Gold Makers, Not Receivers

in LeoFinance2 months ago

A friend of mine was saying that he was reading a book on the history of work and there was a prediction mentioned by John Maynard Keynes that by the end of the twentieth century, working hours would be reduced due to automation drastically. However, as we might realize, that hasn't happened - was he wrong?


Well, that is a matter of perspective. The reason is that technically, we could very well work a 15-hour week, because we are far more productive than we were as individuals at generating income. This means that back in the 1930s we might have been generating a relative 10 dollars an hour, we may now be generating 100. And, if that translates as a 400 dollar week to a 4000 dollar week, why work 15 hours for 1500, even though it is an almost 4x change.

But of course, this generation isn't all pushed into salaries, it is pushed into owners income, which means that a company like Ford which existed in the 30s and today might have less of a multiplication factor than for a company like Alphabet - this means that a person at Ford might generate 200K of revenue, whilst a person at Google will generate 2 million per year on average. But this doesn't mean that the average employee is going to get that as a salary.

What this means is that the technological advantages that could lead to a 15-hour week through value generation, mostly benefit the owners, creating an increasingly large wealth gap between those who own the companies and those who work in them. Due to maximization practices, the owners will of course look to increase their wealth, rather than spread that wealth more widely amongst their employee base. As a result, while on average "everyone" is much, much better off, the fact is that some are much better off than others.

Not only are we not working that 15-hour a week prediction, we are also increasingly expected to work longer in our lives. When I was a kid, my parent's generation were looking to retire at 63, but ended up at 65 to 67. Now, looking at the future, the expectation is more like 70 and then, the reality prediction in the next 27 years until I retire though, is more like 75. Sure, you could say that we are "healthier" than we were and are expected to live longer, but think about what that does to the career lifecycle.

Starting work at 32 and finishing at 63 is a 40-year working career in total. However, if that becomes 70, that is adding 7 years or 17.5%, and at 75, that is a 37.5% increase in working lifetime. Talk about inflation.

And, while we might live longer, how much longer? In the US in 1980 the average life expectancy was 74, now it is is 78 - A four year change, significant in 40 years yes, but does it warrant shifting the age of retirement age by such an extreme? If it is 75 for full retirement by the time I retire, that would mean that I would be in working life a year longer than people were expected to die in 1980.

Automation has massively changed our ability to produce and generate value, but this doesn't mean that it is going to be used to improve the lives or reduce the workload burden on everyone. Instead, because businesses are maximization mechanisms, they will look to increase the income to cost ratio, including the cost of labor. That doesn't necessarily mean reducing hours spent working, it can also mean working more hours for less, in a cost averaging exercise.

And on top of this, because businesses don't die and need to pay inheritance, can pay their taxes in ways that minimize exposure and have longevity, they can maximize well beyond the life expectancy of their employees, building up wealth that will increasingly benefit those who own the company.

And of course, a person isn't limited to a salary cap and the more they earn, the more incentive there is to keep working, so these days, the highest paid tend to work the longest hours and their roles tend to extend well past the average retirement age. They could retire much younger, but don't.

And why should they?

I have always said I will work until I die, at least if I feel that I am able to do something I enjoy and feel adds value. And if I am earning well and feel good in what I do, why would I stop, as it feeds into my human need of relevancy. However, it could very well be that my state of health will be "work til I die" for other reasons too.

Would I want to do a 15 hour week if I can earn the same as I am now? Or over time, will the scope of my needs "creep" and I would be working 20, 30 and then 40 again? Perhaps Keynes was right and we could all be working a 15.hour week - but he apparently didn't consider if we would.

[ Gen1: Hive ]

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Dang, if I am still working when I am 75 years old then I did something really really wrong! I am shooting for 50 right now, but I think that might honestly be too soon. I don't want to have so much free time on my hands that I get bored!

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Yeah, I don't plan on working at 75, but 50 (7 years away) might be too soon for me too - I am not prepared enough, unless something really big happens in crypto. :)

Crazier things have happened right?! You never know with crypto! I should put that on a shirt.

Ah 50 that's not too far off! Lol. I don't know about 50 but I think 60 wouldn't be terrible.

50 isn't that far off for me either! I don't know if that is a good thing or a bad thing!

Quite a thought provoking post......!

With time wealth gap is certainly increasing. The wealthy are getting wealthier.

I thought of something when I read the post. Aside all the factors associated with working hours mentioned in this post, there is one more factor and that is unemployment. When there are more applicants than the job the owners take more work from their employs otherwise they have a threat of losing their job.

Yes, so as automation takes jobs, the employers have more leverage and can force more work - though, I suspect that there will be a lot of "busy work" getting done too.


I heard someone saying.... more luxuries more problems

I think when AI has replaced us in many working area, we will have to work less and paid less, or we will be unemployed.

I think we will be unemployed :)

universal basic income will be offered at first.

I have always said I will work until I die, at least if I feel that I am able to do something I enjoy and feel adds value.

It feels really exciting to engage on what makes you happy most especially when it involves the work you do to make a living, there is nothing better of than to do what bring you the happiness no matter the duration of time spent in the work

Wouldn't it be nice if everyone was able to spend the majority of their working life doing what they were good at and enjoyed?

Working may decrease significantly while bots taking over.

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The ability to work perhaps - so people will be forced out of work, not by choice.

When Automation has fully take over I believe many people will lose thier and the jobs that remains will actually pay less with doesn't change the amount of 15hour use in working.

I also want to work till I die but it will be for myself and not under anybody or anyone, so that I can decided to work longer or not

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I also want to work till I die but it will be for myself and not under anybody or anyone, so that I can decided to work longer or not

It is easier said than done :)

Retirement age obviously increased because of decreased fertility.

This is one factor, but not the only one. There is also a reason for decreased fertility.

But, retirement is kind of like a lifelong ponzi, the last ones in support the top. It resets to some degree as the top dies though :D

It's the kind of Ponzi where there will always be suckers so long as there is life. :D

What a brilliant scam!

When life ends, there is no need for scams.

Well said 👍👍

Ah not a big fan of the Keynes methodology for a lot of things. He's the reason if I remember correctly that things are so fucked up, people following his words like a bible of late. One of those old dudes, not sure which one it is lol.

Yeah I reckon by the time we get to that "retirement" age, it will likely keep pushing so far that it's not attainable by most. I honestly wouldn't put it past the governments to push retirement to 80 in our lifetime sadly. They want to keep pushing the carrot a little further away with the stick, hoping that like a good horse we keep following it hoping we can get a nibble.

I think with creating different side hustles and income streams, as undesirable as it may be sometimes, it's very likely that many can retire at a good age from a formal career and enjoy doing smaller things for fun and some extra money. If I could do something related to what I'm doing now for the next couple decades I think I'd have a lot of fun with that and would be happy. I've moved up the "ladder" into my role and I could go for higher yes but I'm not interested in the stress that comes with that and the other things that I know are associated with it but is something I am not at all interested in. My wife thinks I'm crazy for not doing it but then I wouldn't get time to be at home and try to do the far more important job: being a dad!

I think it depends but I wouldn't mind working if I want to work and it's something I want to do. If it's just a job for a paycheck like right now, then I wouldn't mind taking the 15 hour week if I am earning the same.

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Another thoughtful piece. I actually think the lines of work/hobbies are somewhat blurred these days, looking at the number of the side incomes that people engage in, be it doing Youtube, or play to earn crypto games, etc.

I just had a talk with someone about business today and I kind of just hate it more now -_-