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Happiness

for whom? for everyone!

H.G. Brown: Significant Paragraphs from Henry George's Progress & Poverty: 14 Liberty, and Equality of Opportunity (in the unabridged P&P: Part X: The Law of Human Progress — Chapter 5: The Central Truth)

The truth to which we were led in the politico-economic branch of our inquiry is as clearly apparent in the rise and fall of nations and the growth and decay of civilizations, and it accords with those deep-seated recognitions of relation and sequence that we denominate moral perceptions. Thus are given to our conclusions the greatest certitude and highest sanction.

This truth involves both a menace and a promise. It shows that the evils arising from the unjust and unequal distribution of wealth, which are becoming more and more apparent as modern civilization goes on, are not incidents of progress, but tendencies which must bring progress to a halt; that they will not cure themselves, but, on the contrary, must, unless their cause is removed, grow greater and greater, until they sweep us back into barbarism by the road every previous civilization has trod. But it also shows that these evils are not imposed by natural laws; that they spring solely from social maladjustments which ignore natural laws, and that in removing their cause we shall be giving an enormous impetus to progress.

The poverty which in the midst of abundance pinches and embrutes men, and all the manifold evils which flow from it, spring from a denial of justice. In permitting the monopolization of the opportunities which nature freely offers to all, we have ignored the fundamental law of justice — for, so far as we can see, when we view things upon a large scale, justice seems to be the supreme law of the universe. But by sweeping away this injustice and asserting the rights of all men to natural opportunities, we shall conform ourselves to the law —

  • we shall remove the great cause of unnatural inequality in the distribution of wealth and power;
  • we shall abolish poverty;
  • tame the ruthless passions of greed;
  • dry up the springs of vice and misery;
  • light in dark places the lamp of knowledge;
  • give new vigor to invention and a fresh impulse to discovery;
  • substitute political strength for political weakness; and
  • make tyranny and anarchy impossible.

The reform I have proposed accords with all that is politically, socially, or morally desirable. It has the qualities of a true reform, for it will make all other reforms easier. What is it but the carrying out in letter and spirit of the truth enunciated in the Declaration of Independence — the "self-evident" truth that is the heart and soul of the Declaration —"That all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness!"

These rights are denied when the equal right to land — on which and by which men alone can live — is denied. Equality of political rights will not compensate for the denial of the equal right to the bounty of nature. Political liberty, when the equal right to land is denied, becomes, as population increases and invention goes on, merely the liberty to compete for employment at starvation wages. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 2: A Short History of Capitalism (pages 15-32)

If thneeds were the path to happiness, most Americans would be delirious by now. But the accumulation of goods is only one means among many in the pursuit of human satisfaction. Everyone except economists seems to know this.

Economists take as a given that consuming more goods makes people happier, not just when they’re poor, but at all times. Yet this assumption is not only illogical, it’s contradicted by numerous surveys. Logically, the law of diminishing returns should apply here as elsewhere; as people acquire more goods, the marginal benefit of each additional good should decline toward zero. And research confirms this is so.

Since the early 1970s, the General Social Survey has asked Americans the same question: Taken all together, how would you say things are these days — would you say you are very happy, pretty happy, or not too happy? Though we’ve gotten considerably more accessorized since the question was first asked, our answers have barely changed. In 1972, 31 percent of Americans considered themselves very happy; in 2004, it was 33 percent (see figure 2.4). A noneconomist might conclude that, if happiness is our goal, we’ve wasted trillions of dollars.

Why isn’t economic growth making us happier? There are many possibilities, and they’re additive rather than exclusive.

  • One is that, once material needs are met, happiness is based on comparative rather than absolute conditions. If your neighbors have bigger houses than you do, the fact that yours is smaller diminishes your happiness, even though your house by itself meets your needs. In the same way, more income wouldn’t make you happier if other people got even more. That’s why an affluent country can get richer without its citizens getting happier.
  • A second reason is that surplus capitalism foments anxiety. Millions live one paycheck, or one illness, away from disaster. When disaster strikes, the safety nets beneath them are thin. And everyone sees jobs vanishing as capital scours the planet for cheap labor.
  • Another reason is that surplus capitalism speeds up life and creates great stress. Humans didn’t evolve to multitask, sit in traffic jams, or work, shop, and pay bills 24/7. We need rest, relaxation, and time for companionship and creativity. Surplus capitalism can’t give us enough of those things.
  • Similarly, its nonstop marketing message — you’re no good without Brand X — breeds the opposites of gratitude and contentment, two widely acknowledged precursors of happiness. According to the Union of Concerned Scientists, the average American encounters about three thousand such messages each day. No wonder we experience envy, greed, and dissatisfaction. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 5: Reinventing the Commons (pages 65-78)

Thus far I’ve argued that Capitalism 2.0 — or surplus capitalism — has three tragic flaws: it devours nature, widens inequality, and fails to make us happier in the end. It behaves this way because it’s programmed to do so. It must make thneeds, reward property owners disproportionately, and distract us from truer paths to happiness because its algorithms direct it to do so. Neither enlightened managers nor the occasional zealous regulator can make it behave much differently. ... read the whole chapter

Peter Barnes: Capitalism 3.0 — Chapter 7: Universal Birthrights (pages 101-116)

Capitalism and community aren’t natural allies. Capitalism’s emphasis on individual acquisition and consumption is usually antithetical to the needs of community. Where capitalism is about the pursuit of self-interest, community is about connecting to — and at times assisting — others. It’s driven not by monetary gain but by caring, giving, and sharing.

While the opportunity to advance one’s self-interest is essential to happiness, so too is community. No person is an island, and no one can truly attain happiness without connection to others. This raises the question of how to promote community. One view is that community can’t be promoted; it either arises spontaneously or it doesn’t. Another view is that community can be strengthened through public schools, farmers’ markets, charitable gifts, and the like. It’s rarely imagined that community can be built into our economic operating system. In this chapter I show how it can be — if our operating system includes a healthy commons sector. ...

The Idea of Birthrights

John Locke’s response to royalty’s claim of divine right was the idea of everyone’s inherent right to life, liberty, and property. Thomas Jefferson, in drafting America’s Declaration of Independence, changed Locke’s trinity to life, liberty, and the pursuit of happiness. These, Jefferson and his collaborators agreed, are gifts from the creator that can’t be taken away. Put slightly differently, they’re universal birthrights.

The Constitution and its amendments added meat to these elegant bones. They guaranteed such birthrights as free speech, due process, habeas corpus, speedy public trials, and secure homes and property. Wisely, the Ninth Amendment affirmed that “the enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” In that spirit, others have since been added.

If we were to analyze the expansion of American birthrights, we’d see a series of waves. The first wave consisted of rights against the state. The second included rights against unequal treatment based on race, nationality, gender, or sexual orientation. The third wave — which, historically speaking, is just beginning — consists of rights not against things, but for things — free public education, collective bargaining for wages, security in old age. They can be thought of as rights necessary for the pursuit of happiness.

What makes this latest wave of birthrights strengthen community is their universality. If some Americans could enjoy free public education while others couldn’t, the resulting inequities would divide rather than unite us as a nation. The universality of these rights puts everyone in the same boat. It spreads risk, responsibility, opportunity, and reward across race, gender, economic classes, and generations. It makes us a nation rather than a collection of isolated individuals.

Universality is also what distinguishes the commons sector from the corporate sector. The starting condition for the corporate sector, as we’ve seen, is that the top 5 percent owns more shares than everyone else. The starting condition for the commons sector, by contrast, is one person, one share.

The standard argument against third wave universal birthrights is that, while they might be nice in theory, in practice they are too expensive. They impose an unbearable burden on “the economy” — that is, on the winners in unfettered markets. Much better, therefore, to let everyone — including poor children and the sick — fend for themselves. In fact, the opposite is often true: universal birthrights, as we’ll see, can be cheaper and more efficient than individual acquisition. Moreover, they are always fairer.

How far we might go down the path of extending universal birthrights is anyone’s guess, but we’re now at the point where, economically speaking, we can afford to go farther. Without great difficulty, we could add three birthrights to our economic operating system: one would pay everyone a regular dividend, the second would give every child a start-up stake, and the third would reduce and share medical costs. Whether we add these birthrights or not isn’t a matter of economic ability, but of attitude and politics.

Why attitude? Americans suffer from a number of confusions. We think it’s “wrong” to give people “something for nothing,” despite the fact that corporations take common wealth for nothing all the time. We believe the poor are poor and the rich are rich because they deserve to be, but don’t consider that millions of Americans work two or three jobs and still can’t make ends meet. Plus, we think tinkering with the “natural” distribution of income is “socialism,” or “big government,” or some other manifestation of evil, despite the fact that our current distribution of income isn’t “natural” at all, but rigged from the get-go by maldistributed property.

The late John Rawls, one of America’s leading philosophers, distinguished between pre distribution of property and re distribution of income. Under income re distribution, money is taken from “winners” and transferred to “losers.” Understandably, this isn’t popular with winners, who tend to control government and the media. Under property pre distribution, by contrast, the playing field is leveled by spreading property ownership before income is generated. After that, there’s no need for income redistribution; property itself distributes income to all. According to Rawls, while income re distribution creates dependency, property predistribution empowers.

But how can we spread property ownership without taking property from some and giving it to others? The answer lies in the commons — wealth that already belongs to everyone. By propertizing (without privatizing) some of that wealth, we can make everyone a property owner.

What’s interesting is that, for purely ecological reasons, we need to propertize (without privatizing) some natural wealth now. This twenty-first century necessity means we have a chance to save the planet, and as a bonus, add a universal birthright. ...

A Children’s Opportunity Trust

Not long ago, while researching historic documents for this book, I stumbled across this sentence in the Northwest Ordinance of 1787: “[T]he estates, both of resident and nonresident proprietors in the said territory, dying intestate, shall descent to, and be distributed among their children, and the descendants of a deceased child, in equal parts.” What, I wondered, was this about?

The answer, I soon learned, was primogeniture — or more precisely, ending primogeniture in America. Jefferson, Madison, and other early settlers believed the feudal practice of passing all or most property from father to eldest son had no place in the New World. This wasn’t about equal rights for women; that notion didn’t arise until later. Rather, it was about leveling the economic playing and avoiding a permanent aristocracy.

A nation in which everyone owned some property — in those days, this meant land — was what Jefferson and his contemporaries had in mind. In such a society, hard work and merit would be rewarded, while inherited privilege would be curbed. This vision of America wasn’t wild romanticism; it seemed quite achievable at the time, given the vast western frontier. What thwarted it, later, were giveaways of land to speculators and railroads, the rise of monopolies, and the colossal untaxed fortunes of the robber barons.

Fast-forward to the twenty-first century. Land is no longer the basis for most wealth; stock ownership is. But Jefferson’s vision of an ownership society is still achievable. The means for achieving it lies not, as George W. Bush has misleadingly argued, in the privatization of Social Security and health insurance, but in guaranteeing an inheritance to every child. In a country as super-affluent as ours, there’s absolutely no reason why we can’t do that. (In fact, Great Britain has already done it. Every British child born after 2002 gets a trust fund seeded by $440 from the government — $880 for children in the poorest 40 percent of families. All interest earned by the trust funds is tax-free.)

Let me get personal for a minute. My parents weren’t wealthy; both were children of penniless immigrants. They worked hard, saved, and invested — and paid my full tuition at Harvard. Later, they helped me buy a home and start a business. Without their financial assistance, I wouldn’t have achieved the success that I have. I, in turn, have set up trust funds for my two sons. As I did, they’ll have money for college educations, buying their own homes, and if they choose, starting their own businesses — in other words, what they need to get ahead in a capitalist system.

As I hope my sons will be, I’m extremely grateful for my economic good fortune. At the same time, I’m painfully aware that my family’s good fortune is far from universal. Many second-, third-, and even seventh-generation Americans have little or no savings to pass on to their heirs. Their children may receive their parents’ love and tutelage, but they don’t get the cash needed nowadays for a first-rate education, a down payment on a house, or a business venture. A few may rise because of extraordinary talent and luck, but the majority will spend their lives on a treadmill, paying bills and perhaps tucking a little away for old age. Their sons and daughters, in turn, will face a similar future.

It doesn’t have to be this way. One can imagine all sorts of government programs that can help people advance in life — free college and graduate school, GI bills, housing subsidies, and so on. Such programs, as we know, come and go, and I prefer more rather than less of them. But the simplest way to help people advance is to give them what my parents gave me, and what I’m giving my sons: a cash inheritance. And the surest way to do that is to build such inheritances into our economic operating system, much the way Social Security is.

When Jefferson substituted pursuit of happiness for Locke’s property, he wasn’t denigrating the importance of property. Without presuming to read his mind, I assume he altered Locke’s wording to make the point that property isn’t an end in itself, but merely a means to the higher end of happiness. In fact, the importance he and other Founders placed on property can be seen throughout the Constitution and its early amendments. Happiness, they evidently thought, may be the ultimate goal, but property is darn useful in the pursuit of it.

If this was true in the eighteenth century, it’s even truer in the twenty-first. The unalienable right to pursue happiness is fairly meaningless under capitalism without a chunk of capital to get started.

And while Social Security provides a cushion for the back end of life, it does nothing for the front end. That’s where we need something new.

A kitty for the front end of life has to be financed differently than Social Security because children can’t contribute in advance to their own inheritances. But the same principle of intergenerational solidarity can apply. Consider an intergenerational transfer fund through which departing souls leave money not just for their own children, but for all children. This could replace the current inheritance tax, which is under assault in any case. (As this is written, Congress has temporarily phased out the inheritance tax as of 2010; a move is afoot to make the phaseout permanent.) Mind you, I think ending the inheritance tax is a terrible idea; it’s the least distorting (in the sense of discouraging economic activity) and most progressive tax possible. It also seems sadly ironic that a nation that began by abolishing primogeniture is now on the verge of creating a permanent aristocracy of wealth. That said, if the inheritance tax is eliminated, an intergenerational transfer fund would be a fitting substitute.

The basic idea is similar to the revenue recycling system of professional sports. Winners — that is, millionaires and billionaires — would put money into a kitty (call it the Children’s Opportunity Trust), to be divided among all children equally, so the next round of economic play can be more competitive. In this case, the winners will have had a lifetime to enjoy their wealth, rather than just a single season. When they depart, half their estates, say, could be passed to their own children, while the other half would be distributed among all children. Their own offspring would still start on third base, but others would at least be in the game.

Under this plan, no money would go to the government. Instead, every penny would go back into the market, through the bank or brokerage accounts (managed by parents) of newborn children. I’d call these new accounts Individual Inheritance Accounts; they’d be front-of-life counterparts of Individual Retirement Accounts. After children turn eighteen, they could withdraw from their accounts for further education, a first home purchase, or to start a business.

Yes, contributions to the Children’s Opportunity Trust would be mandatory, at least for estates over a certain size (say $1 or $2 million). But such end-of-life gifts to society are entirely appropriate, given that so much of a millionaire’s wealth is, in reality, a gift from society. No one has expressed this better than Bill Gates Sr., father of the world’s richest person. “We live in a place which is orderly. It’s a place where markets work because there’s legal structure to support them. It’s a place where people can own property and protect it. People who have the good fortune, the skill, the luck to become wealthy in our country, simply have a debt to the source of their opportunity.”

I like the link between end-of-life recycling and start-of-life inheritances because it so nicely connects the passing of one generation with the coming of another. It also connects those who have received much from society with those who have received little; there’s justice as well as symmetry in that.

To top things off, I like to think that the contributors — millionaires and billionaires all — will feel less resentful about repaying their debts to society if their repayments go directly to children, rather than to the Internal Revenue Service. They might think of the Children’s Opportunity Trust as a kind of venture capital fund that makes startup investments in American children. A venture capital fund assumes nine out of ten investments won’t pay back, but the tenth will pay back in spades, more than compensating for the losers. So with the Children’s Opportunity Trust. If one out of ten children eventually departs this world with an estate large enough to “pay back” in spades the initial investment, then the trust will have earned its keep. And who knows? Some of those paying back might even feel good about it. ... read the whole chapter

 

 

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... because democracy alone hasn't yet led to a society in which all can prosper