The state of happiness is not being in the EU

Chris Dillow of Stumbling and Mumbling is pointing to an economics paper that, to those on the 'right', shows a most unremarkable result.

The effect is large. Controlling for a few obvious things, they estimate that, within OECD countries a one percentage point rise in the share of government spending in GDP cuts growth by 0.13 percentage points a year. This implies that the rise in government spending we've had in the UK since 2000 (from 37.2% of GDP to 42%) would, if sustained take half a point off GDP growth, making us more than 5% worse off in 10 years' time than we would have been had spending stayed at 2000's levels.

So far so unexceptional and the luddite left will bleat that all of this growth is oiled by the blood of cute little fluffy puppies, that economic growth cannot possibly ever be good and that we would all be much happier living in unheated mud huts and inbreeding. They will claim that we should be trying to make people happy rather than rich, and the pressures of modern life mean that we are far less happy now than when our forefathers where working themselves into the grave at 40 trying to scrape together enough food to survive the winter from their peasant small holdings. They are wrong of course.

In a sample of over 130,000 people from 126 countries, the correlation between the life satisfaction of individuals and the GDP of the country in which they live was over .40 – an exceptionally high value in social science.

So if the aim is happiness the proscriptions of Polly Toynbee et al. would be completely counter productive. Their desire for control and stopping economic growth is not going to make everybody happier, it is going to make everybody far less happy than they could have been. In stead of yet more regulation and yet more big government if you really want to improve quality of life then yo should be arguing to let people get on with their lives, improving them and making their own choices as to what will make them happiest. There is another point to this paper as well, some ways of shrinking the state are better than others at promoting growth (and therefore happiness).

It estimates that it is indirect taxes, and not income taxes, that depress growth most.

He then singles out two particually bad examples of these indirect taxes, VAT and excise duties stating that if we cut these we could even increase income tax and still have the same effect. Unfortunately we cannot cut these taxes, they are controlled by our imperial masters in Brussels. Excise duties are completely under the control of the protectionist Customs Union that forms the core of the EU, and VAT is required to never be levied at below 5% and, like the revenue from excise duties, it forms part of the funding of the EU.

This means that not only could we get a boast of 3% growth simply by leaving the EU and its red tape factory behind, even if they decide to raise tariff barriers against us but because we could then get rid of these regressive, fraud magnet, taxes growth would probably be even better. This would in turn make everybody happier than they could have been in the EU, and happier than those poor serfs still serving the EU empire.