Amusingly enough, Chris Betram at CT jumps on me for extrapolating from an economics article using elementary economic reasoning, apparently so he can quote Marx and harumphingly say, “So goes human nature according to libertarians.”
Well, harumph. I’ll point out that I’ve dwelled on my own preference for “farting around” here and here. We each value extra dollars and extra leisure hours differently, so how we trade them off against each other will differ. But I don’t assume that Europeans and Americans are really so different on average. So I resort to a Marx-style materialist explanation for the difference. Which makes me, apparently, insufficiently Marxist.
Now, I wonder if Chris believes that being “self-sustaining peasants working for their own consumption,” is really “good for them?” Just wondering.
A point that I haven’t sufficiently appreciated in the past is that there is no simple trade-off between work and leisure. Working more hours can increase leisure time. I was simplifying in my story, as was Prescott in his (as he notes). Higher taxes don’t necessarily make it more worthwhile to consume leisure, they make it more worthwhile to do stuff that isn’t taxed. If you’re taxed at a very high rate, it can make sense to spend a lot of time fixing your own car, cleaning your own house, preparing your own meals, doing your own laundry, mowing your own lawn, doing home improvements, or whatnot — that is, working for one’s own consumption. However, if taxes were lower, you could earn enough money to pay someone else to do these tasks in LESS TIME than it would take to do it all yourself. So, at the end of the day, you’d have more time for genuine farting around, even though you worked more TAXABLE hours. So it’s not at all clear that Americans do work less, or do consume less leisure. We go to the office so that we can relax.
I like the idea of a black market for household chores, with the Handyman’s Union lobbying their Congressmen over a shady wave of untaxed DIY.
Bernard, Beautiful.
Will, there seem to be two problems with your analysis. Firstly, you say that working more enables us to spend more time on leisure than we otherwise would because we can pay people to do things that we would have to do otherwise, and these things are thereby done quicker, leaving us with more leisure time. This only provides us with more leisure time if the time spent working to acquire the income to pay these people to do these things is less than the time it would have taken us to do them, which isn’t always going to be the case. Secondly, I think, and I may be wrong here, that you assume that the value of leisure time is constant across the amount of time worked: the value of four hours of leisure time having spent eight hours working and the value of four hours of leisure time having spent ten hours working may be different, because I will be more tired, grouchy and generally less able to enjoy myself having spent longer at work.
Rob: yeah, the value isn’t constant, but is there really a strong a priori reason to believe it will go one way or the other? On the one hand, yeah, maybe you’ll be grouchier after your ten hours. On the other hand, maybe you’ll appreciate those two hours more at the end of a longer day, and be less likely to get bored.
But why would lowering taxes make me work more? I don’t get it. Let’s say that I really prefer to have somebody else to do the housework for me, so that I can play football for example. I will have additional amount of money from the mere tax reduction without the need to work more. With this additional money I will be able to pay somebody else to do some of the housework for me (if I can’t pay for everything), let’s say to paint the fence, and I will trim the garden myself.
It may be true that some people will prefer to have somebody else to do stuff like this for them, but I don’t see how this is related to the tax level. Even if tax levels were the same on both sides of the Atlantic the difference between Americans and Europeans would still prevail, in my opinion.
Vulgar empiricism here — Europeans really, definitely, do have more genuine leisure time than Americans. I suggest you visit them and see. Or you can wait for them to come on vacation to your town, having exhausted all their other favorite places on earth to visit.
It is somewhat harder to get cheap contractors in heavily socialized European countries than the U.S., but this is mitigated by the fact that there is a huge black market in home repair services paid under the table in those countries. Again, ask some Europeans about it.
Note I have said nothing about efficiency implications — I am endeavoring to keep my post non-partisan.
Why is there a huge black market in home repair?
Will, because the Government puts heavy taxes on transactions which are very easy to organise informally without its knowledge.
If the guy next door can repair your boiler as a favour, and you can slip him £400 in cash, both of you save significantly on what the venture would cost as an official transaction (the difficulty being that no legal contract is signed and so, as with all black markets, disputes have to be resolved without the Govt. too).
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I like the idea of a black market for household chores, with the Handyman’s Union lobbying their Congressmen over a shady wave of untaxed DIY.
Bernard, Beautiful.
Will, there seem to be two problems with your analysis. Firstly, you say that working more enables us to spend more time on leisure than we otherwise would because we can pay people to do things that we would have to do otherwise, and these things are thereby done quicker, leaving us with more leisure time. This only provides us with more leisure time if the time spent working to acquire the income to pay these people to do these things is less than the time it would have taken us to do them, which isn’t always going to be the case. Secondly, I think, and I may be wrong here, that you assume that the value of leisure time is constant across the amount of time worked: the value of four hours of leisure time having spent eight hours working and the value of four hours of leisure time having spent ten hours working may be different, because I will be more tired, grouchy and generally less able to enjoy myself having spent longer at work.
Rob: yeah, the value isn’t constant, but is there really a strong a priori reason to believe it will go one way or the other? On the one hand, yeah, maybe you’ll be grouchier after your ten hours. On the other hand, maybe you’ll appreciate those two hours more at the end of a longer day, and be less likely to get bored.
But why would lowering taxes make me work more? I don’t get it. Let’s say that I really prefer to have somebody else to do the housework for me, so that I can play football for example. I will have additional amount of money from the mere tax reduction without the need to work more. With this additional money I will be able to pay somebody else to do some of the housework for me (if I can’t pay for everything), let’s say to paint the fence, and I will trim the garden myself.
It may be true that some people will prefer to have somebody else to do stuff like this for them, but I don’t see how this is related to the tax level. Even if tax levels were the same on both sides of the Atlantic the difference between Americans and Europeans would still prevail, in my opinion.
Vulgar empiricism here — Europeans really, definitely, do have more genuine leisure time than Americans. I suggest you visit them and see. Or you can wait for them to come on vacation to your town, having exhausted all their other favorite places on earth to visit.
It is somewhat harder to get cheap contractors in heavily socialized European countries than the U.S., but this is mitigated by the fact that there is a huge black market in home repair services paid under the table in those countries. Again, ask some Europeans about it.
Note I have said nothing about efficiency implications — I am endeavoring to keep my post non-partisan.
Why is there a huge black market in home repair?
Will, because the Government puts heavy taxes on transactions which are very easy to organise informally without its knowledge.
If the guy next door can repair your boiler as a favour, and you can slip him £400 in cash, both of you save significantly on what the venture would cost as an official transaction (the difficulty being that no legal contract is signed and so, as with all black markets, disputes have to be resolved without the Govt. too).