FOR AMERICA, CHEERING UP KEY TO BEING GREATER

Since becoming president, Donald Trump has talked a lot about what we need to add to make America great again. But one thing we clearly need to lose is some of our misery. Independent reports comparing various countries found the U.S. is more unhappy than many. Regardless of whether you believe the U.S. could be greater or is great just as it is, these studies show when it comes to morale, we have some room for improvement.

Overview

It’s easier to gauge our own personal happiness than the collective sentiment of the country as a whole. However, you needn’t look much further than protests, marches and town halls reported in the news and on social media to see that a lot of Americans are displeased.

The reasons are mixed. Some citizens who are unhappy with the current state of the country cast their vote for a businessman who promised more jobs and tax cuts with hopes that he could turn things around. Others protest and complain that the current administration will not only renege on those promises but will wreak further harm on a country that only recently recovered from a long period of slow growth.

At the moment, there are lots of unhappy people on either side of the political spectrum. But does personal happiness influence national policies? Recent evidence indicates that it does, both in the United States and in many countries throughout the world that are experiencing a “nationalist” movement. There is even an index to measure national malcontent: the Misery Index.

The Misery Index

In the 1960s, an advisor to President Lyndon Johnson created the Misery Index to provide an at-a-glance measure that combined the general well-being of America’s economy with that of its citizens. Originally, the index was determined by adding the unemployment rate to the inflation rate; the lower the sum, the better. (1)

Misery Index by Presidential Administration

Index number = unemployment rate + inflation rate (lower number is better) (2)

List of presidents from 1948-2016 with each of their Misery Index ratings at the start, end and change during term

 

In recent years, the Misery Index has been revised to include the sum of the unemployment, inflation and bank lending rates minus the percentage change in real GDP per capita. Using this updated formula, the index compares up to 59 different countries. In 2016, the Misery Index ranked the U.S. 39th, with a score of 9.4. The least miserable countries were Japan, China, Thailand, South Korea, Switzerland and Germany. (3)

America’s Campaign Promises

The Trump administration campaigned on issues appealing to the heartland of America: Bringing back outsourced manufacturing jobs, spending on infrastructure and replacing the Patient Protection and Affordable Care Act. The likelihood of these initiatives being implemented could directly determine how much the nation’s Misery Index number changes in the future.

As many of Trump’s actions have come under fire in the early months of his time in office, two questions remain:

  1. Will he be able to enact his platform to his satisfaction?
  2. If so, will those actions serve to make Americans happier or more miserable?

Jobs

According to the most recent U.S. Department of Commerce figures, U.S. companies employ 14 million workers in their overseas affiliates, many of them in call center and manufacturing jobs. That’s nearly twice the number of Americans currently out of a job. But if those jobs returned, would that solve our unemployment problem? Not likely. More and more job responsibilities in these sectors are being replaced by automated technology, eliminating the need for full-time workers. And given the high-tech nature of jobs that would return, the level of education and experience required is much higher these days than it was for manufacturing jobs 20 years ago.

If some jobs return, this could lower the unemployment rate further. However, U.S. employers would have to pay higher wages, as overseas workers generally earn less than $10,000 a year. This in turn would cause an increase in consumer prices and send inflation soaring — perhaps even enough to offset employment gains and escalate our Misery Index score. (4 )

Infrastructure

According to the American Society of Civil Engineers’ 2017 Report Card, the overall score for U.S. infrastructure is a D+. Categories that score a D+ or lower include airports, dams, public parks, roads, drinking water, energy, schools, hazardous waste, inland waterways, transit, levees and wastewater. (5) Both sides of the political aisle support increased spending on America’s infrastructure. The questions are how much money do we need and where will it come from?

Trump’s preliminary budget allocates $1 trillion toward infrastructure projects in the U.S., which would not only address much-needed repairs but produce hundreds of jobs to boot. The administration says these funds will come from a combination of public-private financing partnerships and a reduction in federal regulations that increase the cost of federal projects. (6)
In the upcoming months, there will be more clarification as to budget specifics and how well the infrastructure plan is supported by Congress, especially in consideration of other Trump priorities such as tax cuts and increased military spending. But ultimately, higher employment offset by higher spending may not do much to change the bar on our Misery Index score.

Health Care Reform

There’s no way to tell at this time how the proposed GOP bill will pan out. Even if the bill is signed into law, it may take a year or longer for the impact of higher insurance premiums and reduced tax subsidies to hit consumers. While health insurance is not a factor used to calculate the Misery Index, it no doubt has an impact on the happiness and well-being of Americans.

Political Divide

Regardless of what this administration is able to do, the country is likely to remain as divided, if not more so, than during the Obama years. That’s because so many Americans fall into one camp or the other, as evidenced by the near-even split in the presidential election: 65,844,610 votes for Clinton versus 62,979,636 for Trump. (7 )

Even if Trump proves successful, our Misery Index score may well rise. Regardless, the political divide suggests at least half of the country will still be unhappy.

The World Happiness Report

A different report, published each year by the World Economic Forum, suggests the level of happiness in the U.S. isn’t quite so bad. The World Happiness Report, makes annual updates analyzing a variety of measures for 156 countries, such as per capita gross domestic product, healthy years of life expectancy trust and perceived freedom to make life choices. Currently, the U.S. is ranked 13th, trailing top-ranked nations Denmark, Switzerland, Iceland, Norway and Finland. (8)

Wealth at What Cost?

“The message for the United States is clear. For a society that just chases money, we are chasing the wrong things. Our social fabric is deteriorating, social trust is deteriorating, faith in government is deteriorating.” (9)

Professor Jeffrey Sachs, special advisor to UN Secretary-General Ban Ki-Moon, on wealthier nations’ low rankings

Final Thoughts

Most of us have a public stance and a private stance. No matter what we would like the government to do for the greater good, we ultimately judge success based on how policy issues and reforms affect us individually. It’s a good strategy for each of us to try to protect our personal financial security with as little reliance on government and employer programs as possible. Consider those external resources as safety nets and perks of the job.

1 Steve Hanke. Cato Institute. Jan. 17, 2017. “The World’s Most – And Least – Miserable Countries in 2016.” https://www.cato.org/blog/worlds-most-least-miserable-countries-2016. Accessed March 17, 2017.
2 MiseryIndex.us. 2017. “United States Misery Index.” http://www.miseryindex.us/indexbyPresident.aspx. Accessed March 17, 2017.
3 Steve Hanke. Cato Institute. Jan. 17, 2017. “The World’s Most – And Least – Miserable Countries in 2016.” https://www.cato.org/blog/worlds-most-least-miserable-countries-2016. Accessed March 17, 2017.
4 Kimberly Amadeo. The Balance. Jan. 2, 2017. “How Outsourcing Jobs Affects the U.S. Economy.” https://www.thebalance.com/how-outsourcing-jobs-affects-the-u-s-economy-3306279. Accessed March 17, 2017.
5 American Society of Civil Engineers. 2017. “Infrastructure Report Card.” http://www.infrastructurereportcard.org/. Accessed March 17, 2017.
6 S.A. Miller. The Washington Times. March 12, 2017. “Budget Hawks, Anti-Tax Conservatives Support Trump’s Infrastructure Plan.” http://www.washingtontimes.com/news/2017/mar/12/trumps-infrastructure-plan-gains-support-of-budget/. Accessed March 17, 2017.
7 Hamdan Azhar. Forbes. Dec. 29, 2016. “2016 vs. 2012: How Trump’s Win and Clinton’s Votes Stack Up To Romney And Obama.” https://www.forbes.com/sites/realspin/2016/12/29/2016-vs-2012-how-trumps.win-and-clintons-votes-stack-up-to-obama-and-romney/#4c6a54731661. Accessed March 17, 2017.
8 Keith Breene. World Economic Forum. Nov. 14, 2016. “The World’s Happiest Countries in 2016.” https://www.weforum.org/agenda/2016/11/the-worlds-happiest-countries-in-2016/. Accessed March 17, 2017.
9 Ibid.
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