Lion of the Blogosphere

Where does all that increased earnings and productivity go?

The forty-hour workweek became a thing in the early 20th Century. Eighty years since the New Deal, and productivity has massively increased, so why do we still have to work 40 hours per week? On top of that, there has been a large increase in female labor force participation. And for many white-collar workers who don’t get paid overtime, 40 hours is considered a light week. So in aggregate we are working a lot more hours than we did in technologically primitive times.

Where are all of the extra earnings going for all that high productivity work going?

1. Cost disease

2. Positional goods. A house (or apartment or condo) in a “good” neighborhood is the most expensive positional good.

3. Goods and services that were once considered luxuries or didn’t even exist at all, but are now considered essential to live a normal life. Here’s a list of some:

Car + car insurance
Clothes washer & dryer
Air conditioning
Microwave
Television
Smartphone
Computer and internet

Plus the following services are possibly candidates for this:

College
Health insurance

There’s a lot of overlap between the three categories. Some of the goods and services listed above definitely have intrinsic value, but also to an extent they are required because everyone else has one, and society has changed because of that.

The last two services on the list, college and health insurance, have been the most affected by cost disease.

College, I believe, is mostly a positional good. The labor force has changed such that today you probably can’t get a decent paying job, and almost certainly can’t get a self-actualizing career, without a degree. Society has changed, turning something that’s intrinsically not worth that much money into a necessity.

So there’s an economic rule to be gotten out of this. When real per-capita income increases, it gets entirely eaten up by increasing prices for positional goods and cost disease, plus occasionally some new product becomes a “necessity” because everyone else now has one.

Thus, we can predict the futility of tax cuts (everyone has more money, so certain “necessary” things go up in price as a result, eating up all of the money from the tax cut), and the negative-sum effect of increasing labor-force participation.

Written by Lion of the Blogosphere

December 13, 2017 at 2:34 PM

Posted in Economics

57 Responses

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  1. On the first order, our society does reward work. Basically humans have this keeping up with the Joneses syndrome, and that’s normal. So when people see other workers benefit, they want work too. This is so clear with the women entering the workplace. Most of them do it for financial independence. Well, then as everybody goes to work, the value of work decreases… the job market is a market after all. So there you go, ofc that the hours spent per week will not change much. It will not go up too much either, because chasing stuff has too many consequences on the personal life. It will not go lower too much either, because of the market forces. (in other places like Europe is a little lower because of regulations and social standards)

    The positional goods talks about how some stuff is affected more than other, but does not address the question in the first place.

    Zack

    December 13, 2017 at 2:51 PM

  2. > Thus, we can predict the futility of tax cuts (everyone has more money, so certain “necessary” things go up in price as a result, eating up all of the money from the tax cut), and the negative-sum effect of increasing labor-force participation.

    True, which is why we need to reduce the size of government and cut spending. But I see no signs that that will ever happen. Government is self-perpetuating. As soon as a town gets some money, the first thing the city government does is build themselves a nice big city hall and cut themselves six figure salaries.

    Big Daddy Gov and feminism aren’t going anywhere until they simply aren’t sustainable anymore, due to external factors. Yeah I’m all for Trump, but he hasn’t really done much to roll back feminism or big gov. Such things are probably not even feasible in a democracy. It’s more about how you’re going to divide up the pie and who gets more of it.

    Fact Checker

    December 13, 2017 at 3:07 PM

  3. So what should a little guy do now?

    Yakov

    December 13, 2017 at 3:08 PM

    • Lion is basically wrong.

      The only way to grow the economy is through tax cuts and only economic growth can deliver a solution to most problems.

      “Cost disease” and “positional goods” sound novel but what makes you think you could not describe such things back in 1870?

      The point is that people still respond to incentives and increasing the returns to risk-taking and work is still a time-honored practice that works.

      By keeping regulations severe and taxes high, you are enforcing current monopolies, reducing competition and feeding leftism, since leftism loves monopolies.

      map

      December 14, 2017 at 1:18 AM

      • “‘Cost disease’ and ‘positional goods’ sound novel but what makes you think you could not describe such things back in 1870?”

        Because in 1870 there was such a shortage of goods that had intrinsic value, like FOOD, there wasn’t any money chasing positional goods and causing cost inflation.

        Lion of the Blogosphere

        December 14, 2017 at 7:29 AM

  4. Eighty years since the New Deal, and productivity has massively increased, so why do we still have to work 40 hours per week?

    And a large fraction of those 40 hours are not real work except for the most workaholic of office drones. Instead, for the average cubicle worker it’s idle office chit chat, gossip, people checking the weather on their computer, pointless meetings run by women, and coffee breaks. And that’s if you work in the private sector. Government workers apparently do nothing except fantasize about being the “Resistance” while they gorge themselves on taxpayer money.

    A 20-30 hour work week focused only work would be as economically productive as what we have now.

    Switzerland also has shorter, but more intense, work hours as well as generous vacation time and no one thinks their economy is lagging in productivity.

    The Undiscovered Jew

    December 13, 2017 at 3:20 PM

    • Strongly second this notion. A compressed 20 hour week of productivity (with daily allotted hours of work being chosen by employees) would do more for productivity than anything save the invention of the computer/internet.

      Paul Ryan's Sickly Old Lap Dog

      December 13, 2017 at 5:36 PM

      • What will people find good use with their time, when their weekly work hours are cut in half?

        And some of us vouch for a basic income, in this case, a supplemental basic income, and the average person degenerates into hedonism and slothfulness, because idle time and a perpetual cash flow affords those with median to lower IQs to pursue unhealthy pleasures effortlessly.

        Furthermore, a Star Trek world where a replicator produces whatever one wishes, will lead Americans into roid rage consumerism.

        JS

        December 13, 2017 at 10:03 PM

    • My guess is the opposite is the case in much of the private sector.

      For example, my girlfriend works in operations for a Wall Street firm. Occasionally, she works from home. The last time she did, she literally didn’t get a chance to eat until close to 6pm. It was just nonstop work.

      That was the case in my last office job too, working as a temp/contractor at a Big Four firm.

      Companies monitor everything their employees do these days. They know when they’re surfing the web (assuming they have access to the Internet), they monitor phone calls, email etc. There are exceptions for CYA purposes (HR, for example), but why would they keep people employed if they were doing nothing productive?

      David Pinsen

      December 14, 2017 at 12:30 AM

      • No one seems to be monitoring my internet usage at work. In the sense that I am sure it’s monitored, but the people who have access to that have not red flagged me, and there’s the benefit of being an unimportant person in the company such that the IT person with that access isn’t curious about me.

        Lion of the Blogosphere

        December 14, 2017 at 7:26 AM

      • Can an employer fired someone who posts on LoftB? The likelihood of someone in that dept who figures out which poster actually works at the company is very slim, unless you have a profile and or blog and you forgot to sign out.

        The real irony is that you are more likely to get caught if your co-workers are White as opposed to those from the lower groups that are frequently mentioned here with impunity.

        JS

        December 14, 2017 at 2:00 PM

      • “No one seems to be monitoring my internet usage at work. In the sense that I am sure it’s monitored”

        I think David Pinsen’s experience is more common than yours. At my company, my direct supervisor, through multiple monitoring programs, can know of every click I make on the computer, what actions I’m taking and how long those actions are taking. I never go to outside websites on my work computer, just work related ones.

        Mike Street Station

        December 15, 2017 at 7:05 AM

      • Of course, they could be keeping stuff like that secret from the serfs, but my guess is that managers at my company do NOT have access to my internet logs, it’s on a need-to-know basis and HR would have to file a specific request to IT in order to get at it.

        Never visit porn sites at work! (Unless you work at a company that produces porn, then you can PPV your own sites.)

        Lion of the Blogosphere

        December 15, 2017 at 8:04 AM

  5. So limit work hours, heavily tax positional goods (after isolating non positional elements, such as the desire to have low crime), regulate college and health care effectively.

    Lion, please read The Affluent Society. It blows the Darwin Economy out of the water in its discussion of these things.

    Magnavox

    December 13, 2017 at 3:21 PM

  6. How many of those 40 hours are spent reading Lion of the Blogosphere?

    DataExplorer

    December 13, 2017 at 3:28 PM

  7. Increases is productivity never seem as high as they should because there is often a related increase in expected quality.

    Look at the court briefs filed in the 1970s for famous cases such as Roe v. Wade. The briefs are written by typewriter, with typos corrected by hand. The word processor increased productivity, but also increased the expectation of perfect documents.

    Another example: We used to wear clothes a few times between manual washings. With the advent of the modern washer and dryer, the expectation is that you wash clothes after each wearing.

    JA

    December 13, 2017 at 3:37 PM

    • Whaddaya mean corrected by hand? You mean hitting the lift-off key on the Selectric?

      Marty

      December 14, 2017 at 11:38 AM

  8. Heh. As if people were really WORKING forty hours a week. On my last job I think I averaged about 3-4 hours on most days, and spent the rest web surfing. I was there 12 years and retired from it.

    I’m not proud of that. I wish I could have spent the down time learning new concepts that would have helped me on the job, but I was on the downside years of my career, and didn’t see much point in that. Also, I’m a very slow learner, which held me back as well. And in full disclosure, let me say that I wasn’t goofing off in order to stick to my employer. I was treated quite well, and had great bosses all the time I was there. I’m sorry that I was in over my head and probably never should have pursued that career in the first place.

    sestamibi

    December 13, 2017 at 3:45 PM

    • If you can do an acceptable job while only working 3-4 hours per day, then I don’t think you are in over your head.

      Lion of the Blogosphere

      December 13, 2017 at 4:49 PM

      • I do about 2 hours of work per day in average and I still manage to hold jobs for many years. The rest of the time I procrastinate. I am not even that talent in my field, it is just that in most white collar work places people don’t know how to assess the proper amount of work one should do per day. It is very different in most blue collar jobs where productivity can be quantified pretty easily.

        Hashed

        December 13, 2017 at 5:12 PM

    • I have considered myself on the downside of my career for the past ten years, with about five to go. I could have doubled my salary if I had maintained my drive. I do about two hours of real work per day, take a two hour lunch, and still get great reviews and the praise and respect of my boss and coworkers. Still, even at that light work load, I’m held to a higher standard than my (many) female and (not so many) minority coworkers. Today, I literally spent my entire work day managing my investments, wasting time on the Internet, and cut out an hour early.

      E. Rekshun

      December 13, 2017 at 5:11 PM

    • Heh. As if people were really WORKING forty hours a week. On my last job I think I averaged about 3-4 hours on most days

      Cripes on a lollipop, I used to scoff when people said doctors work “hard”. I’d think to myself, “I don’t work THAT hard.” But compared to this idea I see in this thread, of spending half the day goofing off, I sure do! What a clownworld!

      SJ, Esquire

      December 13, 2017 at 6:07 PM

      • It is much easier to do the hours in a people facing type of job, they just come in and you serve them, you can’t really waste too much time. On white collar office jobs you sit in front of a computer and it is much harder to keep the pace and concentrate for long period of time especially if you are doing a job which require some brain power. If I had to do a doctor type of job or a mechanic type of job I am sure I would work more hours.

        Hashed

        December 14, 2017 at 12:08 AM

      • Responses are probably skewed here, since people in jobs where they have to work nonstop are probably less likely to comment on blogs.

        David Pinsen

        December 14, 2017 at 12:33 AM

  9. Elites want more prole drifting and more lower IQ subjects in our nation, and therefore Manhattan officially becomes a gated community.

    JS

    December 13, 2017 at 3:58 PM

  10. lion is assuming that the average person is earning more because productivity has increased so much.

    that assumption is false.

    there was a story on This American Life recently about poultry plant workers in alabama. they used to all be white. now they’re all mexican.

    the money shot: today the wage for these workers is at most $11 an hour. but that’s about the same they were making nominally in 1970. in real terms the poultry worker made about $48k per year in 1970.

    there has been a class war in the US since 1970. and in one direction only. its warriors are so dishonest they use “class warfare” as a term of abuse for any who point out their war making.

    it’s 1984 in ‘mer’ca-stan for real.

    whatch you talkin' 'bout willis?

    December 13, 2017 at 4:14 PM

    • Workers lost ground in the 1970’s because America closed the gold window and got off the gold standard. Without the gold standard, the unit of account was shot to pieces and wealth and productivity was destroyed by successive bouts of inflation and deflation.

      World productivity growth dropped by half starting in the 1970’s because of this.

      map

      December 14, 2017 at 1:11 AM

      • You need to get back to a gold standard, end free trade and end mass immigration.

        map

        December 14, 2017 at 1:23 AM

      • You’d think that if people truly wanted a return to greater prosperity we would all simply agree to re-create the policies of the early 1960s to get the economic results of the early 1970s.

        Artifact

        December 14, 2017 at 4:24 PM

    • Here a news article of what you call trash in the Anglo Prole world and Christmas splurge:

      http://www.msn.com/en-us/lifestyle/whats-hot/this-single-mom-has-bought-her-kids-so-many-presents-you-can-hardly-see-her-christmas-tree/ar-BBGJV0v?ocid=ientp

      Single mom who spends close to 2K Sterling ($3K) in presents for her children that pile as high as the tree.

      Is there any reason to blame wealthy people with better finances?

      JS

      December 14, 2017 at 2:23 PM

  11. the show also described how easy it was to get work in rural alabama for high school drop outs in 1970. quit one plant and be hired the next day by another.

    but it’s not down to immigration. it’s down to union busting.

    libertarians loves theyselves some free trade, but…

    NAFTA is THE reason for the swarming mexicans.

    thanks ronnie.

    December 13, 2017 at 4:30 PM

    • If republicans could do more union busting, tax cuts and less religion, abortion then this democrat will convert to republican.

      mpt

      December 14, 2017 at 3:01 AM

    • But why has social cohesion degraded to the point where these ridiculous anti union fantasies about individualism and personal liberty hold so much sway?

      Magnavox

      December 14, 2017 at 11:36 AM

  12. Most of the productivity gains went into the S&P 500 stock prices, which went up from about 100 to over 2700 today in the span of 37 years (1980-2017). That’s an average annual return of approximately 8.5% per year, significantly higher than inflation of GDP and more than US workers’ wage growth.

    This is where your 1% vs the 99% comes from. The fact that wealthy people (10% of Americans) own stocks, while the rest only exchange their labor for value. If everyone had the same wealth gain from the S&P (ie stocks were linearly distributed among the US population) then the wealth distribution would be the same as in 1980.

    That being said, today’s asset prices are fueled by monetary easing and loose credit standards. So the rich are paper rich, but not as rich as everyone thinks, if this bubble were ever to pop (it will eventually just due to mathematics, but try telling an entire lost generation that things will work themselves out in 20-30 years).

    Paul Ryan's Sickly Old Lap Dog

    December 13, 2017 at 5:45 PM

    • But stock prices haven’t been historically anomalous over the last 37 years. So your whole argument falls apart.

      Magnavox

      December 14, 2017 at 11:39 AM

  13. “Where are all of the extra earnings going for all that high productivity work going?”

    the pockets of capital owners. wages are stagnant.

    james n .s.w

    December 13, 2017 at 8:14 PM

  14. Interest. Usury be it yo.

    Artifact

    December 13, 2017 at 9:03 PM

  15. O/t – Found this blog by the owner who calls himself Uncle Guido — an IA who talks about Italian food, but his main highlights are intellectual themes where he writes about literature, Shakespeare and political philosophy and even quotes from Charles Murray’s Coming Apart. A rare find, and he does it nicely with illustrations.

    http://www.uncleguidosfacts.com/2017/11/equalitypolitical-fiction-social.html

    JS

    December 13, 2017 at 11:41 PM

    • This post of his clearly shows the intent of the Anglosphere which I have been commenting — a money driven entity with no regards to national or cultural entity, not even the quality of its citizens, money is the sole objective here.

      JS

      December 14, 2017 at 10:39 AM

  16. Perhaps cost disease is a symptom of the other two.

    JayMan

    December 14, 2017 at 8:06 AM

  17. The two greatest pieces on the INSANITY, MALICIOUSNESS, AND ABSURDITY of work. 40 hours a week for 30 years is TOO MUCH! It IS prison.

    http://www.primitivism.com/abolition.htm

    http://www.zpub.com/notes/idle.html

    fakeemail

    December 14, 2017 at 10:18 AM

  18. My cousin is a successful 50 y/o multi-millionaire Fortune 500 corporate executive. He’s away from home on business travel for at least ten nights per month, as well as four or five international trips each year. He sneers at people that only work 40 hours per week. I’ve watched him repeatedly check emails and call in to conference calls while on vacation. His work seems mostly like attending meetings and conferences, sitting in airports, sending email, and yapping on lengthy conference calls. It seems like all of this churn could have easily been done w/o him. His salary is $400K per year. Last year he cashed in a bunch of stock grants for $1 million.

    Smartest Woman on the Internet

    December 14, 2017 at 11:10 AM

  19. Cost disease and positional goods are certainly part of the issue. But we are also spending more or better things. Two big examples:

    1. The average house people live in is much larger. My grandma’s new suburban house built in 1955 is about 1800sf, 5 smallish bedrooms, 2 baths. Now new suburban houses average about 3200sf and typically have at least 3 full baths plus at least 1 half, and multiple walk in closets almost as big as old bedrooms are standard as well.

    2. Cars are significantly better but more expensive to produce.

    In the nicer parts of the third world, old 1st world cars are often produced and sold for about $7500 for 10-20 years after 1st world production ends. For instance, the old VW Beetle was produced in Mexico until the 1990s. But in the 90s, such a car was too low end to sell in the USA. Brasil is full of old Nissan Sentra models made there after first world production was upgraded.

    One obvious upgrade is power steering, windows, and locks and automatic transmissions are found on about 90-95% of new US cars.

    Pop

    December 14, 2017 at 2:15 PM

    • Technology has made things more accessible not better.

      Without the internet, your boss wouldn’t email you nonsense while you’re at home and want you to respond ASAP, thus increasing your labor for the workweek.

      JS

      December 14, 2017 at 7:03 PM

    • Who cares about all that shit. The measure of quality of life is summer time on an uncrowded, quiet beach. Hence the Corona™ adverts. 50 years ago a clerk in urban America could take his wife and kid to a cheap rental shack on the uncrowded east coast beach for at least a week for an affordable price. You could lower a string tied around a piece of garbage meat into the estuary and pull up five crabs gripping the garbage and then eat the crabs for dinner. You could wade out and dig up clams yourself very easily. The crabs are all dead now from sewage and pollution. You lay a baited steel crab trap now and you’ll be lucky to pull up a single crab. You used to literally be able to lower a piece of garbage into the water tied on string and pull up a few crabs.

      Most normal white people don’t care about neurotic status bullshit like NYC people. They want enough time in nature and at lakes and in the forests. We have an over population problem more than anything else. Normal white people want at least few weeks a year in nature, not crowded with proles and noise.

      Nobody gives a shit about tax rates and insane fantasies about our imminent robotised future. The thing that matters is population reduction and immigration restriction.

      I don’t think anyone would care if the place was one third muslim if there was plenty of space. Well, there ain’t plenty of space. We need closed borders and mass deportations. A reasonable long term population target for the USA is 200mm. To hit that target, a lot of people need to go.

      We will end up at somewhere near that number whether people agree or not. The robot utopia stuff is completely retarded. We face famine and war and pandemics before this insane urban couch potato fantasy comes to anything.

      bobbybobbob

      December 14, 2017 at 11:35 PM

      • Manhattan Whites love nature just as much as prole Whites in the sticks.

        JS

        December 15, 2017 at 8:38 AM

      • Suburbanites and ruralites often make sour grapes comment that metro centers are no good, simply because there is too much demand for them.

        JS

        December 15, 2017 at 9:43 AM

      • “Suburbanites and ruralites often make sour grapes comment that metro centers are no good,”

        Yes, I’ve observed this from prole members of my family who can’t afford the city.

        Lion of the Blogosphere

        December 15, 2017 at 9:45 AM

      • Proles used to populate the city in large numbers. Their numbers dwindle significantly from 2 groups who are now deemed their political enemies — NAMs who were shoved with proles by their SWPL instigators who are now pushing the NAMs away.

        JS

        December 15, 2017 at 11:27 AM

      • Some of your readers think America has gotten more expensive and blame it solely on immigration and non-whites.

        I blame the less intelligent who make it more expensive for the rest of us. Stupid people are always a liability wherever they go.

        JS

        December 15, 2017 at 11:34 AM

      • LOL, dropping $8k a month for an upper westside 3br apartment is a mark of mental retardation, not “making it.” I know these people. They’re prematurely bald and ugly and wear glasses, because they work stupid hours to enrich the rentiers who own their residences. I roll up with a full head of black hair and 20/20 vision. NYC makes zero sense on any level right now. It kinda pencils out if you’re childless and pulling $300k and have an exit plan. Otherwise you’re just an innumerate idiot.

        bobbybobbob

        December 17, 2017 at 12:42 AM

  20. Where does it all go? From the great Amy Chua:

    “There’s something suspicious about saying, ‘I’m just going to leave my child alone and let her pursue her passions.’ You know what? I think most 13-year-olds’ passion is sitting in front of the TV, or doing Facebook, or surfing the Internet for hours.”

    gothamette

    December 14, 2017 at 10:31 PM

  21. Increased earnings and productivity are being redistributed to the top. Hence increased inequality, CEO salaries, inflated stock markets, overpriced luxury goods and art pieces ($300m van Gogh paintings), etc. The poor are being manipulated into working meaningless jobs for peanuts. Bill Gates wasn’t honest when he was talking about increased standard of life for everybody and not agreeing about severity of rising inequality– the poor (99%) are getting mere trinkets, while the rich take all that really matters in life.

    cannotwest

    December 15, 2017 at 12:57 AM

  22. europeans have used increased productivity to have more leisure. not as much as predicted, but more than non-european first world countries. this was done legislatively.

    as we see in america, corporations don’t view increased productivity as belonging to workers in anyway.

  23. wrt healthcare i think we need to treat it like a utility, at least for emergency care, and for people with major illnesses, since their demand for care is so inelastic that doctors can charge $1000/dose for pain killers, and they would pay.

    state governments need to lower tuition by thousands of dollars. if people want a fancy college experience they may attend a private school on their own dime.

  24. CIS (Computer, Internet & Smartphone) are the only 3 things you really need in this world of transience and globalization. The other things are all BS, especially if you live in America.

    JS

    December 15, 2017 at 8:37 AM


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