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#171: Do We Work Hard Enough?

#171: Do We Work Hard Enough?

micksonmatch
November 04, 2024

S2N Spotlight

On Friday, my wife and I were chatting with our 25-year-old daughter. I said something along the lines that people seem to work a 4-day week these days. Every popular coffee shop near the beach is full, with traffic and parking a nightmare. I am very supportive of working from home; I do it. However, I believe many have become so accustomed to it that their weekend now starts early.

My daughter said what is wrong with it—working less is better for you. This question is a lot more complex than I believe she and many of the left-leaning liberals realise. I tried to explain how it was inflationary, but I think it is worth going into more detail.

John Maynard Keynes wrote about it nearly a century ago that he saw innovation leading to more leisure time. He envisioned us working only 15 hours a week.

“Thus for the first time since his creation man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

Let us come back to this quote, as I have some thoughts on it from a philosophical point of view.

The main drivers of economic growth come from population growth and productivity. It is a big mistake to think it is only these factors; there are a multitude of other contributors.

Here are some additional components:

Investment and Capital Formation
Technological Innovation
Institutional and Policy Frameworks
Trade and Globalisation
Consumer and Business Confidence
Natural Resources and Sustainability
Financial System and Access to Capital: The Nobel prize for economics this year focused on the right institutional environment for economic success.
Debt and Fiscal Policy: Debt can stimulate growth when used productively but may limit it if overused. Well-managed fiscal policy, including government spending and taxation, can boost demand and provide essential public services and infrastructure that support growth.

Each one of these components merits a lengthy discussion, but I want to keep this light and focused. I am going to focus on point 8, DEBT.

It would seem on the surface to be ok for my daughter to make the argument that there is enough prosperity around and that we don’t need to be slaves to our jobs; we can afford to take it easy.

The problem is we didn’t just get to our current level of “prosperity” without help. One of the primary contributors to our seeming prosperity has been the use of debt. Both private and public. Let me show you how much debt we require to produce $1 trillion of economic activity. $14 trillion of debt is required to produce $1 trillion of nominal GDP in the US. In 1980, it required $6.4 trillion of debt for the same $1 trillion. I think the chart I created below is pretty instructive.

What I have shared above is that there is complexity to the concept of leisure. Keynes wrote in 1930, when debt was not nearly as large as it is today. Someone has to pay the debt back; if not paid back, it compounds and grows. We do not have the luxury of working 4 days a week; we should be working 6 days a week.

Now for some philosophy. You can take a religious angle, or you can just rely on experience. Empiricists such as David Hume emphasised that knowledge of the world is grounded in experience, and conclusions about causality or behaviour are derived from patterns observed over time rather than from innate principles. I really recommend reading the classic economists if you want a deeper understanding of what makes society tick.

My experience is people get up to no good when they have too much time. Boredom and hedonism lead to thrill-seeking from vice or danger.