One of the more striking things about economic debate in this country
is that there is a broad call for “more reform” and yet an equally
narrow view of what such reform should constitute.
Economic reform is often synonymous with reducing labour costs and increasing after-tax profit, because much of the debate is generated by those whose view of the world and position in life is benefitted by such outcomes. But many of these styles of reform are most suited to an economy that might be passing us by – one where output is greatly disconnected from employment.
While watching the latest X-Men movie, Logan, one scene that particularly stood out for me was when the characters drove along a highway featuring driverless trucksThe trucks have no cabins and are essentially just containers on wheels. It was a particularly soulless vision of the future, in which there was not only automation but where the suggestion that humans had any control of say steering wheels or windscreen wipers, was absent too.
The path of automation is of course not sci-fi, but with us right now. And while there is the hope that, as with the industrial revolution, new technology will create many new jobs, the current path appears to be to making jobs redundant and creating new work that is also able to be automated.
This new economy should be a more productive one – after all, there is no need to automate if humans are able to produce the same level of output in the same time for the same cost. But as manufacturing workers around the world have discovered, greater productivity does not mean greater hours of work.
So automation might be a future with more output but fewer jobs.
So what to do? And what good is cutting penalty rates to lower costs for people working in takeaway shops when a robot is able to cook and wrap a burger (along with any other job that was once considered safe from automation because it was seen as a service)?
One response put forward by the Greens leader Richard di Natale this week was to reduce the amount of work that people did and shift to a four-day work week.
Sometimes an idea is worth considering because the initial reaction is to shake your head and assume that couldn’t work. So it is with the four-day week.
Di Natale’s proposal (and even he admits it is more about starting a discussion than anything concrete) would see people either go from an eight-hour day, five days a week to a 10-hour a day, four day a week job, or to reduce hours across the five days.
The shift to a 10-four working week is not actually all that radical. It was pursued in Utah for state employees from 2008 to 2011. Generally satisfaction among workers was high and, while offices were closed on Fridays, they were open longer on other days.
The results were mixed – not much difference in productivity, some were marginally better, some the same, some services saw improved wait times, but it was less successful for those agencies that had to deal with federal authorities who expected them to be open on Fridays.
That such a change in hours however did not result in massive disruption and enabled government services to continue to operate successfully says a bit about how such ideas might seem on first blush to be impossible, but actually are quite doable.
But the more radical switch is to actually reduce the hours in the working week – either a five days week with six hours or a four days week of eight hours.
While there is evidence of individual firms going down that route and being successful, it’s a great deal different to shift to it being standard for all workers.
But then the 40-hour week is not some pre-ordained amount of time that we must work.
The idea is that if we work fewer hours then there is greater opportunity for more people to work. But you can see the difficulties – people might wish their unemployed neighbour to have a job, but how many would give up hours to ensure they can?
John Maynard Keynes was suggesting working fewer hours in 1930 – because of increases in technology his grandchildren would only need to work 15 hours a week.
He argued that “the course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed”.
We don’t of course work 15 hours a week, even though many of us could and enjoy a standard of living as good as the average person in 1930.
When given the option of working fewer hours with more leisure time and keeping the same standard of living, or working the same hours and improving our standard of living, we have mostly chosen the later.
And that in itself is not bad, but it works only if there is the option of working those hours.
But what if automation reduces national employment by 20%? What happens to those people who are left out? On the current welfare system we would see massive gaps in inequality and a pretty horrific change in the look of our society.
Economist Mike Konczal argues if we all worked 20% fewer hours (that is a four-day week), combined with a universal basic income, the massive cut in employment need not occur, and neither would the huge increase in inequality.
That sure is radical, and of course comes with the question of cost. But I always get a bit bemused when I hear talk of the productivity wonders of automation combined with talk that we need to reduce the taxation of the profits derived from that process.
We know an automated world is coming. The problem with much of the economic debate in this country is that it is conducted by those who are currently free of pressures of that process.
No one is really arguing the shift to a four-day week needs to happen right now. But as we have seen with energy policy and with climate change, there is not much good knowing things are coming and not only doing nothing, but not even considering doing anything.
Economic reform is often synonymous with reducing labour costs and increasing after-tax profit, because much of the debate is generated by those whose view of the world and position in life is benefitted by such outcomes. But many of these styles of reform are most suited to an economy that might be passing us by – one where output is greatly disconnected from employment.
While watching the latest X-Men movie, Logan, one scene that particularly stood out for me was when the characters drove along a highway featuring driverless trucksThe trucks have no cabins and are essentially just containers on wheels. It was a particularly soulless vision of the future, in which there was not only automation but where the suggestion that humans had any control of say steering wheels or windscreen wipers, was absent too.
The path of automation is of course not sci-fi, but with us right now. And while there is the hope that, as with the industrial revolution, new technology will create many new jobs, the current path appears to be to making jobs redundant and creating new work that is also able to be automated.
This new economy should be a more productive one – after all, there is no need to automate if humans are able to produce the same level of output in the same time for the same cost. But as manufacturing workers around the world have discovered, greater productivity does not mean greater hours of work.
So automation might be a future with more output but fewer jobs.
So what to do? And what good is cutting penalty rates to lower costs for people working in takeaway shops when a robot is able to cook and wrap a burger (along with any other job that was once considered safe from automation because it was seen as a service)?
One response put forward by the Greens leader Richard di Natale this week was to reduce the amount of work that people did and shift to a four-day work week.
Sometimes an idea is worth considering because the initial reaction is to shake your head and assume that couldn’t work. So it is with the four-day week.
Di Natale’s proposal (and even he admits it is more about starting a discussion than anything concrete) would see people either go from an eight-hour day, five days a week to a 10-hour a day, four day a week job, or to reduce hours across the five days.
The shift to a 10-four working week is not actually all that radical. It was pursued in Utah for state employees from 2008 to 2011. Generally satisfaction among workers was high and, while offices were closed on Fridays, they were open longer on other days.
The results were mixed – not much difference in productivity, some were marginally better, some the same, some services saw improved wait times, but it was less successful for those agencies that had to deal with federal authorities who expected them to be open on Fridays.
That such a change in hours however did not result in massive disruption and enabled government services to continue to operate successfully says a bit about how such ideas might seem on first blush to be impossible, but actually are quite doable.
But the more radical switch is to actually reduce the hours in the working week – either a five days week with six hours or a four days week of eight hours.
While there is evidence of individual firms going down that route and being successful, it’s a great deal different to shift to it being standard for all workers.
But then the 40-hour week is not some pre-ordained amount of time that we must work.
The idea is that if we work fewer hours then there is greater opportunity for more people to work. But you can see the difficulties – people might wish their unemployed neighbour to have a job, but how many would give up hours to ensure they can?
John Maynard Keynes was suggesting working fewer hours in 1930 – because of increases in technology his grandchildren would only need to work 15 hours a week.
He argued that “the course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed”.
We don’t of course work 15 hours a week, even though many of us could and enjoy a standard of living as good as the average person in 1930.
When given the option of working fewer hours with more leisure time and keeping the same standard of living, or working the same hours and improving our standard of living, we have mostly chosen the later.
And that in itself is not bad, but it works only if there is the option of working those hours.
But what if automation reduces national employment by 20%? What happens to those people who are left out? On the current welfare system we would see massive gaps in inequality and a pretty horrific change in the look of our society.
Economist Mike Konczal argues if we all worked 20% fewer hours (that is a four-day week), combined with a universal basic income, the massive cut in employment need not occur, and neither would the huge increase in inequality.
That sure is radical, and of course comes with the question of cost. But I always get a bit bemused when I hear talk of the productivity wonders of automation combined with talk that we need to reduce the taxation of the profits derived from that process.
We know an automated world is coming. The problem with much of the economic debate in this country is that it is conducted by those who are currently free of pressures of that process.
No one is really arguing the shift to a four-day week needs to happen right now. But as we have seen with energy policy and with climate change, there is not much good knowing things are coming and not only doing nothing, but not even considering doing anything.
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