The Road to Freedom Page 4

  Not surprisingly, working makes Americans much happier than it makes Europeans. One economist at the University of Texas-Dallas has used numerous databases to show that Americans outrank Europeans in happiness at high work levels, while the reverse is true at low work levels.35 Europeans are happiest working thirty-five to thirty-nine hours per week. Americans are happiest working fifty to fifty-nine hours. My own data analysis shows that “very happy” Americans work more hours each week than those who are “pretty happy,” who in turn work more hours than people who are “not too happy.”36

  The vast majority of Americans like their jobs. Among adults who worked ten hours a week or more in 2002, 89 percent said they were very satisfied or somewhat satisfied with their jobs.37 And people with high-paying jobs aren’t the only ones who are satisfied. There is no difference between those with below- and above-average incomes: 89 percent are satisfied.38

  In America, job satisfaction relates to life satisfaction. Among those who say they are very happy in their lives, 95 percent are also satisfied with their jobs. Only 5 percent say they are not satisfied with their work.39 The evidence also shows that the relationship is causal: job satisfaction actually increases life happiness.40

  Europeans find this notion mind-boggling. When I describe American work habits to my European in-laws, they just shake their heads and make derisive comments about how brainwashed we all are. Even weirder, they think, is our attitude about vacations. When getting to know a European, a typical question is, “Where are you going on vacation this year?” You rarely hear this trivial conversation in America. There is no indication that Americans wish they had more vacation time than they have already. Only 11 percent of American workers say they wish they could spend a lot less time on their jobs.41

  Am I arguing that Americans are happier than Europeans and that Europeans could be as happy as Americans are, if only they embraced our system? Actually, I’m not. Europeans do reasonably well on happiness indexes. One British study from 2006 compared 128 countries worldwide and concluded that Denmark was the happiest country in the world, even somewhat more so than the United States.42 Other surveys show that the United States has the edge. But either way, it’s clear that Europeans think they’re pretty happy.

  It is reasonable to assume that Americans and Europeans are different, on average, and are made happy by different things. For most Americans, work in a free enterprise system that matches our skills and talents is essential to happiness, so the European system would be wrong for us. Immigrants with “American wiring” come to our shores to work hard and create value. European-style social democracy would make it harder for most Americans—whether they are Americans by birth or by choice—to earn our success and would make us unhappier as a people. We need to resist all efforts to push America in a European direction.

  WHEN I DESCRIBE earned success, perhaps I seem to be talking only about the good things in life. After all, flourishing and happiness don’t come from pain and suffering, right?

  Wrong. According to the great Hindu yogi Paramahansa Yogananda, “the weakling who has refused the conflict, acquiring nothing, has had nothing to renounce. He alone who has striven and won can enrich the world by bestowing the fruits of his victorious experience.”43 Earned success requires sacrifice. And a system that dedicates itself to expunging the challenge and risk from people’s lives is immoral.

  Whenever you ask entrepreneurs about their success, they spend a great deal of time describing the hardships: early failures and bankruptcies, missed little league games, and endless nights without sleep. They talk about almost losing their homes and the strain all this put on their marriages.

  Take Bernie Marcus, founder of The Home Depot, the $60 billion home improvement retail chain. Marcus initially struggled desperately to make the venture work. At the first store’s grand opening in 1979, he sent his friends and family into the street to give away $1 bills to lure people into the empty store. The result? “We literally couldn’t give the dollar bills away,” he recalled.44 He jokes that his wife wouldn’t let him shave during this time, because she didn’t want him to be alone with a razor blade.

  The legendary investment company founder Charles Schwab is another example. When asked about the incredible success of his $15 billion company, he tells the story about taking out a second mortgage on his home just to make payroll in the early years.45

  The focus on early failure is funny, when you think about it. If you ask a friend about a vacation to Mexico she clearly enjoyed, she’ll talk mostly about how sunny it was and how beautiful the beach was—not so much about how it had increased her chances for melanoma or how the airline lost her luggage. Yet happy, successful entrepreneurs always talk about how much they sacrificed before attaining success.

  I asked Bernie Marcus why entrepreneurs always recall the sacrifices when they talk about the path to prosperity. For him, he told me, sacrifices were central to his later earned success. Failure, anxiety, and lean years weren’t just necessarily evils; they were lessons to learn and tests to pass. They were the “earned” part of “earned success,” and there was no substitute for them. Without sacrifice, either there’s no success or, at the very least, it’s not earned. Either way, it’s no good.

  When we hear about successful entrepreneurs, it is always as if they had the Midas touch. You know the story: A pimply college kid cooks up an Internet company during a boring lecture at Harvard, and before lunch, he’s a billionaire. But in real life, that’s not how it works. Steven Rogers, in The Entrepreneur’s Guide to Finance and Business, reports that the average entrepreneur fails 3.8 times before succeeding.46 According to careerbuilder.com, the average small-business owner earns $44,576 per year in personal income, hardly a fortune, and a lot less than the average civil servant.47

  Entrepreneurs aren’t generally rich, and they fail a lot. When they sacrifice, they are learning and improving, exactly what they need to do to earn their success through their merits. Every sacrifice and failure makes them smarter and better, showing them that they’re not getting anything for free. When success ultimately comes, they wouldn’t trade away the earlier sacrifice for anything, even if they felt wretched at the time.

  Experimental psychologists have shown in novel ways the link between the ability to sacrifice and success. In one famous study from 1972, Stanford psychologist Walter Mischel concocted an experiment involving young children and a bag of marshmallows. A researcher would put a marshmallow on the table and tell the child he was leaving the room for a little while. He told the child that if he or she could refrain from eating the marshmallow until the researcher came back fifteen minutes later, the child would get another one as a reward.48

  It sounds easy, but it wasn’t. About two-thirds of the kids failed the experiment. Some gave up immediately and gobbled up the marshmallow as soon as the researcher walked out. Videotape shows other kids in agony, trying to discipline themselves to get the sweet reward—some even banging their little heads on the table.

  But the most interesting results from that study came years later. Researchers followed up on the kids in the study to see how their lives were turning out. What was the difference between the kids who waited, and the kids who didn’t? The kids who took the marshmallow immediately had average SAT scores 210 points lower than the kids who refrained. They dropped out of college at higher rates, made far less money, were more likely to go to jail, and suffered from more drug and alcohol problems.49

  So let’s return to public policy as it relates to sacrifice. The welfare state exists, in no small part, to shove the marshmallows into our mouths. It gets rid of sacrifice. It smoothes out our economic lives and protects us from unpleasant downsides. The welfare state—including not just those who receive welfare checks but everyone else who relies on the state to bail them out as well—protects people from the vicissitudes of life.

  For instance, during the current mortgage crisis, politicians justified bailing out mortgage holders by blaming ban
ks for selling mortgages to people who couldn’t afford them. In some cases, this was undoubtedly true. But according to researchers at the National Bureau of Economic Research, about a quarter of the people who defaulted on their mortgages during the economic crisis did so “strategically”—that is, they could afford to pay but chose not to.50 Yet by law, they could walk away from their mortgages without losing any of their other personal property. Thousands were bailed out with tax money.

  The National Flood Insurance Program is another glaring example of how the federal government protects citizens from the consequences of the risks they take. For less than $600 per year—far below what any private insurance company would charge in this market—the program insures homeowners who choose to build houses in flood plains, some of the riskiest real estate in America.51 The program is currently $19 billion in debt as a result of taking on risks that the homeowners themselves should assume if they want to live in disaster-prone areas.

  The most obvious example of the federal government protecting citizens from the consequences of their actions is the massive bailouts of banks, failed corporations, and government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac in 2008 and 2009. The federal government made an open-ended commitment to Fannie and Freddie, the failed Washington, D.C., giants that sparked the housing crisis and recession. As of July 2011, this has cost taxpayers $317 billion, according to the Congressional Budget Office.52 Similarly, when the private market deemed Chrysler and General Motors too uncompetitive to succeed, the government handed these companies $80 billion in taxpayer money.53

  Thus, Americans, who boast to the world about independence and resourcefulness, become infantilized. We see more and more preposterous examples of the attitudes this creates. During the 2011 Occupy Wall Street protests in New York, a reporter interviewed a young man holding a sign that read, “Throw me a bone, pay my tuition.” When asked why he thought the government should pay his college tuition, his answer was, “Because it’s what I want.”54 During the 2008 presidential campaign, a Florida woman was asked in an interview why she was supporting Barack Obama for president. If he is elected, she told the interviewer, “I won’t have to worry about putting gas in my car. I won’t have to worry about paying my mortgage. . . . If I help him, he’s going to help me.”55

  People who avail themselves of welfare and bailouts are not bad or stupid. They are just human. No one is eager to sacrifice all that much. I bet that many entrepreneurs who say they now cherish their sacrifices would (at the time) have welcomed faster, easier success. But if people are given a way out of every crisis and challenge, they are both less likely to succeed in the long term and less likely to enjoy any success that they acquire because it’s unearned. Bailouts that do more than provide a minimum standard of living—whether mortgage relief or a billion-dollar bank bailout—teach the wrong lessons and lead people to learned helplessness.

  INSTEAD OF offering more data, studies, and experiments that show how redistributive ways are making the pursuit of happiness harder by penalizing earned success and enabling learned helplessness, here is a poem I like entitled, “Tame Duck,” published in 1929 in a newsletter from the Milwaukee Co-operative Milk Producers.56 For me it describes, in an amusing way, the lives we face if we turn our backs on American free enterprise.

  There are two tame ducks in our backyard,

  Dabbling in mud and trying hard

  To get their share, and maybe more

  of the overflowing barnyard store.

  They’re fairly content with the task they’re at

  Of eating and sleeping and getting fat.

  But whenever the free wild ducks go by

  In a long line streaming down the sky,

  They cock a quizzical, puzzled eye

  And flap their wings and try to fly.

  I think my soul is a tame old duck

  Dabbling around in barnyard muck,

  Fat and lazy, with useless wings,

  But at times, when the north wind sings

  And the wild ones hurtle overhead

  It remembers something lost and dead,

  And cocks a wary, bewildered eye

  And makes a feeble attempt to fly.

  It’s fairly content with the state it’s in

  But it isn’t the duck that it might have been!

  EARNED SUCCESS, not materialism and government redistribution, is the way to understand the Founders’ moral promise of the pursuit of happiness in America today. The free enterprise system allows the most people to earn their success, going far beyond the benefits of mere money. Free enterprise is therefore not an economic imperative; it is a moral imperative.

  Free enterprise requires the existence of a level playing field, though. Some may say that the concept of earned success rings hollow because America is not a fair society. Capitalism, we hear, simply rewards a privileged few.

  We need to deal with these claims about fairness. So that is the next subject.

  3

  A SYSTEM THAT IS FAIR

  Imagine a typical family—a mom, a dad, and three young children. The kids have been asking mom and dad to adopt a dog, but the parents are resistant. Dad, in particular, objects. Dogs are dirty, he argues. They mess up the house. And you have to walk them all the time.

  But the kids are persistent and pretty soon they win over mom. Dad quickly caves in front of this new coalition. They adopt a puppy from the pound and name her Muffin.

  Dad is proved wrong. Muffin turns out to be a great dog: friendly, intelligent, and wonderful with the kids. Everyone loves her, especially dad. They all laugh at how he didn’t want to get her in the first place.

  A couple of years pass. One day, the family’s youngest child accidentally leaves the front door open. Muffin sees a squirrel in the neighbor’s yard and takes off in hot pursuit. She darts into the street and is hit by a speeding car. She dies on the spot in front of the whole family.

  Everyone is understandably heartbroken. The kids are crying, mom is crying, and even dad tears up. Lovingly, they pick up Muffin’s lifeless body and bring her in the house. After a short family discussion, they come to a decision about what to do next.

  They decide to cook and eat Muffin.

  IF YOU ARE LIKE ME—and everyone else I know—you’re either laughing or shaking your head in disgust. That ending is just wrong. (Try the story at your next dinner party and see!) Is eating the dog—bizarre to be sure—morally okay? Just about everyone will say, “Of course not.” But why not? Nobody is physically harmed by the act, least of all the dead dog. It’s legal, and people eat animals all the time. Still, people say, it’s just wrong.

  This story is liberally adapted from the work of Jonathan Haidt, a social psychologist at the University of Virginia and the world’s leading expert on the science of morality. Haidt and his co-authors have conducted a string of experiments in which they present human subjects with situations about which they have an immediate and overwhelming moral reaction, but one that they cannot justify rationally for minutes, hours, or sometimes ever.1 (The dog story is one of the tamer tales.) Haidt explains that when people are confronted with an emotionally evocative situation like the one in the story about the dog, their intuitive minds kick into gear and send their reasoning minds out on a mission: find a rational justification for my moral judgment! Generally what people eventually come up with (for example, “In our society, it is not alright to eat your pets”) simply justifies their initial moral predilections. You are unlikely to persuade people based on logic and reason that their initial moral judgment was wrong.

  Public policy debates are similar: People have very quick moral reactions and respond strongly to moral appeals. Once they are leaning morally in one direction, it’s extremely difficult to push them the other way using logic and evidence. Imagine you are debating someone about the virtues of free enterprise. You can be ready with all the PowerPoint charts in the world about the economic efficiency of the capitalist economy, but the moment
your interlocutor says, “Capitalism is unfair to the poor!” you’ve lost the debate. You might as well try to convince somebody to eat his dog.

  Right now, that’s the situation in which free enterprise advocates find themselves. From the Occupy Wall Street Movement to more moderate liberal politicians, income inequality has become the bogeyman on the basis of nothing more than the moral claim that the free enterprise system is unfair because it rewards some people so much more than others. They ask how a few enjoy billions of dollars when so many others have less. They say it’s morally repugnant.

  It does not matter very much if this kind of fairness claim is logically dubious. A materialistic rejoinder about economic growth and balanced budgets will not persuade the American public to turn away from big government policies. Only a moral rejoinder about the fairness of rewarding merit through free enterprise will carry the day.

  ALTHOUGH CURMUDGEONS will argue that America has become a land of moral relativism, Americans do, in fact, share a common set of beliefs about what is right and wrong.

  Through extensive surveys, Haidt (of the dog-eating experiment) has established what these beliefs are. He has asked people indirect moral questions such as, “How much money would it take to get you to accept a plasma screen television that a friend of yours wants to give you? You know that your friend got the television a year ago when the company that made it sent it to him by mistake and at no cost to him.” Using sophisticated statistical techniques, Haidt distilled the answers to his questions and found that in America and around the world, fairness is a universally shared moral value.

  Except for sociopaths, people crave fairness and naturally try to act fairly. This trait appears to be wired in from the youngest ages. Psychologists have studied this in a number of creative ways. For example, two Swedish researchers showed several dozen four-and-a-half year-olds a puppet show in which one puppet was struggling to complete a task. The puppet was helped by another but violently hindered by a third. Afterward, the researchers asked the kids to distribute an odd number of toys between the helper and the hinderer. They almost always favored the helping puppet and justified this decision in terms of fairness.2