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MEASURING HAPPINESS

Measuring happiness is inherently difficult. There is no happiness index like there is with age or income. Perhaps the question shouldn’t be ‘how happy am I?’ But rather, ‘how productive am I?’

Gary North explains…

Life, Liberty, and the Pursuit of Output

Gary North – June 22, 2013

Reality Check

“Life, liberty, and the pursuit of happiness”: these words have become part of our inheritance as Americans. That is because of the power of Jefferson’s rhetoric. The more familiar phrase in 1776 was life, liberty, and property. That phrase makes a whole lot more sense than Jefferson’s.

MEASURING YOUR PROGRESS

You can measure life. You can see how long somebody lives. This does not tell you much about the quality of life, but there is at least a numerical aspect to it. People talk about living to a ripe old age. They want to live another five years. If somebody who has a terminal disease finds out about a cure, he rejoices.

Liberty is more difficult to measure. It is usually measured by our ability to achieve more today than we did before. This may be because the government has gotten smaller, but I doubt it. It usually has to do with greater wealth, because what we mean by liberty is liberty of action. If you can afford to do something today that you could not do several years ago, you think of yourself as being freer. In today’s world, this is not usually achieved by a shrinking of the government. It is usually achieved by becoming sufficiently wealthy that you can hire a lawyer, an accountant, and a specialist in offshore investing, so that the government cannot get at you quite as easily. In other words, you are staying ahead of the government, but not by seeing a contraction of the government.

Most conservatives and libertarians would rather see the shrinking of the state as the basis of our liberty, because that would at least mean that we would not have to work so hard to stay ahead of the state. We could spend the money on what we want to spend it on, not on lawyers and accountants. Also, a lot more people could participate in the benefits of liberty, simply because the state would be more restrained. But, over the past century, that has not been the world we have lived in. Yet it has been the world that people have lived in in China over the last 30 years, and China has been the great beneficiary. Nations that abandoned communism have done much better than expected, because communism was such a horror. The state really has shrunk in those societies, and people have a great deal more liberty than they had. I do not know if they are more happy, but they surely are more free.

Property can also be estimated numerically. You have more money. You have more land. You have more capital. You can see progress in your life. You can see that you are better off today than you were a few years ago.

The problem with happiness is that it is inherently non-measurable. There is no happiness index. It is very difficult to know if an increase in happiness is even possible by means of any program you could adopt. I do not think it is. Psychologists are coming more to the opinion that people have a certain capacity for happiness at a very young age, and that this does not change much over a lifetime. A few people can suffer enormous setbacks that make them permanently less happy, usually associated with the death of somebody close, or a setback in career plans that cannot be overcome. But these events are relatively rare. Most of us do not face this very often. I have said for years, even before I was subjected to the reality of it, that the greatest single benefit that we have had over the last 200 years of economic growth is it we no longer bury our children.

The new field of behavioral economics has discovered that, once someone has gotten beyond the level of something like Third World poverty, his level of happiness does not improve. No matter what he gains in terms of profession, money, leisure time, or however else we measure an increase of wealth, the person does not get any happier. He may get happy for a relatively brief period of time, but then he gets used to whatever level of income he has, and he falls back into the level of happiness that he possessed before he got the wealth.

This is a tremendous advantage if you lose something. We hear of people who lose the use of their legs. They are depressed at first. But then, over time, they adjust. A few years later, when you talk to them, they seem about as happy as they were before. They would like to get their legs back, of course, but if they did, the level of happiness would probably adjust to the restored conditions in a few years. So, we adjust both ways. This makes for more predictable living.

The problem with the phrase, “pursuit of happiness,” is that it really means the pursuit of the non-sustainable. It is in this sense utopian. Whatever it is that we choose to pursue, we would be wise to pick something other than happiness. If you are going to pursue something, pursue something which is measurable. You can see your progress. If you pursue something that is inherently non-measurable, you will be caught on what is sometimes called the hedonic treadmill. I call it the hedonic ratchet. You are pursuing the pot of gold at the end of the rainbow.

The greatest single advantage of being prosperous is that you no longer have to worry about the kinds of traumatic events that afflict people with little money. If your car breaks down, you pay to get it fixed. If your air-conditioning unit breaks, you get it repaired or replaced. Some numbers in your bank account decline, but you have your air-conditioning unit. You do not have to worry about the disruptions of your life that are imposed on you by external circumstances.

This does not protect you from a child who has gone astray, or a wife who is about to divorce you. These problems are common across the board. Rich people, middle-class people, and poor people suffer from them. There is not much that anybody can do about these. But in those areas of life that I like to think of as the annoyance factors, a person with money can escape from most of them. You just have to pay somebody to deal with the annoyances. It is nice get rid of annoyances. It lets you pursue other things with the time that the annoyances would otherwise have cost you. Jefferson’s phrase ought to be written: “Life, liberty, and the avoidance of annoyances.” It does not have the same rhetorical power, but at least it is realistic.

MAKING COMPARISONS

I have never been bothered or motivated by my contact with people who have more money than I have. But I have been bothered or motivated by people who appear to be more productive than I am. I do not mean superhuman people. I do not have in mind Jacob Neusner. But there are people I have known who seem to be more productive than I am, and who seem to get more productivity out of whatever capital assets they have, including time. They seem to be able to start businesses more easily than I do, or achieve other kinds of output more easily. But I do not think there is much that I could do, given my personal limitations, to do what they do. They have a certain knack of doing something that I would like to have, but I do not think there is anything I could do in terms of the allocation of my capital, including time, to match them in what they do. So, I have done my best to shrug it off, and to stick with my knitting.

Comparing yourself with other people is legitimate, if these people are in your area of service. It is a complete waste of time to worry about people’s skills, or fame, or success in areas that you are not interested in, or not well-equipped to perform at an exceptional level. What does it matter that you are not as good as they are? I do not care at all that I cannot run the hundred meters in under 10 seconds. That limitation has never been a burden to me. Yet most of life is made up of goals such as these. The more the division of labor extends, the more there are people out there who are going to be extraordinarily gifted in doing something that I have no possible opportunity to match.

The only reason for comparing yourself with others that makes any sense to me is to compare yourself with somebody in your own field, where you know something about what it takes to be a high-level performer. If you find that a person is constantly doing better than you are in terms of output, then I can see a reason for becoming motivated to match that person, or least try to catch up. It is something within your grasp. It is something worth doing. The price may be too high, but at least you should assess what that price is.

If the goal is to improve your performance by serving others, this makes sense to me. If your goal is to equal the other person’s money, or exceed his income, this is an utter waste of time. First, if the person is really any good, his income does not make much difference to him. If he makes twice as much next year, he probably will not be able to do anything that he cannot do this year. He is short of time, not money. So are you.

There is only one reason that I can think of for caring about the amount of money you make in relationship to somebody else. That has to do with matters of productivity. It may also have to be a matter of charity. If you could make an investment in tools, and the tools would significantly increase your productivity, but you just do not have enough money to do it, and some competitor does, then that is a matter of annoyance. That is worth considering. I do not think there are many tools that would enable us to do that, but attaining a new skill would count for this kind of an investment. If you can double your reading speed, and also double your retention, but it would take you three hours a day of hard work to do this for the next two years, and the guy you are comparing yourself with his already done this, then I can see being annoyed by the fact that your time schedule does not allow you to do it. I can see being concerned about it, and trying to find a way to adjust your schedule, to invest the time you need to double or triple or quadruple your output.

I cannot see any good reason for making this kind of an investment to double, triple, or quadruple your income. Yet we also know that, in most cases, if you double your output, you are going to double your income (before taxes). So, should the goal be to double your income, or to double your output? I say the goal is to double your output. You would like to double your income, but your doubling of income is simply a measure of your success in doubling your output. In other words, income should be used as a measure of your productivity, and as such, this is a legitimate concern. But it is not a legitimate goal, in and of itself. Of course in this life, almost nothing is a legitimate goal, in and of itself. Almost any goal you can think about, in and of itself, can become an addiction, or can become a source of enormous discontent. It is not worth it.

In 1980, I came close to doubling my output. That is because I adopted word processing. I adopted an ancient version of WordPerfect, which ran on a minicomputer. If I had waited two years, I could have achieved the same increase in output at about 20% of the cost. I got in too early. But I watched my output increase by something like 50% in less than a month. It was like nothing I had ever experienced.

I changed my way of writing. In some sense, I changed my way of thinking. This is because I could now correct my mistakes on screen so much more easily than on paper. Being able to correct your mistakes is one of the great advantages of digital world.

But because of the recession in 1980, my income dropped. It became much more difficult for me to generate income by writing an ad and mailing it. My income fell dramatically. It was easy to get new subscribers in 1979. But, because of the recession of 1980, and because of the drop in the price of gold, it became much more difficult in 1980 to generate income. Yet my productivity rose. In retrospect, 1980 was a great year for me. That is because I remember how much my output increased. I have tended to forget the struggles that I had over the next three years with income. My productivity went up like a rocket, but my income fell, if not like a stone, then at least like a balloon suffering from a loss of helium.

CONCLUSION

If you could double your productivity in one year by giving up half your income for one year, would you do it? I would surely do it. Even at my age, I would do it. That is the great advantage of having a lot of income. You can make a deal like that, should it ever arise, and not feel much pain. If you are at the ragged edge of nothing, you cannot afford to make that kind of deal. If you have a lot of money, you should make the deal in a minute. It has to do with productivity, not income.

So, I recommend substituting this phrase: life, liberty, and the pursuit of output. That makes sense to me. Jefferson’s version does not.

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