Monday, June 12, 2023

Consumerism and social status keep our noses to the grindstone

What better time to think about whether we’re working too hard than while we’re enjoying a Monday off, thanks to a public holiday? Wouldn’t it be nice if every weekend could be a long weekend?

Actually, almost 100 years ago, the greatest economist of the 20th century, John Maynard Keynes, pretty much predicted that’s the way we’d be living by now.

In his essay Economic Possibilities for our Grandchildren, written in 1930, he envisaged that by now, we’d be able to live comfortably while having to work only 15 hours a week. We could work just three hours each weekday, or clock up our 15 hours in just a few days – say, three five-hour days.

Really? What a duffer. How could anyone so smart be so disastrously wrong?

Well, not quite. What Keynes was saying was that, technological advance – the invention of ever-better labour-saving machines – would increase the productivity of our labour to such an extent that, by now, we wouldn’t need to work very hard to be able to live comfortably.

His point was that, as we’re able to produce more goods and services per hour of work, we become better off. We can take that benefit either as enjoying an unchanged material standard of living while working fewer hours a week, or as higher monetary income – thus allowing us to buy more stuff – while working the same number of hours.

As Jan Behringer and other economists from Germany’s University of Duisburg-Essen have written, in the years since Keynes made that prediction the productivity of labour in the developed economies has improved by more than he expected.

So, we could have been working a 15-hour week had we chosen to but, in fact, we chose to take the money and the extra stuff rather than the extra leisure. Working hours have fallen since the 1930s, but not by all that much.

Behringer and colleagues say the “obstacles to more leisure time are primarily sociopolitical in nature” – by which they mean it’s not purely economic reasons, the shortage of resources, that require us to work more.

I’ve no doubt it has suited the rich and powerful to have us working and spending rather than devoting four days a week to developing our hobbies. That way, the rich and powerful get more so.

But, by the same token, I think the rest of us have been easily seduced by the lure of the materialist, consumer culture. We love buying things that are new, shinier and do better tricks.

In Australia – and in Europe, but less so in America – pretty much all the reductions in working hours, the increases in annual leave and sick leave, and the introduction of that strange animal, long service leave, have happened because union-backed governments have imposed them on unwilling employers.

And every time they have, the employers and their political parties have predicted the death and destruction of the economy.

But, even so, how long since you’ve seen a union telling its bosses they should go easy on the pay rise, but cut working hours? No, I have no doubt that the workers have preferred more bangles and baubles.

Behringer and colleagues, however, have a different take. Their study of developments in the US and Europe over the decades leads them to two conclusions.

First, since the 1980s, average working hours have fallen more slowly as inequality – the gap between high and low incomes – has increased.

Second, in countries with high inequality, employees earning higher hourly wage rates tend to work longer hours than those on lower hourly wage rates.

Both these findings are striking because they contradict economists’ earlier finding that people with higher incomes chose to increase their leisure time.

So, what’s going on? The authors’ explanation is that rising inequality of incomes leads to more “upward status comparisons”. Like most social animals, we are conscious of our social status – where we fit in the pecking order.

And, particularly where there’s a big difference between the top and the bottom, we seek to improve our position.

“The upper middle class emulates the consumption norms of the rich, and sacrifices leisure time to do so. Because the rich also increase their spending on status goods such as housing, education, etc as their incomes rise, the middle class feels pressure to keep up,” they say.

“After all, what constitutes ‘a good place to live’ or ‘a good education’ is essentially defined in comparison to the standards that the upper income groups largely determine.”

Another of their findings is that working hours are more likely to be shorter when wage bargaining is centralised and government social benefits in kind (but not in cash) are more adequate.

One possible explanation, they say, is that centralised wage bargaining reduces status conflict because workers can decide collectively to avoid a “positional arms race” to allow shorter working hours and more leisure.

They find that social benefits in kind rather than cash are associated with lower hours of work. This may be because the direct provision of goods and services by governments reduces the need for status-oriented private spending on goods and services.

Education has many dimensions. It broadens the mind, it helps you get a better-paying job, and it’s a “positional good” – it helps people judge your social status.

"The extent to which the education sector is organised through private markets is found to be associated with longer working hours among workers who themselves have high levels of education,” the authors say.

Get it? If governments provided better healthcare and public schools, more people would be content to use the publicly provided services along with everyone else, and fewer people would feel the need to work longer to afford private hospitals and schools.