July 16, 2007
What Kind of Economy Makes a Happy Planet?

You might be happy to hear that the US is not included in the European Happy Planet Index, compiled by the New Economics Foundation and Friends of the Earth. They limited themselves to Europe, probably in consideration of our feelings.

The ratings don’t give Europe much to crow about. The Guardian considers that “Europe is now worse at creating well-being than it was 40 years ago.”

I went looking for details, and learned that conceptually the HPI is Life Satisfaction times Life Expectancy divided by Environmental Footprint.

The HPI reflects the average years of happy life produced by a given society, nation or group of nations, per unit of planetary resources consumed. Put another way, it represents the efficiency with which countries convert the earth’s finite resources into well-being experienced by their citizens.

Seems like a thing worth measuring, and a reasonable try at measuring it.

So it’s interesting to find the list that does include the US. (Here’s an interactive map of the world colored by HPI.) Of 178 countries, We’re Number One… Hundred and Fiftieth. The UK is 108th, Canada 111th, well ahead of us because of superior Environmental Footprints. The United Arab Emirates take the Worst-Of trophy in that area, with the US, Kuwait, and Qatar tied for second.

Certainly people will dispute the rankings, the definitions, the methods of calculation, and so on (possibly even including some folks not on an oil company payroll). To me the value of such a calculation is precisely that it generates controversy, which in areas such as environmental issues is often the only way that any conversation is allowed to take place.

And it’s not very hard to figure out why.

Andrew Simms, the foundation’s head of climate change, said countries with a strong market-led economic model fared least well. “What is the point if we burn vast quantities of fossil fuels to make, buy and consume ever more stuff, without noticeably benefiting our well-being?”

A rhetorical question, no doubt. Obviously, the point of capitalism is the concentration of capital.

State capitalism, at least. Chomsky talks about a continuum with completely centralized control at one extreme, and completely decentralized control at the other. (I believe a lot of this comes from Bakunin, but I’m not sure how much.) The first he calls “state” and the second “libertarian”.

Capitalism can be of the state variety, like ours, with massive market intervention. Subsidies of all sorts for the defense contractors, drug companies, and so on nudge most of the benefit of the common wealth to those already at the very top of the ladder.

Then there’s libertarian capitalism, which seeks to distribute capital much more widely. The first I remember hearing about such a batty scheme was watching Bill Moyers interview Louis Kelso, the inventor of the Employee Stock Ownership Plan (ESOP). He, along with Mortimer Adler, published The Capitalist Manifesto in 1975. It’s now out of print; Powell’s has no copies, eBay has one for $65, Amazon has three from $40 to $125, aLibris has two starting at $51. Oh, and the San Francisco Public Library does not have a copy, though I did get one through interlibrary loan. Apparently either Moyers interviewed a complete nobody who once had a beer with Mortimer Adler, or Kelso said something you’re not supposed to know about.

As I recall the interview, Kelso advocated a legal and enforced upper limit on the amount of capital that anyone could accumulate. He believed that it’s good to have a lot of well-off people, and as Greider says, capitalism is the greatest wealth-generation engine humanity has encountered. The question is, who ends up with the wealth? Our system concentrates it; Kelso wanted to distribute it.

As much as I believe that capitalism is based on some of the worst aspects of human character, I can imagine that we could make it respond to reality. It’s our construct, after all; it’s not part of nature, or it would have existed throughout history. It’ll be tricky, kind of like turning around a bunch of Bush administrations. But there are signs that we’re learning something about how to do that in the political realm; perhaps that expanded consciousness might transfer to the economic.

For example, in The Soul of Capitalism Bill Greider talks about the extent to which corporations are able externalize many of their costs while internalizing the profits. Whether through loopholes or lax enforcement or political pressure preventing relevant regulations, they can often avoid paying for environmental damage they cause. But you sure don’t hear them talking about sharing their profits with the people in the area that was damaged. Quite the opposite: those people are the ones who pay the cost, in money and health and future.

Capitalism might work if it was forced to include all the actual costs in its calculations. It does not work in the US today. In fact it’s destroying our common fantasy of the American Dream on physical, economic, and spiritual planes.

If we can force Congress to do something about Bush and Cheney, we might actually be able to force Congress to do something about the environment as well. As long as the US is in form a democracy, we have the theoretical power to pull it off.

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Posted by Chuck Dupree at July 16, 2007 04:13 AM
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A"happy" index? Are they kidding? Maybe the folks who decided to do the test were on happy pills. The happiest people on earth might live in a lost civilization in the Amazon jungle for all we know, and they probably wouldn't measure their happiness based on anything we would recognize. But happiness is a moving target. If one lives in a culture in which the life expectancy is 40 but one doesn't realize that their are other cultures that have life expectancies with people living to 80, would the 45 year old in that culture be happier than a 90 year old in this one? I suspect there are studies which would indicate that more material prosperity equals less happiness. If there aren't, then someone should "do" one. (most of these kinds of studies are jobs "done" on some body elses dime, most probably for a nefarious purpose of some sort or other).

Ask the employees of Enron about their ESOP plan and how well that worked out for them. Although those plans often worked out extremely well for people with some companies - my father lucked out for example and did well with his on a very moderate lifetime income. But don't go too far with that argument. The "get rid of social security" schemers will be on you like the plague.


From Thurmond Arnold's The Folklore of Capitalism,/em> (1937), discussing how to avoid another major depression:

"the first method, and probably the most desirable one, this one the businessman can adopt. It is for them to put into action the program recommended by the Brookings Institution on its book, "Income and economic progress". That method is very simple: Use the reduced costs of production arising from technological improvements and full-capacity operation primarily to lower the selling price of the product, and the raise the wages of labor; and only in small measure to raise profits. In that way, the buying power of workers can be kept rising, more workers will be kept employed, and production and consumption will rise together. Also, that will avoid the vicious circle of rising wages, rising prices, and more rises in wages, leading to still further rises in prices, which many industries seem to be starting today.

In the essence, this program boils down to this: Increase payrolls faster than you increase profits; and pay higher wages out of lowered costs, rather than passing them on as higher prices. Unfortunately, our leading corporations seem to be going in the other direction.
From 1935 to 1936, industrial pay rolls increased only a little over 10 percent, while the profits of reporting corporations increased more than 50 percent. If businessmen continue to increase profits out of all proportion to pay rolls, disaster is sure to follow".

The last sentence is the kicker. And Arnold's words, true then, are doubly true right now.

I'm not sure if your argument that "the point of capitalism is the concentration of capital" really makes sense. Actually, capitalism, if is to remain in business, needs to insure that its benefits are spread out with at least some degree of equity. Otherwise, sooner or later, the mob starts rolling out the guillotines and the hangmans nooses.

And that is really what everyone is arguing about. How equitable do we force it to be? That's the 64 trillion dollar question. Right now the equity factor has gotten way out of kilter. But that's the essence of the problem too. If we make it equitable, but run it as a fully global system, the equity hogs are those of us living in the US. Maybe we need to get used to living with a lot less.
Where to start making it more equitable here? Despite all rumors to the contrary, the US has the worst healtch care system in the industrialized world. Highest in cost, and mostly the worst outcomes.

I don't wanna be in the lost civilization with the 40 year life expectancy not knowing that things could be much better. Let's fix our health care system first. That part of capitalism isn't working well at all, at least here in the US.

Posted by: Buck on July 16, 2007 6:38 AM

One of the most nonendearing traits in the American character is our total lack of knowledge of the rest of the world, which results in a total disinterest in improving our own part of it. Knowing only what is around us (and that little badly distorted by media that merely reflect our own ignorance back on us) we cannot imagine how anything could be changed, or whether we need to change anyway. Being already the best in the world at everything, why change a thing? When reality does finally begin to break through (as it may be now in health care), we limit our thinking to tinkering around the edges of the present system, as if a car with a blown head gasket and a busted transmission could profit from a good paint job.

Fixing our health system is no great mystery. Congress and the president could do it with eight little words: "Eligibility for Medicare shall hereinafter begin at conception."

Posted by: CCRyder on July 16, 2007 8:16 AM
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