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What is given up by working less?

by Bill McGaughey

 

“What occasions then so much want and misery? It is the employment of men and women in works that produce neither the necessaries nor conveniences of life, who, with those who do nothing, consume the necessaries raised by the laborious ... Look round the world and see the millions employed in doing nothing or in something that amounts to nothing ... Could all these people, now employed in raising, making, or carrying superfluities, be subsisted in raising necessaries? I think they might ... It has been computed by some political arithmetician that if every man and woman would work for four hours each day on something useful, that labor would procure all the necessaries and comforts of life, want and misery would be banished out of the world, and the rest of the 24 hours might be leisure and pleasure.”

- Benjamin Franklin, in a letter to a friend, 1784


The standard argument against shortening work time is that a trade-off exists between leisure and income. Workers have to decide whether having more time off from work is personally more valuable than enjoying higher living standards; for there is no free lunch. Every hour that Americans are not working means something is not being produced. We can either choose to live in relative poverty or continue to ride our “work ethic” to ever greater prosperity.

Such an argument is, however, wrong. The error is to equate “production” - i.e., whatever a person does during working hours - with levels of material well being. Much of what is done today in positions of gainful employment contributes little or nothing to people’s real standard of living. If this “production” were simply left undone, people would be just as well off. It therefore makes little sense to keep them confined in a place of work. Citizens of a free society should have maximum opportunities to spend their time as they themselves choose.

Now it will seem to many that this argument is rhetorical. Which jobs contribute little to prosperity? And, if that is the case, why does our community have such jobs? Will people continue to work without a sense of purpose? Yes, they will if they receive money. And the one who has money to spend on employment featuring nonexistent production will be able to justify the expenditure if it is somehow considered “necessary”. Much of what would be considered wasteful spending in terms of real living standards falls into the category of being a “necessary evil”.

A necessary evil is something that exists to prevent a greater evil. For instance, we have armed police officers to deter crime. The officers themselves produce nothing useful; but they are necessary to prevent dangerous criminals from taking over the community. That would be the greater evil which is prevented. Occupations like the police that represent a necessary evil are found in all societies and serve a legitimate function - provided that their share of GDP is kept in a reasonable balance. I would argue that this is no longer the case.

In the 1860s, when Lincoln was President, half of the American work force was employed in agriculture. Food production contributes obviously to material well being. For an undernourished population, increased production of food means higher living standards. In the second half of the 19th century, such industries as mining, manufacturing, and construction grew rapidly in employment and production. The Bureau of Labor Statistics calls these “goods-producing industries” Their type of output also contributes to living standards - people want automobiles, toasters, television sets, residential housing, washing machines, etc.

In 1920, the goods-producing industries accounted for 46.9 percent of total nonagricultural employment in the United States. By 1960, this had fallen to 37.7 percent; and, by 2006, to 20.0 percent of U.S. nonagricultural employment. Agriculture, the source of our food and other useful materials, has steadily shed workers since Lincoln’s time. in 1947, 13.8 percent of Americans worked on the farm. In 2006, such employment was down to 1.5 percent of the total.

The bottom line is that today only one worker in five is employed in industries that produce useful goods whose output may therefore be considered a part of our material standard of living. Yes, if these people skipped an hour of work, maybe we would feel a loss of prosperity. But what of the four out of five workers who are employed neither in agriculture nor in goods-producing industries? Who are these people and what do they do for a living? The Bureau of Labor Statistics classifies them as employees of “services-providing industries”, which includes transportation and public utilities, wholesale and retail trade, finance, insurance, real estate, government, and other kinds of “services”. Would we really miss their output if it were not produced?

Yes, it would seem that some production here is useful - for instance, we need the electric utilities to generate the electricity that powers our toasters and refrigerators. We need natural gas or heating oil to heat our homes in the winter. Obviously, it is helpful to have retail clerks to answer our questions while we are shopping in stores. But this is not where employment is growing so fast. (If the function is useful, it is probably not a “growth industry”.) Rather, employment growth is in areas that might be considered “necessary evils”.

A prime example would be the health-care industry. In 1950, this industry accounted for 4.5 percent of Gross Domestic Product in the United States. Its share of output rose to 9.1 percent of GDP in 1980; and to 15.3 percent of GDP in 2006. Most agree that U.S. health-care costs are spiraling out of control. Does the increased employment in this sector of industry mean that Americans are becoming healthier? Far from it. Despite the impression given by prescription-drugs advertisements on television, the amount of professionally-administered health care does not equate with better health. Nations that spend much less on this service than we achieve better results.

The truth is that, by and large, the human body heals itself. Now, of course, there are major illnesses that require professional intervention, but most people can remain healthy without doctors or prescription drugs by cultivating a healthy life style. This means eating the right foods, avoiding use of carcinogens such as cigarette smoking, and having plentiful exercise and rest. In the latter respect, shorter working hours that leads to increased recreation and rest would actually boost our national health although reflected in fewer dollars. The best way to keep that necessary evil called the “health care” industry under control is to avoid becoming sick.

So we can see that the duopoly of sickness and health are one of many examples of a necessary evil unduly extending its influence in our economy. In the remainder of this paper, I would like to focus on two others: (1) the military-industrial complex and (2) occupations devoted to crime and punishment. If we did not have external enemies threatening our nation’s security, we would not need a military establishment. If we did not have crime, we would not need an industry devoted to dealing with its problem. Both areas of concern have spawned rapidly growing industries.

In his most recent address to the state legislature, retiring Governor Arnold Schwarzenegger reported with alarm that the State of California now spends more on incarceration than on higher education - an average of $50,000 per year per inmate. in 1950, there were 166,123 in state or federal prisons in the United States. This number climbed to 315,974 inmates in 1980; to 773,919 inmates in 1990; and to 1,525,924 inmates in 2005. In fact, in 2005, more than seven million Americans were either in jail or in prison, on probation, or on parole.

Illegal drugs

Is U.S. society becoming a more dangerous place or are other forces at work? Surely gang violence and unlawful activities of various kinds are on the rise, reflecting poor parenting, inadequate employment, and other factors. However, to have a crime that requires incarceration, one must also have laws that criminalize certain acts. In the 1920s, the U.S. government criminalized production and consumption of alcohol, thus spawning a crime wave. Today it is criminalizing “illegal drugs” - heroin, cocaine, marijuana, and methamphetamine - as well as medications that have not been approved by the Food and Drug Administration or prescribed by licensed medical professionals. A significant portion of our prison population was sentenced for drug-related offenses.

How much of an “evil” would it be if Americans went ahead and used marijuana for mood-altering purposes as we lawfully use alcohol? Arguably, it would not make much difference in our community life. As it is, millions use this drug unlawfully. Moreover, there seems to be a growing tide of opinion in favor of legalization. A recent newspaper article reports: “Never has there been such a concerted thrust to legalize the drug (marijuana) nationwide ... Together with a rapidly shifting public attitude toward pot and a White House willing to accept state medical-marijuana laws, legalization seems as inevitable today as it was unthinkable a generation ago.”

Evidently, a broad segment of the public questions whether marijuana use is a problem needing to be criminally addressed. The law-enforcement industry offers a dissenting view. When asked about legalization of marijuana, a lobbyist for the California Peace Officers’ Association responded: “What good comes of it? Right now, we have enormous social and public safety problems caused by alcohol abuse (and) by pharmaceuticals What is the good of adding another mind-altering substance? Look at all the highway fatalities.” He might have added: “Look at all the jobs.”

New York State decriminalized possession of small amounts of marijuana 34 years ago. Yet, 40,000 persons were arrested on charges related to marijuana last year, making this the city’s top criminal offense. Queens College sociologist Harry G. Levine calls this “an epidemic of marijuana arrests”. There may be an economic motive for the practice. The newspaper article notes that the “police ... profit from pot, and often ‘trick’ their suspects into violating specific law against openly displaying the weed in public.”

“ Technically (police officers) are not allowed to go into people’s pockets, “ Levine explained. “But they can lie to people ... They can say, ‘We’re going to have to search you. If we find anything, it’s going to be a mess for you ... so take it out and show it to us now.’ When the person complies with this request to empty their pockets and display marijuana in public, they violate the law and are charged with a misdemeanor.

“ Such busts are huge business for the police,” the article continued. “Not only do they sweep potential bad guys into the system, generating vast databases of fingerprints and photographs, but the arrests also beef up crime statistics. Departments in big cities and small towns alike use the numbers to secure fortunes in federal funding. Street cops have an angle, too They like to nab docile pot users ... at the end of their patrol shifts, when the extra hours filling out reports at the precinct house get charged as overtime. In the jargon, the practice is known as ‘collars for dollars.’”

In my view, it is legitimate to question practices such as marijuana use from the standpoint of its impact on society. If a practice is harmful, government-imposed restrictions may be in order. On the other hand, if an “evil” is created by persons or groups charged with countering its influence, we must suspect other motives than public well being behind their judgment. One must then ask whether the “cure” is worse than the “illness”. Perhaps a policy of doing nothing about the illness would bring better results. Just let everyone go on holiday and watch the situation improve.

Military expenditures and economic growth

War is an evil. Most would say it is a necessary evil if a people’s country is invaded by foreigners threatening destruction. However, the United States is a large and powerful nation whose flanks are protected on two sides by oceans. No sane nation would try to invade our territory. That does not stop the U.S. government from maintaining the world’s largest military establishment. Our leaders say that we need to protect ourselves and other peoples from terrorists or others prone to using violence against us. They have not adequately explained why the United States government should volunteer to be the world’s policeman. Wasn’t that why the United Nations was created?

In 2005, the U.S. government devoted 4.1 percent of GDP to military activities, having invaded the nation of Iraq two years earlier. A recent report suggests that the insurgency in Iraq, which killed so many Americans, was prompted by overly aggressive behavior by American troops during and after the invasion. No doubt many Iraqis resented their nation’s military occupation by a foreign power. So the question is whether the “cure” represented by Saddam Hussein’s removal was better than the original illness when a nation was profoundly disrupted and so many people were killed. Might not there have been a better way?

It would seem overly cynical to suggest that U.S. policy makers choose to go to war for economic reasons. Yet, scholars have uncovered evidence of a deliberate policy to inflate the U.S. economy by increased military expenditures. This happened during the Truman administration. The chairman of the Council of Economic Advisors, Leon Keyserling, was a principal architect of the approach. National Security Council document, NS-68, written in 1950 by Paul Nitze, gave it substance. This directive called for increasing the U.S. military budget from $13 billion to $50 billion per year.

NSC-68 emphasized the political and ideological threat posed by the Soviet Union. Containing Soviet expansion by a military build-up was one of its purposes. Another purpose, however, was to build up the U.S. economy by creating a new type of demand. If it was necessary to counter the Soviet threat, then it would be seen as necessary to spend additional billions of dollars on armaments, incidentally bolstering employment and defense-contractor profits. We could achieve economic growth this way.

Keyserling thought that the economic “growth” achieved through increased military spending would pay for those expenditures and it would occur "without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product." Though such policies, "the United States could soon attain a gross national product of $300 billion per year.” It was important to pursue “growth” rather than allow the nation’s industrial potential to be diverted into increased leisure for working people.

In September 1952, Presidential candidate Dwight D. Eisenhower criticized this policy in an undelivered speech that was reported in the Washington Post. He argued that money spent on a military build up would not create a corresponding increase in useful goods and services and therefore would be inflationary. Eisenhower said: “The inflation we suffer is not an accident. It is not, as the Administration would have us believe some queer and deadly kind of economic bacteria breathed into the atmosphere by Soviet communism... The point and purpose of this policy I have already indicated: to fool the people with a deceptive prosperity. The method is very simple: to give more people more money that is worth less... "

After he retired from the Truman administration, Leon Keyserling became an advisor to organized labor. He persuaded CIO president Walter Reuther and AFL president to fund a think tank called Conference on Economic Progress that promoted full employment through massive government spending rather than reduced work hours which Keyserling called “sharing unemployment”. As he had once worked within the Roosevelt administration to derail Sen. Hugo Black’s 30-hour-workweek bill, Keyserling now labored within union circles to blunt the call for shorter hours.

So it seems that the “growth argument” combined with a desire for increased military spending for geo-political reasons conspired to defeat the shorter-workweek proposal in its time of opportunity in the late 1950s. Ironically, the adversary meant to be contained by the U.S. military expansion made the same connections. In 1959, Nikita Khrushchev told a group of U.S. labor leaders: “I think that if our disarmament proposals were accepted - we are now planning a six-hour day in 1964 - we could immediately reduce it to a six-hour day and raise wages.” If that offer had come ten years earlier, NSC-68 might not have been adopted - or, at least, one would hope it might not have been.

The point is that leaders of the U.S. government have been willing to subject our citizens to the horrors of war both for reasons of geo-politics and the desire to maintain economic growth. The first motive, in some cases, might be tolerated; the second is unworthy of a civilized society. By no means can America’s war-making industry be considered a “necessary evil”. What greater evil is there than war itself unless a people’s liberty is in peril (which ours was not)?

The imperative to waste

Unnecessary military spending is just one of many ways that economic “growth” can be achieved in financial terms without adding to the stock of goods and services associated with real prosperity. In the book “Nonfinancial Economics”, Eugene McCarthy and I called this “economic waste”. We wrote (on page 66):

“ Economic waste can occur when:

1. Goods and services for which there is an insufficient demand are aggressively marketed.
2. Products that cannot be sold in the domestic market are exported to foreign countries.
3. National rivalries lead to war.
4. Products are used to exhibit status or social rank rather than to satisfy other, more substantial, human needs.
5. Government legally mandates unnecessary activities.
6. People are socially compelled to spend money in observance of commercial holidays.
7. The seller of a product decides what or how much of it the purchaser will buy.
8. Personal consumption is required to gain income
9. The system of career development breeds incompetent personnel.
10. Goods and services that used to be free come to be sold commercially.
11. Considerable economic resources are thrown into self-defeating routines of ruin and repair.”

One suspects that a large part of that “output” associated with the 80 percent of the work force not employed in agriculture or goods-producing industries goes to produce one or another kind of economic waste. People might be as well off materially if the function had never been performed. Alternatively put, if workers had been given shorter hours and more leisure, they might not have missed anything of value in their lives.

The wasteful nature of U.S. economic output became evident in the “roaring ‘20s.” In 1929, a literary critic named Kenneth Burke published a satyrical essay in New Republic magazine titled “Waste - the Future of Prosperity.” His argument is summarized as follows: “The more we learn to use what we do not need, the greater our consumption: the greater our consumption, the greater our production; and the greater our production, the greater our prosperity ... By this system, business need never face a saturation point. For though there is a limit to what a man can use, there is no limit whatever to what he can waste ... We have simply to make sure that the increase in the number of labor-saving devices does not shorten the hours of labor.”

Burke paid particular attention to war as a type of wasteful activity. He wrote: “For long we have worried about war, driven by a pre-industrial feeling that war is the enemy of mankind. But by the theory of the economic value of waste we find that war is the basis of culture. War is our great economic safety-valve. For if waste lets up, if people simply won't throw out things fast enough to create new needs in keeping with the increased output under improved methods of manufacture, we always have recourse to the still more thoroughgoing wastage of war."

Burke’s writings proved to be prophetic. Asked to write another article for the Nation, Burke wrote that a Business Week article on the “age of distribution” had showed him “that what he had thought of as a burlesque (in 1929) was nothing less than the gospel of modern day economics. 'Just past the midmark of the 20th century,' Burke quoted from the article, 'it looks as though all our business forces are bent on getting everyone to… Borrow. Spend. Buy. Waste. Want.’”

An eye to servicing the financial bubble

Is this madness, or is the U.S. economy driven by some unseen force to create increasing amounts of output that people neither need or want? I think there is another motive behind this approach. It has to do with financial rather than economic growth. The financial aspect becomes prominent when government borrows large amounts of money, as it did during the Great Depression and World War II, to meet its immediate needs in those times.

Once government has gone down the path of continual borrowing without repaying, it acquires a cumulative debt that becomes increasingly difficult to service. Needing to pay increasing amounts of interest, the government must keep its tax collections growing to the greatest extent possible. The problem with leisure is that government can’t tax it. Increased leisure is good for people but not good for a Treasury Department needing to service its unsustainable load of debt obligations.

In short, the U.S. government is no longer an honest broker of policies designed to promote the people’s well being but more like the operator of a Ponzi scheme who must lie and conceal to keep the financial game going as long as possible. Any serious proposal for a general increase in leisure threatens to puncture the financial bubble. Therefore, it cannot be. The American people must work long hours to pay taxes to the government so that a default on debt payments will not occur. Such an event might discredit government itself. Heads would likely roll.

Therefore, the lives of millions of our citizens today must be appropriated to cover for the financial misdeeds of past glorious or inglorious U.S. administrations; and various deceptions are used to explain the situation. There is no “tradeoff between leisure and income”, only a postponed day of reckoning for government officials.

Note: The information about Leon Keyserling, Kenneth Burke, and others prominent in the leisure-vs-growth debates in the 1940s and 1950s comes from the draft of a prospective book by Tom Walker, titled “Gift of Prosperity”. It is used with the author’s permission.

 

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