Monday, March 14, 2011

Don't Worry, Be Happy

Like the song says "Don't Worry, Be Happy". That's the new theme song for the UK's Conservative government, the one that's implementing an austerity program that is causing the economy to nose-dive. So what is Prime Minister Cameron doing in the light of the bad economic news? He is doing an old magician's trick, sleight of hand. He is is redefining the nation's goals. Here is Paul Krugman writing a post on it in his NY Times blog:
Roger Cohen writes about David Cameron’s new campaign calling for a focus on “emotional prosperity” rather than just financial prosperity. As he notes, it’s easy to be cynical about Cameron’s motives — and I am.

There’s also the question of what difference it makes. How would policy change if we agreed that happiness, not GDP, is the goal? After all, it’s not as if governments really try to maximize GDP, so why does it matter if we change the thing that they aren’t really targeting anyway?

And yet, there are cases in which the distinction between financial and emotional prosperity makes a big difference — namely, periods of high unemployment.

One overwhelming result of happiness research is that having a job matters a lot, much more than you might have expected just from the income involved. Well, duh, you may say — and it’s true that anyone who has ever spent time unemployed, or knows anyone who has been unemployed, knows that the blow to self-esteem is far greater than the mere financial loss.


The irony, of course, is that Cameron is pushing happiness economics even as he pursues an austerity program that will lead to a great deal of misery, above and beyond the lost GDP.
I'm pretty sure Governor Walker of Wisconsin with his own austerity program will soon announce a conversion to the "emotional prosperity" as the chief goal of his policies. And I don't think Barak Obama is all that far behind.

The economics profession and the political leaders around the world have failed us. They simply haven't deal with the Great Recession in an honest and significant way. They have used cant and mumbo-jumbo rather than serious economic theory. They have taken half measures and in the worst case (like Cameron) they have taken contraindicated measures, the voodoo economic moves made so popular since the rise of Reaganism. It is tragic beyond comprehension.

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