artifact of ignorance rather than an intentional suspension of values.

Why do you think war isn't a good time for rational reflection? The battlefront requires action, but there's no reason for civilians to worry during a superpower proxy war. The US is massive and our enemies are oceans away.

I very strongly recommend reading literature on the Industrial Revolution(s) generally, and on relating energy and economic growth. There's still a fair bit I've yet to read, but:

* Vaclav Smil, Energy in World History (1994). Highly technical, short, dense, but quite readable. Focus is on energy and technology primarily, economics and politics only remotely.

* Manfred Weissenbacher, Sources of Power (2009). Also technical, long, rambles, somewhat, and unevenly edited, but still recommended. Draws heavily on Smil as well as numerous other sources, and includes more politics (particularly recent) and economics.

* Robert J. Gordon, The Rise and Fall of American Growth (2016). A good technical history, a middling economics text. Really hammers home the transformation in the United States, 1870 - 2015.

* Daniel Yergin, The Prize (1992). A history of oil, which is to say, the last (and largest) segments of Weissenbacher and Smil's histories (Weissenbacher continues to a forecast / scenario), and much of Gordon's work. Focus is on energy.

Gordon's book is part of a series edited by Joel Mokyr on modern industrial history and development, there are several other good books within it.

I've yet to read, but still recommend, Karl Polanyi's Great Transformation.

And yes, the obsession with economic growth was a post-WWII thing. Mostly, people didn't want to see a return of the Great Depression and pre-war crisis.

Although I'd have to poke around for the specific sources, I've read papers that showed that, in fact, subjective well-being increases continuously with wealth (per capita GDP). However, the increase is not linear, but rather logistic--which makes intuitive sense, since a $5,000 pay raise for an employee making $25,000 a year isn't the same as for one making $100,000. On the other hand, I've also read that the increase in wealth past the much-referenced $75,000 level doesn't significantly increase emotional well-being (unconscious positive/negative feelings).

> $75,000 level doesn't significantly increase emotional well-being

Not true. It actually goes much higher. Admittly quite slow. I think until $150,000.

Sounds like this would depend a lot on what kind of social safety net is provided by the society. You need a lot more income to feel secure in the US than Sweden, where healthcare/education/pensions are more or less collectively provided.

The way of measuring happiness is nonsense

basically asking people, "are you happy?"

There is a gigantic cultural bias. In many cultures people say that they are happy because they are expected to say that they are happy. Itd just a facade. In some others people just dont like to talk about self happiness or they have negative connotations when they talk about it.

I have lived in 5 countries from that list and I find it really hard to say that people from those countries are happier than other countries I've lived in and are not listed.....

anyway lets keep living in hackernews bubble...

Which countries have you lived in, and how would you rate the happiness?

BTW, i'm from Israel, an we're number 2 on the happiness scale! hooray!

On average, how would you rate your happiness from 1-10 (10 being the most happy you could ever possibly be)?

"Happiness" as a gauge for the "quality" of a country doesn't make much sense to begin with.

A person can be unhappy even in literal paradise. Personal issues, strained/failed relationships, or inability to fit in with your peers can make one miserable even in the best of countries, while on the other hand, people can find happiness even in an economic backwater that has virtually no modern amenities.

Are there any rankings that consider the multiple factors which govern and represent the potential for happiness, such as the degree of personal liberty, environmental quality, crime, and the unique goods, art and research produced by a country?

A lot of happy millionaires have close to no income, in fact they remain happy millionaires while incurring in negative net worth growth.

Maybe poor people wanting to make more money need to rethink their strategies?

Denmark the most happy nation in the world cares about growth a lot. Maybe Danes don't but the nation as a whole does.

This is interesting. If Danes don't care about growth, then in what sense does Denmark care about growth?

I assume "nations caring about growth" means they have economic and social policies that end up encouraging such growth. The average Dane (or any person anywhere really) probably doesn't think much about policy.

>There's plenty of wealth, that goal is already achieved. Good policy is a matter of directing it toward the determinants of happiness.

This reminds me of this quote:

"It is only in the backward countries of the world that increased production is still an important object: in those most advanced, what is economically needed is a better distribution"

-John Stuart Mill, Principles of Political Economy (1848, book IV, chap. VI)

One day we'll look back at the levels of wealth people today possess the same way that today we look back at the level of material prosperity people enjoyed in 1848, as being at the level of extreme poverty.

To prioritize ephemeral happiness over substantive gains in the people's capabilities is shortsighted.

They also have the highest suicide rates. Go figure.

No they don't. See the WHO ranking

Why are Finns so unhappy, while Swedes are as happy as the world average?

Edit: I found a BBC article saying just the opposite [1], may be Finns are happy, after all? :-)

[1] http://www.bbc.com/travel/story/20110622-travelwise-why-are-...

Should be renamed to "Wealthy nations, which don't need growth to be more wealthy, tend to be happy"

Big surprise

Growth also contributes to global warming. And the many people who think it could now or eventually decrease it compound the problem.

but what if growth is required for certain scientific and medical investment, funding, and advancement even if it depresses the average happiness of a population?

If that is true, how much of suffering of individuals are we able to tolerate to keep the average of a whole up a few notches? (re: all the issues with utilitarianism)

Growth makes nations happy

Richest nations are the happiest nations as long as they don't run out of their money. That is the proper conclusion.

I am pretty sure 10 years ago Greece would have featured as a happiest nation and Venezuela not as much as a miserable nation that it is today.

Contrary to all this India WAS super miserable 10 years and go and much more happier today though comparatively might not be as happy as the Italian.

Correlation does not imply causality...

> Policymakers should care more about happiness inequality rather than mere income inequality.

Policymakers are probably very concerned with happiness. Their own ;-)

They are probably very correlated

This means China isn't happy at all. They need to fake that 7.0% growth every year for eternity, even though everyone knows it's all fake data, and most likely they're not even growing.

Visit China. It's definitely still growing.

What makes you think China's growth is fake?

It is somewhat fake. Digging a hole and filling it shows up on GDP statistics even though it is pointless and adds no real wealth to the population. Chinese growth is a lot like this. A lot of production for the sake of production. They tend to have overproduction in many sectors. So they their GDP growth is made up of a lot of stuff nobody is demanding. Of course this kills profits, but since China had capital controls investors can't move their money elsewhere.

This is why Chinese growth is considered unbalanced. Also a great example of the stupidity of obsessing about GDP numbers.

Ghost cities:

http://www.dw.com/en/what-has-become-of-chinas-ghost-cities/...

China is a unique place. And an amazing place that has executed an unimaginable transformation. Obviously they embrace capitalism, but they have a central planning edge from their Communist roots.

Saying that Chinese growth is "fake" is obviously ridiculous in its face; but the metrics almost certainly are -- comparing China to Germany or the US is an apples to oranges comparison.

There's no adjustment accounting for the Chinese government saying (and funding): "go build a city there". You also don't have bullshit state enterprises that are essentially big works programs propped up by loans that will never be repaid in the west.

The veracity of China's economics reporting is wwidely questioned:

China’s recent economic weakness has revived questions about the quality of its economic data. Critics charged that official statistics overstated the economy’s growth and understated inflation in China’s economy. The recent complaints followed a long period of questioning whether China, a developing country and authoritarian state, has the institutional capacity and political will to publish accurate statistics. Because China is now the world’s second-largest economy, and is suffering from economic imbalances, the debate carries more weight than in the past.

http://www.uscc.gov/sites/default/files/Research/TheReliabil...

http://www.rfa.org/english/commentaries/energy_watch/numbers...

Generally: https://duckduckgo.com/?q=china%27s+economic+reporting+quest...

There's a huge difference between fudging GDP data from 5.5% to 7.0%, out of / internal politics / whatever (which is probably about what is happening) and "not growing"

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