Saturday, February 13, 2010

nef strikes again

The new economics foundation has a brilliant idea: let's all work 21-hour weeks (link). Genius, except for a small number of teensy problems.

Firstly, does this allow for overtime? Secondly, people on hourly wages won't have their rate increased, so they have just been given a mandatory pay cut of 50% (this will also go through for salaried workers, but the mechanism is slightly different). Thirdly, the self-employed get to work as many or as few hours as they like, thus earning as much as they wish: why bar employees from, through negotiations with their employers, achieving something similar? Fourthly, professionals work far more hours than their contractual hours, as I know from working in a university. Fifthly, hospitals and many schools only survive because their professionals work far longer than twenty-one hours: what will become of the health service and education? Sixthly, the lump of labour fallacy (wiki), about which one might have expected a self-described economics group to have known. Seventhly, the French experience with a simple 10% cut is not universally positive. Eighthly, laws to restrict people's working patterns are illiberal; we need the law to put employees in a position to refuse demands, rather than the law refusing negotiations on their behalf. Ninthly, technology and capital investment have been the main driver behind the reduction in the industrial working week by a factor of fifty percent from 1840 until now: why use the law to make us all poorer, instead of investment to make us all richer?

Bryan Caplan commented — my summary! — that crazy libertarians exist to make moderate libertarians look sane (src). Is this the function of nef with regard to the left wing? Because otherwise, I can say this with confidence: it would be no great loss to society if nef cut its working week to twenty-one hours. The corresponding fifty percent decrease in the output of vapid and insane policy papers which merely serve to embarrass the sensible and thoughtful side of the political left-wing would be a gain to us all.

5 comments:

Paul Sagsr said...

"The corresponding fifty percent decrease in the output of vapid and insane policy papers which merely serve to embarrass the sensible and thoughtful side of the political left-wing would be a gain to us all."

Amen to that.

Niklas said...

"...laws to restrict people's working patterns are illiberal; we need the law to put employees in a position to refuse demands, rather than the law refusing negotiations on their behalf."

Amen to that as well!

The impact that such economic nonsense has on the debate is worrying: nef got a lot of (uncritical) coverage for this and other "reports", the Robin Hood Tax is popular with intelligent people who ought to know better (Gordon Brown and Oxfam, for example) and Wilkinson and Pickett's The Spirit Level has had a big impact even though their statistical methodology is fundamentally flawed, at least if you want to draw policy inferences.

The flaws with The Spirit Level are basically a) they don't seem to control for anything and b) they don't look at trends in the same countries across time. For example, a Swedish academic has already shown that life expecancy has no correlation at all with income inequality if use panel data (i.e. trends within different countries over time) and control for nutrition and the number of doctors per head of population (with those controls GDP per capita is also insignificant).

Does anyone know why such bad economics is so widely believed?

Phil Walker said...

Niklas: the fact that nef gets such unthinking coverage is a source of never-ending wonder to me. I can understand the man in the street not knowing always whom to believe in economics, but journalists are meant to be intelligent people. We're experiencing the sad death of the inquiring mind.

As to your final question, I think it is confirmation bias. We like to confuse our prejudices for facts (I don't exclude myself), and when someone says something which confirms our prejudices, we jump on it even if it's nonsense.

Hence, for instance, the quote on the Wikipedia page from a reviewer of The Spirit Level, that it 'merely formulates what everyone has always felt'. Bzzt: that's epistemological narcissism and confirmation bias. The truth of the conclusion does not allow us to brush over dodgy analysis. The ends do not justify the means.

Anonymous said...

Clearly you haven't even read the paper, as if you had you would realise that all your "points" are completely invalid and not appropriate to the actual proposals of nef. Next time you review a publication, make sure to read more than just the title and debate from there.

Thanks

Phil Walker said...

Thanks anon. You're correct I hadn't actually gone through the paper itself, which is why some of my questions really were questions: the first one, for example, was a genuine question, albeit a pointed one because it does strike at a key point. However, I had read enough of nef's own defence, in the press and new media, to know where they're coming from.

For instance, they persist in claiming they don't want to force people to work less, but when they think we've stopped watching they fall back on coercive mechanisms. If you want a citation from the report itself, 'regulations will be required', page 29. So I think that puts the ball in your court: is nef proposing regulations to make the working week shorter, or not?

Moreover, their rhetoric is consistently indistinguishable from 'lump of labour'. They say that if we cut everyone's hours to 21/week, the work not done will be picked up by others. I say that's lump of labour. Again, the ball is in your/nef's court: where do they deal with that objection?