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(A Shorter Workweek in the 1980s)

 

OBJECTION #1: THE SHORTER WORKWEEK MUST WAIT UNTIL PRODUCTIVITY IMPROVES

CHAPTER 5

 

In this and subsequent chapters, we will consider three kinds of arguments which economists and other have used to defeat the shorter-workweek proposal. Later, we will examine related statistics. Let dogmatic opinions be cast aside. Let the reader decide which of the two positions, pro or con, is more realistic based on fact.

The first objection to the shorter-workweek proposal might be stated: “The shorter workweek must wait until productivity improves.” This is a frequently heard argument in recent years of economic stagnation. Some say that U.S. productivity is just too low to afford giving workers more time off from work. They argue that the increases in wages and benefits, including paid leisure, cannot exceed the increases in the rate of productivity or inflation will take place. Therefore American workers must wait patiently for the day when productivity shows sufficient improvement and employers are ready to cut the workweek. They have been waiting already for that moment to arrive for the past forty years.

The problem with such an argument is that increases in productivity depend upon a variety of factors including work time. There is evidence to suggest that cuts in working hours in themselves stimulate increased productivity. It’s a “chicken or the egg” situation. Admittedly, improvements in productivity make it possible for employers to grant employees higher pay, more free time, and other benefits. But it is also true that such benefits in a roundabout way help the employer. Wage increases strengthen consumer purchasing power. More free time gives working people more opportunity to consume commercial products. Insofar as a worker is better rested and becomes more alert and energetic from recreational activities, this helps his or her performance on the job.

The productivity of labor is increased as a direct result of cutting hours. Therefore, those employers who take the risk of allowing employees more free time before productivity gains allow them to “afford it” and reap a profitable return in terms of better work performance, lower absenteeism and employee turnover, and stronger job commitment. On the other hand, if you wait until after productivity has improved to consider increasing the amount of leisure, you are likely to have neither.

Some people confuse productivity with production. For instance, by extending the hours of work an employer will try to get more work out of people, and he will call this “improved productivity”. It is unlikely, though, that productivity would improve in such a situation. More likely, the opposite would take place. “Getting more work out of people” refers to their output of goods and services - that is, to their production. Productivity is, rather, the rate by which production changes relative to changes in a particular component of productive input.

This component could be many things. For instance, the productivity of invested capital would describe the increase in production per additional dollar of investment in plant and equipment. Productivity might also be measured in terms of expenditures for research and development, the BTUs of energy consumed in production, or the development of employee training. But by far the most common measure of productivity is productive output in relation to the input of labor measured in units of worker-hours.

Even here there is some difference of interpretation. Let me give an example. In Houston Texas, an expensive new building has recently been constructed as headquarters for an organization known as “American Productivity Center Inc.” This organization is the brainchild of C. Jackson Grayson, Jr. It is funded by contributions from various corporations and foundations. An article in the New York Times about the American Productivity Center and its dedicated founder twice defined productivity as “output per worker”. That is curious because although such a definition is sometimes used, it represents a departure from the most common definition used by the BLS, “output per man-hour” (or per “worker-hour”). I do not know if the reporter derived this other definition from talking with Mr. Grayson or slipped it in inadvertently. If the choice of words was deliberate, Americans may be in for an extensive campaign to change their economic thinking considering the resources which Grayson’s organization plans to devote to “education”.

Definitions are important in this instance, Is the basic unit of labor the worker or is it the worker-hour? In the days of slavery it might have made sense to equate labor with the worker because human beings were a capital resource to be spent as the owner saw fit. In a free-market economy, on the other hand, labor is generally equated with the time which workers sell to their employer for certain laboring assignments The definition of labor input ought to reflect that fact. In the one case, if we define productivity as output per worker, productivity might be raised by extending the hours of work. In the other case, if we define productivity as output per worker-hour, productivity would not increase unless the worker’s output increased per hour spent on the job. Therefore, the distinction between these two definitions of labor is more than “nitpicking”.

Let us stay with the free-enterprise definition of productivity: output per man-hour. This is the nation’s output of measurable goods and services divided by the product of employment and average hours. From previous chapters we are familiar with the equation: Output equals Productivity times Employment times Average Work Hours. According to this equation, if output rises but the number of workers rises to the same degree and the average hours per worker stay the same, productivity will remain unchanged. Alternatively, if output rises but the total man-hours (employment times average hours) rise by a smaller amount, an increase in productivity will occur. Many different results for productivity are possible depending upon the combinations of the other three factors: output, average hours, and employment.

Looking at the equation - Output equals Productivity times Employment times Average Hours - you will perceive that productivity may be increased in three ways: (1) You can expand output while holding hours and employment the same. (2) You can hold output and hours the same but reduce employment. (3) You can hold output and employment the same but reduce average hours. Each of these alternative approaches has its champions.

 

three possible adjustments

Many people want to stimulate economic growth - i.e., increase output. That is fine but we have discovered that there are limits to the growth that can reasonably be achieved. The output should consist of useful goods and services, not bureaucratic inventions. By and large, people have a natural appetite for food, clothing, shelter, and such things. It is true, we are finding many new products to attract the consumer dollar, some of them quite frivolous or fanciful or luxurious. But in periods of economic crunch, the demand for such products may not be enough to stimulate gains in output and in productivity.

Another related way to increase output might be to integrate all the people who are unemployed, marginally employed, or impoverished into the economic system Give them jobs at a fair rate of pay and they will spend this money to stimulate output of useful products. Fine, but where are the jobs? If there aren’t any jobs, should the government hire people to do meaningless work or pay them for not working and put them on welfare? If we travel that route too far, we will find - are finding - that taxes and inflation will rise to the point that taxpaying workers will become financially overburdened.

The second approach, then is to keep output and working hours constant and to squeeze employment. This is the approach favored by some of our less enlightened employers. We are all familiar with this strategy: Abolish the job in the sense of cutting personnel but not in the sense of eliminating work. Instead, a worker is laid off or is eliminated through attrition and the remaining workers are expected to incorporate that person’s work in their job routines.

The theory is, perhaps, that workers usually have some spare or idle time during the day which might be put to better use. Even if they don’t, the workers could learn to work faster or more efficiently. If the work load exceeds their comfortable grasp, these workers might have to sweat and strain a bit to get the work done on time. They will thus be motivated to increase their productivity. And, if all else fails and they fall by the wayside, there is always some recent high-school or college graduate coming along who is eager for a job and who will work as hard as it is humanly possible until he or she, too, falls by the wayside and the burden is picked up by his or her younger brother or sister.

More than a few employers operate on this philosophy and you must admit: They do have a point. The slave-drivers often get results. They do frequently manage to meet targeted levels of profits and score impressive gains in productivity and, in the process, personally rise to the top. Under certain circumstances, this approach might be justified. Where the employees are loafing, goofing off, or continually gossiping with their coworkers, or even where they are working diligently but half-heartedly at jobs which they may consider to be insufficiently challenging or interesting, the employer might be forgiven for expecting more work for an hour’s pay and even, occasionally, “cracking the whip”.

A manpower expert, Professor Eli Ginzberg, has said: “If you have more people than you have work, people get frustrated and nervous and they try to protect their little ‘turf’ in the organization ... You ought always to have more work chasing people than you have people chasing work. Most human beings, given the option, want to work - if it is meaningful work and they can make a contribution ... There’s a simple piece of advice I give all the companies I consult with: ‘Get rid of 10 percent of your people - sight unseen.’”

Anything which is done “sight unseen”, however, is apt be be misguided in at least some instances. Certain employer act insensitively or impulsively with respect to the people who work for their organizations. Isolated perhaps in their corporate headquarters, they don’t know what work is being done in the ranks below; and, what’s worse, some of them don’t want to know. They are content to make sweeping decisions affecting the health and well-being of numerous people without regard to the human consequences. As long as profits increase! Unfortunately, little can be done about this unless the community’s conscience perceives it as an abuse and becomes mobilized against the abuser. That has not been happening on any broad scale yet.

The third approach is the neglected one: Keep output and employment the same and reduce average working hours. Once again man-hours shrink as output is maintained, forcing an improvement in productivity. However, the burden is shared a bit differently. Instead of requiring employees to do more work in the same or longer periods of time, the burden would fall more upon the employer to devise better work methods and to invest in capital equipment. Employees might also have to work harder during their hours of work but they would have more time to recuperate.

 

a view of enlightened employers in past years

Some would question whether it is the employer’s responsibility to improve productivity. He provides the jobs and it should be up to the employees to improve their own work efficiency. One businessman who disagreed with that notion was Henry Ford. In an interview with World’s Work magazine in 1926, he said: “The harder we crowd business for time the more efficient it becomes. The more well-paid leisure workmen get the greater become their wants. These wants soon become needs. Well-managed business pays high wages and sells at low prices. Its workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment.” Henry Ford also said: “The hours of labor are regulated by the organization of work and by nothing else. It is the rise of the great corporation with its ability to use power, to use accurately designed machinery, and generally to lessen the wastes in time, material, and human energy that made it possible to bring in the 8-hour day ..”

A Boston industrialist of this period, Edward A. Filene, agreed. He said: “I consider the five day week as a force that will bring about a reduction of waste in industry. Moreover, it will compel all producers to improve their methods, take the loads off the backs of men and put them on machinery, and finally there will be a heavier production with costs at a point which will enable us to export temporary surpluses.”

Since 1910, the productivity of American industry has increased by more than four times. Does this mean that the average worker today is working four times harder or faster than his or her counterpart seventy years ago? Of course not. Today’s workers are working within a more efficient system of production and distribution. They are utilizing advanced power tools, better communication devices, and newer technologies of production. Such innovations are for the owners and managers of businesses to develop.

So long as labor is cheap, employers will not be motivated to make the necessary improvements in work efficiency. On the other hand, when some pressure is put on the available supply of labor - in this case, reducing man-hours by reducing average hours - then employers will go to greater lengths to use it sparingly.

Do cuts in working hours, in fact, stimulate improved productivity? As usual, the experts disagree. Most economists, businessmen, government officials, bankers, and other economic leaders in the United States today appear to be skeptical. It would be hard to find a person of stature from the business community who would make a statement similar to Ford’s or Filene’s about the advantages of reduced work time. Economists in this country have usually argued that cuts in the workweek would not tend to increase productivity. They make two kinds of arguments:

(1) While productivity may improve as the workweek drops from 60 or 50 hours per week down to 40, below 40 hours progress would stop. Studies show that the 40-hour week represents the point of optimal work efficiency; at this level, workers get all the rest they need. To schedule work for shorter periods than this might actually reduce productivity by disrupting the workers’ daily or weekly rhythms of work.

(2) If a shorter workweek forced employers to hire more workers, more supervisors might have to be hired to coordinate these workers, more capital funds might have to be devoted to providing more work space instead of purchasing production equipment, and the newly hired workers would tend to be less productive until they became fully trained. Therefore, full employment might turn out to be a mixed blessing.

It would appear, however, that the arguments about “optimal work efficiency” apply, if at all, only to the individual workers. The sprinter in a 100-year dash may seem to possess an unbeatable rhythm, but the same contestant in a 50- or 60-yard dash would run faster still. Who says that the 40-hour week is the most efficient work schedule? It turns out that this “fact” comes from a study made by Max Kassoris and Reinfried Kohler of workers during World War II. Actually, their report rejected the notion of an ideal workweek but stated that, “everything else being equal, the 8-hour day and the 40-hour week are best in terms of efficiency and absenteeism, and higher levels of hours are less satisfactory.”

Thirty-five years later, we find similar statements concerning the advantages of part-time work and 4-day weeks over the traditional 40-hour pattern. For example, an article in the Wall Street Journal told of a box-board factory in Northhampton, Massachusetts, which was experiencing problems with absenteeism. As a result of a survey conducted by the plant manager, “the company switched last June to a four-day night shift and reaped a double reward: Not only did absences fall, but the shift’s production climbed 9%.”

Of course, it is always possible to find individual examples tending to prove or disprove any point of contention. Rather than to dredge up a series of such examples, I would refer the reader to a book published by the International Labor Office in 1975 which is entitled “Hours of Work in Industrialised Countries.” This book devotes an entire chapter to the relationship between productivity and reduced work hours. There is a wealth of recent examples, mainly from European industries, which demonstrate that cuts in the workweek do stimulate increased productivity.

The book states: “Before the reduction in hours of work is carried through, consideration is naturally given to the probable effect of the proposed change on productivity and output. In a first approximation there will be an assumption that if, in the undertakings directly affected, the numbers of workers employed and the methods of production remain unchanged and if no other technological improvements are introduced, the reduction in output will be proportionate to the reduction in hours of work ... In practice, however, the mere fact of reducing the duration of the working week usually brings into action factors working in the opposite direction and thus offsetting, at least in part, the proportionate reduction. The more significant of these facts may be briefly mentioned.

(1) Most people are capable of working more intensely during a relatively short period than they are able or willing to work over relatively prolonged periods ...

(2) Where hours of work have been particularly long, their reduction has in many cases had a favorable effect on absenteeism and sick leave ...

(3) A need to make changes in work schedules stimulates management to examine certain methods of production, including standard times and materials flows ...

(4) The higher cost of an hour of labor, assuming weekly earnings are maintained, also stimulates the search for more capital-intensive methods of production ...

(5) In some cases a reduction in hours of work ... may eliminate a relatively unproductive shift ...

(6) In some cases, the reduction in hours of work makes it easier to introduce shift work ... thereby facilitating a more economic use of capital equipment.

(7) The reduction in hours of work ... can often help to create a better climate of labor relations, which is itself conducive to higher productivity.”

 

examples of jobs created when work hours were cut

Among the many examples given in this book, the following ones might be mentioned:

“Investigations were carried out in the Federal Republic of Germany ... as to how far the presumed loss of output proportionate to the reduction in hours could be offset through increased individual capacity for work. The conclusion was that 65% of the proportionate loss of output could be recovered when hours were reduced from 10 to 9 a day, 45% in the case of a reduction from 9 to 8 a day, and 36% for a drop from 8 to 7 hours a day.”

“In France, the Manpower Commission of the Fifth Plan estimated that a 1 per cent cut in weekly hours of work would lead to an average fall in production by 0.6 per cent.”

“In Denmark, a committee set up .. in 1967 .. when the working week was being reduced from 44 to 42 1/2 hours ... estimated that when hours of work were reduced by 1 per cent, the loss in production was 0.66 per cent when employment remained unchanged.”

“An Austrian investigation published in 1969 when the 40-hour week was being planned with a reduction from a normal limit of 45 hours also came to the conclusion ... that a compensatory effect of between 0.3 and 0.4 per cent for every 1 per cent of reduction in hours of work was to be expected.”

“In the USSR, while the shorter working week was being introduced during the period 1958 to 1960, productivity rose by 6 per cent in 1958, 7 per cent in 1959, and 5 per cent in 1960. It was estimated that only 1 per cent out of the 11 per cent over-all reduction in hours of work had to be made good by increasing the work force while the remaining 10 per cent was covered by improved organizational and technical planning.”

In addition to these cases cited in Hours of Work in Industrialised Countries, two others from different sources might be of interest:

During the late 1960s, the Japanese Ministry of Labor launched a campaign to encourage the larger manufacturing firms to convert from a 6-day week to a 5-day week largely to counter the “sweatshop” image of Japanese manufactured goods. This change did not hurt Japan’s competitive position in the least. A lead article in the Wall Street Journal on January 18, 1973, reported: “The Japanese five-day week would seem like good news for U.S companies battling tough Japanese competition. After all, a shorter workweek should mean less production. It should - but it doesn’t. For the Japanese are working harder than ever and companies that have cut the workweek say that, if anything, production is rising ... One reason Japan succeeds in world business is that it works hard, analysts say. But how hard it works seem to have little to do with how long it works. Average weekly working hours in Japan have been falling steadily for years. Employes were at the job 45.8 hours a week in 1967; by the end of 1971, this had decreased to 42.5 hours ... ‘And in just that period, productivity has been rising, wages have been rising, and they’re still selling to us like mad,’ the U.S. labor economist says.”

In 1973, a nation-wide coal miners’ strike in Great Britain forced the government to impose an emergency 3-day workweek upon the nation’s economy. The curtailed work schedule lasted for a period of three to four months. When the crisis had ended. economists were startled to learn that industrial production had dropped by only 6%. Improved productivity combined with a drop in absenteeism had made up the difference in lost production from the shorter hours. “Life settled, after a brief dislocation, into a new and different rhythm,” reported Vision, a European magazine.

 

The need to utilize all our manpower

If the preceding examples are all from foreign countries, it is no coincidence. There have not been too many shorter workweeks in America in recent decades. That in itself gives a clue to the rest of our economic performance - in particular, the dwindling gain in productivity. The more earnestly competitive we try to be, the farther behind we find ourselves. American workers work longer and just as hard but receive less in return.

I think we are running the economy too much like a professional football team. We strive mightily to beat the Russians in their red jerseys or the silk-trousered Japanese so we can remain Number One. “Winning is not the most important thing - it’s everything.”

Sorry, Vince, but there’s a difference between coaching a professional football team and managing an economy. For one thing, a football team has a fixed number of players. Only eleven men can be on the field for each team at a given point in time. In comparison, an economy must be broad enough to accommodate everyone in the community. In a full employment economy, most of those who are able and willing to work find jobs and therefore contribute to the team’s production In an economy such as ours, only a fraction of the people who want to work productively are permitted to do so. There are not rules which would prevent several more “players” from running on to the field to increase our economic strength - if only the “coach” would allow it.

In a professional football team, player selection becomes critical. Each team is allowed only so many players and there is fierce competition among the many able athletes for places on the team. The cream of the college-football crop is recruited in the player draft. The best players are drafted in the first round, those not quite so attractive in the second round, etc. Scouting prospective draft choices has become an important factor in a team’s success. Some businesses operate in this manner, too. Their personnel recruiters employ highly organized and sophisticated techniques of recruiting. They, too, visit the college campuses to scout the prospects. On their “team”, they want only the very best people who are available for each position.

Regrettably, our society includes many people who may not be the best economic performers. There are illiterates, ex-convicts, alcoholics, etc, as well as persons of ordinary ability. The high-powered corporate and professional organizations screen them out. Such persons, who comprise a substantial number of our citizens, have seemingly no place in this well-honed economic system. The businesses are each run to operate at a high level of efficiency; that earns them a profit. Their highly educated, able, and dedicated employees are impressively productive. Yet, there are others in the community who do nothing at all. If you throw them in with the employed workers, the productivity of the economy as a whole is quite low.

Again, the productivity question boils down to a choice of definitions. If you define the individual business enterprise as the economic unit, then the workers are reasonably efficient. If, on the other hand, you define society as a whole as the economic unit, its inefficiency becomes clear. Employers individually beat the band to increase their workers’ productivity and in the process throw people out of work. That does nothing to increase the society’s productivity. People who were once working, however inefficiently, now depend upon public charity. The productivity statistics are based upon the hours of persons at work and do not include the time that unemployed people spend at home waiting for the telephone to ring.

In a professional football game, only the performance of those eleven players representing the team counts towards the score. In a real-life economy, everyone’s presence as a contributor or a consumer is reflected in the community’s standard of living. All persons consume goods and services but not all contribute work. The more producing members, the stronger the economy will be. I would dare to guess that a football team comprised of an unlimited number of high-school players could defeat the winning team from any Superbowl which was limited to eleven players. That may be roughly what foreign nations are doing to the United States in the global economic competition. Few others are content to carry the huge burden of waste which we carry year after year in high unemployment.

Certain nations have mobilized their people for employment on a national scale; they call that “socialism”. We Americans have long equated socialism with inefficient production. In one respect, that may be true but in another respect it is not. Let me give an example.

Renault, owned by the French government, has become Europe’s leading automobile producer, ahead of Volkswagen and Fiat. The government of France allows its managers to operate much as the managers of any large corporation, but with a difference. According to an article in the Wall Street Journal, Renault’s corporate policy “hasn’t been maximum profits but maximum French jobs.” The article stated that “Renault’s success ... isn’t due to efficiency but to an unusual readiness to accept smaller profits or even losses ... But ... also ... the company knows how to build cars with ‘an unbeatable reputation for reliability.’”

Perhaps, socialism in the limited form which Renault represents has an advantage over American-style capitalism because it can compete more aggressively on price. The socialist enterprise draws its definitions differently than its capitalist counterpart. Renault’s management has two goals: to maximize profits and to maximize French jobs. The second goal reflects the interests of its owner, the French government. That government insists upon Renault’s protecting the well-paid French jobs from which it derives tax revenues; but, in return, it stands ready to back up the losses which Renault might incur through unprofitable sales. It is the combination of the two things that counts, profits and jobs, not profits alone.

It is interesting that this state-owned, “socialist” enterprise acquired an equity position in the fourth-largest U.S. automobile company, American Motors, about the same time that the nation’s third largest automobile company, Chrysler, was moving toward socialism of another kind. Reportedly, the $1.5 billion loan guarantee which the federal government worked out for this company gives Washington bureaucrats the authority to supervise Chrysler’s day-to-day operations, including its marketing policies. If you accept the domino theory, Ford could be next. Alternatively capitalistic businessmen might realize that, in order to survive, they should take a broader view of their business than just to maximize profits.

It is not being “realistic” to say that earning profits is the only purpose of business or that a business can prosper while the society of which it is a part is disintegrating. Such businessmen who preach this are not “realists”; they are persons who have somehow inherited a thriving organization and are likely in the process of running it into the ground. The people who build up businesses are not “realists”, seeking only profits, but what we would call “idealists” who are pursuing a broader concept of service.

“I have noticed that those who work exclusively for money,” said Henry Ford, “do not retain it unless they continue the use of it for the public. The desire for mere money has a sure way of defeating itself - a very sure way ... If the main object of any business is the earning of a fixed dividend, then that business is surely doomed. Profits must come as incident to doing the job well or they will not come at all.” In contemporary Japan, the outstanding success story belongs to Sony’s chairman and founder, Konosuke Matsushita, who recently said: “The purpose of an enterprise is to serve for the benefit of the nation, the benefit of society and to the people of that society.” Are these pious words or “reality”?

Returning to the subject of football teams, the purpose of an economy ought not to be to win games which others must lose or to claw one’s way to the top of an organizational pyramid and survey on the lower levels the multitudes who have been surpassed. It is not to have a tyrannical “coach” cheerleading others into working harder for his own fame and glory, or to compel the lowly employees to give “one-thousand percent” during extended work hours as their family life withers away, or, if they will not, to pull someone else off the bench to replace them. A particular firm can run through a string of burned-out employees once superbly qualified. But it is the society as a whole that must pick up the pieces.

That is why the non-holds-barred brand of business philosophy is not being honest with itself. It may be profitable for an oil tanker to operate with inadequate safety precautions if someone else will pay to clean up the oil spills, or for the health of persons downstream, or for a sales manager to push his people to the limit to produce sales until they have to quit. At the end of this road are the hospitals, prisons and detoxification centers which the taxpayers support.

Productivity means little under a too-narrow definition. This is like taking a total when some of the pieces are missing. In the calculations of productivity, some kinds of workers are excluded: government workers, private household workers, those employed in non-profit organizations Some who are included, nonproduction and supervisory workers, do not contribute directly to the production of goods and services. What, then, does it mean to measure their productivity if they produce nothing? Nothing that they can do will increase output. They influence “output per man-hour” by their numbers and by the time spent on the job. The fewer of them there are, the higher productivity becomes. It’s a no-win situation.

How do you measure the productivity of a government bureaucrat? It may be, as Art Buchwald half-humorously suggested: “The only way you can measure productivity in the government is by how much paperwork a person is producing. If he has nothing in his files, there is no way the President knows he’s doing his job.”

 

a final word about productivity

As it has developed, the study of productivity has been directed almost entirely against the blue-collar worker. Those who do the studying are themselves exempt from the investigation. “When you use the word ‘productivity’ round a banker, he says ‘not applicable’” said the senior vice-president of a Chicago bank. Yet, as the proportion of white-collar workers in the economy increases, any discussion of productivity which excludes them is meaningless. A management consultant with a national CPA firm has said that “continually refining the productivity of the blue-collar worker while ignoring the white-collar worker is analogous to swatting flies while elephants rampage around you.”

We know all about the farmers, coal miners, auto workers, and how their productivity compares with that of foreign workers. We need to know more about educators, lawyers, accountants, financial advisors, social scientists, planners, coordinators, and communications specialists. Economists have never paid much attention to them yet their impact is increasing. When we picture the causes of inflation, we think of such things as the price of rolled steel, barrels of crude oil, bushels of wheat, or the wages paid to electricians. However, the American economy is quite different from what it was fifty years ago when economic theory was conceived.

Pension funds, tax-sheltered bonds, insurance annuities, etc. now dominate the capital markets. Military retirement, army reserve, V.A. benefits - how do these fit into the picture of national production and consumption? What of the mounting expenditures for health care and for education? Before deciding anything about inflation, we need to analyze more precisely the man-hours which are devoted to the processing of credit, filing reports, paying and avoiding taxes, auditing procedures, motivating people to do who knows what. No wonder economists do not care to become involved in these areas.

Is it even useful to discuss productivity? Perhaps it is. However, in stressing more efficient work practices, we should take care not to pick on just the workers who are doing obviously productive work. Consider the total manpower picture. What is the use of raising our productive enterprise to a high level of efficiency if millions of our citizens cannot find jobs? In India and other nations, it is recognized that the technology which is employed in production should be “appropriate” to the nation’s human and capital resources. This means that sometimes a less efficient and cheaper piece of equipment will be used if it helps an idle person to find work.

Even in the United States, an advanced industrial nation, we need to organize work in a way that utilizes all the available labor. We need to recognize that unemployment and underemployment can sap the economy just as much as loafing. If neither is reflected in our calculations of productivity, it is because we have chosen to define this is a narrow sense.

 

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