Ed Dolan's Econ Blog

Growth, Public Policy, and the Economics of the Good Life

In the first part of my review of Robert and Edward Skidelsky’s How Much is Enough? I looked at the puzzle of leisure. Why, the Skidelskys ask, do we work so hard, even when we are well enough off to afford the additional leisure we need to live a good life? Beyond that follow some even more important questions:  What is a good life, anyway? Does endless economic growth make it easier or harder to live a good life? What kinds of public policy could help us live better? These questions contain both economic and philosophical elements, a combination that the Skidelsky team—the father, an economist, the son a philosopher—are eminently qualified to take on. This second part of my review explores some of their answers.

The elements of the good life

The Skidelskys see seven “basic goods” as essential to a good life:

  • Health, by which they mean all that is necessary to vitality, energy, and alertness.
  • Security, the expectation that one’s life will not be disrupted by war, crime, revolution, unauthorized government surveillance, or social and economic upheavals.
  • Friendship, in a broad sense that encompasses family, lovers, workmates, and others.
  • Respect, which means that others indicate, by some formality or otherwise, that one’s views and interests are worthy of consideration, even if they don’t agree with or like them.
  • Personality, sometimes called autonomy, which means the ability to frame and execute a plan of life according to one’s tastes, temperament, and conception of the good.
  • Leisure, not just rest and relaxation, but activities that we pursue for their own sake, not for the sake of obtaining something else.
  •  Harmony with nature, which they do not define as clearly  as the others.

On the whole, I like the thinking behind this list of basic goods. I agree with its rejection of the notion that pursuit of the good life consists of nothing more than accumulating an ever greater quantity and variety of material goods and paid services—the lifestyle so aptly mocked in the bumper sticker that reads, “He Who Dies with the Most Toys Wins.”

The Skidelskys are not the first to grapple with the question of what constitutes a good life. They consider what several other thinkers have had to say, ranging from Aristotle to John Rawls. For some reason, though, they omit one of the best known treatments, one with close parallels to their own: Abraham Maslow’s hierarchy of needs. In its simplest version, it includes five categories of basic needs:

  • Physiological needs, such as food, shelter, and sleep
  • Safety needs, including protection from threats of nature, crime, and war
  • Belongingness needs, which can be satisfied in relationships with family, friends, workgroups, and communities
  • Esteem needs,  including self-respect and respect from others
  • Self-actualization, a special term of Maslow’s that encompasses all aspects of fulfilling one’s potential through personal growth, creativity, and peak experiences. Maslow emphasizes that the specific content of self-actualization will vary greatly from one person to another.

These needs are hierarchical, in the sense that the next one cannot take priority until the previous one is substantially satisfied.

Most of the Skidelsky’s seven needs fit easily into Maslow’s  hierarchy: Health is an outcome of meeting physiological needs, security and safety needs are the same, friendship is an element of belongingness needs, and respect is necessary to meeting esteem needs. Both personality and leisure, as defined by the Skidelskys, are necessary conditions for achieving what Maslow calls self-actualization. Really, it would not be too much to say that the Skidelsky’s list of basic needs is little but a reinvention of Maslow’s scheme, which social scientists of all stripes have been debating, criticizing, and putting to daily use for seventy years in applications from clinical psychology to sales training.

True, “harmony with nature” does not fit neatly into Maslow’s hierarchy, but then, it does not fit very well into the Skidelskys’ list, either. The fact that it is the only one of their seven basic goods for which they provide no definition is one indication. It is also hard to reconcile harmony with nature as a basic need with the Skidelskys’ view of mainstream environmentalism as essentially nonrational and romantic. Somewhat condescendingly, they write that

the covertly religious character of the Green movement is often viewed, by friends and foes alike, as an embarrassment, a scandal, even. . . That is not our view. We respect and share the religious feeling at the heart of environmentalism. But we believe that this feeling is best expressed openly rather than hidden under the fig leaf of science.

Yet later, in laying out the criteria for selecting their basic goods, they consider but then reject religion, on the following grounds:

Now, while we might consider a culture devoid of religion or aesthetic experience to be impoverished, we would not call an individual who lacked either of these two things seriously harmed. There are many people who are simply “tone deaf” to art or religion but lead otherwise healthy, flourishing lives. . . our own goal . . . requires us to treat as basic only those goods whose lack constitutes a serious loss or harm.

Very well, but since there are also many people who are “tone deaf” to harmony with nature, why not dismiss that on the same grounds, especially after going out of their way to equate environmental and religious values? On the Skidelskys’ own terms, it makes no sense to consider harmony with nature a “basic need.” By comparison, Maslow’s more flexible framework allows people to fulfill the need for self-actualization in a variety of ways—through aesthetic experience for some, through religion for others, and through harmony with nature for others still.

The case against growth

Let’s turn now from psychology and philosophy to economics. The first question is, how much economic growth do we need to attain the good life?

The Skidelskys have a straightforward answer to this question: None.

The continued pursuit of growth is not only unnecessary to realizing the basic goods; it may actually damage them. The basic goods are essentially non-marketable: they cannot properly be bought or sold. An economy geared to maximizing market value will tend to crowd them out or to replace them with marketable surrogates

They follow this up with examples of ways in which growth has failed to contribute to achievement of the basic goods, or has seen them decline. Many of their examples are unconvincing, however. For example, they concede that life expectancy has increased. However, they say that the increase owes little to growth, but rather, to advances in medical technology and infrastructure. Are we to understand that economic growth has nothing to do with advances in technology and infrastructure? They cite increased divorce rates as evidence of a decline in friendship, without considering whether greater ease in escaping the domination of a spouse might facilitate women’s (and occasionally men’s) search for personality and autonomy. They lament the advance of industrial farming but sneer at organic food and farmers’ markets as “middle-class baubles.”

Details aside, however, there is one point on which I do agree with the Skidelskys. If we are concerned with making our lives better, we need to be concerned with the quality of growth, not just the rate of growth— “Growth for what, not of what,” as they put it. It is clearly the case that in many respects, the content of economic growth, as recently experienced, is not helping us get any closer to the good life, at least as far as anyone whose thinking has advanced beyond the “most toys win” stage understands it.

One problem is the bias of recent growth trends toward the already wealthy. (For some numbers to back this up, check out the clever interactive chart that you can find here.) For the already wealthy, added income goes largely toward buying positional goods, those that are valued mainly because they demonstrate one’s wealth relative to that of others. Even if we grant that moving up the positional goods ladder (for example, by ownership of one’s own jet rather than mere time-share access to a jet) helps satisfy a basic need for respect or esteem, not everyone can become relatively richer at the same time. Instead of contributing to a better life, then, pursuit of positional goods only adds to stress and subtracts from the leisure needed to pursue self-actualization.

Environmental externalities are another issue that raises the question, “growth of what?” Logically, if what we want is growth of goods, we should subtract growth of bads, like pollution, but conventional GDP accounting does not do that. True, believers in the environmental Kuznets curve will point out that some kinds of pollution, at least, reach a peak at middle levels of GDP and decrease thereafter. As an example, consider that there is now more smog in Beijing than in Los Angeles, the world’s former smog capital. However, the environmental Kuznets curve does not arise entirely from market forces. To the extent that pollution decreases in wealthy societies, it does so because of increasing demand for public policies that internalize the externalities through regulations, taxes, emission trading, or whatever. China has so far been willing to accept the smog in return for keeping its export order book full, but now that it is getting richer, it is experimenting with pollution control policies, too.

The bottom line: Economic growth is not a sufficient condition for progress toward a good life as philosophers and psychologists see it. For countries that are already wealthy, it is probably not even a necessary condition.

Can public policies promote the good life?

The Skidelskys are clear-headed enough to understand that the state cannot force people to live a good life. They concede that any such attempt would be self-defeating, since personal freedom, autonomy, personality—whatever term you want to use for it—is itself one of the basic goods. However, they do think certain policies might nudge people in the right direction.

  • Despite the frequently leftist bent of their rhetoric, they are strongly in favor of private property as a bulwark of both security and personal autonomy.
  • They favor French-style limits on hours of work, at least for most occupations. (The self-employed and creative elites would be exempt.) Short of legal limits, they favor policies that make it easier for employees to negotiate part-time or flex-time work arrangements.
  • They are fans of a basic income—an unconditional, non-means-tested grant for all citizens sufficient to provide a person’s physical needs. They acknowledge the possibility that some recipients might spend the grant on drugs or designer clothes, but they consider that worth the risk if it would allow some to take more leisure and others to pursue more rewarding occupations.
  • They like consumption taxes, whether in the form of a VAT or of an income tax with full deductibility of all saving. They think they would discourage consumption and encourage leisure, although, ironically, the most ardent supporters of consumption taxes see them as a way to promote more saving and faster growth.
  • Like many before them, they would like to suppress advertising, which they blame for people’s insatiable appetite to consume. (Really? I seem to remember that people in the blissfully ad-free Soviet Union smoked more Kazbeks than the number of heavily promoted Lucky Strikes consumed by Americans at the time, but maybe that is an isolated example.)
  • Finally, they seem inclined to think that we could help people in less developed countries achieve a better life by refusing to trade with them. “No country has become rich under a free trade regime,” they write. That  proposition could be disputed, but it is too big a subject to go into here.

Is there any hope?

The Skidelskys are determinedly skeptical that individual free choice within a capitalist market economy could possibly allow any outside an elite of academics and creative artists to achieve a good life. Everyone else, they think, is doomed. They see workers as forced to accept long and inflexible hours if they want to escape outright unemployment. They see consumers as sheep, easily manipulated by marketers into buying things that they don’t want and don’t need. They see the rich as workaholic automatons pursuing positional goods that bring no real fulfillment. There is some truth to each of these stereotypes, but I see some hopeful trends, too.

One is that some cracks are beginning to appear in the model where the bosses unilaterally dictate all conditions of work other than pay and make as few employees as possible work as many hours as they can. In reality, as the Families and Work Institute reports, we see some incipient trends toward greater workplace flexibility:

  • Employers allowing at least some of their workers to change starting and quitting times are up from 68 percent in 2005 to 77 percent in 2012
  • Employers allowing some paid work at home are up from 34 to 63 percent
  • Percentage allowing employee control over paid or unpaid overtime hours are up from 28 percent to 44 percent
  • From 1997 to 2008, there was a decrease of three hours, from 11 to 8, in the number of weekly hours of work at all jobs that exceeds the worker’s  ideal weekly hours.

Another hopeful trend is that consumers are increasingly asking for, and getting, food choices that are more consistent with the Skidelskys’ basic goods of health and harmony with the environment. True, organic foods still account for only 4 percent of total food sales in the United States, but they are steadily increasing their market share. Interestingly, contrary to the farmers’ market image, more than half of all organic food is sold in mass-market retail outlets, according to the Organic Trade Association.

These trends do not mean that we are about to enter an end-of-growth utopia, but they do suggest that a market economy is capable of supplying the elements of the good life. The responsibility for demanding them is up to us as individuals.

6 Responses to “Growth, Public Policy, and the Economics of the Good Life”

benleetJune 24th, 2013 at 3:58 pm

I think inequality should enter into your analysis. $40,000 a year sounds like a good income, but only 35% of workers receive that much or more in wage income, only 61% of households receive that or more in total income. What about the other 39% of households who are below 200% of the official poverty line? Their leisure opportunities are marred by the worries of having their utilities cut off, having to use ER facilities for medical care, of having not enough food — some leisure! One in three households, 32%, have regular worries and high frequency of these hardships according to a recent article below. What if you had an emergency $2,000 expense, could you pay for it? 44% of adults said no according to a NBER/FDIC study. Here are the sites to see if you want to confirm my claims:
my blog:
The premise of your article is the use of "us" and "we". Let's be inclusive.

Ed Dolan EdDolanJune 25th, 2013 at 9:27 am

The Skidelskys are very sensitive to the issue of inequality. If I underplayed it in my review, it was perhaps in part because their agenda is explicitly to ask why people who do have plenty of material means still do not take enough leisure and often do not lead what they see as good lives.

Peter ShawJune 24th, 2013 at 5:04 pm

A thought-provoking post, which touches on two issues not yet in economic discourse.
> "Growth" I think conflates two items: Expansion (size) and improvement (quality), so economics currently lacks the vocabulary to discuss these. To see the difference, consider the UK a lifetime ago. People bought cars, but in fact what they purchased was not a consumer durable, but personal mobility for the first time. What had been unobtainable a generation before became affordable.
The same period saw much housebuilding. Economics I think tends to lump these together, where that society didn't.
> Technologies continually improve and are displaced by better. A close look at an Okun plot suggests that we persistently need around 1% smaller labour-force per year for the same output. Increasingly, we all will (must?) have the leisure for "good life" activities.
Only if most of our knowledge is destroyed or rendered obsolete can this "clock" be reset, and we probably don't wish to go there.

Marta BraunsteinJune 29th, 2013 at 2:46 pm

It is true that technological advances have and will generate overproduction and rampant capacity, along with an increase in global unemployment. Without subsidies (unless already rich) and land and shelter, most people are forced to seek employment. A better method for understanding why people are forced to work more and have less leisure is taking into account how much people have to spend to cover the basics. In the US, people spend more than 30% of their income on rent or mortgage, 15% on transportation, 14% on food, 6% on utilities… that alone accounts for about three quarters of all income and we have not even accounted for healthcare, education and so forth. These percentages are actually higher for the majority of people who make the average or less than the average income in the US. The living wage, according to the calculator offered by MIT, is a lot higher than the salaries paid for various professions and more than triple the minimum wage for most families. Why do we work so much? Because we do not make enough to cover basic necessities. It is as simple as that for the great majority. Thoreau advocated a simple life, which is great, but hard to achieve if shelter and land is beyond the purchasing power of most people today. Bertrand Russell in his praise of leisure stated that it was possible for human beings to work less and have more free time if wealth was better distributed. He was right but unfortunately inequality is and will grow exponentially. More efforts are required in wealth distribution as well as teaching people methods to live better with less, but that is another story.

Ed Dolan EdDolanJune 29th, 2013 at 7:43 pm

You write, "These percentages are actually higher for the majority of people who make the average or less than the average income in the US."

Obviously, this is true for people with low skills who have low incomes even when fully employed. However, keep in mind that the Skidelskys are really more interested in the philosophical question of why people at middle and upper incomes work just as hard as those at lower levels of income, even though the middles and uppers spend less of their income on necessities. It is not that you are wrong–they are just asking a different question.

You write, "Why do we work so much? Because we do not make enough to cover basic necessities. It is as simple as that for the great majority."

Again, I think the Skidelskys would ask some different questions here. For example, why do middle class people today have a much different idea of what is necessary when it comes to housing than they did 50 years ago? I grew up in a family headed by a college professor, five of us in a newly built house with 4 BR, 1.5 baths, and less than 1000 sq ft. We thought it was pretty nice, and it was about on a par for the middle class in our town. Today, the same family would want 4 bedrooms, 4.5 baths, 2500 sq ft, and a two-car garage. In the 50s, in our town, that was the kind of house that doctors and bank presidents lived in, the upper-upper-middle class. Obviously, then, if your expectations of what is necessary go up as your income goes up, you have to keep working just as much. The interesting question is, why do those expectations keep rising?

Marta BraunsteinJuly 4th, 2013 at 1:27 pm

I see, but then the Skidelskys are entering the realm of biology, psychology and culture. On a biological level many species manipulate the environment for survival. Humans are more sophisticated, can analyze flaws and enhance things continuously. On a psychological level, all humans strive for security, comfort, assertion, control, etc. Our expectations are dynamic and tend to be rising continuously, just as our natural inclination not only to enhance things in our environment but to gain an advantage. Our current culture is sustained by an enormous technological apparatus that has become inseparable from our human experience, that is, "things" or the "things" money can buy are no longer external to mankind and human livelihood but an intrinsic part of our "being". It is true that in any inflationary system (i.e. rising expectations) one eventually reaches the point of diminishing returns. Also true is that for every apparent improvement there is some collateral damage and in this case, working more hours can bring in more money but also deprive us from valuable time. Though money allows us to create and manipulate our reality in ways we never dreamed before, we also tend to be overly optimistic as to the limits of time and the passing nature of our existence.