Globalisation is making everyone richer, but may undermine human happiness. What would a (utilitarian) God suggest?by Robert Wright / December 20, 2000 / Leave a comment
For all the discord over globalisation, virtually everyone agrees on two of its properties. First, globalisation is hard to stop. Second, globalisation makes the world-on balance, at least-more prosperous. The critique of globalisation isn’t that it fails to churn out ever more stuff, but that churning out more stuff has lots of drawbacks, especially given the way the stuff then gets distributed.
These two properties are related: globalisation is almost unstoppable precisely because it is driven by lots of people hell-bent on increasing their prosperity. Nike shareholders want to boost profits by holding down production costs, which means manufacturing overseas. Indonesian workers want to raise their income by moving from farm fields to Nike factories. Nike customers want, well, they want a shoe that has not just the generic “Air Sole” (old hat) but a “Tuned Air Unit” in the heel and “Zoom Air” in the forefoot.
Human nature itself-the deep desire to amass resources, to keep up with the Joneses, and, if possible, to leave them in the dust-drives the engine that is transforming the world. Unfortunately, human nature has a spotty record in the driver’s seat. Humanity is famous for pursuing things, such as power and riches, that don’t bring lasting happiness. Are those Nike shareholders happier behind the wheel of a Mercedes-Benz SUV than they would be driving a Hyundai Accent? Might some Indonesian factory workers be better off if they had never left the farm? Couldn’t a weekend athlete find contentment without Zoom Air in the forefoot?
This is the $64,000 question: does globalisation bring happiness? It is seldom addressed, perhaps because of its presumed elusiveness. But psychologists have amassed a lot of data about what does and doesn’t make people happy. Several big cross-cultural surveys over the past two decades are beginning to make it clearer which economic and political circumstances lead people to feel satisfied with their lot. Combine this data with what we know about globalisation’s economic and political effects, and it is possible to take a preliminary shot at the big questions: Is globalisation good or bad? If you were God (and a utilitarian), would you adopt a hands-off policy, leaving global capitalism on autopilot, or would you intervene? And what form might intervention take?
Psychologists have asked people in dozens of nations, rich and poor, how satisfied they are with their lives. The results are provocative. There is a clear connection between a nation’s per capita gross domestic product (GDP) and the average happiness of its citizens. But the strength of that connection comes mainly from nations in the bottom three quarters of the income scale. Once a nation attains a fairly comfortable standard of living, more income brings little, if any, additional happiness. In the US, between 1975 and 1995, real GDP per capita grew by 43 per cent, but the average happiness ratings didn’t budge.
The point where more wealth ceases to imply more happiness is around $10,000 per capita annually-roughly where Greece, Portugal and South Korea are now. Above that point, additional dollars don’t seem to cheer up nations, and national differences in happiness hinge on the intangibles of culture. The Irish are appreciably happier than the Germans, Japanese and British, though less wealthy than all of them. And Scandinavia’s happiness isn’t traceable to any economic edge over others. (One possible explanation: nations with high levels of trust tend to be happier, and Scandinavians are very trusting.)
This fact alone-that making poor nations less poor seems to raise the level of happiness, but making rich nations richer doesn’t-is worth contemplating in the light of globalisation. Before we do so, we must deal with two methodological issues. First, all these studies rely on self-reported satisfaction with life. There are many good reasons why this may be an unreliable index of happiness. But studies in various nations have shown that self-reported happiness correlates well not just with people’s observed demeanour, but with the evaluations of friends and relatives, and with survey questions that get at happiness more obliquely (for example, by determining how many pleasant memories a person can summon).
The second big methodological question is whether economic output masks other variables that are the real source of happiness. Are the keys to happiness things that money can buy-more food, cleaner drinking water, better healthcare, more comfortable housing? As William Easterly of the World Bank showed in a recent study, richer nations, compared to poor ones, tend to have “more democracy, less corruption… more rule of law, and higher bureaucratic quality… more civil liberties, less abuse of human rights.” Indeed, if you forget about GDP and plot national happiness levels against various indexes of freedom, you’ll see a clear relationship. So, if economic development not only improves diet, medicine and shelter, but also goes hand-in-hand with more democracy and human rights, then one way or another, development will probably make people in poor nations happier. And judging by evidence from Mexico, South Korea and Taiwan, economic development does indeed improve political life.
This potential for globalisation to increase the happiness of poor nations is surprising in view of the standard wisdom that it showers prosperity on rich nations at the expense of poor ones. Even Laura D’Andrea Tyson, former national economic adviser to President Clinton, wrote recently that “as globalisation has intensified, the gap between per capita incomes in rich and poor countries has widened.”
This observation is misleading at best. First, in absolute terms, poor nations have become on average less poor. And where the gap has widened, it is hard to argue that globalisation is the cause. As Jeffrey Sachs and Andrew Warner showed years ago, developing nations with the most open economies-the nations most plugged into the global market-grow fastest.
Some would claim that the rising level of prosperity among the more open developing nations is misleading because their poorer citizens are being left behind. But economists have found no general tendency for economic growth to exacerbate income inequality. Last spring, World Bank economists David Dollar and Aart Kraay released a study that looked not just at the effects of economic growth but specifically at the impact of globalisation. Tracking nations with the most open economies over the last several decades, they found that, as national income grew, the fraction of the economic pie going to the bottom fifth of the income scale didn’t shrink. The rising tide does appear to lift all boats.
If you look at the world as a utilitarian God would-ignoring political boundaries and focusing on the total number of souls-the picture looks still brighter. Bernard Wasow of the Century Foundation has calculated that between 1965 and 1997, the poorest 10 per cent of the world’s population increased its share of world income from 0.3 per cent to 0.5 per cent. Of course, 0.5 per cent is pathetically low-especially given that the richest 10 per cent meanwhile expanded its share from 50.6 per cent to 59.6 per cent. But the fact remains that in 1965 the average income of the top 10 per cent was 169 times the average income of the bottom 10 per cent, and by 1997 that ratio had fallen to 119 times.
According to a report issued in June by a squadron of agencies-the UN, the World Bank, the OECD, and the IMF-the number of people who live on less than a dollar a day dropped by 100m between 1990 and 1998. The number remains very high-1.2 billion-but bear in mind that the drop came even as the population of poor nations grew by hundreds of millions. In short, the world’s poor people seem to be getting less poor in absolute terms and, by some measures, less poor in relative terms. And the more globalised that poor nations become, the better their people do both absolutely and relatively.
If you add these findings to the happiness data, the implication is a bit perverse. In terms of psychological pay-off, the benefits of globalisation go overwhelmingly to the world’s lower classes, nations with a per capita annual income under $10,000. Only at that level does money reliably bring happiness. Indeed, richer nations not only fail to get happier as national income grows; the small fraction of the population suffering from serious psychopathology expands. More people become chronically depressed, and the suicide rate often rises.
It makes you wonder: Why do the rich work so hard at getting richer if it isn’t making them any happier-and is making a few of them crazier? Answering this question is the first step to fathoming the engine that drives globalisation. It is also the first step to deciding whether globalisation, given its benefits to the poor, should be left on autopilot.
Within nations, as among them, there is a link between income and happiness. But the link is not as strong as most people believe. Most of the thrill of a pay-rise wears off quickly, leaving us hungry for more. As with national happiness, there is a per capita income level-in the US, around $20,000-beyond which more money brings declining utilitarian bang per buck. Still, the bang per buck doesn’t quite level off to zero. Affluent Americans are a bit happier than their middle-class compatriots, and much happier than the poor. Making more money does make people at least a bit happier. So if individual Americans get happier as they get richer, why doesn’t the US collectively get happier as it gets richer?
The answer favoured by some psychologists, and championed by Robert Frank in his book Luxury Fever, is simple: Much of what gratifies people about higher income is that it boosts their relative standing. To the extent that this is true, one person’s gain is another person’s loss. Consider the late Greek shipping magnate Aristotle Onassis, who insisted that the faucets on his yacht be made of solid gold, and that the yacht’s bar stools be covered with the ultrasoft foreskin of a whale’s penis (I’m not making this up). Let us stipulate, for thought-experiment purposes, that Onassis impressed people enough to raise his social status, his serotonin level, and his sense of well-being. To the extent that he succeeded, he lowered the relative social standing of rival shipping magnate and yachtsman Stavros Niarchos. In Greek society as a whole, there was no net utilitarian gain.
This theory ties in with evolutionary psychology. As Frank notes, humans evolved in the context of small hunter-gatherer societies in which social status was correlated with reproductive success. There was only one top spot, one number two spot, and so on. Social status is a finite resource. The modern legacy of our evolved competitiveness is that, within the US or Japan or France, pursuing happiness through monetary gain is essentially a zero-sum game.
Within poor nations, by contrast, this game is partly non-zero-sum. No doubt some of the happiness associated with increased income comes from one-upmanship. But as people struggle to raise their standard of living, they gain things-better nutrition, healthcare-that increase their happiness without reducing anyone else’s. Moreover, these upwardly-mobile citizens are moving the nation as a whole toward more human rights, more political freedom, even more democracy-the political ingredients of national happiness.
The link between poor nations and rich nations is also non-zero-sum. Upper-middle-class Americans, in working overtime to afford that forest-green Ford Explorer, may be jostling for pieces of a more-or-less finite happiness pie. But at least some of that car was built in a developing country, where money can buy more national happiness. Net happiness is created by US status seeking-even if none of the happiness winds up in the US. A utilitarian God, indifferent to national boundaries, would be pleased.
or would he (or She)? Reducing poverty isn’t all that globalisation does, and income isn’t the only ingredient of happiness. Globalisation also affects the texture and structure of life, and on these things much of our happiness depends. The nations at the high-income, high-happiness end of the spectrum are mostly nations-in North America and western Europe-that underwent the transition from agrarian to industrial society long ago and have had time to catch their breath. It’s auspicious that more recent modernisers, such as South Korea and Taiwan, show pretty high levels of happiness, too. But the current pace of transition may give many modernising nations a degree of disorientation that neutralises much of the happiness brought by growing income.
The early 20th-century American sociologist William Ogburn had this type of problem in mind when he coined the term “cultural lag.” Cultural lag happens when material culture changes so fast that immaterial culture (government, social norms, moral strictures) falls dangerously behind. Some of globalisation’s examples of cultural lag are vivid and much discussed. The pollution that envelops a Mexico City or a Bangkok can race ahead of government’s capacity or will to solve the problem. Other aspects of “cultural lag” are less tangible, but at least as important. Take family and friends. Strong and intimate social bonds are deeply conducive to happiness. In a US survey, respondents who could list at least five people with whom they had discussed matters of personal significance in the last six months were 60 per cent more likely to say they felt “very happy” than people who could list none. People with close friends and kin also handle stress, illness and career setbacks better.
Moving from an agrarian to an industrial society can upset the social structures in which social bonds are embedded. In Brazil, a worker in the “informal sector” gets up each day, takes a bus out to an industrial area, then starts walking back toward his slum, stopping at work sites along the way in hopes of landing a few hours of labour. If he succeeds, he may spend the day among strangers; if he fails, he spends it alone. In India, journalist Robert Kaplan writes of tens of millions of migrants, no longer tethered to the norms of the rural village, who are “assaulted by the temptations of the pseudo-western city-luxury cars, night clubs, gangs, pornographic movies.”
The modernised nations underwent a roughly comparable transition-and lived to tell the tale. In the US at the end of the 19th century and the beginning of the 20th, as young men and women moved from farm to city and workplaces became larger and more impersonal, there was a sense of social crisis. Parts of Brazil and India are reminiscent of turn-of-the-century slums in the US, where rural migrants, remote from their families, tried to scratch out a living amid disease, corruption, and new forms of temptation. Yet by the second world war, Americans had partly succeeded in weaving a new social fabric.
Still, today’s developing nations are facing this adjustment in fast forward. Some are starting out more agrarian than the US was in the late 19th century and are being asked to move not just into the industrial age, but into the electronic age-an age that even modern nations are struggling to cope with. In the US, political scientist Robert Putnam (author of Bowling Alone) has famously blamed television for helping to fray that industrial-age social fabric, eroding everything from civic participation to picnics. (People who watch lots of television, by the way, are unusually unhappy, though that may be because unhappiness leads to television watching.)
The newer electronic technologies-microcomputers, modems-might seem just what the doctor ordered. Unlike television, they are tools of communication, even long-distance friendship. But there are reasons to doubt it. Cybercaf?s were not part of the environment in which Homo sapiens evolved. We most naturally get social gratification from face-to-face contact, not from sentences on a screen. What’s more, we seem to have evolved in small and intimate communities that offered the chance for long-term social bonds; what we need isn’t just “friends” in the sense of acquaintances or even colleagues, but actual friends. Just look at all the names in your e-mail address book. My, aren’t you well connected! But well connected doesn’t mean deeply connected. It means widely and shallowly connected. You communicate with many people along narrow channels of common interest, and you get to know few of them well. For many people, e-mail only sustains the trend-described by David Riesman in his 1950 book The Lonely Crowd-away from a solid grounding in kin and trusted friends and toward the superficiality of broad and efficient social networks. It is in this world that rates of depression and suicide have grown.
Information technology also abets the much-noted transience of the modern workplace. Deft communication makes it easier for companies to find temporary workers, easier for slightly underpaid executives to find their full market value at another firm-easier, in general, for economic efficiency to trump social stability. According to a study by McKinsey, the number of companies the average executive has worked for grew over the last decade from three to five. And many people don’t work for companies in a traditional sense at all-they just contract with them. The resulting “free-agent” culture has made many people richer (mainly at income levels where money doesn’t make you much happier) by making their social environment less solid.
The globalisation elite-the consultants and lawyers and corporate execs-spread their time among so many nations that they almost cease to have a home. This is the class dubbed “the cosmocrats” in A Future Perfect, the book on globalisation by John Micklethwait and Adrian Wooldridge. It is hard to work up sympathy for people who seldom fly economy even if they are “an anxious elite” who face “the perils of placelessness.” But it is true that many cosmocrats live in a vast and fluid web of facile connections. We don’t yet know whether this can bring long-term happiness, but we do know that this isn’t the way human beings were designed to live.
We must guard against over-extrapolating from these information-age trends. The information age and globalisation are still young. As the world wide web goes broadband, making real-time video more practical, rendering “tele-presence” more and more realistic, the web could become a more gratifying medium, allowing even “placeless” elites to stay closely in touch with a core of intimates.
But there is one rule about evolving information technology that is sure to hold, however broad the band-and this rule underscores the perils of “cultural lag.” As more powerful means of communication become cheaper and cheaper, groups of people with common interests will find it easier and easier to organise. There are enough groups with long- simmering grievances-Kurds, Basques, Palestinians, Indonesian minorities-for real havoc to ensue. When you add in the backlashes fomented by globalisation-among militias in the US, rabid nationalists in Russia and Germany, and religious fundamentalists worldwide-the picture gets spookier.
To be sure, the threat that information technologies pose to entrenched, centralised powers very often serves just causes. But even political improvement can be unsettling when it is sudden. The lowest national happiness level ever recorded anywhere was in the Dominican Republic in 1962, not long after the assassination of the dictator Rafael Trujillo, which in retrospect was the first in a series of steps toward democracy. And, leaving survey data aside, when political turmoil brings widespread death, as it often does, lots of people cease to be happy forever.
dorothy parker, when asked if she enjoyed writing, supposedly replied, “No. I enjoy having written.” So it sometimes is with historical progress. It could turn out that having globalised is more fun than globalising. Though the results of globalisation are good, the process of globalising can be costly, especially when it moves at high speed. One reason is the growing access to catastrophic technologies, most notably biological and nuclear weapons. Even past eras, with lower-tech forms of slaughter, attest to the toll that history can take when running on fast forward. As the industrial revolution, having matured fairly gradually in western Europe, swept rapidly eastward in the late 19th century, it brought extreme social dislocation to German lands and to Russia. It is possible to see both the virulent German nationalism of the 20th century and Stalin’s reign of terror as long-run consequences of this disruptive change.
How to proceed when the destination is good, but the journey dicey? Trying to fine-tune the velocity of history seems beyond our mortal capacity. But maybe we should look with increased sympathy on policy ideas that have plausible internal logic and may have the side effect of slightly slowing down globalisation.
Consider Robert Frank’s analysis of luxury fever: the pursuit of happiness through money and status. Here is the paradox: If everyone in an affluent society cut back on their work so their relative incomes didn’t change, they could all spend more time with friends-and the society’s overall happiness would grow. Yet it may not be in the best interest of any one person to take the initiative. How, asks Frank, can we halt the individually rational but collectively futile status-seeking and use the time to pursue happiness more wisely? He proposes a progressive consumption tax that would, among other virtues, discourage 60-hour working weeks. No doubt such a tax would cut demand for some products made in the developing world. But when globalisation is already moving at a scary pace, this slowdown is not necessarily an indictment of the proposal. So, too, with various other initiatives. If a fossil fuel tax, or environmental and labour accords in trade agreements have the effect of dampening demand for cars, that may not be a flaw. If you worry over idled Sri Lankan factory workers, you can donate money to charities that provide them with food and medicine. Unless you are yourself poor, you weren’t getting much joy out of those few dollars anyway. Besides, one psychologist found that performing altruistic acts gives people a psychological lift. Apparently, giving things to people can be a non-zero-sum game. Human nature is full of ironies.
Globalisation, given enough time, could itself bring one final irony. Suppose that the world truly becomes a “global village,” and a sense of common belonging suffuses all humankind. Wouldn’t that be wonderful? Maybe not. To the extent that happiness depends on how your social station compares with that of your neighbours, the happiness of poor nations might suffer. Indeed, the psychologist Michael Hagerty has speculated that the global telecommunications web is already becoming dense enough for these “comparison effects” to take a toll. The world’s poor may soon acquire a strong-and increasingly collective-sense of envy and resentment toward the world’s collective rich.
On the other hand, as economic development proceeds, and both the poor and the rich in developing nations become better off, this transnational class consciousness could begin to deter war among nations. One effective antiwar activity is networking among national elites-from the US to China to Botswana. A similar connectedness among the world’s lower classes could have the same effect; the more conscious of their commonality people become, the less prone they will be to nationalist fervour.
Such a supranational class conflict always has the potential to turn violent. But assuming the world’s upper classes have the presence of mind to minimise resentment with ameliorative economic and social policies, any such warfare is unlikely to be as destructive as the wars among nations during the 20th century were. It is also unlikely to match the horrors of current ethnically-based civil wars (which tend to afflict nations which are not deeply embedded in the global economy). Given the alternatives, a certain degree of class conflict on a global scale is a problem we should be happy to face. n