You know when grown-ups tell you everything's going to be fine, and you think they're probably lying to make you feel better?
Everything's going to be fine.

Friday, April 15


What Would Ross Gittins Do Without Monkeys?

Okay, the title is stolen from James Taranto, but what else is there to say?

Ross Gittins, economics writer for the Melbourne Age and Sydney Morning Herald, tells us:

With so many businesspeople, economists and politicians banging away, you would have to be pretty slow not to have got the message: what our economy desperately needs is a lowering of income tax rates, particularly the punishing top rate of 48.5 per cent.

The high tax rates we face are discouraging people from working as hard as they could. We need more incentive to try harder - to earn more, produce more and consume more.

But I've just been reading a new book - by an economics professor, no less - that argues the exact reverse: we need to keep tax rates high to discourage us from working so hard and, in the process, neglecting more important aspects of life, including leisure.

The prof is Richard Layard - Lord Layard, to you - of the London School of Economics. His book is Happiness: Lessons from a New Science, published in Britain by Allen Lane.


Okay, now that that's settled -

This guy is arguing that people working hard is the problem, and taking their money away is the solution? Niiiice.

Why on earth could so many of us - particularly those on the top tax rate - be working too hard and neglecting our leisure?
Because we like to get things done? Because we want the money? Because we enjoy our fancy toys? No:
At base, because our evolutionary make-up makes us highly rivalrous towards other people, to be always comparing ourselves with others and seeking higher status.
Mmmf. It's true enough that people seek status in various ways, including by the possession of material goods. But to argue that this is the only reason people work hard is as silly as, oh, I don't know, basing an entire economic theory on the levels of serotonin in monkeys.
The researchers manipulated the status of a male monkey by moving him from one group of monkeys to another. In each situation they measured the monkey's level of serotonin, a neuro-transmitter connected with feeling good. "The finding was striking," Layard says, "the higher the monkey's position in the hierarchy, the better the monkey feels.
I am not making this up.
Not convinced this has any implications for humans? Well, in a famous study of British civil servants, those of higher rank secreted lower average levels of stress-related cortisol - one reason people in the higher grades lived on average 4½ years longer than those in lower grades.
There are just sooo many things wrong with that paragraph, I hardly know where to start.

It's the tea, I tell you. The tea in the low-rank civil service cafeteria will kill you.

Meanwhile, back at the monkey farm:

Still not convinced we're obsessed by getting ahead of the Joneses? Consider this experiment where students at Harvard were asked to choose between living in two imaginary worlds. In World One, you get $50,000 a year while other people average $25,000. In World Two, you get $100,000 a year, while others average $250,000.

The majority of respondents preferred the first world. They were happy to be poorer in absolute terms, provided their RELATIVE position improved.

Now this is actually interesting. There's a leetle problem, of course, in that if everyone else makes 2½ times as much money as you, anything scarce will end up getting priced beyond your reach. So hey, you'll be able to afford twice as many ham and cheese sandwiches as in World One, but that nice house? That holiday in Tahiti? Forget it.
All this suggests that a major motivation for people in working so hard is to gain higher status directly from their position in their organisation or from the amount of money they earn and the homes, cars and other status symbols they are able to buy with that money.
Either that, or they have priorities other than ham-and-cheese sandwiches.

Or, y'know, because we should never discount this possibility, they're just idiots.

Trouble is, what may make sense for the individual doesn't make sense for society. Status-seeking is a zero-sum game. I can advance myself in the pecking order only at the expense of those I pass. My gain is cancelled out by their loss.
Says who?

No, really, says who?

Status is what people decide it is. Status is only zero-sum if people decide it is.

Thus all the effort we expend trying to get ahead of the Joneses, or at least keep up with them, is like a perpetual arms race, which is socially wasteful. We'd be better off if we could somehow call a truce.
In this case, "calling a truce" means "stealing everyone's weapons".
"So most people are not rivalrous about their leisure," Layard says. "But they ARE rivalrous about income, and that rivalry is self-defeating. There is thus a tendency to sacrifice too much leisure in order to increase income."

Taxes are clearly performing some useful function beyond that of raising money to pay for public spending, he concludes. "They are holding us back from an even more fevered way of life."

Oh, thank you, milord. Wouldn't want to suffer from the horrible fever of actually getting to keep some part of the money I've earned.

When did they start making communists into peers?

Posted by: Pixy Misa at 04:18 AM | Comments (6) | Add Comment | Trackbacks (Suck)
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