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Happy Face Money


Inside and Outside Countries Income and Life Satisfaction

Yet another way to look at the data is what happens inside of a country and also between countries. The plot below answers this question. The black circles are the values of Life Satisfaction against Income for each country. As you can see, the higher the Income, the higher the Life Satisfaction. The arrows indicate the direction of Life Satisfaction inside of each country. As we can see again, Life Satisfaction rises as Income rises, but this time inside of each country.

Life Satisfaction

Reference: Stevenson B, Wolfers J (2008) – Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox. Brookings Paper Econ Activ 2008 (Spring):1–87.

Well-being and Income in Societies

Fair enough, by now it seems clear that the richer a person is, the happier this person is. But what happens within "societies"? In this case "societies" are loosely defined by culture but also by political systems. The term "society" in this case is not to be confused with the manner in which it is abused by politicians (see Dont Talk To Us About Society). This question is answered by the graph below.

Wellbeing Societies

Reference: Inglehart, Foa, Peterson, and Welzel (2008) – Development, Freedom, and Rising Happiness: A Global Perspective (1981–2007). In Perspectives on Psychological Science, 3, 4, 264–285.

This graph is very interesting indeed and as such we can extract several conclusions. In no specific order they are:

The Ex-Communist block is quite unhappy and this is so because their incomes are low. However, communism died in 1991 and the poll was taken in in 2007, this is, 16 years after the fall of communism. Yet, these countries are still quite miserable and still quite poor. This graph shows in an incontrovertible manner that not only communism does not work but it is very dangerous to your well-being. The destructive power of communism is such that it takes a very long time for people to recover.

If communism clearly very bad, what about Socialism which is Communism-light? The plot would seem to indicate that people in the Main Socialist Area (e.g. US, Denmark, Canada, Britain, etc.) are doing great. Does this mean that socialism works? No. Not at all. This graph is only showing what happens with well-being when you spend money on people. The conclusion is that the more wealth you give to people, the happier they will be. But the key question is this: is this wealth-giving sustainable? And the answer for socialist countries is clearly NO! (see for example our Incompetence Socialist Index). What happens once the unholy trinity (tax, borrow and print) cannot be exploited any longer? Wealth-giving disappears and with it well-being. Yes, it is that simple.

What about Latin American societies? It is clear that they are doing great too even if they don't have exorbitant amounts of Income. These cultures seem to be content with less wealth than other cultures. Could this be a trend?

Socialism, Income and Wellbeing

If we now take a second look at the Main Socialist Area we can reach a further conclusion. Although it is clear that the wealth in those countries is to a large degree fake and unsustainable and will eventually implode, the wealth "feeling" for their populations is quite real. They can't see the difference because all the monstrous oceans of debt are hidden. As such they live in a "wealthy" country. Yet, it is clear that passing certain point people become less and less interested in becoming wealthier. If you take a look at the horizontal axis, you will notice that it is not logarithmic but linear. For this reason, this phenomenon can only be seen in this graph and not in the previous ones.

What this is telling us is that people are not just greed machines and that they do indeed being to feel content once they have achieved a certain level of wealth. This could not be otherwise since most serious statistical analysis show that people value leisure time and only wish to work to the extent to which this work reduces boredom. This is interesting because in ideal conditions neither 100% leisure time nor 100% work time is desired. There is a balancing point for each person which is ideal.

What this tells us is that our emphasis on increasing wealth is indeed desirable because it allows people to reach this ideal point. What this tells us is that the Libertarian point of view about people giving time and wealth freely is indeed a reality. People would naturally share and give for as long as their wealth is high enough so that they are content. They will do so because this giving is "work" for them but this holds true only for as long as there is enough wealth to sustain their state of contentness. Below this limit it is obvious that they won't have serious incentives to give. This is yet another reason why socialism is so damaging, because it prevents people from reaching this ideal state of contentness by destroying wealth and in this manner they prevent people from helping people. It is a curious but a real contradiction in terms: "The more a socialist system attempts to provide equality for all people, the more it prevents it and the more it must force people to share their wealth which then become insufficient for all" F&P.

Note: please see the Glossary if you are unfamiliar with certain words.

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