Most normal people intuitively understand that inflation is harmful and think the government should try to avoid it.
http://www.politonomist.com/gdp-deflator-and-measuring-inflation-00491/
It prevents people from saving money in a bank; wages tend to rise slower than inflation so real purchasing power goes down; and it forces people to invest in the financial markets where most people will underperform the market or even lose money.
This transfers money from people who try to save to financial workers (such as hedge fund managers), which leads to a short-term increase of spending, higher GDP and employment if unemployment is high, so most economists think inflation is good for 'the economy'.
Any reasonable person will admit that governments provide some useful services, but also waste money. This is why when asked how much money the US government wastes, people answer that it is about half for the federal government and somewhat less for state and local governments, instead of saying that it wastes 0% or 100% of what it spends. People do not feel the need to distinguish between political corruption and wasteful spending, because it is difficult for anyone outside of the government to do so.
It is therefore not possible to either eliminate all wasteful spending when unemployment is high or spend enough to fix unemployment through fiscal stimulus. Since political corruption rewards unethical actors while taxes punish everyone, a spending deficit is the natural result of this conflict.
Because inflation from spending deficits also raises GDP via the financial sector, many economists do not see any benefit to the economy from raising taxes to pay for spending and prevent inflation. This means any economists that do suggest raising taxes will not get any support from the rest of the profession and the proposal will basically be ignored by everyone.
Another poll:
Q12b Would you say that your vote is more FOR Barack Obama or more AGAINST Mitt Romney?
Results shown among Obama voters
More for Barack Obama .........................................72
More against Mitt Romney ......................................22
Q12c Would you say that your vote is more FOR Mitt Romney or more AGAINST Barack Obama?
Results shown among Romney voters
More for Mitt Romney .............................................35
More against Barack Obama ..................................58
Barack Obama's approval ratings high: 47% very positive, 21% positive, 12% neutral, 9% negative, 10% very negative, February 2009. Compare overall low for any president: George W. Bush in October 2008, 15% negative, 45% very negative.
President Obama had hope for the nation. He was let down not by his economic advisors, but by the economic profession as a whole.
Job creation without higher government spending, inflation, bubbles, or trade barriers: [this site]
Sunday, July 15, 2012
Friday, July 13, 2012
Psychology of the rich
(Note: "the accelerated work week" is derived from the reviews for a fast electric car. Though some people might not feel any reason to be impressed by any terrestrial or existing technology... speed of thought and all that.)
Someone I know said that most people are not aware of the many ways in which they cause damage to society, but expressed hope that in teaching piano lessons they were not helping to create the next Adolf Hitler.
The world is complicated, and it isn't realistic for everyone, or even anyone, to completely understand everything important about it. As long as people acknowledge the possibility of their shortcomings this doesn't need to cause any problems, because it allows other people to distinguish between malicious intent and simple mistakes. Of course, there is no reason to expect that anyone is completely sure that their actions will lead to the intended result but people like to think this of other people anyway because it simplifies decision-making.
So why do rich people work just as hard, or even harder than people with less money? It must first be noted that states or regions with higher average income tend to be 'progressive' or support the US Democratic party, while states with lower average incomes often have a majority of conservative Republican voters. At the same time, extremely rich people are often thought to be mostly supportive of the Republican party.
It has been empirically shown that people with higher incomes tend to have a lower marginal propensity to consume, and it is also thought that money has diminishing marginal utility. The fifth private yacht is not nearly as enjoyable or useful as the second one. So one might assume that once a rich person has enough money to buy everything they could possibly benefit from having in the rest of their life, they might stop working or at least work less.
But evidently many don't and furthermore feel resentful that others would criticize their wealth or attitude toward economic problems.
This is best explained using the ideas of two previous posts on this site: the first describes the 'market failure' which leads to inaccurate standards of judgement, while the second provides evidence that this leads to harmful effects which everyone should be concerned about.
Since the economy is a competitive environment, many rich people are intelligent enough to be aware of the underlying problem and its implications. The idea of 'good' and 'bad', separate from the legal structure, is one of the most fundamental concepts of culture and this explains the role people give it in demonstrating that things are not always as they seem. Rich people can only hope that people will realize that the assumptions they make about economic benefit are wrong and that the judgements of other people are likely to be of limited use in deciding how to accomplish goals, especially economic ones.
So to summarize the above, many rich people feel the need to continue working harder because it might cause them to be thought by others as selfish. This is intended to improve the success rate of things like relationships by not worrying about specific inaccurate standards of judgement, but at the same time rich people cannot conclude that doing so is the most likely to lead to accomplishment of personal goals or the greatest benefit to society as the sum of individual goals.
However, this has the unintended effect of causing people to think that earning a lot of money is also the best way to accomplish the economic goals of society.
As a result, people with mid-range incomes are reluctant to work less when those with even higher incomes, who might be more aware of the underlying problem, are not doing so. Someone with an income of just $450k or so might still find useful things to spend their money on, like private school for children, paying off education loans, hiring gardeners or domestic help etc. Someone with an income of $450m is less likely to find 'useful' things to spend their money on, but revealing this to the less affluent would be tantamount to admitting that earning a lot of money is not, in fact, beneficial to society, or that it represents a sort of sacrifice or compromise in the face of an unsolved problem.
It is almost an amusing situation: poor people think that having some money is good, so having lots of money must be great and the key to being happy even if it is more selfish than, say, donating that money to charity. And so rich people continue to work hard, because this is what causes other people to think they are selfish even if the more intelligent of rich people are completely aware that this is all somewhat of a sham.
If people are to make a dramatic reversal of attitude and agree that perhaps GDP is not the only important number when it comes to how 'successful' an economy is, there might be questions about whether we should expect people with say, $100~500k incomes to decide to work less before people with $10m+ incomes do.
But this is the wrong question, one which implies that we can have an expectation of who might decide to work less. Even if reducing the hours worked was a moral imperative for anyone who could do so, we should still not expect any specific individual to work less because the United States is based on ignoring the prevailing opinion if it is within your interests to do so, and it has already been shown there can be harmful effects when too many people agree on what the "right" thing to do is.
So it is completely fine to say that as a society, we should encourage the use of the accelerated work week while personally choosing not to do so, even if unemployment remains high. If everyone were to agree that the accelerated work week would be good for society and yet no one expresses any desire to work less despite that it is seen as socially acceptable to do, then we simply have another conversation about whether we prefer high unemployment, or taxes or inflation from fiscal stimulus.
But the accelerated work week doesn't work unless the entire management of a company supports it, otherwise working less just leads to discrimination in promotions. Anyone who is interested in fixing unemployment should be prepared to spend at least a little time convincing themselves that this would, in fact, fix unemployment and associated problems, with a minimal or no net cost to the company.
I still don't know if anyone is interested in discussing the problem since there has been so little support up to now. I don't want to think it's because people aren't smart enough to understand it.
Anyone who has played WoW to some extent should know about the 'zerg' that takes place between flags in the PvP battleground of Alterac Valley. AoS-type maps had it a little too but I guess that was just about the travel time causing greater resistance to a wave of units with momentum... I have not played League of Legends though. Alterac Valley was different because 'reinforcements' only happen when defeated but since the other formats have static defenses or three sides I guess the stability isn't that different. More importantly a single individual can have a greater effect in Alterac Valley if they are prepared to ignore the pointless zerg taking place between the two flags. Which of course is partly a result of the incentive design... need more non-shooter games with actual strategy! And intelligent people to play them.
Lower taxes vs fiscal stimulus is the pointless zerg, of course. And people wonder why many female persons are not interested in economic or political discussions..! I hereby declare that anyone who argues for lower taxes or more government spending will get no points for their efforts. Please spread the message that arguing about those issues is not a productive activity.
Someone I know said that most people are not aware of the many ways in which they cause damage to society, but expressed hope that in teaching piano lessons they were not helping to create the next Adolf Hitler.
The world is complicated, and it isn't realistic for everyone, or even anyone, to completely understand everything important about it. As long as people acknowledge the possibility of their shortcomings this doesn't need to cause any problems, because it allows other people to distinguish between malicious intent and simple mistakes. Of course, there is no reason to expect that anyone is completely sure that their actions will lead to the intended result but people like to think this of other people anyway because it simplifies decision-making.
So why do rich people work just as hard, or even harder than people with less money? It must first be noted that states or regions with higher average income tend to be 'progressive' or support the US Democratic party, while states with lower average incomes often have a majority of conservative Republican voters. At the same time, extremely rich people are often thought to be mostly supportive of the Republican party.
It has been empirically shown that people with higher incomes tend to have a lower marginal propensity to consume, and it is also thought that money has diminishing marginal utility. The fifth private yacht is not nearly as enjoyable or useful as the second one. So one might assume that once a rich person has enough money to buy everything they could possibly benefit from having in the rest of their life, they might stop working or at least work less.
But evidently many don't and furthermore feel resentful that others would criticize their wealth or attitude toward economic problems.
This is best explained using the ideas of two previous posts on this site: the first describes the 'market failure' which leads to inaccurate standards of judgement, while the second provides evidence that this leads to harmful effects which everyone should be concerned about.
Since the economy is a competitive environment, many rich people are intelligent enough to be aware of the underlying problem and its implications. The idea of 'good' and 'bad', separate from the legal structure, is one of the most fundamental concepts of culture and this explains the role people give it in demonstrating that things are not always as they seem. Rich people can only hope that people will realize that the assumptions they make about economic benefit are wrong and that the judgements of other people are likely to be of limited use in deciding how to accomplish goals, especially economic ones.
So to summarize the above, many rich people feel the need to continue working harder because it might cause them to be thought by others as selfish. This is intended to improve the success rate of things like relationships by not worrying about specific inaccurate standards of judgement, but at the same time rich people cannot conclude that doing so is the most likely to lead to accomplishment of personal goals or the greatest benefit to society as the sum of individual goals.
However, this has the unintended effect of causing people to think that earning a lot of money is also the best way to accomplish the economic goals of society.
As a result, people with mid-range incomes are reluctant to work less when those with even higher incomes, who might be more aware of the underlying problem, are not doing so. Someone with an income of just $450k or so might still find useful things to spend their money on, like private school for children, paying off education loans, hiring gardeners or domestic help etc. Someone with an income of $450m is less likely to find 'useful' things to spend their money on, but revealing this to the less affluent would be tantamount to admitting that earning a lot of money is not, in fact, beneficial to society, or that it represents a sort of sacrifice or compromise in the face of an unsolved problem.
It is almost an amusing situation: poor people think that having some money is good, so having lots of money must be great and the key to being happy even if it is more selfish than, say, donating that money to charity. And so rich people continue to work hard, because this is what causes other people to think they are selfish even if the more intelligent of rich people are completely aware that this is all somewhat of a sham.
If people are to make a dramatic reversal of attitude and agree that perhaps GDP is not the only important number when it comes to how 'successful' an economy is, there might be questions about whether we should expect people with say, $100~500k incomes to decide to work less before people with $10m+ incomes do.
But this is the wrong question, one which implies that we can have an expectation of who might decide to work less. Even if reducing the hours worked was a moral imperative for anyone who could do so, we should still not expect any specific individual to work less because the United States is based on ignoring the prevailing opinion if it is within your interests to do so, and it has already been shown there can be harmful effects when too many people agree on what the "right" thing to do is.
So it is completely fine to say that as a society, we should encourage the use of the accelerated work week while personally choosing not to do so, even if unemployment remains high. If everyone were to agree that the accelerated work week would be good for society and yet no one expresses any desire to work less despite that it is seen as socially acceptable to do, then we simply have another conversation about whether we prefer high unemployment, or taxes or inflation from fiscal stimulus.
But the accelerated work week doesn't work unless the entire management of a company supports it, otherwise working less just leads to discrimination in promotions. Anyone who is interested in fixing unemployment should be prepared to spend at least a little time convincing themselves that this would, in fact, fix unemployment and associated problems, with a minimal or no net cost to the company.
I still don't know if anyone is interested in discussing the problem since there has been so little support up to now. I don't want to think it's because people aren't smart enough to understand it.
Anyone who has played WoW to some extent should know about the 'zerg' that takes place between flags in the PvP battleground of Alterac Valley. AoS-type maps had it a little too but I guess that was just about the travel time causing greater resistance to a wave of units with momentum... I have not played League of Legends though. Alterac Valley was different because 'reinforcements' only happen when defeated but since the other formats have static defenses or three sides I guess the stability isn't that different. More importantly a single individual can have a greater effect in Alterac Valley if they are prepared to ignore the pointless zerg taking place between the two flags. Which of course is partly a result of the incentive design... need more non-shooter games with actual strategy! And intelligent people to play them.
Lower taxes vs fiscal stimulus is the pointless zerg, of course. And people wonder why many female persons are not interested in economic or political discussions..! I hereby declare that anyone who argues for lower taxes or more government spending will get no points for their efforts. Please spread the message that arguing about those issues is not a productive activity.
Consequences of Inaccurate Prices
An example:
Seller "α" sells products. Wanting to help customers, and not having anything else to do, "α" increases production and lowers prices in an attempt to get more sales.
β buys from α. Due to lower prices, β spends less money. Because they are using the accelerated work week, they are then able to choose to work less and earn slightly less money due to lower expenses. This lets β's coworker, γ, work slightly more and earn more money.
Because γ is not as good of a worker and not as efficient as β, γ has to spend more time working to do what β was previously doing, but because the business is aware of this γ is paid at a lower average wage rate and the cost to the business is the same. In a large enough business, there will always be someone who would prefer to work and earn more at any point in time so there will always be a γ.
It doesn't matter what γ does with their money. Maybe they spend it on the casinos in Las Vegas. Maybe they gamble it away in the financial markets. Maybe they use it to buy luxury goods like Louis Vuitton. The point of the accelerated work week is to ensure that plenty of people are willing to work less if they earn lots of money which means there are no ways of spending money that are harmful to the economy — as opposed to the environment.
δ also buys from α. However, when δ saves money due to α's lower prices, they don't decide to work less. Because people with lots of money tend to eat the same amount of food as people with less money and often (if they're male... sorry :P) buy the same number of pants, if they end up with more money than they planned they will probably spend it on luxury brands or invest it in the financial markets.
(Apparently these are some relevant books:
Then you have ε, who sells luxury brands, and ζ who specializes in the financial markets — maybe they work with clients, maybe they give free advice on a popular website, or maybe they're just a "quant" who makes money from technical analysis of price movements instead of by choosing and investing in promising companies. An important point is that no matter how much money ε and ζ have, they are not going to spend more on α's products than the price that α charges. So while by working harder they end up selling more to γ and δ, this doesn't help α at all except, possibly, by increasing 'GDP' and the taxes they pay so that α can pay lower taxes.
But if α really cared about how much money they had, they could just raise their prices (or if unemployed, they could support this). β would end up working more, γ would have less work to do unless something else changed, δ would also spend more on α's product and so ε and ζ would end up with less business and less money.
On the other hand, maybe when γ works more they use that money to buy food or essential health care. If β was like δ and just spent the savings from α's lower prices on luxury brands and investing in the financial markets, then γ wouldn't be able to buy these things.
If α wants to help γ, someone they have never met, instead of trying to figure out whether to raise or lower their prices they just need to support the use of the accelerated work week so β can work less when α lowers their prices, allowing γ the opportunity to earn more.
Seller "α" sells products. Wanting to help customers, and not having anything else to do, "α" increases production and lowers prices in an attempt to get more sales.
β buys from α. Due to lower prices, β spends less money. Because they are using the accelerated work week, they are then able to choose to work less and earn slightly less money due to lower expenses. This lets β's coworker, γ, work slightly more and earn more money.
Because γ is not as good of a worker and not as efficient as β, γ has to spend more time working to do what β was previously doing, but because the business is aware of this γ is paid at a lower average wage rate and the cost to the business is the same. In a large enough business, there will always be someone who would prefer to work and earn more at any point in time so there will always be a γ.
It doesn't matter what γ does with their money. Maybe they spend it on the casinos in Las Vegas. Maybe they gamble it away in the financial markets. Maybe they use it to buy luxury goods like Louis Vuitton. The point of the accelerated work week is to ensure that plenty of people are willing to work less if they earn lots of money which means there are no ways of spending money that are harmful to the economy — as opposed to the environment.
δ also buys from α. However, when δ saves money due to α's lower prices, they don't decide to work less. Because people with lots of money tend to eat the same amount of food as people with less money and often (if they're male... sorry :P) buy the same number of pants, if they end up with more money than they planned they will probably spend it on luxury brands or invest it in the financial markets.
(Apparently these are some relevant books:
- Where Are the Customers' Yachts? Or, A Good Hard Look at Wall Street
- The Money Game
- The Richest Man in Babylon)
Then you have ε, who sells luxury brands, and ζ who specializes in the financial markets — maybe they work with clients, maybe they give free advice on a popular website, or maybe they're just a "quant" who makes money from technical analysis of price movements instead of by choosing and investing in promising companies. An important point is that no matter how much money ε and ζ have, they are not going to spend more on α's products than the price that α charges. So while by working harder they end up selling more to γ and δ, this doesn't help α at all except, possibly, by increasing 'GDP' and the taxes they pay so that α can pay lower taxes.
But if α really cared about how much money they had, they could just raise their prices (or if unemployed, they could support this). β would end up working more, γ would have less work to do unless something else changed, δ would also spend more on α's product and so ε and ζ would end up with less business and less money.
On the other hand, maybe when γ works more they use that money to buy food or essential health care. If β was like δ and just spent the savings from α's lower prices on luxury brands and investing in the financial markets, then γ wouldn't be able to buy these things.
If α wants to help γ, someone they have never met, instead of trying to figure out whether to raise or lower their prices they just need to support the use of the accelerated work week so β can work less when α lowers their prices, allowing γ the opportunity to earn more.
Wednesday, July 11, 2012
Recent Developments
The common-sense idea that plentiful jobs are the best way to address things like workplace discrimination, poor working conditions due to inadequate regulations, or illegal unpaid overtime: Labor Market Regulation: Freedom and Property Rights Are Red Herrings
("Lack of jobs for scientists story goes mainstream": U.S. pushes for more scientists, but the jobs aren’t there)
Low recruiting intensity continues despite a fall in the job fill rate, which critically suggests that some people might have more bargaining power than they think: Why That Great Interview Didn't Land You a Job: Recruitment Intensity Rates and Mass Unemployment
Nobel-prize winning economist says that there are no negative consequences for the economy from working less, except maybe a decrease in tax revenue: What You Add Is What You Get - NYTimes.com
It seems some people have the idea that if everyone just works hard and is nice to each other, then productivity will increase and people will get paid more, allowing them to buy more stuff. This might be based off a mental economic model of "The US's wealth vs the amount of wealth in other countries, including ownership of US government debt" and by encouraging everyone to work hard, the US will 'win' and jobs will be created due to abundant wealth.
People might even think of "success stories" where encouraging people to be 'nice' seemed to lead to positive results, like the cancellation of the plan to add a banking fee to customers of some major bank. But the well-intentioned reporting of this type of story in the news media is only a distraction from the fact that generally speaking, wages are the result of supply and demand. Maybe as a result of OWS, more people are aware that productivity gains are not being shared with workers.
Another reason people seem reluctant to work less is the idea of 'consumer surplus' when something is sold for less than what someone would be willing to pay. This assumption was mentioned in the first post on this site and described in more detail in "The Occupy movement is wrong about the rich". Specifically, the reason for this assumption seems to be a cognitive overemphasis on "people with unmet needs" as well as "situations of which one has personal knowledge". If someone is selling a product X, and other people are also selling X, someone might be inclined to discount the gain to competitors selling X that would result from a reduction in the amount of work one does, possibly to guard against invitations for collusion. Simultaneously, it is seen as beneficial to help and offer low prices to poor customers, or even rich customers, again as described in the first post on this site.
Concerning the idea that working less leads to a lower contribution to tax revenues, there are several possibilities but the end result in all cases is that working less is a morally neutral decision from the point of taxes.
Possibility 1: you are a monopoly provider, no one else can offer the same level of service you can, and if you work less someone will just not spend any money.
Compare this to a hypothetical situation: rich people collectively agreed to "starve" the nation by not spending any money, or just the bare amount needed to survive. For example see Economy is in Crisis, Yet Luxury Brands, Tiffany's, LVHM Still Report Sales Growth — "The high prices do not seem to ruffle customers – in fact, many high-end businesses have been able to mark-up items to attract clientele who liken quality with price."
If this situation were to happen, people would probably conclude that rich people did not have the nation's best interests in mind and would be much more supportive of fiscal stimulus. This option is also available in the unlikely case that many 'extremely unique' people decided to work less and customers decided not to purchase similar products from other providers as a result.
Possibility 2: you work less, but there is a shortage of other providers and so prices go up instead of the business just hiring someone else less experienced to fill in. If this is such an exclusive occupation you are probably selling to the rich who can afford to pay higher prices, both to you and to your competitors. This means increased income and taxes for your competitors will partly make up for the lower taxes paid by you, while the customers who were forced out of the market can just spend their money on something else.
Possibility 3: you work less, and a competitor offers the same product at a similar price or a slightly inferior product at a lower price. If at a lower price, then lower taxes will be paid due to both lower revenues for the entire market and the progressive tax code but the sales are being made to someone who might otherwise not have had any work and would have had to be supported by welfare from taxes.
The "decisions based on well-known local information" also applies to where money goes. When taxes are too low compared to spending, sometimes useful programs that prevent poverty etc. get cut even when the government is spending money on $100k+ pensions, $17k drip pans that could be made for $2.5k, signs announcing stimulus spending instead of on actual projects, etc. Paying more in taxes might thus contribute to keeping useful programs, and it becomes difficult to use taxes as the reason for working less.
However, when the 'taxes' go to the company one works for, such as an investment bank where the average salary is already over $200k, it can seem much more acceptable to work less time at a higher wage rate.
("Lack of jobs for scientists story goes mainstream": U.S. pushes for more scientists, but the jobs aren’t there)
Low recruiting intensity continues despite a fall in the job fill rate, which critically suggests that some people might have more bargaining power than they think: Why That Great Interview Didn't Land You a Job: Recruitment Intensity Rates and Mass Unemployment
Nobel-prize winning economist says that there are no negative consequences for the economy from working less, except maybe a decrease in tax revenue: What You Add Is What You Get - NYTimes.com
It seems some people have the idea that if everyone just works hard and is nice to each other, then productivity will increase and people will get paid more, allowing them to buy more stuff. This might be based off a mental economic model of "The US's wealth vs the amount of wealth in other countries, including ownership of US government debt" and by encouraging everyone to work hard, the US will 'win' and jobs will be created due to abundant wealth.
People might even think of "success stories" where encouraging people to be 'nice' seemed to lead to positive results, like the cancellation of the plan to add a banking fee to customers of some major bank. But the well-intentioned reporting of this type of story in the news media is only a distraction from the fact that generally speaking, wages are the result of supply and demand. Maybe as a result of OWS, more people are aware that productivity gains are not being shared with workers.
Another reason people seem reluctant to work less is the idea of 'consumer surplus' when something is sold for less than what someone would be willing to pay. This assumption was mentioned in the first post on this site and described in more detail in "The Occupy movement is wrong about the rich". Specifically, the reason for this assumption seems to be a cognitive overemphasis on "people with unmet needs" as well as "situations of which one has personal knowledge". If someone is selling a product X, and other people are also selling X, someone might be inclined to discount the gain to competitors selling X that would result from a reduction in the amount of work one does, possibly to guard against invitations for collusion. Simultaneously, it is seen as beneficial to help and offer low prices to poor customers, or even rich customers, again as described in the first post on this site.
Concerning the idea that working less leads to a lower contribution to tax revenues, there are several possibilities but the end result in all cases is that working less is a morally neutral decision from the point of taxes.
Possibility 1: you are a monopoly provider, no one else can offer the same level of service you can, and if you work less someone will just not spend any money.
Compare this to a hypothetical situation: rich people collectively agreed to "starve" the nation by not spending any money, or just the bare amount needed to survive. For example see Economy is in Crisis, Yet Luxury Brands, Tiffany's, LVHM Still Report Sales Growth — "The high prices do not seem to ruffle customers – in fact, many high-end businesses have been able to mark-up items to attract clientele who liken quality with price."
If this situation were to happen, people would probably conclude that rich people did not have the nation's best interests in mind and would be much more supportive of fiscal stimulus. This option is also available in the unlikely case that many 'extremely unique' people decided to work less and customers decided not to purchase similar products from other providers as a result.
Possibility 2: you work less, but there is a shortage of other providers and so prices go up instead of the business just hiring someone else less experienced to fill in. If this is such an exclusive occupation you are probably selling to the rich who can afford to pay higher prices, both to you and to your competitors. This means increased income and taxes for your competitors will partly make up for the lower taxes paid by you, while the customers who were forced out of the market can just spend their money on something else.
Possibility 3: you work less, and a competitor offers the same product at a similar price or a slightly inferior product at a lower price. If at a lower price, then lower taxes will be paid due to both lower revenues for the entire market and the progressive tax code but the sales are being made to someone who might otherwise not have had any work and would have had to be supported by welfare from taxes.
The "decisions based on well-known local information" also applies to where money goes. When taxes are too low compared to spending, sometimes useful programs that prevent poverty etc. get cut even when the government is spending money on $100k+ pensions, $17k drip pans that could be made for $2.5k, signs announcing stimulus spending instead of on actual projects, etc. Paying more in taxes might thus contribute to keeping useful programs, and it becomes difficult to use taxes as the reason for working less.
However, when the 'taxes' go to the company one works for, such as an investment bank where the average salary is already over $200k, it can seem much more acceptable to work less time at a higher wage rate.
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.
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...
- most jobs include some amount of inefficiency or unnecessary activities, whether it is Facebook use at work, TPS reports, or other types of corporate bureaucracy.
- jobs that do have standards which push employees to maximize efficiency are generally deemed to be exploitative.
- people in the United States cannot compete for low-wage jobs against workers in China because of higher costs of living for necessities like housing and imperfect price discrimination which prevents those who control things like land or certification-awarding institutions from offering lower prices while retaining profits.
- people do not want the government to spend more to create jobs, but are also unwilling to encourage use of welfare.
- most spending beyond a certain point is on things like brands.
- completely dropping out of the work force is seen as unacceptable to many people.
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.
Wednesday, July 4, 2012
The ideals of freedom and independence
What is to be avoided: Girl Escapes Boyfriend’s Abuse, Covered with Infected Cuts – chinaSMACK
How to avoid it: as mentioned in a previous post, pursuit of a goal which is commonly seen as being in the interests of society, or at least a community, until a decisive point is reached of either success or failure. It is difficult to justify failure for more important goals, which means that it must come from an external source. Since this retains ambiguity in whether one is being "good" or "bad" by avoiding any benefit from lying about being good, it is then possible to isolate mistakes as being the result of misjudgements of value, specifically an overestimation of the value of the self.
Random song~
An informal poll on the Occupy Wall Street forums found that many people do not believe that working harder helps the unemployed. However, as mentioned before on this site the United States was built on the idea of personal success, even if it means risking one's life or ignoring the majority opinion—only about 40~45% of the white population of the thirteen colonies supported the revolutionary cause during the American rebellion against Great Britain, while the rest were neutral or actively opposed to the revolution.
The implication is that if someone is "successful", then unless laws have been broken that person deserves to enjoy their success due to the fundamental assumptions of the moral system. Similarly, if someone else is not content with their fortune then in most cases it does not matter what the basis of their decisions were to reach that point. The system may change through democratic participation, but until that happens, exploiting the flaws in the system is not only allowed, it is encouraged. One might be lead to assume that the current mapping of income and wealth to individuals is not only fair, but also an accurate measure of ability if everyone desires to have the financial security that a high income provides.
But this is not a reason to keep the current economic system or the assumptions which support it. If, for example, the financial sector becomes much less profitable due to a policy of no inflation, then people who did not spend time and effort learning how to be proficient at financial markets become the winners and people who were proficient become the losers in the sense of opportunity cost of work experience, although they might feel that the investment was worth it. Predicting, or causing, changes to the economic system is also a form of skill. As a previous post mentioned, the rules in life are not fixed.
So who would be the winners and losers if the accelerated work week was used to fix unemployment? This depends on who uses it, and is somewhat hard to predict without knowing the goals that people have. Stereotypes are part of what cause people to act in ways that economists do not expect, and someone might choose to work hard because they believe it reflects on their skin colour, gender, or some other attribute and feel that the economic impact of their actions is less important than the social benefit to these categories of similar people.
But types of work can be identified based on changes to demand for work and compensation rate: unskilled work, 'necessary' skilled work, and 'unnecessary' skilled work. Skilled work is defined by the length of education required to get a job. Unnecessary skilled work is simply that which has a lower value to society and is sometimes seen as unethical, such as the financial sector and the work that results when wealthy corporations file large numbers of lawsuits against competitors.
Unskilled work would be the clear winner vs unnecessary skilled work, which depends on the high profits that come from spending excess income on brands or unwisely investing in financial markets. However, necessary skilled work, such as that done by doctors, is more complicated. Lower inequality would reduce the optimum prices for skilled work, but demand is less elastic than for unnecessary skilled work so if this was all that changed, we would just see a reversion to the income distribution by sector of previous decades, with roughly the same number of doctors but fewer financial sector workers.
But there are two other considerations. By definition, the supply of labour for any particular skilled job is limited and if people choose to work less this will cause prices to rise and reduce use of that service. At the same time, the option of working less may induce people to make an investment for education or training for that job if working less is not realistic with the compensation rates for unskilled work. Many high-paying jobs come with the expectation that someone will work as much or more than someone doing unskilled work, and combined with the opportunity cost of education this may lead to a substantial reduction in the lifetime amount of 'free time' someone has. According to one estimate, a physician will spend nearly twice as much of their life either working or in training as a teacher will. Regardless of pay, talented people might be more willing to pursue these occupations if the demands on time were not so high.
It was also mentioned that some types of skilled work might see oversupply if people become willing to do that work for free in their spare time. This has been seen in the popularity of open-source software like Firefox, with much of the work being done by volunteers.
Any changes to college, such as reversing the historical trend toward grade inflation, are more difficult to predict as are improvements of other standards for deciding employment or promotion within a company. However, the clear winners would be those who are prepared to succeed within the new system and not too invested, emotionally or otherwise, in the old system.
TL;DR: costs of moral integrity or time are too high for some types of skilled work in the current system, reducing supply and causing employment in these jobs to not accurately reflect skill or the allocation of talent with the greatest benefit to society.
How to avoid it: as mentioned in a previous post, pursuit of a goal which is commonly seen as being in the interests of society, or at least a community, until a decisive point is reached of either success or failure. It is difficult to justify failure for more important goals, which means that it must come from an external source. Since this retains ambiguity in whether one is being "good" or "bad" by avoiding any benefit from lying about being good, it is then possible to isolate mistakes as being the result of misjudgements of value, specifically an overestimation of the value of the self.
Random song~
An informal poll on the Occupy Wall Street forums found that many people do not believe that working harder helps the unemployed. However, as mentioned before on this site the United States was built on the idea of personal success, even if it means risking one's life or ignoring the majority opinion—only about 40~45% of the white population of the thirteen colonies supported the revolutionary cause during the American rebellion against Great Britain, while the rest were neutral or actively opposed to the revolution.
The implication is that if someone is "successful", then unless laws have been broken that person deserves to enjoy their success due to the fundamental assumptions of the moral system. Similarly, if someone else is not content with their fortune then in most cases it does not matter what the basis of their decisions were to reach that point. The system may change through democratic participation, but until that happens, exploiting the flaws in the system is not only allowed, it is encouraged. One might be lead to assume that the current mapping of income and wealth to individuals is not only fair, but also an accurate measure of ability if everyone desires to have the financial security that a high income provides.
But this is not a reason to keep the current economic system or the assumptions which support it. If, for example, the financial sector becomes much less profitable due to a policy of no inflation, then people who did not spend time and effort learning how to be proficient at financial markets become the winners and people who were proficient become the losers in the sense of opportunity cost of work experience, although they might feel that the investment was worth it. Predicting, or causing, changes to the economic system is also a form of skill. As a previous post mentioned, the rules in life are not fixed.
So who would be the winners and losers if the accelerated work week was used to fix unemployment? This depends on who uses it, and is somewhat hard to predict without knowing the goals that people have. Stereotypes are part of what cause people to act in ways that economists do not expect, and someone might choose to work hard because they believe it reflects on their skin colour, gender, or some other attribute and feel that the economic impact of their actions is less important than the social benefit to these categories of similar people.
But types of work can be identified based on changes to demand for work and compensation rate: unskilled work, 'necessary' skilled work, and 'unnecessary' skilled work. Skilled work is defined by the length of education required to get a job. Unnecessary skilled work is simply that which has a lower value to society and is sometimes seen as unethical, such as the financial sector and the work that results when wealthy corporations file large numbers of lawsuits against competitors.
Unskilled work would be the clear winner vs unnecessary skilled work, which depends on the high profits that come from spending excess income on brands or unwisely investing in financial markets. However, necessary skilled work, such as that done by doctors, is more complicated. Lower inequality would reduce the optimum prices for skilled work, but demand is less elastic than for unnecessary skilled work so if this was all that changed, we would just see a reversion to the income distribution by sector of previous decades, with roughly the same number of doctors but fewer financial sector workers.
But there are two other considerations. By definition, the supply of labour for any particular skilled job is limited and if people choose to work less this will cause prices to rise and reduce use of that service. At the same time, the option of working less may induce people to make an investment for education or training for that job if working less is not realistic with the compensation rates for unskilled work. Many high-paying jobs come with the expectation that someone will work as much or more than someone doing unskilled work, and combined with the opportunity cost of education this may lead to a substantial reduction in the lifetime amount of 'free time' someone has. According to one estimate, a physician will spend nearly twice as much of their life either working or in training as a teacher will. Regardless of pay, talented people might be more willing to pursue these occupations if the demands on time were not so high.
It was also mentioned that some types of skilled work might see oversupply if people become willing to do that work for free in their spare time. This has been seen in the popularity of open-source software like Firefox, with much of the work being done by volunteers.
Any changes to college, such as reversing the historical trend toward grade inflation, are more difficult to predict as are improvements of other standards for deciding employment or promotion within a company. However, the clear winners would be those who are prepared to succeed within the new system and not too invested, emotionally or otherwise, in the old system.
TL;DR: costs of moral integrity or time are too high for some types of skilled work in the current system, reducing supply and causing employment in these jobs to not accurately reflect skill or the allocation of talent with the greatest benefit to society.
Sunday, July 1, 2012
The accelerated work week as moral imperative
The method by which decisions are made is, of course, timing. This provides plausible deniability to all parties.
A previous post, "The Inflation Scam" had two Google +1's... the only interaction I have noticed on this blog. It is possible there are more and Blogger just discriminates against non-Google social networking sites in its listing of posts though, and it is also possible that people shared posts on OWS (the sharing options were off the screen with my browser window size). But then it went down to a single Google +1.
As mentioned in a previous post, most people think they're above average. This means when the system is broken, they are predisposed to thinking that they have the ability to take advantage of and profit within the current system compared to people who are not aware that the system is broken.
It is, in other words, to the advantage of the smartest people in an untrusted environment to avoid revealing their capabilities. One example of this can be seen in the short story "The Change", set in the Star Trek universe.
Apparently this site has some information on financial "quants" although I haven't read any of the posts on the first page of search results, only the ones linked from a comment on FT Alphaville » When scientists become hedge fund managers. The general idea is that many mathematicians and physicists end up going into the financial sector. Maybe this is why unemployment for those college majors are relatively low? I am not sure if statistics about well-paying college majors care whether someone ends up with a job in the field they studied for. There is a book on the topic, the general idea seems to be that the "quants" did well in normal times but were unprepared for the large-scale events of the financial crisis and some of them lost money. In contrast, some other financial entities profited from the crisis including apparently Goldman Sachs.
Which is to say, while most companies were net "long" for the crisis, some of them were better at preparing for the crash or whatever else happened and were therefore better positioned to buy up assets at low prices.
The point is just that given two equally smart people, one of whom spends 12 hours per day studying financial markets and the other spending 10 minutes per day, the second will likely end up losing their money to the first, or to someone else who is even more intelligent. A quick example:
Person 1 is sure that a certain asset will be higher in price one year from now than it is today, due to inflation driving up the cost of everything. They buy 100 units of the asset from someone who is willing to sell, for a total of $500. Let's say it was a bank that was selling, named "The Bank", that now has an extra $500.
Person 2 is an expert trader, who invests their money where it will give the highest returns. They anticipate that the asset will drop in price by 20%, and so "short" the market by borrowing units for a small fee and selling to someone who is willing to buy at the current price, then returning the units once the price has dropped. The market 'width' allows them to do this with 100 units, so they have instantly made $100 as the price for 100 units drops to $400. (Another FT Alphaville post, "The power of the dark inventory" gives an example of this kind of price manipulation in practice.)
But let's say that usually they don't have the opportunity to short. Several months later, Person 2 anticipates the price will rise back to $5 per unit from $4. So using just $50 of their own money, they borrow $350 from "The Bank" (which has money because it previously sold units to Person 1) and buy 100 units.
If the price dropped below $3.50 per unit, Person 2 would have to provide more cash to the bank or allow the bank to immediately sell the units to prevent further losses, but prices rise as predicted. Person 2 makes another $100 profit and returns the $350 to the bank after selling the shares at $500.
Another several months go by. Unit cost has dropped to $4.50, Person 2 repeats the same deal, etc... after a total of 11 months have gone by, unit cost is at $8 and Person 2 has made $500 profit using just $50 of their own money. They spent the $500 profit on pizza or reinvested it in other, similar but slightly less profitable deals.
But just before Person 1 is prepared to sell, prices drop down to $5 because of a glut in the market! Person 1 has made no money. "The Bank" made a small profit each time that Person 2 borrowed money to buy up units using 'leverage', as did anyone who lent units for "shorting". Person 2, of course, profited greatly. Everyone who bought high, because they expected prices to keep going up, and then sold low, because they expected prices to drop even further, has lost out. At month 11, Person 1 thought they had made an easy $300 because the value of their investment had increased from $500 to $800 despite many changes on the way, but prices dropped and it turned out they were wrong.
This paper from the Economic Policy Institute (mentioned before) has an interesting chart on page 27 comparing home ownership in the United States to housing prices, which is basically like the above narrative. Around 1995 home ownership rates began to increase. Housing prices gradually began rising and then accelerating in the price increase as the idea that "house prices are rising" became more popular, leading to greater acceptance of high prices. Home ownership peaked around 2005, house prices peaked about a year later, and as soon as it was apparent that those without houses were either unable or unwilling to buy into the market, prices collapsed leaving people who had bought at the peak of housing prices heavily in debt.
I suppose it helps to mention Table 9 from the same paper, page 17. Stocks don't make up the only type of investment, but for example 58% of households with income $50~75k held stocks either directly (19%) or in pension plans (50%).
The point is that while the recent financial crisis mostly led to only a temporary drop in stock prices, the accelerated work week would basically lead to a permanent drop in stock prices and wealth loss even for households that are not using leverage in their financial investments.
Charts are nice: US Debt Limit and Debt Versus Gold in US Dollars
As you can see, the price of gold has been rising nicely with the US debt limit. Of course, people noticed this and so gold had a sort of bubble. If not for this volatility, people would just borrow more and more money to buy gold because the fundamental reason for its price increase, the increase of US debt which effectively determines the amount of money people have to play with since government bonds are basically the equivalent of cash, is very predictable so people can anticipate the general prices that gold will go for in the future. If people anticipate prices will not continue a predictable rise, they will pull out causing an immediate drop in prices. And if the US fixes its budget deficit and ends inflation, there will be an expectation that prices will no longer rise.
Not a good argument? Then look at it this way: it is commonly repeated that people are buying inflation-adjusted US bonds at negative real interest rates, and the effective rates for non-inflation-adjusted bonds are at record lows. This means that "a very low rate" is still higher than what they could get from buying stocks and getting dividends. Other people should not expect a different result.
...this situation is so stupid. "Society is mean and uncaring, so I'll secretly do something which hurts society (higher unemployment) but helps me by earning and saving money"... or even earning and spending money. People are so concerned with concealing knowledge of the first part that they take what they should do in the second part for granted. Meanwhile everyone pretends that working harder is the "right thing" despite that there is no logical connection between working harder and reducing unemployment; people simply never question why there would be one.
I might as well point out that with the Manifesto for Economic Sense, what is significant is those who have not signed it.
As pointed out in the notes for a previous argument, if you can't negotiate for a reduction in work hours with a higher rate of pay, you are a bad employee who is not valued at your company. If people are to be trusted when they say that reducing unemployment, upholding moral values etc. are important, then using, supporting, and encouraging the use of the accelerated work week is a sort of moral imperative as long as these problems are seen to exist. If enough people use it that unemployment basically goes away, then people will be able to work more without harming society. In the current situation, working very long hours is not justified for any economic task which people are willing to pay for.
Most people do not say that the price levels in financial markets or any similar thing is an important issue in the US or a factor in their voting decisions. While people with exposure to the financial markets should be warned of the consequences of a widespread adoption of the accelerated work week, this risk should not be a factor in decision making.
A previous post, "The Inflation Scam" had two Google +1's... the only interaction I have noticed on this blog. It is possible there are more and Blogger just discriminates against non-Google social networking sites in its listing of posts though, and it is also possible that people shared posts on OWS (the sharing options were off the screen with my browser window size). But then it went down to a single Google +1.
As mentioned in a previous post, most people think they're above average. This means when the system is broken, they are predisposed to thinking that they have the ability to take advantage of and profit within the current system compared to people who are not aware that the system is broken.
It is, in other words, to the advantage of the smartest people in an untrusted environment to avoid revealing their capabilities. One example of this can be seen in the short story "The Change", set in the Star Trek universe.
Apparently this site has some information on financial "quants" although I haven't read any of the posts on the first page of search results, only the ones linked from a comment on FT Alphaville » When scientists become hedge fund managers. The general idea is that many mathematicians and physicists end up going into the financial sector. Maybe this is why unemployment for those college majors are relatively low? I am not sure if statistics about well-paying college majors care whether someone ends up with a job in the field they studied for. There is a book on the topic, the general idea seems to be that the "quants" did well in normal times but were unprepared for the large-scale events of the financial crisis and some of them lost money. In contrast, some other financial entities profited from the crisis including apparently Goldman Sachs.
Which is to say, while most companies were net "long" for the crisis, some of them were better at preparing for the crash or whatever else happened and were therefore better positioned to buy up assets at low prices.
The point is just that given two equally smart people, one of whom spends 12 hours per day studying financial markets and the other spending 10 minutes per day, the second will likely end up losing their money to the first, or to someone else who is even more intelligent. A quick example:
Person 1 is sure that a certain asset will be higher in price one year from now than it is today, due to inflation driving up the cost of everything. They buy 100 units of the asset from someone who is willing to sell, for a total of $500. Let's say it was a bank that was selling, named "The Bank", that now has an extra $500.
Person 2 is an expert trader, who invests their money where it will give the highest returns. They anticipate that the asset will drop in price by 20%, and so "short" the market by borrowing units for a small fee and selling to someone who is willing to buy at the current price, then returning the units once the price has dropped. The market 'width' allows them to do this with 100 units, so they have instantly made $100 as the price for 100 units drops to $400. (Another FT Alphaville post, "The power of the dark inventory" gives an example of this kind of price manipulation in practice.)
But let's say that usually they don't have the opportunity to short. Several months later, Person 2 anticipates the price will rise back to $5 per unit from $4. So using just $50 of their own money, they borrow $350 from "The Bank" (which has money because it previously sold units to Person 1) and buy 100 units.
If the price dropped below $3.50 per unit, Person 2 would have to provide more cash to the bank or allow the bank to immediately sell the units to prevent further losses, but prices rise as predicted. Person 2 makes another $100 profit and returns the $350 to the bank after selling the shares at $500.
Another several months go by. Unit cost has dropped to $4.50, Person 2 repeats the same deal, etc... after a total of 11 months have gone by, unit cost is at $8 and Person 2 has made $500 profit using just $50 of their own money. They spent the $500 profit on pizza or reinvested it in other, similar but slightly less profitable deals.
But just before Person 1 is prepared to sell, prices drop down to $5 because of a glut in the market! Person 1 has made no money. "The Bank" made a small profit each time that Person 2 borrowed money to buy up units using 'leverage', as did anyone who lent units for "shorting". Person 2, of course, profited greatly. Everyone who bought high, because they expected prices to keep going up, and then sold low, because they expected prices to drop even further, has lost out. At month 11, Person 1 thought they had made an easy $300 because the value of their investment had increased from $500 to $800 despite many changes on the way, but prices dropped and it turned out they were wrong.
This paper from the Economic Policy Institute (mentioned before) has an interesting chart on page 27 comparing home ownership in the United States to housing prices, which is basically like the above narrative. Around 1995 home ownership rates began to increase. Housing prices gradually began rising and then accelerating in the price increase as the idea that "house prices are rising" became more popular, leading to greater acceptance of high prices. Home ownership peaked around 2005, house prices peaked about a year later, and as soon as it was apparent that those without houses were either unable or unwilling to buy into the market, prices collapsed leaving people who had bought at the peak of housing prices heavily in debt.
I suppose it helps to mention Table 9 from the same paper, page 17. Stocks don't make up the only type of investment, but for example 58% of households with income $50~75k held stocks either directly (19%) or in pension plans (50%).
The point is that while the recent financial crisis mostly led to only a temporary drop in stock prices, the accelerated work week would basically lead to a permanent drop in stock prices and wealth loss even for households that are not using leverage in their financial investments.
Charts are nice: US Debt Limit and Debt Versus Gold in US Dollars
As you can see, the price of gold has been rising nicely with the US debt limit. Of course, people noticed this and so gold had a sort of bubble. If not for this volatility, people would just borrow more and more money to buy gold because the fundamental reason for its price increase, the increase of US debt which effectively determines the amount of money people have to play with since government bonds are basically the equivalent of cash, is very predictable so people can anticipate the general prices that gold will go for in the future. If people anticipate prices will not continue a predictable rise, they will pull out causing an immediate drop in prices. And if the US fixes its budget deficit and ends inflation, there will be an expectation that prices will no longer rise.
Not a good argument? Then look at it this way: it is commonly repeated that people are buying inflation-adjusted US bonds at negative real interest rates, and the effective rates for non-inflation-adjusted bonds are at record lows. This means that "a very low rate" is still higher than what they could get from buying stocks and getting dividends. Other people should not expect a different result.
...this situation is so stupid. "Society is mean and uncaring, so I'll secretly do something which hurts society (higher unemployment) but helps me by earning and saving money"... or even earning and spending money. People are so concerned with concealing knowledge of the first part that they take what they should do in the second part for granted. Meanwhile everyone pretends that working harder is the "right thing" despite that there is no logical connection between working harder and reducing unemployment; people simply never question why there would be one.
I might as well point out that with the Manifesto for Economic Sense, what is significant is those who have not signed it.
As pointed out in the notes for a previous argument, if you can't negotiate for a reduction in work hours with a higher rate of pay, you are a bad employee who is not valued at your company. If people are to be trusted when they say that reducing unemployment, upholding moral values etc. are important, then using, supporting, and encouraging the use of the accelerated work week is a sort of moral imperative as long as these problems are seen to exist. If enough people use it that unemployment basically goes away, then people will be able to work more without harming society. In the current situation, working very long hours is not justified for any economic task which people are willing to pay for.
Most people do not say that the price levels in financial markets or any similar thing is an important issue in the US or a factor in their voting decisions. While people with exposure to the financial markets should be warned of the consequences of a widespread adoption of the accelerated work week, this risk should not be a factor in decision making.
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