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How to Become More Competitive:

Embrace Happiness


Embrace Happiness


How can Taiwan survive in a competitive world market and enable its citizens to find satisfaction with their lives? The answer is: Change, on both the national and personal level.



Embrace Happiness

By Fuyuan Hsiao
From CommonWealth Magazine (vol. 500 )

I would like to tell you a story.

Once upon a time, there was a small island surrounded by the seas. The island did not have any natural resources, but its residents were hard-working and good-natured.

They diligently produced many goods and sold them worldwide, thus earning money from around the globe. Over time the islanders accumulated huge wealth on the order of NT$130 trillion and were widely admired for their affluent, comfortable life, their friendliness and warmth.

But the more money the islanders made, the less happy they became. Some 7 percent of the population even became clinically depressed. More and more people began to complain, the quickening pace of life caused more and more anxiety, and those in charge had no idea what to do.

Within a short time an epidemic broke out on the island that caused people to lose sight – of the good side of their lives and the admiring glances of others. They became more and more disenchanted with life on the island…

Does this ring a bell with you?

Lately, Singaporean and South Korean scholars have been referring to Taiwan's recent history as a "failed case."

They have pointed to the island's brain drain, income stagnation, policy swings, and lack of direction. Recent developments seem to underpin that diagnosis: rainfall causes flooding, flooding leads to finger-pointing, finger-pointing causes political confrontation between the two main political camps, and political confrontation results in inaction.

What those scholars say is entirely correct. Yet is Taiwan truly such a "failure"? A look at the national balance sheet seems to show quite a different picture.

Based on purchasing power parity (PPP), which takes into account the cost of living, Taiwan's per capita GDP is even higher than that of its neighbors Japan and South Korea. (Table 1)

Taiwan's national net worth surpasses that of Singapore. (Table 2)Last year, Taiwan's per capita GDP topped US$20,000, and the average family net worth stood at NT$9.79 million, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). Both figures are historic highs. (Table 3)

In terms of individual wealth, Taiwan ranks fourth in Asia. (Table 4) Its disposable income per household is second only to the United States. (Table 5) And nearly 250,000 Taiwanese are worth more than US$1 million. (Table 6)

Foreign experts have their own versions of the Taiwan story.

In mid-June two researchers, Panos Mourdoukoutas, professor and chair of the Department of Economics at Long Island University Post, and Abraham Stefanidis, assistant Professor at the Peter J. Tobin College of Business, St. John's University, ranked Taiwan No. 10 in their list of the World's 10 Great Societies. The ranking is based on five indicators that measure economic opportunity and five indicators that measure quality of life. Three western European countries – Germany, the Netherlands and Britain – top the list with nine out of ten possible stars. Best placed among the Asian countries was Japan at No. 5 with eight stars, followed by South Korea at No. 8 with seven stars. Taiwan grabbed No. 10 with five stars.

In the eyes of the world, Taiwan performs quite well. Why do the Taiwanese themselves feel unsatisfied?

In mid-May CommonWealth Magazine conducted its first ever nationwide "Happiness Index Survey." The survey results show that life satisfaction in Taiwan merely gets a passing grade. (See "Seeking Taiwan's Happiness Equation")

Lio Mon-chi, professor at the Department of Political Economy at National Sun Yet-sen University, notes that while Taiwan enjoys economic growth and increasing wealth, its citizens' sense of happiness has not increased accordingly. Lio points to the "Easterlin Paradox" to explain this phenomenon.

Two Monsters Eating Away at Happiness

American economist Richard Easterlin found that at any particular time individuals become happier with increased wealth, but over time and with continued economic development, society at large does not become happier as it becomes richer. Lio believes that "two monsters in the human heart" eat away at subjective happiness.

One of the monsters is called "comparison." While people might lead a good, comfortable life, their subjective happiness or life satisfaction is undermined when they compare themselves with others that are better off or outdo them otherwise.

The other monster is called "acclimation." People very quickly adjust to a higher income, so that greater wealth does not correspondingly translate into more happiness. "People will always raise their expectations. It's like buying a digital camera. The resolutions keep going up. It's like a bottomless pit. You won't be happy," remarks Lio.

Another important factor is that the ways to measure happiness have changed, while Taiwanese society still clings to its old criteria for a happy life.

Since the beginning of the 21st century, the appropriateness of GDP, which measures the sum of all goods and services produced in a country, as the most important indicator of national economic development is being seriously questioned.

Major multilateral, international organizations including the Organization for Economic Cooperation and Development (OECD), the World Economic Forum (WEF), the European Union (EU) and the United Nations (UN) have conducted studies to find a new theoretical framework that goes beyond GDP, taking into account the new goals of the current era.

Israeli-American Daniel Kahneman, the only psychologist to win a Nobel Prize in economics, very early on advocated that happiness be used as a measure for national performance. Kahneman believes the raison d'etre of a country is to create more happiness for its people. Only countries whose citizenry has a high sense of happiness are competitive.

Influenced by Kahneman, American psychologist Martin Seligman, the father of positive psychology, wrote in his latest book Flourish: A Visionary New Understanding of Happiness and Well-Being: "But what is wealth for, anyway? The goal of wealth, in my view, is not just to produce more wealth but to engender flourishing."

As Seligman argues, any events that increase the volume of goods and services produced and consumed also increase GDP, even if they are events that decrease the quality of life, such as divorces, car accidents, natural disasters, or administrative waste.

Seligman proposes the concept of a "new prosperity," that values both wealth and well-being to measure a nation's overall performance. "The future calls us to measure and then make policy around well-being rather than just around money. This measurement will be part of our gift to our posterity," he writes in Flourish.

Based on scientific research, Seligman has defined the five key elements of well-being: positive emotion, engagement, relationships, meaning, and accomplishment.

Happiness Makes Nations Competitive

The latest theories on national competitiveness combine economic figures, social justice, and sustainable development in their formulas.

American economist Jeffrey Sachs, director of The Earth Institute at Columbia University, in April this year published the World Happiness Report, commissioned by the United Nations.

In the report, Sachs notes that national competitiveness condenses down to the sum of a country's economic, social and environmental performance, and that a combination of these three key indicators constitutes national happiness. Happiness, in return, makes a country competitive.

This big shift in economic thinking is closely related not only to the realization that the blind pursuit of GDP growth is absurd, but also to the collapse of capitalism, as evidenced in the global economic crisis.

Taiwanese economist Thomas C.P. Peng, secretary-general of the Taiwan Competitiveness Forum and a specialist on happiness economics, believes that the worst after-effect of capitalism is the widening wealth gap that allows only a minority of people to enjoy the fruits of economic growth. Societies that give free rein to market mechanisms will not achieve true happiness, declares Peng.

How can Taiwan survive in a fiercely competitive, capitalist world market and at the same time enable its citizens to find life satisfaction?

The answer is: We need change, at both the national and personal level.

In a brand new apartment building in a quiet alleyway in Taipei's Da-an District, the living room's floor-to- ceiling windows reveal a view of lush greenery. Sitting on his sofa, Acer Group founder Stan Shih attempts to define happiness for his native Taiwan.

Drawing an analogy to computers with two processors, Shih states that a happy country should have a dual-core society. One core, which is "direct, tangible, the present," stands for the material well-being of a nation such as GDP. The other, which is "indirect, intangible, the future," refers to a nation's mental well-being.

"We must strike a balance between the two cores to create a happy society. However, it does not have to be fifty-fifty, we can also strike a balance with a 70:30 mix," Shih declares. Looking back on a lifelong career at the top of a home-grown multinational company, Shih strongly feels that the economic environment is becoming more difficult day by day.

He believes Taiwan is bound to face "certain difficulties" if it attempts to raise its citizens' happiness through further GDP growth. But Taiwan has great potential to match the internationally leading countries with regard to national happiness, Shih insists.

As chairman of the National Culture and Arts Foundation, Shih devotes much effort to bringing cultural events to Taiwanese companies, creating an opportunity for artists to "hone their skills" while also raising cultural and spiritual life within corporations.

Shih attends at least three performances per week, drawing a lot of personal happiness from such activities. "I feel very blessed," he professes. Shih firmly believes that happiness will be an important source of competitiveness for Taiwanese industry.

Doing Palpable Deeds

In fact, citizens' happiness has a lot to do with how the government spends money.

The inspiration Lio drew from Easterlin's theory is, "Government must never aim for pie in the sky. Spending a lot of money in one stroke will not make people happy, because they get used to it very quickly."

Lio has observed that small yet concrete steps toward well-being are very important. Citizens will only feel that something is being done for them if governments start with noticeable, small improvements in communities and use a comparable level of resources to build up small yet substantial sources of happiness.

Lio, who lives in Kaoshiung, recently discovered that a range of outdoor fitness equipment had been installed in a nearby park and that the park had undergone elaborate landscaping.

"Making such small investments is much better than spending big money on firework displays. Fitness equipment allows people to ease work-related stress and increases opportunities for interaction among neighbors. That's what I call small pleasures that are truly palpable," Lio muses.

Taiwanese writer Chiang Hsun sits on a large concrete block at the breakwater of Bali Ferry Pier north of Taipei, enjoying the cooling afternoon breeze from the Danshui River. Every day Chiang, who lives nearby, strolls along the banks of the river to take in the fresh, salty air.

Chiang thinks it's the small pleasures in life that give us a sense of happiness. The government only needs to do a good job on things that are of immediate concern for its citizens such as creating a few more parks and greenery to enable people to get in touch with nature. While this does not require a lot of money, it can create happiness, Chiang avers.

The core topic of the 500th issue of CommonWealth Magazine is "happiness."

Referencing OECD and WEF studies, CommonWealth Magazine explores how Taiwan could employ happiness on five fronts – the state, work, society, family, and daily life – to trigger the next wave of development. We also throw the spotlight on the many unknown heroes who have planted the seeds of happiness in all corners of Taiwan.

The global trend is moving away from economic competition to competition over which country provides more happiness. Yet this does not mean that our past pursuit of GDP growth or wealth was wrong. After all, GDP epitomizes a nation's international influence. It's only that in the 21st century, sole reliance on GDP no longer suffices. We need "happiness" to give our nation a shot in the arm and become happy ourselves.

My story about the small island is not over yet.

Later on, some people on the island decided to roll up their sleeves and put their creativity to work to change themselves, change society, change the glasses through which they see the world, and also change the world's perspective about them. The remedy they used called "happiness" also healed the sightlessness of others. Together they created another miracle for the island – a society devoted to the common good.

Be brave, and embrace change for the sake of happiness.

Translated from the Chinese by Susanne Ganz