On economical thinking that attempts to maximize happiness

I’m an economical layman, but there’s a kind of economical thinking that strikes me as wrong. The argument goes along the lines of: It’s good when a rich man buys luxury, because then money finds its way into the economy and ultimately into the hands of poor people.

I think the reverse is true. To see why, we should shift the focus away from money and towards goods. Ultimately, the goal of a society should be happiness for as many as possible. Happiness necessarily requires a certain minimum of goods: shelter, food, perhaps means of mobility. Let’s have a small gedankenexperiment.

Suppose that on a small island chain of 20 islands, there are 20 people, and just enough space to give each person sufficient shelter: every person needs an entire (tiny) island. Clearly, in this economy, if the space isn’t distributed equally, happiness will suffer.

Now suppose that a rich guy owns half the space. He might like kitschy gardens that everyone else finds appaling. So, he he has two gardens planted on two islands, and the rest of his islands he lets to workers in exchange for them making his gardens more kitschy.

So, what happened to happiness? Seven islanders are working hard to increase the rich guy’s happiness … but can that offset the unhappiness caused by the workers’ daily commute and exposure to kitsch? My intuition is a clear no. With their time, the islanders could be researching spline spaces, make compilers faster, or figure out how to travel to other stars. And they could, ideally, do that with everyone having enough space.

I grandiosely deduce that unequal distribution of money may not immediately lower happiness, but luxury spending certainly does. Luxury spending is the kind of spending that generates comparatively little happiness for the resources being spent. Those resources, thru a smart distribution scheme, could be generating more happiness.

In the real world, when a rich person is flying his private airplane from Berne to Paris in order to arrive one hour faster, the resources in oil, material and work time that the flight consumes might have been spent allowing a group of families to reunite via train over the holidays, producing more happiness.

And here’s a scary thought: we’re all rich people compared to third world countries’ inhabitants. We’re all taking from poor people’s ability to meet their loved ones over the holidays by spending oil on trivia.

To me, this confirms the nauseatingly-oft voiced opinion that some correcting, money-channeling influence of the law can increase overall happiness. But there’s a less-heard corollary of our discussion: policy must control population size. Our island chain might have been fine, even with imbalanced resources, were there only 10 islanders. A limited set of resources cannot be used to provide an unbounded number of people with a minimum standard of living.

So, think about this when donating to campaigns that increase population size by feeding more people: your action may be counterproductive. We should, however, all take action for campaigns that limit population size by empowering women or distributing condoms.