Nathan and Sandwichman,
There isn't much, if any, disagreement here between you, or with me
either, except for a perspecive on consumption and the resulting future.
As income is re-distributed from current higher income recipients to
current lower=income recipients, WHAT will be purchased changes. The
implications of that seem to me to be profound but I'll leave most of that
alone for the time being. But with respect to jobs, if there is a shift in
what is consumed, where jobs are will also change. And my guess is that will
be for the better.
But the shift in income from higher to lower means not only lower
income for the most affluent but also a big drop in the value of the
corporations they own, on the stock market. That is to say, profits will
decline and thus the value of the shares. This drop in wealth will be the
biggest financial hit for the 1 % and the top 20%, much more than the shift in
wages.
The drop in the value of the shares will mean, in turn, reduced investment and
thus slower growth in GDP in the future. That slower growth, anticipated,
impacts the share price in addition to the drop in profits. All that plays out
in the future, changing things profoundly in my view. I think that investment
may shift in favor of worker-run co-ops or collectives as investment is used to
provided places to work rather that capital gains. Lots to speculate about in
that area.
Just one example of how complicated the hypotheses can get, think about what
happens to the auto industry as (if) we change to a four day week: commuting
drops and thus wear and tear on autos. Car sales decline, the auto industry
shrinks over time
Finally, most important, we need to think about how aspirations change --- now
people say "I want a better life for my children." That better life today
requires a higher and growing income forever. But will aspirations for what
the better life requires change as working time is reduced? I think so.
And then there is climate change. What happens to aspirations in the less or
least-developed countries as incomes and aspirations change in the developed
countries? Will China and India, for example, continute to build big auto
industries? Will they continue to work long hours? What happens in France as
the pressure to keep up with USA hours is reduced by the cut in hours here?
So much to learn and argue about. Thanks to all for the discussion.
Gene
On Dec 28, 2011, at 9:24 PM, nathan tankus wrote:
> Sandwichman said...
>
> "At the core of the case AGAINST shorter working time is the claim that it
> is not needed because "increased productivity [technology, trade,
> immigration, postponing retirement age, etc.] creates more jobs than it
> destroys." The classic version of this was the 1701 anti-mercantilist
> pamphlet, "Observations upon the East-India Trade." With regard
> specifically to technology, the locus classicus is the 1780 pamphlet by
> Dorning Rasbotham, "Thoughts on the Use of Machines in the Cotton
> Manufacture."
>
> NT:that would be wrong. fortunately that wasn't my argument. my
> argument is exactly the opposite. i argued that productivity increases
> would be generated by cuts in the work week and those productivity
> increases would lead be biased towards labor saving.
>
> SM:But you say that a large spike in productivity from reduced hours and an
> increase in wages would mean "that not many more workers would be needed to
> produce the same amount of output as before."
>
> Repeat the last seven words of that sentence: "the same amount of output as
> before." Does that sound to you at all like "a fixed amount of work to be
> done" or "a certain quantity of labor to be performed"? It does to me. That
> means you are making a lump-of-labor assumption and the lump of labor is a
> fallacy.
>
> NT: you are correct that i made a simplifying assumption.
>
> SM:What makes you think that the demand for output would remain unchanged
> after a reduction in hours and an increase in wages? A Keynesian argument
> could be made that the increase in wages would redistribute income to
> people with a higher propensity to consume thus increasing aggregate
> demand.
>
> NT: it's an increase in wages per hour and a simultaneous cut in hours
> worked. barring an immense amount of extra overtime i don't see how
> this would increase demand for output immensely. my entire argument is
> that a large cut in hours worked would increase productivity, so that
> not many more workers would be needed to meet the current demand for
> output and thus the positive feedback loop would be weak. how would
> these increases in wages paid per hour increase aggregate demand if
> annual income for these workers is the same?
>
> SM: It is worth doing anyway. That is, aside from any job-creating
> potential, reducing the hours of work from current levels will improve the
> quality of life.
>
> NT: I said that exact same thing. In fact I think that the increase in
> productivity is an extra reason to do it.
> --
> -Nathan Tankus
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