Farting around (and “economic rationality”)

Cf, Marshall Sahlens’s Economics of Stone-Age Life

A good case can be made that hunters and gatherers work less than we
do; and, rather than a continuous travail, the food quest is
intermittent, leisure abundant, and there is a greater amount of sleep
in the daytime per capita per year than in any other condition of
society.

That’s a quality of life metric worth optimising for, for sure!

But once again I am reminded of the only puzzling thing about Libertoonians and their beloved -Ism: that anyone gives a toss about them or it.

And just how long do you think this can last? If current trends continue, will have grown 100% from 1990 to 2020. The EU will have grown 50%. How sustainable is it to have a shiny example of productivity and the benefits wealth begits and the EU falling into realitive poverty?

Apparently it is very sustainable, no one in the EU has noticed their decline so far.

Higher taxes can lead either to income or substitution effects. Quite rational to work more if taxes are higher.

Jet, you mean production, right, not productivity?
What I doubt is sustainable is the taste for consumption/work over lieaure/life/family.

While it certainly could be true that the substitution effect is strongly positive for leisure, I believe that recent empirical evidence shows that in fact Europeans end up using much of that increased leisure to do things that Americans pay others to do, such as paint their houses or work on their lawns. Perhaps there’s some moral value to painting your own house (and I certainly feel the satisfaction of a job well done when it’s over), but I wouldn’t call it “leisure”. So the high taxes and forced vacations seem to some extent to be switching labour out of the (high productivity) paid workplace and into the (low productivity) home, rather than actually increasing leisure. In my own case, I work for a european company, on European wage scales and vacations, and I find I use a lot of my vacation for things like rearranging my closets, since I can’t afford to travel 6 weeks out of the year.

“…increased leisure to do things that Americans pay others to do, such as paint their houses or work on their lawns. Perhaps there’s some moral value to painting your own house” …Jane Galt

Heck, I din’t even have to leave CT to find a relevant Chesterton quote…

“Our society is so abnormal that the normal man never dreams of having the normal occupation of looking after his own property. When he chooses a trade, he chooses one of the ten thousand trades that involve looking after other people’s property.” – Commonwealth10-12-32”

All the analysis i’ve seen so far looks pretty dodgy.

The key question, I believe, is ‘how far can my effort influence my situation?’

The more socialist the state, the less far personal effort will influence personal outcome.

Fairly straightforward analysis, I would think.

For those above who think that European style government is likely to lead to harder work, how do you explain the fact that they don’t?

Bernard: You’re another of the nutters then, is it?

What we (those of us who are I, at least) actually think is that the workaholisme (AKA presenteeisme) endemic in your once-great nation(TM) is to be explained other than by free individual choice in the pursuit of wealth (“happiness”, as the local idiom bizarrely has it).

This is certainly obvious to anyone who starts from a position other than ideologically conditioned to insist on psychique atomisme, and it is this from which I conclude you are a Libertoonian.

Americans work so hard, in plain language, because _other_ Americans work so hard, and they cannot afford (ha!) to be seen to do less.

Des, I’ll ignore what looks like it might be in-jokey ad hominem because I can’t even begin to interpret it.

With regard to your ‘The reason why Americans work hard is because other Americans work hard’ analysis, presumably if I asked you why those other Americans worked hard you’d tell me it was because still another set of Americans worked hard?

Circular reasoning is an amusing leisure activity, but it doesn’t actually get to the root of the question of why, on the whole, Americans work harder than Europeans.

I work for a european company, on European wage scales and vacations, and I find I use a lot of my vacation for things like rearranging my closets, since I can’t afford to travel 6 weeks out of the year.

Someone with an MBA on a European wage scale can afford 6 weeks of travel. Try the future EU country Turkey. Nice country, easily affordable.

If on the other hand you have chosen a career path that didn’t maximise you income, it could be true. But then that would be real un-American.

Bernard wrote:

“For those above who think that European style government is likely to lead to harder work, how do you explain the fact that they don’t?”

Bernard, that’s precisely not what everyone was arguing above. They were arguing that Europeans work less and there are perfectly rational reasons for thinking that working less might be desirable and further, that there might be good rational reasons for preferring a social and economic system in which it’s possible to do so without grave risk of immediate desitution and ill-health.

It’s not that we want to work more but don’t because of our Evil Socialist Overlords(tm).

And you ‘circular reasoning’ argument is just daft. There’s nothing circular about appealing to, say, the past prevalence of some behaviour to explain it’s current prevalence. Or, for that matter, appealing to some common cultural shared values to explain the presence of some set of behaviours.

No-one’s saying that in some wierdly circular process of instantaneous and simultaneous causation everyone’s ‘desire’ to work more is caused by everyone else’s similar ‘desire’.

Bernard, you’re not getting it are you?

You triumphally claim that Des (and everyone else) is saying what you are. That lower personal security leads to harder and longer working hours.

Which, up to a point, is true. We are all saying that. However, where we differ is that we take entirely opposite positions on the value of such longer and harder work.

That is, we are saying that the fact that the European system encourages people to work less is a GOOD thing.

“I don’t know anyone who would choose to work any more than they actually had to — except for those lucky people I know who have jobs that coincide with precisely the kind of things they’d do in their free time anyway. Some academics, musicians, etc.”

Well that may say more about you and the circles you travel in… I think those who have chosen to work for pay is probably fairly large. E.g. myself. I’ve chosen a profession with long hours because it – pays more ! I’m willing to put in the long hours because today I could retire accepting a substantial reduction in lifestyle or in five years with pretty much the same that I have now. Well, if I live that long…

No but seriously.

Do you people realize how many billions/year are not spent into paying people painting, and thus do not contribute to the painting economy, and thus do not contribute to the overall well being of everyone, just because of the socialists?

Do you thing that our present well being and happiness should have been possible with our founding fathers doing their painting?

Isn’t your time worth more than that painting?

Do you think the rugged people on the last frontier paint their stuff?

That whole activity is, right here, right now, escaping the market and the economy, harming us all, threatening our lifes and our grandmothers and we do nothing?

Well, sheesh.

Does ‘Jane Galt’ have any other anecdotes that she’d like to share with us, in lieu of facts? Is there an under-reported economy of people hiring themselves out on Craig’s List to re-arrange closets? Please, Megan, enlighten us.

I think I remember hearing in grad school that (in the context of modern industrial societies) the backwards-bending labor supply curve was a mythical beast.

Swabian peasants and neolithic hunter-gatherers aside, can anyone actually point me to a (say) review article which actually finds multiple examples of backwards bending labor supply curves in a developed economy?

is there some American who mows the lawns of all and only all those Americans who don’t mow their own lawns?

Oh, yes. Or rather, there is a class of Americans, called ‘teenagers’, who are expected to mow those lawns. It’s an early induction into the low-wage service economy on this side of the pond. (If you’re pre-teen, of course, you’re sent round begging at the door for your church, or sell chocolate bars and whatnot to raise money for school-books.)

That said, there’s also another group of Americans, for whom mowing the lawn is certainly an amusing leisure activity, thanks to John Deere Incorporated.

Des, re: what i said to start with.

~
The key question, I believe, is ‘how far can my effort influence my situation?’

The more socialist the state, the less far personal effort will influence personal outcome.

Fairly straightforward analysis, I would think.
~

With the ‘how much do I have to gain…’ vs ‘how much do I have to lose…’ analysis, you appear to be alluding to the fact that the work/leisure tradeoff will vary according to current levels of work/leisure. I doubt anyone will disagree with that, least of all economically minded libertarians. The point Will made (which I think was only half-right, as i’ve said in the comments section) is that tax and spend policies have a real impact on the choices workers make.

david: if you actually went and read Will’s post, you’d notice that that Prescott’s article was about the first thing he mentioned.

The key issue missed here, I think, is that utility of leisure varies a lot from individual to individual and people with like utilities of leisure tend to cluster. Thus one’s sense of what the general level of utility of leisure “ought” to be or would “naturally” be can be rather distorted by one’s own social milieu.

This blog, for example, is dominated by academics, who as a profession choose to achieve– after the new-faculty publish-or-perish stage– a remarkably high amount of leisure in exchange for relatively limited opportunities for salary advancement. Such people are in a very poor position to make confident statements about how everyone really values leisure more than those nasty hard-working Americans think.

The more socialist the state, the less far personal effort will influence personal outcome.

This requires an unhelpfully idiosyncratic definition of “socialism”, of course. (There is even, horror, a suspicion of circularity – you aren’t secretly defining socialisme so that this is a tautology, I hope?) And the word “far” there also appears to be polemically motivated.

But even I wouldn’t dispute that redistributive taxation and social welfare policies reduce the gain on life’s great effort-to-outcome transducer.

But that certainly leaves open the question of what persons (and societies) are or should be optimizing for.

Matt, the problem with questions which tend to be more interesting is that they’re quite a bit harder to nail down. Would you measure the marginal benefits of hard work in terms of happiness, success, enlightenment?

Given there is no reason to believe that the US’s almost doubled growth (in production) over the EU will stop or slow down anytime soon, how long before the difference in the resultant standard of living becomes so glaringly obvious, even the academics figure it out? I’m guessing never. If you can’t watch 1 hour of American tv and figure out that American’s are consumers who always want more, today, then you are unconvinceable.

And I for one enjoy the trappings of relative wealth, the reality of social mobility, the knowledge that hard work will definitively improve my situation, and the knowledge that most US STATES have more diagnostic medical equipment than all of the UK.

It’s easy to throw words like ‘utility … empirical evidence suggests … backwards-bending labor supply curve … gain versus loss’ back and forth. What any discussion of work in a post-industrial context (a ‘knowledge society’ if you will) needs is also consideration of consumption. Here I’m talking about Bauman – that society is no longer governed by modernist work ethics, clear separation between work and leisure, and supply side theory (cf. Baudrillard’s critique of Marx’s dualism of exchange and ultility.) Aesthetics – symbols, status, gifts – offer far more explanatory power for why someone would pop up with the name ‘hard work’ to justify their chosen profession; why Jane is an apologist for her patterns of work. Now I’m no clandestine post-modernist, but pure number crunching won’t take you very far either.

It’s easy to throw words like ‘utility … empirical evidence suggests … backwards-bending labor supply curve … gain versus loss’ back and forth. What any discussion of work in a post-industrial context (a ‘knowledge society’ if you will) needs is also consideration of consumption. Here I’m talking about Bauman – that society is no longer governed by modernist work ethics, clear separation between work and leisure, and supply side theory (cf. Baudrillard’s critique of Marx’s dualism of exchange and ultility.) Aesthetics – symbols, status, gifts – offer far more explanatory power for why someone would pop up with the name ‘hard work’ to justify their chosen profession; why Jane is an apologist for her patterns of work. Now I’m no clandestine post-modernist, but pure number crunching, and overarching transcultural talk of free loaders and rationality won’t take you very far either.

Jet: And just how long do you think this can last? If current trends continue, will have grown 100% from 1990 to 2020. The EU will have grown 50%. How sustainable is it to have a shiny example of productivity and the benefits wealth begits and the EU falling into realitive poverty?

I am a poor grad student in Economics but I can’t see how number of hours worked have an effect on growth rate. You should use some endogenous productivity growth model and it is still hard to get this result. Please, enlighten me.

Thanks Matt — I love that song but never really had a good idea what the meaning of it was.

Yeah, um, everything Matt says…

Similar questions can be asked about ‘productivity’. It’s not an end in itself.

Actually, 8 European countries have higher productivity than the US, according to this.

Between 1992 and 2002 the US lost ground against most European economies in terms of GDP per hour – the best measure of productivity in the workplace. By 2002 eight of the 15 EU economies (Luxembourg, Belgium, Italy, Netherlands, France, Ireland, Denmark, Germany) had higher workplace productivity (GDP per hour) than the US.

As my contribution to the stock of useless information, may I point out that in 1870 Switzerland’s GDP per capita was 5% higher than that of the USA. The most recent figures I have show that the USA is now 2% ahead of Switzerland.

If we extrapolate this trend over several centuries, the implications for the Swiss are frightening.

‘In fact EU productivity growth was almost double the US during the period 1990 – 2001 despite the EU having a decrease in working hours over that period.’

Matt, if you’re using the same measure that abb1 is (GDP per hour), this makes quite a bit of sense. To take things to the extremes, if British workers were obliged only to work 20 hours a week, they’d likely be a lot more productive in those hours just because of the need to get things done, wheras if we had to work 120 hours a week our hourly productivity would inevitably dive. If overall productivity per worker grew faster in Europe over that period, that would really be something. If not, we’re still on the same sloping utility curves for work and leisure which individuals will navigate according to their preferences(because people with more leisure tend to value it less too, in my experience).

On the rest, I have some thoughts but my work day is finished (damn lazy European and all that). If the debate is still in progress later i’ll see if I can articulate my perspective.

Well all those hard-working Americans sure seem to have ample time discussing idle questions on blogs.

I’m put heavily in mind of the Gang of Four song “Return the Gift” in which the song’s prize-winning protagonist repeats the “Please send me evenings and weekends” refrain.

Yes, but then at least he’ll never need face the question raised in Natural’s Not In It:

‘The problem of leisure
What to do for pleasure?’

Bernard: I agree with you no further than I have to, for sure.

In particular (although you may not hold the view with which I wish to disagree) I hold that Americans, in particular, do not have an especially free choice in their choice of employment – if employers aren’t offering Yoorpean-style working weeks and holidays, they simply can’t choose them.

And expectations in the jobs they are offered are determined to no small extent by the behaviour of others in similar positions. You called this circular last time, but it is simply the breakdown of a model that overvalues the significance of individual choice (and underestimates the constraints on it).

It may turn out in developed economies that the equilbrium point for work is constrained by (eg) tax policy, but the fact that those are the jobs there are and those are the jobs people take doesn’t strongly imply that they are expressing a preference for that kind of job, except for the militant sort of revealed preference fallaciste (of which Libertoonians are generally magnificent cartoon examples).

If you don’t disagree even with _that_, then I’m all fizzled out, and I apologise for all the names I called you.

As for the kinds of goals I want my society optimized for, it is certainly no coincidence that my second langwidge is often Swedish.

Argue as you may, the US’s real GDP growth speaks for itself and requires no explanation. Yankee consumerism rules!

Damn straight, Jet. And while we’re at it, I think we should point out that those silly Euros never factor in the inherent excitement of living in a winner-take-all society like our beloved USofA. The knowledge that I could join the 40 million+ Americans without health insurance just by losing my job adds such spice and zest to my life!

I miss my forced six weeks, dammit! I worked just as hard in Europe as I do here, but I had better downtime. What I didn’t have was huge house, car, tons of material possessions, too many clothes, etc. What I did have was time, good medical care, public transport so efficient I didn’t need a car, and a community where all of the neighbors (and we lived in a very blue collar neighborhood in Germany) had plenty of time to spend with their kids and families. I work harder here, pay lower taxes (barely) have less time, and still have to mow the lawn and clean and do my own yards — it just means I have no weekends.

To the extent that Switzerland is losing ground, I suspect it has more to do with an aging population than the lack of natural resources…

What do you mean – losing ground?

World-wide quality of life survey (2004)

Mercer Human Resource Consulting’s overall quality of life survey has revealed that Zurich and Geneva are the world’s top-scoring cities, with 106.5 points. Geneva moves up from second place last year (score 106) and pushes Vancouver down a place (score 106). This move takes account of Geneva’s schools, where standards of education, both in public and private schools, are now rated among the best in the world.

Cities in Europe, New Zealand, and Australia continue to dominate the top of the rankings: Vienna shares third place with Vancouver (score 106), while Auckland, Bern, Copenhagen, Frankfurt and Sydney are joint fifth with a score of 105.

US cities have slipped in the rankings this year as tighter restrictions have been imposed on entry to the country. Increased security checks on arrivals and departures from the country can be very time-consuming for expatriates. Honolulu and San Francisco rank highest, both at position 24 (score 102). Among US cities included in the survey, Atlanta ranks lowest at position 66 (score 94.5).

Cities are ranked against New York as the base city which has a rating of 100. The analysis is part of a worldwide quality of life survey, covering 215 cities, to help governments and major companies to place employees on international assignments.

Recently liberated Baghdad was at the bottom of the list – number 215 with quality of life index=14.

Uncle Kvetch,

A minor point, but one that is often overlooked is that in the US those 40 million uninsured americans have to be served in an emergency room reguardless of ability to pay. And that all states have programs to help pick up the tab for the uninsured. And (yes another and), one of the largest cost to public hospitals is writing off the debt of those who had no insurance, didn’t get on the state programs, and were forced into payment programs that they coulnd’t make good on.

So while you may rack up an amazing amount of debt, there will be 0% interest, a good chance of having it written off, and only a few more hoops to jump through for treatment. It isn’t like we have people dieing in the streets because they are refused chemo.

CSPAN often shows some interesting quips from PM’s in England telling Tony to do something about the untreated. I’d certainly rather have a system where the problem is the uninsured (in debt) rather than the untreated (dead).

Abb1,

Haha, good one. Maybe the South side of Manhattan ranks 100. That meta-scoring of cities is about as useful as a yard stick at an inch-worm contest.

And (yes another and), one of the largest cost to public hospitals is writing off the debt of those who had no insurance, didn’t get on the state programs, and were forced into payment programs that they coulnd’t make good on.

All of which contributes to enormous waste, with the result that we spend far more than any other industrialized country on health care and have nothing to show for the additional expenditure.

An emergency room is about the least efficient place imaginable for the delivery of non-emergency primary care.

So far as the incentive argument goes, I think you must miss my point. Most of the time people get ill, it’s not immediately obvious that it is potentially life-threatening: it’s apparently unserious. If you have to pay to get non-emergency medical treatment, you don’t go. If it then develops into a serious condition, you are likely to cost enormously more to treat, and to die. That’s the disincentive effect. Treatment costs more and more people get seriously ill and die.
As far as the quality of medical care goes, I don’t have the stats to hand, but I think it is generally recognized that UK medical care is generally of the same standard as American health care (despite decades of chronic under-funding, I might add) by organizations like the WHO and OECD and so on. Also, using comparisons like the number of diagnostic tests is particularly unhelpful: of course a medical system run on a for profit basis is going to do more expensive tests than one that is merely run with the aim of making people better. I suspect that the same is true of comparisons like the age of equipment.

No time to read all the comments above, so maybe someone’s already said this. But really… all you’re talking about is the backward-bending supply curve. That theoretical and sometimes actual possibility hardly refutes Will’s hypothesis. Yes, individual labor supply curves sometimes slope downward, but *usually* they slope upward.

Rob,

I think it would make for an intresting study to see if the “disincentive” effect offset the harm done by fewer diagnostic tests and older equipment. I enjoy newer machines and hospital staff’s fighting for my business. In the US, hospitals advertise on tv touting their wares. If they suck, you can go to another place trying to take their business. No one would argue that a centralised economy is better than capitilism, why doesn’t this hold true in medicine? Shouldn’t service providers compete? Long lines tend to cure themselves.

This is of course at the cost of 40 million stuck on state programs in county hospitals. But do you sacrifice the health of 260 million for the marginal benefit of 40 million?

Jet,

we’re still waiting for the figures on social mobility. By all traditional analyses it is no greater in the US than in other OECD countries, and *is* greater in Sweden. I have a not-very well-worked out from the traditional way of doing the analyses, which would push Sweden back into the rest of the groups, and might even get the US into the lead. Have you worked it out?

But my ill-worked out dissetn doesn’t take quality of life issues into account. I’m glad you enjoy being richer than your comparators. I hope they don’t get as much disbenefit from being be.ow you as you get from being above them.

jet,

How is that going to reduce costs?

So while emergency room visits for non-emergency room care is expensive, the solution is not solialized health-care, just an expansion of our already existing socialized system for the uncovered.

You mean something like the one Kerry was proposing?

Dsquared –
When I was learning quantificational logic, the example was barbers who only cut the hair of…, not lawnmowers. I can’t remember if it was in our text or if it was the professors example though.

Farting around, farting around….Did anybody ever figure out exactly what that expression means?

Are we making the world a better place by fartingaround? How so? Think about it. Then THINK AGAIN! HAHAHAHAHAHAHAHAHA

Oh, abb1 I see you are are reverting back to your old obnoxious presumptuous cantankerous self. I had high hopes for you and you have really really let me down.

Oh, and one more thing abb1. I remember once when you were in a similar mood you said “What is your f—ing problem anyway,” and I would just like to inform you that I have not had any problems in this area so far, but REST ASSURED that you will be the FIRST PERSON on my list that I will contact because you are so EMINENTLY KNOWLEDGEABLE on so many subjects, because all you probably do is READ READ READ and so of course you would have all the answers for me. So, in other words, abb1, YOU’RE MY MAN!@!

HAHAHAHAHAHAHAHAHAHA. Get ready abb1, SUPER FUN TIMES AHEAD!@!

BTW, Bernard,

As one of those free market libertoonians (who apparently aren’t popular among some on this thread), I’d also like to comment on this remark of yours: “The more socialist the state, the less far personal effort will influence personal outcome.”

What you’re describing, the divorce of effort from reward, is less a result of what you call “socialism” (which apparently equates to centralized control) than of centralization and hierarchy in general. The less decision-making control that workers have over how they do their own work, the less fully are the utilities and disutilities of a given action internalized in a single actor. Most large corporations have grown to the point where it is prohibitively expensive even to track the results of an individual action, let alone see that those results are internalized by the actor.

Government is, primarily, a mechanism for creating externalities: especially for forcing the taxpayers to absorb the operating expenses of big business, and thereby rendering large, inefficient organizations artificially profitable. Without such interventions in the market, production on the average would be much smaller-scale and less centralized. Labor would have much more control over the production process, and would keep its full product (as Benjamin Tucker said, the natural wage of labor in a free market is its product).

That’s what *I* mean by “socialism.”

I’ve been thinking about those Quashees enjoying their leisure time once they’ve covered their basic needs, vs. modern people working considerably longer than would be necessary to keep body and soul together, and I think there’s an explanation other than “modern advertising creating an empty demand for material goods”.

I suspect that at the time an extra hour’s labour by the Quashee would not have bought much at all – maybe enough to buy a hair ribbon. And if you took that time in leisure you could make yourself an ornament out of some flax and shells or coloured stones. And I would not be at all surprised to learn that the Quashee had ample reason to believe that any effort to accumulate assets in the long-term would risk appropriation by the whites. (In other words, why bother working on your home if there’s a large risk it will be burnt down in some riots?)

Nowdays that extra hour’s labour can buy a bottle of wine, or a DVD, or a day’s air-conditioning. Assuming that the value of an extra hour spent lounging around in the sun, or playing with kids has not changed since the time of the Quashee, we would expect at the margin as the value of what an extra hour’s labour buys in terms of pleasure increases, more people would choose an extra hour’s labour.

Interestingly, if all other things were equal, I wonder if there would be more work done by people in countries with miserable weather than by people in countries which the climate is such that it is more frequently nice to sit in the sun and watch the world go by.

jet sez: A minor point, but one that is often overlooked is that in the US those 40 million uninsured americans have to be served in an emergency room reguardless of ability to pay. And that all states have programs to help pick up the tab for the uninsured.

No, you’re wrong. If you’re absolutely, positively dead broke you can get ordinary medical care utterly for free in the local emergency room. But of the forty million plus Americans without health insurance, only a small percentage are completely penniless. If you’re too poor to buy insurance, and you become sick or injured, and if you own anything, once you resort to the emergency-room to get medical treatment, you’ll get the treatment all right (probably far too late) but you’re also going to lose everything you’ve got.

For example, imagine your family brings in $25,000 a year. That’s not totally unskilled burger-flipper wages, incidentally; it’s better than twice the minimum wage. I’ve met intelligent, industrious workers who told me with something like joy, something like amazement, how they had never earned so much as twelve dollars an hour at any job before, and what a delight it is, being able now to take the kids to WalMart and buy them all the school clothes they need.

On $25,000 a year gross, you can’t afford rent, food, clothing, gas-insurance-repairs for your car and health insurance. You obviously can’t do without the first three and you need your car to keep your job.

One day your kid falls ill. Too bad you can’t afford a clinic when the first symptoms kick in, but that’s Life in America, ain’t it. Your kid gets sicker. And sicker. Now what’s going to happen to what little your family has got? And once the repo man has taken all that away, and once you’ve been evicted, where and how is your family going to live?