Why Are We Working Longer?

I am on my way back from vacation and into work. Unfortunately there’s a tempestuous lightening storm here in the usually sunny Orlando delaying my flight so I think now would be a good time to take stock of the activity that makes up at least 50% of most of our adult waking lives – work.

In most Western countries like the US, UK, Canada, Australia, Germany, France etc. productivity has more than doubled since the early 70s. In Japan’s case its tripled. And yet the OECD average hours worked per year has declined by only about 11% since 1970. When you factor in the fact that ‘average hours worked’ doesn’t encapsulate other work related activities that you don’t clock like checking and responding to emails, preparing for work presentations/conference calls and side projects we may not be seeing much change at all.

Stop for a moment and think of the technological change since the early 70s. PCs, the internet, 3D printing, mobile phones, basic AI, JIT manufacturing, Big Data etc. Not to mention the fundamental advances in medicine, physics, biology, engineering, finance, etc

If we’re being so productive, why do we need to work as long?

Standard economic models assume an income effect: that is, as we get richer and satisfy our material needs we tend to desire more leisure time. Unfortunately this effect seems to not hold in the real world; in fact it seems the more educated and the higher income you have, the more you work.

This rejection of the income effect in the real world may be readily explained however by a simple fact – across most Western countries real wages (wages adjusted for inflation) haven’t actually risen much…they’ve actually been stagnant since the 80s. So in fact, people have not been getting much richer at all (see below for the the EU and US).

The increased incomes of the rich (or more accurately, those working professionals in the top 19% outside the top 1%) hides another factor that can only be substantiated anecdotally (because data is so hard to attain) – they are working far more hours than they used to. So in effect their real wages per hour have fallen as well. Investment bankers, lawyers, doctors etc. are running themselves into the ground. If you actually worked out the wage per hour of some of some of these occupations, and factor in student debt, junior level professionals don’t actually earn much more than car mechanics, janitors and yes, even McDonalds employees!

But stagnating wages only partly explain the problem. Yes, we may have to work more to stave off credit card repayments and ballooning student debts but our productivity boon should have been enough to tide us over.

Why are we working longer hours?

The answer lies in the realm of political economy more than economics per se in my opinion.

The decline of trade unions in the West since the 70s/80s has basically greatly helped employers to consolidate bargaining power to the point where they can employ a divide and conquer strategy against workers. Real wages have stagnated in tandem with trade union density falling. The liberalisation of world capital flows but not the liberalisation of world labour has created a powerful imbalance in economic power between the two factors of production. Therefore, those owners of capital can expect higher returns than owners of labour, at the cost of labour (after all, the return on capital is a function of the return to labour). Finally, the difference between taxation of labour and capital is noteworthy, capital gains tax or property taxes in most Western countries (if they exist at all), are several orders of magnitude lower in their rates than income taxes on working stiffs like me or you.

These forces have then actually fed into the political side of the equation, making politicians and technocrats reinforce these trends and thereby, increasing inequality in most OECD countries. The conservative revolution of the 80s was a hallmark of this. Politicians like Thatcher and Reagan would then simply go about implementing policies to squeeze labour and improve the returns on capital for owners of capital because they were their constituency. Even supposedly independent central bankers became infatuated with managing inflation (so as to have a macro environment beneficial to owners of capital) at the cost of improving the employment situation (so as to have a macro environment beneficial to the owners of labour).

As a result, today capital is in a far stronger economic bargaining position than labour. Employers can basically demand full commitment from their workers around the clock and if workers don’t like it, they can be easily replaced or the company can move abroad. The insidious nature of modern labour relations has even evolved to the point that workers engage in a race to the bottom by individually demanding less and less of their employer and giving more and more. The only things separating many workers from the cruel abyss of working poverty (like that found in America) are government regulations on the workplace like mandated overtime/maternity leave/minimum wages/working time directives/occupational safety etc. – the very things that vanishing unions brought to the Western world in the first place.

And that explains why we haven’t seen and why we aren’t going to see any of the productivity boon like traditional economic models would predict…and why we are working longer.

Time was when a college degree was a gateway in to an “easier” life; kids would no longer have to lay bricks like their fathers in the baking sun, or repeat the same physical movement hundreds of times over on a factory floor. That nirvana is gone. The very idea of a happy ending that the older generation holds about white collar work is now completely out of date. An hourglass economy is emerging where politico economic forces and impersonal economic forces like automation and offshoring are not just holding down wages for lower skilled workers but also eliminating the roles of medium skilled workers like secretaries and bookkeepers. And as we’ve just discussed, even the rich workers are being squeezed as well, working longer hours for similar salaries.

The solution? Aim to derive as much of your income as you can from capital. Because being a worker bee is hiding to nowhere in this day and age, no matter where you are in the beehive hierarchy.


Fallen Angels

Notwithstanding the encouraging rise of the Christian Left,the general slant of religious leaders and their followers across the modern world is often a deep shade of conservatism in relation to the progressive elements in their societies. As Hindu nationalists coalesce around an election victory in the world’s largest democracy and other semi-theocratic governments fester elsewhere, I think now would be a good time to give my take on how we should view religious conservatives and their views.

The fundamental (and ironic) aspect of all religious conservatism is that it is paradoxically based on progressive foundations.

At least relative to the time that the religion was created in.

The sacred texts of most world religions actively promote peace, love and kindness. The golden rule of most world religions is basically to ‘love thy neighbour’. Relative to their time and environment Mohammed, Jesus and Buddha cannot be seen as anything but revolutionary ‘liberals’ so to speak. Religious organisations from their earliest days usually served charitable, civic or social ends for their members.

Our early religious brothers and sisters are therefore actually our intellectual ancestors in many respects. Certainly if I was to travel back in time to the labyrinths of Rome in the earliest days of Roman Christianity I have no doubt that I would have had more in common with an early Christian than the average Roman citizen of the era philisophically.

With such profoundly morally uplifting ideals the appetite for religion became insatiable. The morally ambiguous roman gods were replaced with a loving, caring god of the New Testament. People flocked to this new liberal order. The process repeated itself around the world in relation to the other major religions as well as old atavistic natural and ancestral religions were cast aside for gods with expressly moral foundations.

And then the conservatives took over.

Through a process of what I call religious ossification, religious teachings failed to evolve with the times. Whether by inertia or belligerence religious leaders clung to ancient texts written hundreds and thousands of years ago; completely unwilling to update the religion to deal with new technologies, social developments and science. This has certainly made them look foolish of course (The major historical example being that of Galileo), but fundamentally even the enlightened moral teachings of hundreds of years ago in their times now seem quaint in today’s world.

This ossification presented the major world religions with a quandary – either attempt to use the philosophical foundations (limitations) of their religions to reinterpret the rules or stick to literal interpretations of texts and the political pronouncements from their leaders. Obviously they mostly chose the latter – often explicitly attempting to marry religion with politics (The psychological yearning of conservatives for ‘strongmen’ who can direct society is a topic I will return to in a later post).

The question then arises as to why major world religions unified around themes of peace and civility in the first place. Wouldn’t the conservative elites at the time have wanted to stop their foot soldiers from having moral compunctions about carrying out their orders of violence? Don’t they hate peace?

The answer, from a political economy perspective is that religion was a glue that held the peace within and not without. As the psychologist Kevin Rounding explains the purpose of religion for a human being may be seen as a mechanism for self control. Now what Kevin Rounding doesn’t say is why this mechanism is so delightful to elites.

If you can imagine an unenlightened thuggish populace without the restraints of religion, you can see how the costs of maintaining social order and deflecting internal threats against ones power becomes prohibitive, particularly once you scale up your realm of control. It becomes messy to extract rents in this scenario. It is no coincidence that expansion of centralised governments/empires also symbiotically developed with the institutional establishment of religion. Indeed the greatest example of this can be seen with the expansion of the Spanish empire in the late 16th and 17th centuries and its profound desire to convert its new subjects to Christian religion by sending missionaries all over the world.

While new religions may initially start out as a threat to the established order, the conservative establishment usually finds some way to co-opt the religion and prune it of its ‘liberal’ values (of taking care of the poor, the sick, the old etc.) and emphasising the ‘law and order’ side of it. In this way we can now see why the institutions of world religions often acted hand in hand with the political elites of their day, even siding with elites of other sects against their own followers. Religion was thus a useful tool of controlling people to milk them without actually expending resources to control them overtly or as Marx would say – it was used a kind of ‘opiate of the masses’. Basic game theory shows the stationary or roving bandit takes on a cost to extracting rents. With religion, this was minimised.

And this brings us to the present day. How should we view our religious conservative brothers and sisters?

Lets us answer the question first with more questions. How should one view concentration camp prison guards? The ‘useful idiots’ of the Stalinist USSR? How should one view the foot soldiers that work for the machines in the Matrix saga? Or the mutilated elves known as orcs that serve Sauron?

With shades of pity. Sadness. And as political opponents – with extreme prejudice.