FT editorial

Now is the time for a less selfish capitalism

By Richard Layard

Published: March 11 2009 20:02 | Last updated: March 11 2009 20:02

What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.

And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.

Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed "most people can be trusted". Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).

Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.

Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.

To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.

So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.

I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children's Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.

Three ideas taught in business schools have much to answer for. One is the theory of "efficient capital markets", now clearly discredited. The second is "principal agent" theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of "continuous change", promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.

We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.

Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.

Lord Layard is at the London School of Economics Centre for Economic Performance. He has written 'Happiness' (2005) and co-authored 'A Good Childhood' (2009)

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Ben Bargagliotti
benbargagliotti@gmail.com
615.545.2941

In case you missed it, there was an illegal immigrant hyped up on colt 40 and killed two teenage girls. That is the kind of story the O'Reilly Factor producers have wet dreams about. So does O'Reilly make this about the drunk driving? No, of course he jumps on the fact that he is an illegal immigrant.



I can't believe I am posting a youtube where Geraldo Rivera says something I agree with, but here it is. Really, shit like this must make the writers for the Colbert Report furious because they put out a kick ass show every night, but they keep getting upstaged by Poppa Bear.

WorldNetDaily Watch

My father-in-law sent me this story from WorldNetDaily.

My favorite quote from the article:

Brendan Daly, speaking for Pelosi, told Associated Press that Pelosi was
reluctant to weigh in on the incident without knowing that such a message
would do more good, than harm.
Apparently, that's the measure of Democrat courage to stand up for what's
right: do nothing if they aren't first assured of the outcome.

You see, in a "9/12" world, consequences don't matter. Why think about your actions before you do them, so long as you know that your actions are in step with your ideology? When the write showed the "measure of Democrat courage", she was also confirming that the measure of current Republican courage is doing whatever you want and fuck the consequences.




I understand that being a leader involves making hard decisions when you don't have all the information, but often, the right thing to do is recognizing what your gut is telling you to do, but choosing the path with fewer extremes in possible outcomes.


To give a poker analogy, if you bet your whole stack on a 51-49 proposition, you are technically doing the "right thing", but damn, you're going to have a whole lot of variance. When you have a slight edge, but losing will mean losing your whole bankroll, sometimes it is just better to toss the hand and wait for another opportunity where the outcome is has either greater probability of success, or less devastation in loss.

Rant against America part 1

I live in the United States, and there is a lot that I like about my country, but there is a whole lot that pisses me off. I'm going to try to break this thought up into several posts.

Every American growing up (and really everyone else all over the world thanks to our pervasive media) is instilled with these beliefs about our country.

1. America is a land of freedom
2. America is a democracy where the "people" are the government.
3. America is a country that stands for goodness around the world.

In some respects, I agree with the above concepts, but in some ways, I think it is obvious that the above are not true.

It is becoming increasing clear to me that our government is a self-perpetuating entity unto itself that needs to answer to a constituancy, but it is not the people. Our government (and by government, I mostly mean our federal government as local and state governments do not have many of the corrupting influences such as a standing army and unlimited ability to borrow money that the federal government has) was founded under the idea that it would be limited to only those activities necessary to allow the citizens to live free and productive lives. The government we have now is much different than that.

1. The President - For anyone to become President, he must raise a lot of money. The money comes from two primary source: industries and special interest groups. The to-be-President (and the President trying to get re-elected) must make certain allegiances to both the industries and the special interest groups. In both cases, the purpose is to get money to run the campaign and votes from those involved with those groups. In the end, the President (from either party) is in the business of meeting the needs of those who put him in office rather than what's best for the country as a whole.

2. The legislators - the legislators are in a similar situation as the President in that they need money and votes and tend to get them from industries and special interest groups. What makes it worse for legislators is that they don't have term limits, so this corrupting relationship often spans decades.

3. The Bureauocracy - this really entails any government body such as the military, any "Department of..." and any "... Administration." These groups live on money, and as such are at the mercy of the legislators and the President to get it. Since the government is the largest employer in our country, our country has little incentive to make any of these things smaller. The problem is that almost every one of these bureaucracies are dead-weight inefficiencies that could be handled either on a smaller scale by the government or completely by private industry. New ones are created all the time, and they are impossible to get to go away.

There are probably more aspects to the above that I could list, but you get the point. All this inefficiency begs the question in my mind of, how could the country that is arguably the richest, most advanced country in the world whose businesses have been so innovative and efficient as to literally take over the world have a government that is the pretty much the perfect example of everything that is detrimental to capitalism and free markets. I will explore my thoughts on that in another post.

"If you're young and conservative, you have no heart. If you're old and liberal, you have no brains"

The is something my mom has said to me when I start arguing for something she feels is a little too liberal for her.

I like to consider myself an independent. If I have to nail down a title, I am a libertarian (as opposed to a Libertarian). I voted straight ticket Democrat in the last two elections (the only two elections I have voted in), though I'm certainly willing to vote for a reasonable Republican (I like Gingrich and Guiliani, though I'd probably still vote for Gore over either of them).

I consider Atlas Shrugged to be the most influential work of fiction in my life.

I was a finance and economics and accounting double major in college.

I hope all of the above adds up to something of a clear picture of my political-economic views.

That being said, there are a couple of thoughts I have had recently that are interesting and challenging.

1. The Democracy Now podcast from a few days ago (check it out in iTunes) featured an hour long speech by Howard Zinn (author of A People's History of the United States). In it, he makes a strong case against war (for those that have read Zinn, this should come as no surprise). Two subpoints:

a. He spends a good deal talking about how and why governments inherently lie. Despite all the rhetoric about "representing the people" all governments, democratically elected as well as tyrants, are in the business of staying in power. This often leads to keeping secrets and lying. Our government has done it from the beginning. If challenged, I will give examples.

b. Right about the time I was asking myself, "I agree that war is bad, but what about WWII?", Zinn says something to the effect of, "yes, then there was WWII, the war I volunteered for and proudly served as a bombardier. I thought it was the good war, but even that war poisoned everyone involved. It started out as the good guys (the US) versus the bad guys (the fascists), but soon the good guys were acting like the bad guys (firebombing of Dresden, Hiroshima and Nagasaki)." He is right. Our country's history of war is at odds with our history of financial and personal freedom. One will eventually have the end the other.

2. Globalization, outsourcing, and technology have done a great deal of good for the world. The Wal-mart effect has helped everyone in our society and many others (those that buy and produce). Even so, an uneducated person in our country today will find it difficult to have the same economic status as that same person 50 years ago. There are many reasons for this, none malevolent in my opinion, but it is still a tragedy that so much more effort must be expended to achieve the same level of success. I have no answer for this.


Technorati Tags: politics, economics, Atlas Shrugged, Howard Zinn, Globalization, Outsourcing, Democracy Now

Glenn Beck hits a new low

In case you were wondering how low Glenn Beck could go, he just accused Congressman-elect Keith Ellison, who happens to be Muslim, of being a terrorist. If this were on the Colbert Report, it wouldn't be funny because no one would believe it.

It's not me...it's you

Wife of pastors take note: if you husband turns out to be a homo, it may be because you let yourself become a disgusting fatass.

Yes, the reason why Ted Haggard "bought crystal meth and threw it away" (I officially deem this to be the new euphemism for being gay) is because his wife "let herself go."

I think I just figured out the origin of the idea that homosexuality is a choice. Once upon a time, there was a prissy little boy who grew up in a repressive household where he taught at home and at church that fags were going to burn in hell. He asked what a fag was, and they told him that they were people who liked other boys. Well, he liked other boys, but he sure wasn't about to tell everyone that he was going to hell!

So the boy grows to be a prissy little man who is smart, organized, articulate, and well dressed (as homosexuals tend to be) and he meets a girl that thinks he is cute. He could take or leave her, but figures he needs a wife in order to get a job as a pastor.

Soon, he is making the rounds with the different sins, and he finally gets to homosexuality. From his perspective, it was a choice: a choice between being openly gay, or being a closeted gay with a wife. So he preaches that being gay is a choice and everyone believes it.

Think about it. What completely straight person believes homosexuality is a choice? To believe that homosexuality is a choice is to be able to look deep inside yourself (assuming you are straight) and say, "I could, under the right circumstances, enjoy being with another man." I'm sure there are a lot of straight people who could own some of that statement, but for the straightest of straight, that statement should chance some minds.

Military newspapers call for Rumsfeld's head

Wonkette is reporting that the commercial newspapers for the four major branches of the US military are calling for Rumsfeld's resignation. Quote:

Rumsfeld has lost credibility with the uniformed leadership, with the troops, with Congress and with the public at large. His strategy has failed, and his ability to lead is compromised. And although the blame for our failures in Iraq rests with the secretary, it will be the troops who bear its brunt.

This is not about the midterm elections. Regardless of which party wins Nov. 7, the time has come, Mr. President, to face the hard bruising truth: Donald Rumsfeld must go.

Rummy, it's time to go find some cushy private sector job that is going to pay you too much. Leave our military alone please.