The importance of opportunity
Some studies have shown that people are happier when they have the opportunity to better their lot. Rich and static societies might be less happy than not-as-rich but more upwardly mobile ones. This highlights the importance of what Adam Smith described as 'the uniform, constant and uninterrupted effort of every man to better his condition.'
This cuts against two different orthodoxies at once, namely the redistributive left's fixation on outcomes, and the sometimes reflexive populist fixation on protecting the position of those already arrived. Smith's line matters because it locates the source of prosperity in individual striving rather than in any given distribution of wealth. A society can be rich and still stagnant if that striving has nowhere to go.
There is real empirical backing for the happiness claim. Hedonic adaptation means absolute wealth buys less happiness than people expect because individuals and societies adjust to a given standard of living and then measure their satisfaction against the trajectory, not the level.
This is why lottery winners' happiness often reverts, and why some perennially less rich but more mobile societies report higher life satisfaction than richer, more sclerotic ones. The mechanism seems to be that people are happier when they feel their own effort is producing visible results, not when they've simply been allocated more.
This is not to call for equality of opportunity, despite the near constant appeal to it. Equality of opportunity, as usually deployed, smuggles in a levelling ambition. It implies the state should engineer identical starting conditions, which quickly becomes an argument for redistributing inputs such as inheritance, education, and family advantage, rather than just clearing obstacles.
What I’m suggesting is closer to opportunity as the absence of blockage. Nobody needs to start level, they simply need the path to be open and the effort to pay off. That's a more Smithian and a more Nozickian position than the equality-of-opportunity crowd usually admit to holding.
There are political implications to this, and a few strands follow fairly directly. Marginal incentives on the way up matter more than levels at the top. If striving is what generates happiness and prosperity, the sharpest political failure is not that some people are rich, but that the effort to move from poor to less-poor is punished. Benefit withdrawal rates that create effective marginal tax rates of 70-90% for people leaving welfare for work are a direct assault on the ‘effort to better one's condition.’ This is a stronger and more targeted argument than the usual case against high top-rate taxation.
It is barriers to entry that are the enemy, not inequality itself. Occupational licensing, planning restrictions that block housebuilding where the jobs are, and protections for incumbents, all freeze the current distribution by making it costly or illegal for new entrants to compete their way up. A policy agenda built on the opportunity premise would prioritize removing these over any redistributive scheme.
Geographic and social mobility become the test of a healthy society, not the Gini coefficient. We need to examine how fluid are intergenerational earnings mobility, rates of new business formation, and the ease of movement between regions and trades, rather than just take snapshots of income distribution.
We must beware of policies that cap the top in the name of fairness. Wealth taxes and punitive inheritance taxes do not open opportunity for anyone, they simply lower a ceiling. They are not just economically costly but beside the point, since the object is not to compress the distribution.
Dynamism has to be protected, including from the already-arrived. This cuts against protectionism and incumbent-favouring regulation as much as against socialism. A rich society that has stopped producing new routes upward, through complacent regulation that defends existing firms and existing wealth, is vulnerable to exactly the stagnant unhappiness that we are trying to eliminate.
It is opportunity that matters, not equality.
Madsen Pirie