People working overtime for extra pay, or purchasing more goods more often, or performing any act that increases their rates of consumption, may justify themselves or be justified by governments or the media with the argument (consistent with current economic thinking) that by doing so they are boosting the economy, creating wealth, giving employment to people.
Hard work for long hours with few vacations is made a particular virtue in some countries, being believed to lead to greater national wealth, a higher standard of living, and ever more jobs in those countries and others, with the “wealth” supposedly ‘created” flowing to other countries.
In fact, any increase in consumption increases the rate of throughput of resources. If resources are already being consumed faster than they are renewed, or if the increase in consumption is sufficient to cause the consumption rate of resources to exceed the renewal rate when it did not previously do so, then resources are being depleted faster than before, or they are beginning to be depleted. This actually shrinks the economy, destroys wealth, and reduces jobs in the longer term.
What really happens is that up to a point a greater national throughput rate is achieved.
This increases the national living standard as long as the TI rate is faster than the population growth rate and the throughput is fairly distributed through the population.
An increasing throughput rate means an ever shrinking wealth base as the renewal rate is exceeded and, to the extent that it depends on the size of the wealth base, reduced.
This sets up stresses in the nation’s economy that exert downward pressure on the throughput rate and on living standards and reduce short- and long-term unemployment.
Pressure is also exerted against the ability of less perfluent nations to increase their throughput rate. This comes back to the point discussed in the posting “Global Inequalities in Wealth”.
As well as depleting wealth in their own economies and thus making less of it available for everyone’s throughput, the more perfluent economies make available to the others facilities for the structuring or realisation of goods and services that would not otherwise have been available and that increase their throughput rate and living standards in the short term.
This further accelerates the global throughput rate, depleting wealth yet faster. This is not transferring throughput but, rather, spreading the economic stresses, the wealth base shrinkage, with inflation and net job loss and ultimate downward pressure on throughput, from more to less perfluent nations.
Instead of making more wealth available to less perfluent nations, quite the reverse happens; wealth becomes less available to than it would otherwise have been. Those last six words are important because yes, more and less perfluent nations may all be increasing their throughput rate at the same time. The point is that the faster the more perfluent countries increase their wealth throughput rate, the more costly and difficult it becomes for the less perfluent to do likewise.
Global resource throughput has to be kept within the limits imposed by the renewal rates of the different resources. More perfluent countries must restructure their economies to maintain full employment regardless of changes in the level of economic activity, letting living standards fluctuate instead. This will set the stage for throughput to be reduced, resource by resource, to enable it to be increased elsewhere without the overall throughput rate for that resource exceeding the renewal rate.
The present course of world economic development leads to a cycle of weakening lifts and deepening crashes in throughput, first in the most perfluent nations and then in more and more of the others as, and if, their perfluence increases.
Work is a virtue up to a point. We must all earn our living and contribute to the throughput in which we take a share, not be parasites. But working harder and harder to realise and consume more and more goods and services becomes more and more a vice.
A person with a fleet of powerful cars and several huge houses grossly beyond their accommodation needs is not, as we are currently taught, someone to admire and to strive to imitate. Rather, such a person is an obscenity, a criminal against the welfare of fellow human beings and the health of the ecosystem, the two things of course being inextricably bound up with each other.
A person who has two or three jobs or works normal time plus overtime and shifts, doing little else but work, eat and briefly sleep, in order to make and consume far more goods than if they just worked flat time, is not sacrificing their strength and their social and family life in order to create better security and ease for themselves in the future. In fact, they are contributing to faster erosion of economic security for themselves and for everyone else.
Actually if we really desire economic security and well-being we should consume as little as possible, which means making as few goods as possible, which means minimising rather than maximising work.
That last point does not mean drawing a wage while slacking, sitting around and not doing the work that the wage requires. It means giving a fair day’s work for the wage paid, but on that basis working only enough to earn enough to support a minimum of consumption.
If the more perfluent countries had followed this idea after World War II there would have been, of course, a slower increase of material living standards and a slower development of technology; but so what? Nothing would have been irretrievably lost, merely postponed. But we could have avoided the huge menacing intractable global economic problems of excessive debt, extremes of perfluence and deprivation, worsening environmental degradation and resource depletion.
The “workaholics” are enemies of the community and must be discouraged, not admired and copied. Their hard work is not accumulating wealth at a faster rate, but consuming it at a faster rate. As has been said before, life is a business of throughput, not of accumulation.
Anyway, it’s all very well to talk of what should have been done. But it wasn’t done, so we must find some way to cope with things as they are. It is hoped that foregoing and subsequent thoughts will indicate some future directions for the world.
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Posts in this Series
- Review of 1988 edition of Economics for a Round Earth
- Ends and Means
- Evolution Not Revolution
- Notes on Evolution Not Revolution
- Concepts and Terms – What is ‘wealth’?
- The Throughput Chain
- The Derivatives of Wealth
- Global Inequalities in Wealth
- Economic Growth Redefined
- Misconceptions in Practice
- Borrowing to Invest to Get Rich
- Environment versus Economic Progress
- Digression: Pollution Red Herrings
- Digression: Depletion and Inflation
- Value Inflation – the Trigger, not the Bullet
- Living Standard and Quality of Life
- Digression: Resource Consumption, Jobs, and Hands Off
- When the Boom comes
- The Effect of People’s Expectations
- Hard Work – Virtue or Vice?
- Who needs the Snail Darter?
- More Dollars for Conservation?
- Non-renewable Resources – Leave Them in the Ground?
- Digression: Fast Breeder Nuclear Fission Reactors
- Minerals in National Parks – Leave Them in the Ground?
- Population and Wealth
- Left, Right and The Environment
- Digression: “So Long As We Profit, Costs Elsewhere Aren’t Our Problem”?
- Limits to Growth?
- Solar Energy – a Special Case
- The Solar-Powered Car
- Money Supply, Throughput and Inflation
- Real and Money Wages: Living Standards
- Digression: Caution about “Increases” and “Decreases”
- The Idea of Proportionate Flows Applied to Wages: the Great Depression
- Deficit Financing
- The Optimum Proportionate Flow Condition
- Digression: Thrift versus Spendthrift
- Digression: the Private Motor Car – a Basic Necessity?
- The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970’s and 80’s
- Excessive Wages Can Cost Jobs
- Fight Unemployment or Inflation First?
- Digression: Work and Jobs
- Other “Job Creation” Schemes
- Visual and Noise Pollution
- Digression: Renewal and Recycling of Resources; Wages and Jobs
- Ratio Distortion and Consumption
- Aggregate Demand – Components and Internal Ratio
- The Slave Economy
- Employment and the Steady State
- Consumer-Led Recovery
- Interest Rates and Ratio Distortion
- Demographic Trends and Living Standards
- Digression: Bad Economics Good for Conservation?
- Coping with Aging Populations
- Stabilising the Human Population
- Costs – What Really Costs Us and What Doesn’t?
- Digression: Other Comments on Statements in UN Report
- Discussion of Costs Resumed
- Budget Balancing Methods – Cost or Gain?
- Digression: Government Expenditure – Government Employees
- Expenditure on Weapons