-------------- forwarded message ------------------
Date: Thu, 28 May 1998 14:36:23 +0100 (BST)
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From: Eero Carroll <[EMAIL PROTECTED]>
To Geoff, and all,
I don't think that one has to be an academic economist to see how the
arguments for WST indeed do run foul of the "lump of labour" fallacy,
albeit not in the same way as arguments for an allegedly
employment-increasing general cutback of working time. To quote David
Chapman's mail on the WST from May 25th:
>For example, suppose that a firm, instead of employing 33 workers each
>working 38 hours per week, employs 38 workers each working 33 hours per
>week. The firm will thus reduce the tax it has to pay, and hence its
>labour cost, by 5 x 35 = 175 pounds per week.
Theoretically, this is of course the case. But practically? The example
still assumes at least short-term stability in the amount of available
work--it's an assumption entirely necessary for the rather static argument
that employers will choose between the two alternatives identified, and not
some third alternative such as rationalizing production in order to
maintain output but at lower levels of necessary labour time inputs (by
just 15 full-time workers, let us say!). In this day and age, why would we
have to assume that tax incentives of the kind advocated here would be more
powerful in affecting employers' hiring decisions than the benefits of
rationalizing away even more workers entirely? If the latter option can be
combined even with increased production (by no means necessarily demanding
more workers), the tax incentives can become even less attractive.
As far as the continued logic of the argument is concerned, there are also
good reasons for questioning why it is the pool of the currently
unemployed, in particular, that employers will look to for purposes of
filling the newly lucrative vacancies (even assuming that these are not
simply abolished entirely). The extensive early retirement programs put
into effect in Continental Europe were built on precisely this assumption.
But the envisioned result of "redistribution of work" appears by and large
simply not to have happened. If the "work" was redistributed someplace, it
appears mostly NOT to have been redistributed to the unemployed (Kohli et
al (eds,) Time for Retirement, CUP, 1991). I think that evidence of this
kind is to be emphatically recommended even for busy people to read (which
I take it that most of us are on this list), insofar as it can help to
improve the quality of policy recommendations which the busywork aims to
produce!
with all due courtesy,
EC
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Regards,
Tom Walker
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