
Why Americans Work So Much Despite Keynes's Prediction - e15ctr0n
http://www.theatlantic.com/business/archive/2016/01/inequality-work-hours/422775/?single_page=true
======
ScottBurson
One answer is that the market forces tend to funnel all increases in income to
landowners as rent.

I was not familiar with this theory until a few days ago, when someone here on
HN linked to an online version (edited and abridged) of Henry George's
_Progress and Poverty_ [0]. I've been reading it since; its clarity is
stunning: I feel as if a great veil has been lifted from my eyes. Whether I'll
still feel that way in a few days, months, or years remains to be seen, but
for the moment, Henry George has me eating out of the palm of his hand.

Whatever the general validity of his theory, it certainly seems to explain the
SF Bay Area extremely well. Salaries here sound incredible to people outside
the area, but then it costs so much more to live here as to deny the wage
earner much of the benefit. Broadly, we can break the population into three
groups. Renters, obviously, have to pay the market rents, which seem to rise
inexorably. Those who bought houses here years ago, before the big increases
in property values, and are still living in them, are the ones who can really
enjoy the high salaries they can earn here. Those who bought property here
more recently, on the other hand, have large mortgages, because someone who
_previously_ owned the property made a pile of money when they sold it. In
effect, the mortgage is like rent being paid to whichever previous owner or
owners saw the property appreciate.

George's theory starts with Ricardo's law of rent [1], which is a truism of
classical economics (and another idea I was not aware of until just recently).
One could say it takes that law to its logical conclusion.

EDITED to add: while George's theory has not been fully embraced by mainstream
economics, it hasn't been completely rejected by any means. Joseph Stiglitz,
Herbert Simon, and to some extent Milton Friedman are some of its adherents,
and Hayek credits George with awakening his interest in economics. [2]

[0]
[http://www.henrygeorge.org/pcontents.htm](http://www.henrygeorge.org/pcontents.htm)

[1]
[https://en.wikipedia.org/wiki/Law_of_rent](https://en.wikipedia.org/wiki/Law_of_rent)

[2]
[https://en.wikipedia.org/wiki/Georgism](https://en.wikipedia.org/wiki/Georgism)

~~~
patio11
_One answer is that the market forces tend to funnel all increases in income
to landowners as rent._

This is partially a result of Americans choosing to consume more housing than
citizens of peer nations or, indeed, Americans historically. The size of the
average owned American home doubled since 1950. You can save a _substantial_
amount of money if you're willing to live like a 2015 Japanese salaryman or a
1950 American middle class family, but the modal American considers that
standard of living "poverty" and is unwilling to accept it.

Another layer is that big houses gate access to good school districts, which
is a very, very deep can of worms.

~~~
jacobolus
Zoning has a lot to do with home sizes. In general American cities are zoned
to not allow smaller units, even for those who might prefer the cheaper rent
if given a choice. Japan has much simpler and more flexible zoning laws.

...But Japan doesn’t have the history of racially motivated urban design in
general, so the story is a bit complicated.

That, and America has been heavily subsidizing an automobile-based lifestyle
for 60–70 years, encouraging people to trade more living space for longer
commutes, without facing the full infrastructure costs of the choice.

~~~
lmm
Japan has extreme ghettoization of immigrants; most landlords will simply
refuse to rent to foreigners.

~~~
jacobolus
Sure. I don’t mean that Americans are as a rule more racist than Japanese, or
anything like that.

What I mean is, Japan didn’t design its whole large-scale metropolitan plan
around racial segregation, the way many places in America did.

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dnautics
Because when you devalue the currency through a policy of secular inflation,
you have to work harder to maintain the same standard of living: this is the
whole point of manipulating the economy using the inflation/employment
connection (aka Phillips curve). You can't negotiate a wage reduction with
your employee due to sticky wages, so for a country to make it appear like
they're doing a good job keeping employment numbers up, they have to screw
over everyone (of course screwing the poor the hardest)

~~~
xlm1717
The simple answer is: because Keynesian economics doesn't work.

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dgreensp
When a company buys a 2x faster copy machine, they don't double the salary of
the human operator. If a department is able to lay off half its staff thanks
to automation, they don't double the salaries of the remaining staff.

There's little in the way of forces that push wages up. Unions, basically,
acting on the idea that rich companies should share the wealth. The market
value of a human butt-in-chair operator remains low. Unskilled labor is a
commodity, and it can be found increasingly cheaply on the global market.

Keynes died before the first computer was invented. Probably his concepts of
"technological innovation" and "worker productivity" do not apply today.

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lhh
This article is deeply flawed... change in wages != change in standard of
living.

But that aside, in addition to people wanting to take part in higher standards
of living, I'd hypothesize that another driver is social status. In our
culture, wealth seems to translate pretty directly to social status, and I
think that's a pretty core human need/desire that most people aren't willing
to opt out of competing for.

~~~
majewsky
> This article is deeply flawed... change in wages != change in standard of
> living.

Measuring "standard of living" is a very hard problem. At least they're being
clear about their definition, so I can judge the correlations they find for
myself.

~~~
lhh
Sure, maybe coming up with a good rigorous definition is difficult, but I
think it's pretty obvious that standard of living is rising drastically. Smart
phones are now ubiquitous, for example, whereas they essentially didn't exist
a decade ago. You could have had all of the wealth of the planet but no
antibiotics less than a century ago. Conflating wages with standard of living
is a glaring error.

~~~
vorotato
I think the biggest complaint is that the improvement in quality of life and
agency, is not even slightly evenly distributed. I'm not knowledgeable enough
to posit good arguments, so you'll have to research this on your own. I'm sure
with a modest bit of effort and investigation you'll come to a more balanced
position.

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netcan
There are some aspects of wealth that basic economic concepts and models don't
capture. Here for example, diminishing marginal utility doesn't seem to play
as big a part as it did.

My guess is that competitive dynamics dominate this issue. Within a career/job
it is hard to progress with less than full effort because of competition, for
example. On the consumption side, by working less an individual becomes poor
relative to his peers. This in itself is meaningful. Where 4 kids in a small 2
bedroom was normal and middle class throughout Europe in Keynes' time, it is
hardship today. Living without smartphones or Internet is hard because they
are normal, both psychologically and practically.

Second, inflation is unevenly distributed. The average salary/price ratio for
bread and cheese and cutlery sets improved miraculously but the ratio for a
tennis lesson did not.

Then, there are many markets that are zero sum or reduced sum. The price of
real estate in many limited supply areas like cities rises to the limit of
affordability for the corresponding percentile of the population. IE the
median house corresponds to the maximal borrowing amount for a median
household.

I also think "you make what you measure" applies. Our governments' highest
measurable priorities are usually gdp and employment. Then there's wealth
distribution. Will the median person's wealth increase 8 fold?

All that said. I think number of working years is a place to look for any
changes that did occur. College, travel retirement. People had longer working
lives back the, especially considering life expectancy.

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tmd
Number of hours worked per week is not everything. I suspect that Americans do
work less over the whole lifetime -- the retirement age has decreased (at
least for men, see [1]) while life expectancy is increasing. The problem is
that it's impossible to estimate total hours worked over lifetime for people
presently in their 20s-30s and current pensioners give you a delayed
statistic.

Personally I think that economy based on a 15-hour work week would be sub-
optimal. Total salaries being equal, I'd rather employ a single person working
40 hours than three working 15 where you need to deal with lots of
communication and administrative overhead.

Maybe the solution would be taking multiple "gap years" during your career or
"mini retirements" but many employers don't like holes in your CVs.

[1] [https://www.soa.org/News-and-
Publications/Newsletters/Pensio...](https://www.soa.org/News-and-
Publications/Newsletters/Pension-Section-News/2012/february/What-Is-The-
Average-Retirement-Age-.aspx)

~~~
miseg
That's the trouble. From an employee's perspective, I'd like a job with less
than 40 hours per week (but also be paid lesson for it). But full working
hours are favourable to employers.

~~~
tmd
You're right but I wouldn't like that even as an employee (which I am).
Imagine your that your team triples in size and everyone is in some kind of
part-time arrangement that makes it difficult to synchronize any kind of real-
time communication. Horror.

~~~
lmm
It seems easy enough to agree some kind of core - "everyone comes in 2-4pm on
Wednesday and we do any meetings then" or some such. I mean, all-remote teams
manage to get work done.

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tim333
I think much of the choice of work hours must be down to human nature. We are
awake about 112 hours a week and choose to work between a half (56 hours) and
a quarter (28 hours) typically. People are seldom very happy unemployed. If
money was the only reason people worked, the likes of Paul Graham would put
their feet up when they cashed in for millions from Yahoo but they almost
never do.

~~~
RogtamBar
I really doubt that. Choose to work 40 hrs?

There are a few people who are lucky enough whose work is their hobby, and who
feel happy doing it, but mostly, work is draining and stressful. And I don't
mean physically draining.

I'm convinced the 'Fall from Eden' story was inspired by the invention of
agriculture. Suddenly, people had to work a lot more (hunter-gatherers
typically work 4-5 hours a day). Only the aristocracy inherited the privilege
of having a lot of leisure time and being able to hunt(barring the US, hunting
is extremely restricted).

Nutrition got worse, it took millenia of improvement till skeletons of farmers
started to look as well-fed as those of hunter gatherers.

And of course proximity to farm animals and greater population introduced all
those nice pathogens: tuberculosis, smallpox, flu...

~~~
theguywith
That's a remarkable explanation for the myth.

~~~
talktime
I find it convincing too. Check out the 'Big History' lecture series.
Particularly the lecture on the transition to agriculture. I was inclined to
think that humans transitioned to agriculture as soon as it was 'invented'.
But the lecture suggests that humans knew perfectly well how to farm long
before, but didn't because it seemed like too much hard work. We didn't
transition until forced to by climatic conditions.

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gozur88
>What Keynes foretold was a very optimistic version of what economists call
technological unemployment—the idea that less labor will be necessary because
machines can do so much. In Keynes’s vision, the resulting unemployment would
be distributed more or less evenly across society in the form of increased
leisure.

I would be shocked if that actually happened. From what I can tell most people
would rather make more money than have more leisure, even if it's not a
conscious decision. Since employers would rather hire one guy for 40 hour
weeks instead of two guys for 20, if marketable people don't demand shorter
hours (and less money) it's never going to happen.

Also, it's an overly simple view of technological innovation. Technology tends
to eliminate low skill and unskilled jobs, creating fewer numbers of higher
skilled positions. It's pretty naive to think if you automate a steel mill
you're going to be able to transition people from that mill into medicine or
software development.

~~~
hellofunk
>From what I can tell most people would rather make more money than have more
leisure

Totally false in most places in the world. Totally true in the U.S.

~~~
gozur88
I don't know how much it's true in other countries, but in the US it's pretty
common to see people trap themselves in debt. You see a lot of people with six
figure incomes living paycheck to paycheck. They can't afford to take less
money because they've already spent it.

~~~
hellofunk
The U.S. is full of all kinds of behavior that is uniquely American. I was
amazed how different the U.S. actually is when I left it several years ago to
live and work in other nations. the U.S. has a _lot_ it could learn from other
places. I definitely think Americans are on average unhappier than the
citizens of other Western nations, for a wide range of reasons.

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at5
The thing about capitalism is that the capitalists tend to win. Gains have
accrued to capitalists mostly. Lack of leverage on the part of labour means
they are expected to be more productive not work less.

~~~
vidarh
> The thing about capitalism is that the capitalists tend to win.

That's because the capitalists are the ones that already "won".

A capitalist - or aspiring capitalist - that fails, is/becomes a worker.

Anything that squeezes the economy of capitalists as a group forces some of
them into the working class.

~~~
tygaa
This comment adds nothing to what was said above. Capitalists started out
advantaged at the advent of modern commerce and have accrued gains.

~~~
vidarh
That's wild oversimplification. A lot of people have become capitalists
without a privileged start, and a lot of people have lost all their privilege.

The point is that what was said above was a meaningless truism to say that
"the capitalists tends to win" because (still) being a capitalist is the
prize.

~~~
tygaa
Not even worth responding to

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illivah
That sounds pretty legitimate.

My first thought is that what you're worth is not what you want, and not
according to your contribution to productivity. You're paid according to what
you'll accept.

So you gotta wonder, if there starts to be a slight shortage of jobs, what do
the different actors do? The middle manager and the employee... Well, as an
employee you have less and less say, and you probably want to try to prove
yourself and work harder or longer. Motivation is toward equal or higher hours
than normal.

And the employer just wants to get the job done. They don't want to sift
through MORE employees to do it. That means more training, more managing, and
generally more hassle. Motivation is toward giving employees equal or more
hours than normal.

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hellofunk
Meanwhile, the Netherlands has a new law in effect on January 1 that requires
employers to allow for shorter working days unless there is a strong reason to
prevent them. And since the Netherlands is one of several European companies
on the list of world's "most prosperous" [0], a list which does not include
the U.S. in the top 10, perhaps this is validation of Keynes afterall.

[0] [http://www.prosperity.com/#!/](http://www.prosperity.com/#!/)

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danieltillett
We are hostages to our genetic and cultural heritages. Until the last 100
years (and even less in many countries) wealth = survival. To expect this
drive to go away after 10,000 years of enormous selective pressure because the
need for wealth has gone away is not how evolution (both culturally and
genetically) works.

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zaro
So that the rich people can get richer, it's that simple :)

If somebody has income without working, the somebody else is working without
getting an income.

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horsecaptin
Fear, manufactured competition and a lack of a social safety net?

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logicallee
all of these comments are totally wrong. why do the richest Americans work the
most, why did Gates work insane hours like 100 a week?

obviously it's not because they can't afford to stop working. it's because
America has a culture that work is - awesome.

what other country could give developers unlimited vacation days? (for
example.)

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sly_foxx
Can you think outside of the communist box?

Competition is in part due to the fact there are more humans alive today
fighting for the same resources. It's kinda similar to dating, where things
are not getting easier(except for those who inherited good genes). Today with
dating you have to do more to get the same result people use to get with less
effort.

Lack of social safety net? Why do you care about that? You don't have a safety
net when you get dumped. You know, if your girlfriend dumps you, you don't get
another girl to give you blowjobs, because otherwise you might get depressed
and suicidal. You're expected to figure it out on your own and you might not
do it - you might end up lonely, without dates and maybe even commit suicide
because of that. So, why not hold wage earners to the same standard? Don't be
a hypocrite!

~~~
fsloth
"..there are more humans alive today fighting for the same resources"

If by "resources" you mean world GDP, then no, the GDP per person has never
been higher:

[http://www.wolframalpha.com/input/?i=world+gdp+%2F+world+pop...](http://www.wolframalpha.com/input/?i=world+gdp+%2F+world+population+from+1900+to+2015)

~~~
sly_foxx
What does GDP have to do with resources? GDP measures volume of transactions.
Resources are oil, gas, silver etc. Also, there is real estate. Land on Earth
is limited. There are 10s of millions of people who want to live in Malibu,
for example. But, number of spots there is limited, so who is going to live
there? Those who have the most money.

Do you get it now - more people alive means more competition for land and
other resources.

