The countries that rank at the very top of global happiness rankings, as well as rankings for different factors that contribute to it (freedom, human development, democratic quality, etc.), have a moderate capitalist economy. They are usually among those with the highest degree of economic freedom. At the same time, within this group, those at the very top typically stand out for balance, such as the Nordic countries, Israel, the Netherlands, Switzerland, Australia, or New Zealand.
By contrast, countries with excessive capitalism in terms of working hours, pressure, competitiveness, and stress tend to rank lower than the previous ones in life-satisfaction rankings.
This is the case for the United States (ranked 15th), Singapore (25th), and, above all, South Korea (57th). It has one of the highest suicide rates among developed countries, as well as high levels of depression and other mental health problems. Due to the limited quality of life, 60% of adult South Koreans want to emigrate to other countries to achieve a better life, despite the high purchasing power they enjoy. Read more…
At the other extreme, countries with communist economic systems or similar have very low levels of subjective well-being, far below capitalist ones.
WHY DOES MODERATE CAPITALISM GENERATE THE MOST HAPPINESS?
One reason is that it is the system that creates the most wealth, and wealth is correlated with happiness, according to various scientific studies. In addition, prosperity tends to foster the following factors, which are also correlated with well-being:
Among the different capitalist models, moderate ones tend to provide higher levels of quality of life because they correct the sources of discomfort typical of unbridled capitalism, such as exhausting workdays, poverty, economic growth that benefits some greatly and others very little, lack of access to healthcare services, a weak social safety net, etc.
WHICH ECONOMIC SYSTEMS GENERATE THE MOST WEALTH?
Throughout modern history, it has been observed that certain economic systems tend to create more prosperity in terms of GDP growth, per capita income, and living standards.
In general, the system at the very top of the ranking is moderate capitalism. It is followed by ultraliberal capitalism and state capitalism.
1.-Moderate capitalism
As a general rule, the system that has achieved the best economic results is moderate capitalism. It has not only generated the greatest increases in purchasing power, but has also ensured that the population as a whole benefits from it, along with good education, healthcare, public services, infrastructure, social protection, etc.
It can be divided into four categories:
Norway has also performed excellently thanks to its oil, well managed by the state and invested by it in an investment fund. By contrast, Japan, France, and the PIGS experienced strong growth in past periods, especially in the 1960s, but since 2000 (or since the early 1990s in Japan’s case) they have basically been stagnant or have had very low growth in purchasing power.
As can be seen, most developed countries have some form of moderate capitalism, combining the advantages of the free market with state intervention to mitigate its failures and improve social welfare, and sometimes also to support the productive sector through subsidies, financing, etc.
2.-Ultraliberal capitalism
In free-market capitalism, typical of Hong Kong today and of the West in the 19th century and early 20th century, the prices of goods and services are determined by supply and demand, and private property is highly predominant.
It has the least state intervention and the greatest pro-business policies that promote competition and entrepreneurship. It creates a business-friendly environment through minimal regulations, low tax rates, and policies that attract investment.
This model is also very effective at generating wealth and high living standards, as competition encourages innovation and efficiency, which in turn drives economic growth.
However, it tends to generate significant economic inequalities, as well as economic crises.
3.-State capitalism
This model, typical of authoritarian regimes, is found in Russia, in China since the 1980s, and in the past in Singapore under the leadership of Lee Kuan Yew. In it, the government plays a dominant role in the economy, controlling and managing key sectors while allowing considerable market freedom.
Results have been very mixed. China and Singapore have experienced significant economic growth and rises in per capita income by focusing on investment in infrastructure, education, exports, and attracting foreign investment.
By contrast, in Russia, where the state has significant control especially over the oil, gas, and other natural resource sectors, performance has been much lower.
HAVE COMMUNISM AND SOCIALISM ALWAYS FAILED TO GENERATE WEALTH AND WELL-BEING?
The answer is very clear and simple: YES.
1.-Communism
Communism, in which the government controls most of the means of production and the distribution of goods and services, has failed everywhere without exception. It has led to much lower levels of purchasing power and happiness than in capitalist countries. In fact, it has caused great suffering to hundreds of millions of people across all continents:
As a result of their citizens’ dissatisfaction, migrations of millions of people have been taking place, fleeing to capitalist countries to achieve a better life. This happens on such a massive scale that some of these nations have had to put up barbed-wire fences and guards who shoot those who try to escape, for fear that these nations will be left empty, since it is an ideology especially characterized by evil… read more…
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For this reason, most communist countries have had to amend course and transition to capitalism. Those that have not have suffered enormous poverty, such as Cuba, where between 78% and 90% live in poverty and basic products such as food and medicines are lacking, or North Korea, where the situation is far worse, with the population literally dying of hunger. In addition, there is a lack of freedoms, human rights violations, and great dissatisfaction that drives many to try to flee those countries to ones with a capitalist-type economy.
Despite all of this, in much of the world there continue to be proposals descended from communism, adapted to each country, which are disguised with appealing cosmetics but whose harmful results for prosperity and well-being are practically guaranteed if they come to power. Read more…
2.-Socialism
Socialism is an intermediate system between communism and moderate capitalism. And it has also failed everywhere:
-Africa: it was the system adopted in most countries after independence. The result has been high levels of poverty (despite many of these countries being very rich in natural resources) and corruption (often outright plundering, such as the dos Santos family in Angola).
This socialism of leaders with accounts in Switzerland has gone hand in hand with dictatorships and authoritarian systems, as well as human rights violations. All of this has produced very low average levels of subjective well-being. Although, to be fair, it should be said that not all of these ills are attributable to socialism, but also, in part, to the idiosyncrasies of a large part of the sub-Saharan population.
-America: we have two emblematic cases:
That changed radically with the arrival of Peronism and its statist interventionism, from which point onward the economy deteriorated, until most of the population (57.4%) ended up living in poverty.
As a result, it went from being a country to which millions of Europeans emigrated (Spaniards, Italians, French, Germans, British, from Eastern European countries, etc.) in search of a better life (in fact, the port of Buenos Aires was, along with those of New York and Havana, the main destination for European emigration) to today’s Argentina, from which increasingly millions are fleeing (and last one out, turn off the lights).
Tell me from which economic systems to which others the major migratory flows go, and I will tell you which ones are best for the well-being of people as a whole.
-Asia: we will highlight two cases:
-Europe. The most paradigmatic case is Sweden, which went from being a poor country in the mid-19th century to having the highest per capita income in the world thanks to its liberal policies. Even under the social democratic governments from the 1920s onward, its tax burden was lower than that of the United States.
It was with the introduction of truly socialist policies in the 1970s and 1980s that its per capita income began to grow more slowly than in countries with more capitalist economies, gradually dropping in the international per capita income ranking until it fell to 13th place. The tax burden was so stifling that companies and talent fled to other countries. The companies that stayed resorted to tax planning and tax havens to avoid taxation. All of this meant that not enough taxes were collected to maintain good public services; as a result, on the one hand, healthcare, pensions, etc. deteriorated, and on the other hand, the country became heavily indebted.
After a considerable crisis in the early 1990s, leaders had to correct their economic policy, becoming one of the freest, most open, and most market-oriented economies in the world, while still maintaining its robust welfare state. They realized that to sustain it, it is necessary to take good care of the geese that lay the golden eggs: companies and entrepreneurs.
Therefore, corporate taxation and taxation of capital income are competitive. The excellent public services they enjoy are not paid so much by companies or the wealthy as by the beneficiaries themselves—that is, the bulk of the middle class, upper-middle class, and lower-middle class—through their personal income tax and VAT.
At present in Europe there are different socialist proposals to varying degrees whose negative results for prosperity and well-being are practically assured if they were to come to power, since they remove incentives for wealth creation. Read more…
In light of everything explained, the best thing communist and socialist parties and movements could do is reorient themselves toward more moderate positions that are more respectful of freedom … read more…
WHAT CAN GOVERNMENTS DO TO ACHIEVE A HAPPINESS-ORIENTED ECONOMY?
To achieve that goal, they can implement the following well-being-oriented policies:
WHAT CAN YOU DO TO ACHIEVE A MORE HAPPINESS-ORIENTED ECONOMY?
Thank you for doing so and for sharing to help achieve a more prosperous and happy world,
Xavier Paya
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