RE: Keynesians, 35 heurs, tobin tax

["Max B. Sawicky" <maxsaw@xxxxxxxxx>]

> > First, for any given level of effective demand,
> > it seems obvious that there is still a trade-off
> > between hous per worker and the number of
> > workers.
> In theory, one could imagine such a trade-off. However, one could

That's all I'm trying to get you to admit.

> also imagine a shift in this same trade-off. In particular, one could
> imagine that, in a high unemployment economy such as France's,
> firms merely REDUCE everyone's standard hours WITHOUT raising
> employment while, at the same time, still cashing in on the subsidy
> for reduced hours! In this case, of course, workers would be employed
> more intensively due, say, to X-efficiencies. But, nothing would suggest
> that your story about a smooth trade-off is more realistic than ours.

Now you're using my argument, namely that the matter is
not logically precluded, though I never claimed that your
position was untenable in principle.  Maybe we're making
progress.

> > .  .  .
> > Why might higher employment change
> > the wage share?  Maybe workers' bargaining
> > powers (formal and informal) would be enhanced
> > in the face of a tighter labor market.  Maybe a
> > decline in the dependent population would
> > bring savings to the public sector which could
> > be used for tax cuts or some kind of
> > productivity-enhancing purpose.
> Frankly, Max, we don't understand your argument about the effect of
> reduced hours of work on labour's share of national income. Are you
> really trying to say that reduced hours of work would increase the
> bargaining strength of workers because of the now, supposedly,
> tighter labour market?! Surely, in a loose labour market like that of
> France, even if your argument that reduced hours of work would
> actually bring about an increase in employment, labour demand (in
> terms of hours of work) would not have changed! Where then would this
> presumed tightness come from?

With more people establishing habits of a shorter
work week and fewer with no work whatsoever, the
hypothesis is that there would be an effective loss in
'surplus' or idle labor, not in a strict quantitative sense,
but in a social respect.  In other words, more individuals
would be less forthcoming with labor supply.

Another possibility, not exclusive from the previous and
overlapping in some sense, is that if we imagine incentives
to shift away from the 'ninth' daily hour, so to speak, and in
favor of the first eight (or whaever is set by legislation), then
there is more supply and demand in the latter case and less
in the former.

> > > the EMU and its consequences on the fiscal policies of the member
> > > governments which is the principal factor behind the high
> > > unemployment rate in France. How would sharing a shrinking
> > > employment pie do anything to alleviate unemployment? Remember
> > > that, under EMU, the government subsidy to induce firms to reduce
> > > working hours would be done at the expense of some other
> > > government programme.
> >
> > Not necessarily.  For instance, imagine a
> > revenue-neutral change in the U.S. payroll tax,
> > where the cap is lifted and the revenue is used
> > to create a 'zero-bracket' for the first X
> > dollars of wages.  There are plenty of ways to do
> > this with taxes at zero cost to the government,
> > and with zero net subsidy to business firms.  How
> > effective the measures are is another matter,
> > but once again the point is that you posit
> > logical arguments which do not follow, where the
> > matter seems either a question of some deeper
> > theoretical point, or of empirics.
> Come on Max! As much as tinkering with the tax system can have
> positive consequences, to our knowledge this is clearly not in the
> works in France. But we are certainly willing to recognize such
> a possibility.

Once again, the issue was that very possibility, not how Jospin's
effort would pan out.

> > >          Once again, just to reiterate what we had said in our
> > > previous message: we have no hesitation in supporting a policy that
> > > reduces hours of work. However, don't call it a strategy to eliminate
> > > unemployment. In our humble opinion, it is merely another supply-side
> > > argument that implicitly assumes that the amount of available
> > > employment is pre-determined or fixed. We believe instead that
> >
> > I can hold reduced work time and increased
> > effective demand in my head at the same time.
> > One system doesn't obviate the other.
> Not in the example that we gave previously where a given level of
> employment is associated with reduced hours of work.

To put it another way, imagine one policy which shifts
micro-incentives in the mode noted above, in the same
world as a Keynesian fiscal policy.

Cheers,

MBS



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Max B. Sawicky            Economic Policy Institute
maxsaw@xxxxxxxxx          1660 L Street, NW
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202-775-0819 (fax)        Washington, DC  20036
http://tap.epn.org/sawicky

Opinions above do not necessarily reflect the views
of anyone associated with the Economic Policy
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