Friday, July 6, 2012

The limits of trust

(overuse of "The" in titles)

I will point out that the assertion that "people cannot be trusted" is not really falsifiable. It is always possible that people are being dishonest, either about things they have managed to conceal or mistakes which are openly known. For example, in a recent incident maybe local police really did believe that a female university student in China with 13 knife wounds had committed suicide despite how unrealistic this seems. The best that can be done is to align incentives so that people can be expected to accomplish goals without being dishonest, with an understanding that deception has a cost to oneself and others in the form of greater complexity, which can potentially decrease performance. This includes dishonesty about the awareness of inaccuracy in ethical or competitive standards of achievement.

A brief summary of the reasoning behind the accelerated work week...

Given all of this, earning a higher wage rate when working fewer hours is essential so people are willing to do so. Even with unemployment still very high and many college graduates looking for work, many companies say they are having difficulty filling positions because they would prefer someone with prior work experience, which schools cannot teach. Unless educated workers agree to reduce their hours, employers will have no incentive to hire any of the unexperienced graduates looking for work.

Now, the question is whether it is the responsibility of economists to support the accelerated work week as a way to fix unemployment. It has previously been suggested that economists are only concerned with GDP, and might not be willing to advocate a solution which fixes unemployment and all its associated problems like crime and poor health outcomes if it does not also lead to an increase in GDP. It is disingenuous for economists to imply concern for the unemployed by suggesting an increase in government spending when it is already clear that these efforts have failed due to widespread public opposition to the wasteful spending and misallocation of resources that results.

If economists are not willing to support the accelerated work week, then any sympathy for the unemployed is deceptive or, at best, insincere and this must be pointed out. If this conclusion is reached, then it will become the responsibility of people interested in fixing unemployment to appeal to policy makers directly in support of positive change.

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