Tuesday, August 26, 2008
But suppose they did cut back to a 32-hour work week? What would be the loss in output? It would be a lot less 20%. The last ten percent of the time we produce just barely enough to cover the wage we receive. It's pretty reflexive to think every hour those workers put in is a waste. Waste is something that occurs at the margin -- we use too many workers. There's no incentive to get the right number of workers. If we asked them all to produce the same output and just removed every fifth worker, they might make it and they might not, but diminishing returns would have to imply the lost work is not one-fifth.
I'm not signing the petition; we might end up with a good experiment.