Should the government go for

happiness or growth?
Before we consider and conclude to which policy the government should pursue,
we should frst know what the following objectives; growth and happiness, mean.
rowth, economic growth in this case refers to an increase in the long run
productive potential of the economy while also causing an increase in actual
output. !appiness is defned as marked pleasure or joy and is currently being
measured through "general well being# by the o$ce of national statistics due to
the prime ministers re%uest.
&hen assessing a policy of growth we must only look at the growth aspect and
not its impact on happiness so we can make a detailed comparison between the
two ideas. 'ursuing a policy of growth over happiness can have many costs as
well as benefts. &hen talking about economic growth we generally refer to an
increase in the long run capacity of the economy, this means that there has been
an increase in the %uality or %uantity of factors of production; as such we can
assume that prices may fall and job creation will rise as lower prices stimulate
aggregate demand. (conomic growth may bring reduced
unemployment and in)ation, thus increasing international
competitiveness due to lower prices. *his would cause the
countries global in)uence and power to increase as it begins to
take control of a market and is able to control prices. +urthermore
as the supply side of the economy grows as
governments invest in better education and
e%uipment, its workforce may become more skilled
and attract private investors and frms who look for high %uality
labour. &ith better education life e,pectancy may rise due to
better health understanding and disease may be eradicated sue to a healthier
workforce and a cleaner environment as waste disposal and street cleaner jobs
may be flled to ma,imum levels. *his will further create new jobs and increase
national wealth. +urthermore as a result of higher wealth and increased
government ta, revenue, health care may be improved along with cultural and
physical amenities such as museums and leisure centres.
!owever in order to sustain growth governments may have to impose a lower
minimum wage to keep profts high and to attract new frms. *his would mean
trade unions would be abolished and many workers rights may be left behind
with that. +or e,ample many holidays may be removed and sick leave may go
unpaid. -f this persists conditions may worsen as shown by history in Stalinist
.ussia when an intensive period of industrialisation was implemented, though
the /SS. was socialist the economic model was rather capitalist as the new
economic policy was introduced. !ardship may endure in the long run and the
standard of living may drop as growth is put before welfare. +urthermore in order
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to sustain growth the amount of carbon emissions 7from fossil fuels8 allowed to
be created may have to be increased in order to prevent frms from moving
elsewhere and prevent growth slowing as e$cient production re%uires the ability
to produce goods which entails large energy use. *he signifcant side e9ects of
burning fossil fuels are global warming and global dimming 7also respiratory
illness due to high pollution levels8. !uman activities cause pollution and are
damaging the natural environment due to the strain we put on it 7we currently do
:; trillion damage per year8. Biodiversity provides essential ecosystem services,
such as decomposition of waste, and removal of to,ins, soil fertility, erosion
bu9ering, pest control, medicinal discoveries, and carbon recycling. (stimates
show that these services are worth trillions each year. -f we continue to put
pressure on the ecosystem we will e,perience a loss of biodiversity which may
have a larger negative impact than all the positive growth that occurred before
the e,tensive damage. +urthermore as we aggravate global warming while
seemingly bettering "ourselves# we need to consider the impacts on other
countries as many poorer countries found in 4frica may be in danger of famine
due to desertifcation of farmland as a result of higher temperatures, while the
/< may e,perience an ice age due to melting ice caps, this would stop all assorts
of agriculture due to inhospitable conditions while commerce may slow due
transport di$culties.
=ass immigration as a result of growth may be benefcial in the short run but in
the long run crowding, disease and congestion may ensue as accommodation
becomes more cramped and thus hygiene levels fall and water becomes
polluted, for e,ample the phenol leak in the <umi sewer near the city of *agu
caused water to become lethal and the Bhopal disaster in 5ecember 1>?@. *he
impact of growth may thus be une%ual as the poor are forced to live in small
houses and prices are driven up due to there being more mouths to feed and
land degrades due to abnormally high pressure causing infertility. *his can end
very badly as it causes a wage price spiral and can lead to hyperin)ation as
workers push for higher wages.
'ursuing a policy of happiness, whilst seeming harmless, may be far more
detrimental than e,pected. Ao one knows what happiness e,actly is, there are
lots of di9erent defnitions, one of which - gave above, even if it could be defned
for a person, it would be unclear how to aggregate it across di9erent people. +or
5', by contrast, market prices provide an aggregation method that is fairly
manipulationBproof and hence permits comparison. *hus concept of happiness
may be too vague to be meaningful for practical policy purposes. &hen
assessing a policy of "happiness# we have to look at it in a way where growth
does not matter and can be a9ected negatively as long as happiness or "utility# is
ma,imised so as to make a valid conclusion. -t has been seen that income and
"happiness# are positively correlated when we use a measure such as the Carman
inde, of deprivation, if a government were to pursue a policy of happiness they
would need to ma,imise income and reduce unemployment by creating jobs or
increase state benefts for the unemployed in order to reduce ine%uality.
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*hey may also pursue a policy of wealth distribution where they ta, highly and re
invest in the infrastructure and the poor#s housing. *his would signifcantly
reduce the standard deviation of wealth and as a result increase happiness;
however this may lead to a form of communism, as the root of unhappiness is
the lack of ability to a9ord a decent standard of living due to high prices caused
by those who have more money. -t has been proven time and time again that
communism fails to work and in fact causes further hardship and poverty.
+urthermore to ma,imise utility, vacation days will have to be e,tended giving
more time o9 which may endanger safe growth rates, though increasing
happiness is likely to lead to a healthier more productive workforce a there is less
stress and thus less days taken o9 due to illness. 4lso higher ta, may mean that
there is less incentive to work and in fact unemployment may rise and as a result
growth may become negative. 4lso higher ta, means fewer frms are likely to
locate in this country and many may move away reducing job availability. *his
can lead to a vicious cycle of decline as the government may have to cut funds
to areas such as child beneft in order to support a growing unemployed
population. *hough this may cause low in)ation to persist meaning a good
standard of living is far more a9ordable. -t seems in order to improve the
standard of living, factors like gross domestic product, poverty rates and
environmental %uality need to be improved or increased.
=any governments believe that in order to increase %uality of life they have to
give the power to the people by giving them many rights which include for
e,ample a minimum wage, trade unions and right to privacy. overnments may
take these e,amples to e,tremes in order to ma,imise %uality of life, for e,ample
they may increase the minimum wage rate to unfeasibly high levels meaning
cost push in)ation follows and frms are also unable to maintain proft margins, in
the short run this may lead to a higher %uality of life but in the long run it may
cause the main objective to be compromised. *hough there are some who say
they would be happier earning less but sleeping more, a survey was taken asking
"would you rather earn :?D,DDD a year and sleep E.F hours a night, or :1@D,DDD
a year with si, hours# sleep a night?# 4bout EDG of people said they would be
happier earning less money and sleeping more. 6ikewise, almost twoBthirds
would be happier making less money and living close to their friends, rather than
more money in a city of strangers. *hese fndings support the notion that money
isn#t everything. But ask people what they would actually choose, as opposed to
what would make them happy, and their answers can sometimes surpriseH 1EG
of those who say they would be happier sleeping for longer and earning less also
say they would still choose the higherBpaying job. *hus it can be seen that a
policy of happiness may not be what people actually want. *hough, it seems
many of these policies may be hard to pursue without strong economic growth,
whilst many of the problems may hinder growth and thus happiness as well.
*hus it seems that both these policies seem to go hand in hand, as an increase in
growth may well stimulate household income to increase and thus happiness
may increase too. &hilst increased happiness may drive economic growth due to
a willing workforce, but in order to follow a successful policy, the objective
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cannot run out of control, but rather has to be balanced by the other policy, thus
leading to possibly sustainable growth and increased happiness, as for e,ample
in order to keep happiness high, prices must be low and this may cause
governments to fnd alternative fuels to lower costs and simultaneously reduce
greenhouse emissions. -n the current economic and environmental climate in the
/<, it seems it would be more benefcial to increase growth relative to happiness
in order to prevent a double dip recession and to reduce unemployment ergo
increasing average household income; this should in turn increase "happiness#.
+or other economies such as the 6(50#s of 4sia and 4frica it is not possible to
slow growth as there is currently starvation, disease and poverty, it does not
come as a surprise that these countries prioritise growth, which will eventually
lead to increased happiness.
4s a result it fgures that countries with strong economies should pursue policies
that may increase %uality of life and standard of living but at the same time
maintain sustainable growth as otherwise in the long run there may not be much
left in which to "grow#, whilst weaker economies should focus upon growth in
order to be able to increase %uality of life and standard of living as long term
prospects are beyond reach until the short run economy is stabilised and
strengthened. 4ccordingly no one policy can be used as it would present the
social economic dilemma of the "Coyless versus the Cobless#.
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