What is your vision of the shorter work week?
We received the following emailed question from a friend, and since it is relevant to what we have discussed on these pages, we reprint it in full, along with our response.
I feel the need to ask this question. I have no doubt of the need to shorten the work week. For reasons I cannot place into words other than to say you have made a convincing argument understood by my reptilian understanding of economics.
My question is this: What is your vision of the shorter work week. That is to say, if a person earns 100 dollars a day and thus 500 dollars a week, does that mean he will now earn 400 dollars a week? How does this square with his need to pay for what he needs to live, food, shelter, clothing, etc. if the “price” for such things does not shrink in direct ratio to this steep drop in earnings? If the price for such things does not change as well, does this not make it impossible to match in income the “costs” of living?
This is the piece of the puzzle that brings my understanding to a grinding halt.
If I am to go forth in the world making the argument that the need to shorten the work week is obvious, how do I answer this first logical question that I am at once confronted with?
Am I making my question clear?
Yes, you are perfectly clear, and perfectly correct that it difficult for people to understand. Part of the difficulty for me lies in translating the way I think about this into images people who are not at least also partly delusional can understand.
But let me try:
To begin, consider a factory which employs 100 persons, and which produces 42 inch, wide screen, high-definition, picture-in-picture, plasma televisions and sells them with the expectation of a reasonable profit.
Of these 100 employees, 5 to ten actually work directly or indirectly producing the televisions sold by the company.
The other 90 to 95 employees spend the entire day doing each others hair and nails, giving back massages, advertising the company product to each other, running the company store, selling each other valuable real estate in the company cafeteria, running loan shark operations and football pools, or passing regulations declaring who among the employees can marry whom, how much of what drug each can use, how often in the course of the day their children must recite the Pledge of Allegiance or pray, and which neighboring factory to invade next.
As you might imagine, paying 95 employees, out of a 100 person work force, to simply hang around looking busy, when, in fact, they are doing nothing at all, adds quite a bit of cost to the price of those plasma televisions.
This is basically what has happened to our economy – 5 to ten percent of the labor force make real things, the rest make mischief, and add to the cost of those real things. That all this mischief, and all these costs occur outside the factory, rather than inside, is of no concern to us when it comes to understanding the effect a largely unproductive workforce has on the prices of real goods.
Inside or outside, it makes every thing more expensive that it otherwise would be.
However, there is a deliciously bizarre twist to this for the factory owner, as we will see:
Let us suppose the owner of that factory were to lay off this unproductive 95 percent of the work force: Now we have to ask who would buy all those spanking new plasma televisions?
This, of course, is no concern to him – he only wishes to reduce his costs of production, and still might export the televisions to some other area where the consumer might afford it. His former employees go hungry, but he can salve his conscience by donating his old $1000 suits to the local charity so they might be recycled to some poor slob to wear to his next job interview.
The problem is, however, in our economy this excess workforce is not inside the factory, where it can be quietly laid off. It is outside the factory in the economy, where they can add to the factory owner’s costs indirectly, and, in a way he can’t so easily offset – they haunt him, cause him to twist and turn each night as he fights to find a way to finally subdue them.
Each day he goes to work and lays off another hundred or so, yet, in the morning they appear again – outside the factory gates – as new indirect costs of production: wraiths asking to mow his lawn, give him a pedicure, personally shop for him; as, hedge fund managers, mistresses, county political operatives, DPW crews, a host of tax collectors, or, Navy Seals ready to plant small suitcase nukes in Tehran.
At McDonalds, or DB Bistro Moderne, in the form of a Corniche or a Hyundai – the carrying costs of a superfluous workforce makes itself felt in the generalized upward pressure on prices throughout society. However, relentlessly he trims his workforce, in equal measure, his indirect costs seem to rise.
We could have our factory owner run his operation from another nation, to no avail. Even there, as when he laid off the the first of his employees, rising prices threaten him: fluctuations in currencies soon crush whatever competitive advantage he seeks. He accumulates more, but only at the cost of spreading the disease of inflation throughout the global marketplace.
Of course, one cannot sidestep the problem of a superfluous mass of employed labor except by reducing it. Leaders of industry and government have tried in every manner to offset this cost by various means, and have all failed miserably.
And, there are only two ways to accomplish this: lay off millions in the current labor force – as is being done by companies and governments around the country – and leave them homeless and hungry. Or, reduce their working hours.
Either solution will lead to the rapid fall in prices, but only one will allow people to take advantage of this fall.
So, in answer to the question, “How does all this work?”: If the reduction of the work week is planned, the starting point is to enact this reduction COMBINED with a reduction in taxes equal to the lost wages.
- So, for instance, if we were to reduce the work week from 40 hours to 32, a working family paying 20 percent of its wages as taxes, would see their tax rate fall to zero – no payroll tax, no income tax, no state income tax – nothing. We would also want to assure ourselves that other silly taxes: sales, property, excise, etc. were subject to the same income test as well – or eliminated entirely.
- This reduction would be combined with offsetting cuts in government budgets, and all government would be required to run balanced budgets – the biggest trick practiced by Washington and government at every level is the issuing of bonds and notes to fund deficits – contributing to inflationary pressure on prices, and larding their rolls with nepotism and cronies.
- Public debt service would be eliminated, allowing government to live within their means and continue to deliver necessary services.
- Private debt would be eliminated as well, as this is simply a form of compulsory servitude – forcing working families into years of involuntary work to pay for over-priced goods. Without eliminating it, it would not be possible to further reduce the work week without threatening to push families out of their homes and into the street.
Reducing the work week, as is obvious from this incomplete list, is only the beginning. As important is reducing government, which has expanded to monstrous proportions feeding on the superfluous working hours of society, and driving us to this present crisis.
This is where I typically part with most on the left who share the same goal of a world with less work. They have adopted the problematic world view of a necessary role for government – a view, which, in my opinion, leads directly to the present crisis.
If pressed, they will admit government has more often worked for Wall Street than it has for working families. Yet, they find it difficult to conceive we might all be better off without it. The ideological grip of what can only be called an American version of fascism – populism – is too deeply embedded.
Yet, this crisis will do precisely everything I have indicated above – and more – before it is over.