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Does Clive Hamilton oppose economic growth?

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The latest Quarterly Essay has replies, including mine (copied in under the fold) to Clive Hamilton’s What’s Left: The Death of Social Democracy, along with Hamilton’s reply to the replies. He is in a revisionist mood. He tells us that

in fact I am not opposed to economic growth, nor to high incomes, or engaging in consumption. What I argue against is the attachment to these things… My position has more to do with the detachment of Buddhism than to the denial of Calvinism.

While books like Affluenza are mainly about the psychological and social effects of the pursuit of wealth, it’s clear from Growth Fetish that Hamilton is (or was) against economic growth as such. It has a whole section (pp.223-32) on the ‘post-growth’ economy. In it Hamilton says:

…Growth can be put to one side…working life, the natural environment and the public sector would no longer be sacrificed in order to push up the rate of growth. This would almost certainly mean that the rate of economic growth as it is now measured would decline and may, in time, become negative.

Later in his reply, he says that he won’t reply to my suggestion that his ‘low-growth strategy’ will cause misery-creating unemployment because he has dealt with it elsewhere, and that my argument is just a ‘debating trick’. It’s true that Hamilton has tried to deal with the unemployment issue, which is discussed toward the end of my review of Growth Fetish. But he hasn’t dealt with it in anything like a satisfactory manner. As I said in 2003:

He argues that more work would be created in the ‘household economy’, financed from taxing the market economy at higher rates. The forced reduction in working hours would require employers to increase the number of workers, if they are willing and able to maintain output. Less population growth will reduce demand for workers. Yet the cumulative effects of these factors are hardly likely to be anywhere near enough to stop unemployment rising massively. In Australia, the mining industry, manufacturers and retailers of luxury goods (with ‘luxury’ likely to be defined widely in Hamilton’s ascetic worldview), and most of the commercial media would be likely to collapse. Retailing generally, car manufacturing, and home building would be badly hit. Without advertising, new products and firms would have trouble finding markets, greatly reducing employment creation. The flow-on effects of all this are unpredictable in the detail, but likely to be severe even for industries not directly targeted by Hamilton’s controls.

Really, who is engaging in ‘debating tricks’ here? Unemployment is the single most important objection to Hamilton’s policy proposals, and to say that it has been discussed elsewhere is to lull readers into a false sense of confidence that Hamilton has an adequate response.

Whatever Hamilton’s in-principle stance on economic growth or unemployment, it’s hard to see how what he proposes could cause anything but less of the former and more of the latter. Even putting aside the policy changes he suggests, what if we all decided to downshift? What would happen to people working in all the industries whose products and services we no longer buy? They will end up downshifting rather more than they might have planned on.

My Quarterly Essay comment:

In a series of books since the mid-1990s, Clive Hamilton has attacked modern society as overly preoccupied with making and spending money. For the most part, political blame is allocated to “neoliberals” who, he alleges in Affluenza (2005), “have set out to promote higher consumption as the road to a better society”. But the left has not escaped criticism, and What’s Left: The Death of Social Democracy elaborates on his view that social democrats share this neoliberal assumption. They disagree over how actively governments should lessen inequalities of income and consumption, not whether rising income and consumption are desirable.

To Hamilton, this “compulsion to participate in consumer society” is no longer driven by material need but by “the belief of the great mass of people that to find happiness they must be richer, irrespective of how wealthy they already are.” Yet Hamilton’s work provides no direct evidence for this proposition. The evidential is circumstantial: inference from consumer behaviour and a Newspoll finding that nearly two-thirds of its respondents agreed with the statement that “you cannot afford to buy everything you really need”. In a society that is very wealthy compared to its own history and elsewhere in the world this figure is consistent with, though not proof of, an excessive preoccupation with money.

What two-thirds of people going without things they need is not consistent with is other similar research. In the 2003 Australian Survey of Social Attitudes, for instance, only 20% of its sample indicated that they were finding it difficult to manage on their current household income. In the HILDA survey of the same year, reported on by Hamilton in a 2005 Australia Institute paper, around two-thirds of the people in this major longitudinal survey indicated satisfaction with their income. Satisfaction with standard of living, which incorporates the benefits of past purchases, is even higher than for income alone. The Australian Unity Well-being Survey consistently finds that around 77% of its respondents are satisfied with their standard of living. Most people could find uses for more money than they earn. But preferring more money is not the same as believing that ever-greater amounts are needed for happiness.

Nor is the belief that money is the key to happiness evident in other survey research, which shows that Australians are willing to trade-off more money to achieve other goals. In the 1999-2002 World Values Survey, Australians ranked 16th out of 80 nations in saying that leisure was “very important” in their lives. Fewer Australians than in most other countries thought good pay important in a job, while more Australians than in most countries wanted jobs that were interesting, gave them an opportunity to achieve something, and let them use their initiative. Australia Institute research corroborates the conclusion that material consumption is not all-important. When asked what would improve their quality of life, 75% said more time with their family, and only 38% opted for more money to buy things. Their survey on “downshifting”, taking a lower income to pursue other life goals, found that nearly one-quarter of adults did this in the decade prior to 2002.

On this evidence, money is neither a source of majority discontent nor a goal to be pursued at the cost of all else. Common sense was well ahead of the academic research in discovering that there is more to life than money. But if extra money is not essential to happiness, why do people prefer more of it? The simple and obvious answer is that if there is more to life than money there is also more to life than happiness. There are many other possible ways money can improve people’s lives in ways that won’t necessarily feed into answers to questions like “All in all, how happy are you with you life these days?”.

To some extent, as Hamilton argues in his Quarterly Essay, consumption choices help define who we are: what we wear, the car we drive, the food we eat, the books we read, the films we see and so on send signals to others about what kind of person we are. Typically, Hamilton offers a reductionist reading of this consumption activity. “We no longer want to keep up with the Joneses”, he tells us, “we want to trump the Joneses by differentiating ourselves from them.” But surely these signals are as much about associating as differentiating. Most people want to fit in more than stand out, and they do so partly through shared tastes in consumer goods and services. In the language of social democrats, people feel “socially excluded” if they cannot afford the purchases expected of members of their preferred social group.

Aside from their social uses, consumer goods and services offer private benefits that are unlikely to influence overall judgments of happiness but are real nonetheless. It’s convenient to be able to read newspapers online, to quickly microwave a meal, or make a call on a mobile while away from home. It’s unlikely that the millions of Australians who purchased these electronic innovations expected to be happier as a result, but did believe that they would be better off in more modest ways. Few people seem to be downshifting from these technological advances. Even the Australia Institute has a website, and its press releases offer Clive Hamilton’s mobile number.

Hamilton won’t accept that greater material wealth, expect for the very poor, can have positive effects. To the contrary, he asserts that the richest people in the world, the Americans, “are saying they are miserable” and that “it is the process of getting rich that causes the problems”. And in his “Ten theses on consumption” he maintains that “in rich countries increased consumption is now associated with declining wellbeing”.

In a minority of cases, where people have muddled their priorities, this may be true. But as a generalisation it is not right. While happiness has not increased as levels of consumption have gone up, nor has it decreased. It is remarkably stable. In the US, an overwhelming majority, more than 80%, say that they are happy. This was as true in the latest survey, 2005, as it had been in the first back in 1946. Happiness questions are asked less frequently in Australia than in the US, but here too only a small minority regard themselves as unhappy. In the latest publicly available Australian survey, conducted in 2003, just 6.5% of respondents rated themselves below the mid-point in a 0-10 happiness scale.

The “rash of psychological disorders—anxiety, depression, substance abuse” that Hamilton attributes to the consumer culture are hard to see in the well-being data. A 1995 happiness survey, like the 2003 poll, put the proportion of unhappy people at 6%. Yet the Australian Bureau of Statistics’ National Health Survey shows an increase in “mental and behavioural problems” from 5.9% of the population in 1995 to 10.7% in 2004-05. While some level of mental distress is in the empirical research consistent with overall well-being—anxiety about one thing need not wipe-out happiness felt about other things—these discrepant results need exploring.

The increase in reported depression may not represent any real change in mental well-being. It could instead be the result of more honesty or reclassifying other states of mind. Initiatives like Beyond Blue have reduced the stigma attached to mental illness, and presumably encouraged more people to acknowledge that they have a problem. New drugs are probably part of the explanation too, providing a relatively easy chemical fix for those who are feeling down, but one that requires them to visit a doctor and say that they are “depressed”.

Even if more people have mental health problems, is the “consumer culture” to blame? Consuming more is not in itself typically bad for wellbeing. In every survey those who do the most consuming, those on higher incomes or with greater wealth, have higher average well-being than the poor or relatively poor. In the National Health Survey, people in the lowest income quintile are more than twice as likely as people in the highest income quintile to report mental health issues. The employed, exposed to the market economy through their labour as well as their consumption, are less than half as likely as the unemployed to experience a mental health problem.

These findings are more consistent with the social democratic view than Hamilton’s: a lack of resources is a risk factor for low well-being and poor mental health.
And indeed the Australian Survey of Social Attitudes found that 18% of those saying they had difficulty managing on their current household income were unhappy, compared to 5% of those who said that they were “coping” and 2% of those who described themselves as “living comfortably” (though the vast majority of people with low incomes do not report unhappiness or mental health problems).

Of particular concern in any analysis of well-being are the unemployed. As noted, the unemployed experience higher rates of reported mental health problems than the employed. European research suggests that this is not just the result of lower income. Even in countries where unemployment benefits make up 70 or 80% of an unemployed person’s previous income they still report significantly reduced well-being. German longitudinal research suggests that repeated unemployment has a “scarring” effect—even after work is found again, wellbeing is still below what it was prior to the initial job loss. Yet Hamilton’s low-growth strategy can only increase the number of unemployed people. Only two years of negative or low growth in the early 1990s nearly doubled the unemployment rate, and we did not get back to pre-recession unemployment levels until 2004. Is it any wonder that social democratic parties prefer economic growth to Hamilton’s misery-creating policies?

Australian politics tends to operate through tackling perceived problems rather than implementing over-arching agendas such as Hamilton’s “politics of well-being”. But implicit in what we see as problems is a rough conception of well-being that accords with the research on happiness and life satisfaction. Unemployment, low income and slow economic growth all make it harder to achieve the materially-based aspects of well-being. Social democratic parties, and for that matter all mainstream parties, sensibly focus on those things policy can do to create the conditions of well-being. After that, it is up to individuals to make the right trade-offs between the competing components of a happy life.

Andrew Norton

Andrew Norton is a Research Fellow at The Centre for Independent Studies and also edits its magazine, Policy. He co-edited A Defence of Economic Rationalism, and has written many articles on anti-market thought. He is also the author of The Unchained University, and a regular contributor to newspapers on higher education issues.

Written by Admin

June 16, 2006 at 8:48 am

Posted in Uncategorized

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