WEBVTT - Four Days a Week 0:00:03.720 --> 0:00:06.760 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:06.760 --> 0:00:15.680 global economy to you. How will we all keep busy 0:00:15.840 --> 0:00:18.280 when we only have to work fifteen hours a week? 0:00:19.040 --> 0:00:22.320 That's the question the great economist John Maynard Canes asked 0:00:22.480 --> 0:00:25.840 nearly ninety years ago, thinking ahead to the possibilities of 0:00:25.920 --> 0:00:28.920 his grandchildren. By the end of the twentieth century, he 0:00:29.000 --> 0:00:31.880 thought the economy would be so productive we'd scarcely have 0:00:31.960 --> 0:00:35.440 to work at all. It didn't work out that way. 0:00:35.640 --> 0:00:38.159 The economy is a lot more productive, and we do 0:00:38.280 --> 0:00:41.720 spend a lot less time collectively on chores like washing 0:00:41.760 --> 0:00:46.800 clothes and dishes, collecting water. But in most advanced economies, 0:00:46.800 --> 0:00:50.839 the daily grind, if anything, has become even grindeer. So 0:00:51.000 --> 0:00:53.360 much for modern technology letting us all spend more time 0:00:53.400 --> 0:00:56.120 in the garden or at the opera. But that might 0:00:56.160 --> 0:00:58.240 all be about to change. In a minute, I'm going 0:00:58.280 --> 0:01:01.200 to talk about a possible revolution in our work week 0:01:01.520 --> 0:01:05.199 with one of Bloomberg's most read economic columnist, Noah Smith. 0:01:05.640 --> 0:01:08.039 I'll also be checking in on the latest on the 0:01:08.160 --> 0:01:12.120 US trade wars. But first, here's UK Treasury reporter Jes 0:01:12.280 --> 0:01:15.240 Shankleman to tell us what's been happening in the UK. 0:01:24.000 --> 0:01:26.679 What if you never went to work on a Friday, 0:01:27.319 --> 0:01:30.320 not because you're ill or pretending to be, not because 0:01:30.319 --> 0:01:32.160 you have to look after the kids, or because you're 0:01:32.160 --> 0:01:36.840 on vacation. This is the four day week and maybe, 0:01:37.440 --> 0:01:43.959 just maybe it could be coming to your workplace. The 0:01:44.080 --> 0:01:48.320 lighting designers Elektra in London. It became a reality at 0:01:48.320 --> 0:01:50.919 the start of this year when they stopped working Fridays 0:01:51.040 --> 0:01:56.120 and added an extra hour to Monday through Thursdays. Director 0:01:56.240 --> 0:02:00.720 Neil Knowles now spends his newly extended weekends perfecting his 0:02:00.800 --> 0:02:04.440 sour dough bread and visiting galleries. One of his colleagues 0:02:04.520 --> 0:02:09.040 has taken up welding. He says output has remained broadly 0:02:09.080 --> 0:02:12.040 the same, and both his team and his clients are 0:02:12.080 --> 0:02:15.600 happy with the switch. I think the biggest surprise would 0:02:15.639 --> 0:02:18.320 be quite how much difference it makes personally it makes. 0:02:18.840 --> 0:02:20.919 It's not I think I think it's going to make 0:02:21.080 --> 0:02:23.960 a little bit of difference going from two day weekends 0:02:24.000 --> 0:02:27.720 to three, but actually it makes an enormous difference, massive 0:02:27.800 --> 0:02:34.280 difference in the UK. It's something Jeremy Corbyn's opposition Labor 0:02:34.320 --> 0:02:37.600 Party is looking at in a bid to kickstart productivity 0:02:37.720 --> 0:02:41.200 and boost well being. The idea is just one of 0:02:41.200 --> 0:02:44.560 a series of radical left wing economic policies that increased 0:02:44.560 --> 0:02:48.480 Corbyn's popularity since the financial crash, an event that caused 0:02:48.520 --> 0:02:52.799 people to question the fairness of capitalism. Some of his 0:02:52.880 --> 0:02:57.720 other ideas include nationalizing utilities, giving employees a stake in 0:02:57.840 --> 0:03:01.960 large companies, and delist businesses from the Stock Exchange if 0:03:01.960 --> 0:03:06.440 they don't do enough to tackle climate change. John McDonald, 0:03:06.520 --> 0:03:10.840 Labor's economic spokesman, who commissioned a review into the idea, 0:03:11.320 --> 0:03:13.760 I think shorter working weeks will be a vote winner. 0:03:14.800 --> 0:03:19.920 The influential grassroots socialist group called Momentum wants Labor to 0:03:19.960 --> 0:03:22.560 adopt a four day week as an official policy in 0:03:22.600 --> 0:03:26.680 its next manifesto, and with the ruling Conservative Party in 0:03:26.760 --> 0:03:31.080 turmoil over its failure to deliver on Brexit, a general 0:03:31.080 --> 0:03:35.520 election seems perpetually on the horizon. I asked John McDonald 0:03:35.560 --> 0:03:38.520 recently in Parliament about his latest thoughts on a four 0:03:38.600 --> 0:03:42.000 day week. It's about making sure that people have a 0:03:42.360 --> 0:03:46.000 quality of life or work life balance, and it's all levels. 0:03:46.520 --> 0:03:48.800 And I think the idea of the way in which 0:03:48.800 --> 0:03:51.040 we can shape the work and week being more flexible 0:03:51.080 --> 0:03:55.920 about it I think will be incredibly proper. Since the 0:03:55.960 --> 0:03:59.360 Industrial Revolution, the length of the work week has taken 0:03:59.400 --> 0:04:03.840 center stage labor relations. In the eighteen sixties, workers averaged 0:04:03.880 --> 0:04:07.520 about sixty or seventy hours a week, and that gradually 0:04:07.560 --> 0:04:10.839 fell to about forty hours a week thanks to improvements 0:04:10.840 --> 0:04:14.520 in labor laws and technology. Now the question of workers 0:04:14.600 --> 0:04:17.839 rights is coming back into the spotlight. Part of the 0:04:17.880 --> 0:04:21.440 reason workers could be left behind amid greater automation and 0:04:21.560 --> 0:04:28.599 use of technology. The consultancy McKinsey estimates of all hours 0:04:28.640 --> 0:04:34.800 work today could be automated using already existing technologies. The 0:04:34.880 --> 0:04:39.599 Trade Union Congress an umbrella group for unions once workers 0:04:39.640 --> 0:04:42.679 as well as companies to reap the benefits of enhanced 0:04:42.680 --> 0:04:47.240 productivity from robots. The group says the march of technology 0:04:47.400 --> 0:04:51.200 so far seems to have increased hours rather than cutting 0:04:51.240 --> 0:04:55.240 them back, so employers increasingly expect people to log on 0:04:55.400 --> 0:04:58.039 all times of the day and as a result, it says, 0:04:58.040 --> 0:05:01.719 British workers currently rack up t two billion pounds of 0:05:01.880 --> 0:05:07.080 unpaid overtime or about forty billion dollars. Here's the Trade 0:05:07.160 --> 0:05:10.320 Union Congress is Kate Bell. We're calling for shorter working 0:05:10.400 --> 0:05:12.479 time with no loss of pay. But I think it 0:05:12.560 --> 0:05:14.960 is important to remember the context we're talking about this in. 0:05:15.160 --> 0:05:18.159 You know, we're hearing all these kind of promises about 0:05:18.160 --> 0:05:21.040 new technology. You know that it's going to give a 0:05:21.120 --> 0:05:24.120 significant boost to our GDP. We've got people like Jeff 0:05:24.160 --> 0:05:26.120 Beesl saying that he's got so much money the only 0:05:26.200 --> 0:05:27.479 thing he can think to do with it is to 0:05:27.520 --> 0:05:29.440 put a man on the moon. You know, we are 0:05:29.480 --> 0:05:32.240 talking about the possibility of getting richer and what we 0:05:32.320 --> 0:05:35.680 know has happened historically over kind of you know, in 0:05:35.800 --> 0:05:39.359 the last Industrial Revolution was when trade unions fought for it, 0:05:39.400 --> 0:05:42.240 we were able to deliver higher pay and shorter working time. 0:05:42.320 --> 0:05:46.480 So that's very much our goal. Labor asked Robert Skidelski, 0:05:46.880 --> 0:05:50.080 an economist at the University of Warwick best known for 0:05:50.160 --> 0:05:53.960 his biography of John Maynard Kines, to study if and 0:05:54.000 --> 0:05:57.200 how the government could cut the working week, and his 0:05:57.279 --> 0:06:01.920 report is set to be published in July. He doesn't 0:06:02.000 --> 0:06:05.320 think capping working hours across the economy is the answer, 0:06:05.839 --> 0:06:08.359 as France's plural Left party did at the turn of 0:06:08.400 --> 0:06:12.600 the century. Instead, he says the UK government should set 0:06:12.640 --> 0:06:17.280 an example. As an employer he found investing in automation 0:06:17.440 --> 0:06:21.359 and improving flexibility in the civil service, health service and 0:06:21.480 --> 0:06:26.039 schools could be a starting point. By now. Skidelski says 0:06:26.640 --> 0:06:29.680 people in Britain should be working about thirty two or 0:06:29.720 --> 0:06:33.560 thirty three hours a week, but actually those hours stopped 0:06:33.560 --> 0:06:37.240 falling in the nineteen eighties, So does that mean a 0:06:37.320 --> 0:06:41.880 more drastic approach from politicians could hold the key? The 0:06:42.000 --> 0:06:46.040 question to to raise is what are the most effective 0:06:46.080 --> 0:06:51.200 forms of government intervention in order to move the whole 0:06:51.240 --> 0:06:55.560 economy to you to increase the denicity of automation, Well, 0:06:55.880 --> 0:06:58.520 the government can do something in the public sector. It's 0:06:58.560 --> 0:07:05.200 the employer and it's got a workforce, and you know 0:07:05.320 --> 0:07:09.520 there are there are seven million, seven million public public 0:07:09.560 --> 0:07:13.240 sector employees. It's about twenty five percent of the workforce. 0:07:13.400 --> 0:07:17.920 You can start doing something there. Don't start planning your 0:07:17.920 --> 0:07:20.960 long weekends quite yet, though. He's keen to avoid the 0:07:21.000 --> 0:07:24.400 trap of using the term four day week and says 0:07:24.440 --> 0:07:28.120 we need to think about shorter working hours overall. So 0:07:28.280 --> 0:07:31.480 that could mean a parent working smarter than leaving at 0:07:31.520 --> 0:07:33.520 three in the afternoon so they can pick up their 0:07:33.560 --> 0:07:37.320 children from school, not just everyone having Fridays off and 0:07:37.400 --> 0:07:40.840 the economy virtually shutting down. You've got to organize in 0:07:40.960 --> 0:07:43.760 such a way, and I know it's difficult, and it 0:07:43.880 --> 0:07:45.840 may be, it may be that there are cost to this. 0:07:46.160 --> 0:07:48.280 You've got organized in such a way that the service 0:07:48.320 --> 0:07:53.080 isn't interrupted because people aren't people aren't at at work. 0:07:54.000 --> 0:07:56.960 And key to making all of this work is increased 0:07:57.000 --> 0:08:01.600 investment in technologies that can do monotony us and repetitive tasks, 0:08:02.200 --> 0:08:05.240 freeing people up to spend more time on innovation and 0:08:05.280 --> 0:08:11.240 creative thinking that might help boost productivity in Britain, where 0:08:11.280 --> 0:08:15.120 the metric is among the worst in Europe, the average 0:08:15.120 --> 0:08:18.760 American worker gets as much done by Thursday afternoon as 0:08:18.760 --> 0:08:22.760 their British counterpart currently does in an entire week. According 0:08:22.800 --> 0:08:26.440 to the International Monetary Fund, The nation also has the 0:08:26.480 --> 0:08:30.240 lowest use of robots in manufacturing of any G ten country. 0:08:31.920 --> 0:08:35.320 But despite promises for getting a better work life balance, 0:08:35.840 --> 0:08:40.920 shorter working hours don't necessarily boost the economy. The UK's 0:08:40.960 --> 0:08:45.440 biggest business lobby group, the Confederation of British Industry, isn't 0:08:45.559 --> 0:08:49.600 convinced a rigid reduction in ours will help productivity or 0:08:49.760 --> 0:08:53.640 works well being. Rain Newton Smith for c b i 0:08:53.720 --> 0:08:57.600 S chief economist, said forcing everyone to move to compressed 0:08:57.640 --> 0:09:01.360 ours could make it harder for people to have the 0:09:01.400 --> 0:09:08.880 work life balance they want or need. Back at Electra, 0:09:09.080 --> 0:09:12.440 the lighting design company, Neil Knowles says the decision to 0:09:12.480 --> 0:09:16.480 shift to a four day week wasn't easy. It does mean, 0:09:16.679 --> 0:09:20.200 as the CBI says, less flexibility on the days they 0:09:20.240 --> 0:09:22.240 are at work. So there's a lot of sorting out 0:09:22.559 --> 0:09:26.640 when we started it, which we kind of started in 0:09:26.720 --> 0:09:29.640 about January February this year. A lot of discussion on 0:09:31.040 --> 0:09:33.959 things and a lot of kind of agreement on things. 0:09:34.280 --> 0:09:36.440 For example, that we don't let people take time off 0:09:36.520 --> 0:09:38.800 to get deliveries, which I used to used to be 0:09:38.840 --> 0:09:41.640 fairly small. We're kind of flexible that people say, I'm 0:09:41.679 --> 0:09:45.839 getting a washing machine delivered kind of coming two hours later. 0:09:45.880 --> 0:09:48.760 The answer is now, no, you can't do it on Friday. 0:09:49.320 --> 0:09:50.679 You want to go to the dentist to do it 0:09:50.720 --> 0:09:56.160 on Friday. And while it might work for their small company, 0:09:56.720 --> 0:09:59.560 four day weeks may not be so easy to implement 0:09:59.600 --> 0:10:03.320 in a ret staunt or a shop. He says. The 0:10:03.360 --> 0:10:06.480 answer would be it works for consumpcy companies where you've 0:10:06.520 --> 0:10:08.600 got an output you're charging for, but if you're charging 0:10:08.600 --> 0:10:11.360 for your time rather than for your services. It's not 0:10:11.400 --> 0:10:15.600 going to work for you. Yeah, so works for the 0:10:15.600 --> 0:10:25.599 professional classes, which is nice for us, isn't it for 0:10:25.679 --> 0:10:33.760 Bloomberg News. I'm Josh equl Well. I'm was quite happy 0:10:33.760 --> 0:10:36.079 to have that segment because it reminds listeners that there 0:10:36.080 --> 0:10:39.240 are some people who are occasionally getting to talk about 0:10:39.240 --> 0:10:42.480 things other than Brexit in the UK. But the idea 0:10:42.559 --> 0:10:45.360 of a four day week and having more flexibility around 0:10:45.440 --> 0:10:47.840 working patterns is also something you hear a lot in 0:10:47.880 --> 0:10:50.240 the US, and I wanted to talk about the economics 0:10:50.280 --> 0:10:54.160 of it and the possible implications of all that with 0:10:54.559 --> 0:11:01.280 one of our most read economic columnists, Noah Smith. Um. No, uh, 0:11:01.840 --> 0:11:04.240 You've written a bit about issues related to this. I mean, 0:11:04.280 --> 0:11:06.800 do you think it's the future that more companies will 0:11:06.800 --> 0:11:08.880 move to a four day week or some version of that. 0:11:10.559 --> 0:11:13.000 You know, it's a really good question. I think that 0:11:13.040 --> 0:11:16.400 what you've seen in European countries that have sort of 0:11:16.440 --> 0:11:20.680 forced their people to take lots of vacation, you've seen 0:11:20.760 --> 0:11:23.959 a rise in productivity per hour, which makes sense because 0:11:24.120 --> 0:11:25.959 number one, you need to get more stuff done within 0:11:26.000 --> 0:11:28.760 the small time allotted. Number Two, you're just more sort 0:11:28.760 --> 0:11:32.160 of alert the question is whether a four day work 0:11:32.200 --> 0:11:35.040 week is actually the right way to accomplish that, or 0:11:35.080 --> 0:11:38.880 whether it would be better to do sort of shorter 0:11:38.960 --> 0:11:42.440 working days across the work week, because you know, I 0:11:42.559 --> 0:11:45.280 liken it to um, you know, full year school versus 0:11:45.360 --> 0:11:48.640 year round school. I think that the United States has 0:11:48.760 --> 0:11:52.360 very long summer vacations in school and sometimes, yeah, there's 0:11:52.400 --> 0:11:54.840 research showing this is bad and basically people start forgetting. 0:11:54.840 --> 0:11:57.760 So there's a question of will constant three day weekends 0:11:58.040 --> 0:12:01.079 cause people to you sort of get out of the 0:12:01.200 --> 0:12:03.600 rhythm of working and really hate coming back to work 0:12:03.640 --> 0:12:06.920 on Monday. Um, would it be better to simply have 0:12:07.280 --> 0:12:10.160 shorter working days and more you know, sort of vacation 0:12:10.240 --> 0:12:11.560 days out of the year. And I think that's a 0:12:11.600 --> 0:12:15.320 debate that people are going to have. Another possibility is 0:12:15.360 --> 0:12:17.360 to have a four day work week but have only 0:12:17.400 --> 0:12:20.520 a two day weekend and then another off day in 0:12:20.559 --> 0:12:22.880 the middle of the week. So that's another model people 0:12:22.920 --> 0:12:24.760 can experiment with. And I think people are going to 0:12:24.800 --> 0:12:28.599 experiment with these models because we haven't seen much of 0:12:28.600 --> 0:12:31.120 a hit to GDP per person from you know, sort 0:12:31.120 --> 0:12:34.880 of shorter work weeks over the years, and and I 0:12:34.920 --> 0:12:37.079 think people are realizing that it can boost productivity to 0:12:37.280 --> 0:12:40.000 how does that sound, Well, there's some of the people 0:12:40.040 --> 0:12:43.360 who are being who are earning the most we know, 0:12:43.480 --> 0:12:47.280 are also the people who are doing the longest hours. 0:12:47.320 --> 0:12:50.720 So somehow it doesn't always um work out. People don't 0:12:50.720 --> 0:12:52.959 seem to make that choice, or at least they're they're 0:12:53.040 --> 0:12:57.040 choosing jobs that have um, that have the money, and 0:12:57.080 --> 0:12:59.040 then they're not able to sort of trade the money 0:12:59.080 --> 0:13:02.400 against hours. But it does sound like you think there 0:13:02.480 --> 0:13:05.360 is a kind of economic free lunch somewhere here, whether 0:13:05.400 --> 0:13:08.200 it's a four day week or shorter hours that you 0:13:08.280 --> 0:13:12.959 could have uh quite dramatic changes to our sort of 0:13:13.040 --> 0:13:15.200 nine to five, five day a week culture, or even 0:13:15.200 --> 0:13:16.880 the bit the longer hours that lots of us have 0:13:16.960 --> 0:13:20.880 got used to working without having a significant hit to 0:13:20.960 --> 0:13:23.880 the economy and maybe making people happier into the bargain. 0:13:24.880 --> 0:13:27.480 That's absolutely right. You know, the key to getting a 0:13:27.520 --> 0:13:30.880 free lunch is to stop throwing away your lunch, always say, 0:13:31.320 --> 0:13:34.760 and you know, I've I've studied Japan a bit and 0:13:34.800 --> 0:13:38.800 lived there, and it's almost certainly true that Japanese people 0:13:39.040 --> 0:13:42.839 at many many companies work much longer than's necessary for 0:13:42.880 --> 0:13:46.240 productivity and The reason that they do is because of 0:13:46.480 --> 0:13:49.480 you know, essentially poor management. Management doesn't know how to 0:13:49.520 --> 0:13:52.560 evaluate their work output, so instead it simply evaluates their 0:13:52.600 --> 0:13:54.840 work inputs. So staying there at your computer till late 0:13:54.880 --> 0:13:57.840 at night doing essentially useless busy work is counted as 0:13:57.880 --> 0:14:00.480 work when in fact nothing is getting done because that's 0:14:00.480 --> 0:14:02.520 the only way that managers know how to monitor it. 0:14:03.000 --> 0:14:05.920 And so the Japanese government has been trying to crack 0:14:06.000 --> 0:14:09.400 down that. The question is where a country falls along spectrum. 0:14:09.400 --> 0:14:12.480 I mean, obviously, if you enforce a one day work week, 0:14:12.960 --> 0:14:15.040 then nobody's going to be able to get their work done, 0:14:15.120 --> 0:14:18.400 and companies are going to have big problems because they're 0:14:18.400 --> 0:14:20.520 going to have to hire many more people to do tiny, 0:14:20.560 --> 0:14:23.400 fragmented days of work, and there's going to be just 0:14:23.520 --> 0:14:26.720 mass confusion and chaos and unproductivity. So there's there's a 0:14:26.760 --> 0:14:29.680 happy medium in there in each country, and to a 0:14:29.680 --> 0:14:32.520 certain extent, each company really has to find it. We 0:14:32.560 --> 0:14:35.920 have these mechanisms that push against finding that happy medium 0:14:35.960 --> 0:14:38.600 because everybody wants to look good for the boss. You know, 0:14:38.640 --> 0:14:41.400 everyone wants to look like they're putting in a lot 0:14:41.480 --> 0:14:44.960 of hours, especially when there's a recession. Or weak economy. 0:14:45.000 --> 0:14:47.120 People don't want to be the first to get fired, 0:14:47.160 --> 0:14:48.720 so they're all sort of competing with each other to 0:14:48.800 --> 0:14:51.360 look like they're putting in the you know, they're they're 0:14:51.360 --> 0:14:54.800 burning the midnight oil. And so I think, you know, 0:14:54.840 --> 0:14:56.920 it does take government to sort of, you know, push 0:14:56.960 --> 0:15:00.560 against these things. One other possible plan that I didn't 0:15:00.560 --> 0:15:03.080 mention is to to go to a four day work 0:15:03.080 --> 0:15:07.640 week temporarily during recessions to encourage companies to retain staff 0:15:07.720 --> 0:15:10.120 and encourage them not to do layoffs, because layoffs are 0:15:10.200 --> 0:15:13.680 very damaging instructive, and that does happen in Germany really well. 0:15:13.680 --> 0:15:17.000 Places where you have closer relationships between the unions and 0:15:17.040 --> 0:15:20.800 the particular factories or the companies, you can often have 0:15:21.240 --> 0:15:26.200 shared limited limiting of hours in exchange for holding onto 0:15:26.240 --> 0:15:29.000 more more people. That's been over the years, that's been 0:15:29.080 --> 0:15:31.280 something that unions have negotiated. One of the reasons why 0:15:31.320 --> 0:15:34.280 sometimes you feel like unions can actually play a positive 0:15:34.360 --> 0:15:37.880 role as as well as sometimes a negative one. But 0:15:37.960 --> 0:15:40.240 it sounds I mean, so you actually think the government 0:15:40.240 --> 0:15:43.720 could sort of play a positive nudge role here and 0:15:44.080 --> 0:15:49.040 help people to solutions that the market wouldn't necessarily lead to. Well, 0:15:49.160 --> 0:15:52.400 I definitely do. But you know, there's a caution, which 0:15:52.440 --> 0:15:54.600 is that, you know, the hammer and nail problem. When 0:15:54.760 --> 0:15:56.560 all you've got as a hammer, everything looks like a nail, 0:15:57.120 --> 0:16:00.440 and there's the possibility that sort of over zealous bureaucrats 0:16:00.440 --> 0:16:03.160 will simply say, Okay, well, you know, because this works sometimes, 0:16:03.200 --> 0:16:05.440 it works all the time, and we should just restrict 0:16:05.440 --> 0:16:07.400 people from working as much as possible. And I think 0:16:07.680 --> 0:16:11.280 that very quickly degenerates into this this negative, one size 0:16:11.280 --> 0:16:13.840 fits all solution that would then end up, you know, 0:16:13.920 --> 0:16:17.400 hurting more than it helps. The other The other problem 0:16:17.520 --> 0:16:21.400 is ideology. If you have a government that's ideologically committed 0:16:21.440 --> 0:16:24.120 to the idea of of you know, forcing people to 0:16:24.120 --> 0:16:26.560 work less work is bad, we should lead lives of leisure, 0:16:26.800 --> 0:16:30.000 or simply the more rules we can make, the better. Well, 0:16:30.040 --> 0:16:32.280 then that's a danger too, and that's you know, I 0:16:32.360 --> 0:16:35.680 certainly worry about this in the context of Bernie Sanders 0:16:35.720 --> 0:16:38.360 and and some of his allied people in the United States, 0:16:38.800 --> 0:16:41.080 and I don't know as much about Corbin in the UK, 0:16:41.200 --> 0:16:44.320 but I'd say you might want to think about is 0:16:44.400 --> 0:16:47.120 this move being done for ideological reasons, or you know, 0:16:47.240 --> 0:16:49.280 is it really being done for practice. If there's an 0:16:49.280 --> 0:16:51.880 interesting form here because the Labor when the Labor Party 0:16:51.920 --> 0:16:54.600 came in in the seventies, they created the May Day 0:16:54.600 --> 0:16:57.080 Bank holiday in the UK, which previously we've had across 0:16:57.120 --> 0:16:59.880 Europe but not in the UK. So there's a sense 0:16:59.880 --> 0:17:01.920 of which they're also just trying to recreate the idea 0:17:01.920 --> 0:17:05.080 of giving everyone a holiday. Um, but I think there 0:17:05.160 --> 0:17:08.439 is also there's a kind of I've seen some work 0:17:08.520 --> 0:17:12.119 by unions, but also some academics on both sides of 0:17:12.160 --> 0:17:14.800 the Atlantic which talks about this in a slightly different 0:17:14.800 --> 0:17:17.640 way and says we should see it as a potential 0:17:17.640 --> 0:17:21.080 opportunity for workers to have more of the benefits of 0:17:21.160 --> 0:17:25.480 the coming automation revolution. So instead of just a chunk 0:17:25.520 --> 0:17:30.040 of workers losing their jobs because everything is more efficient 0:17:30.040 --> 0:17:32.679 and automated, and shareholders doing very well out of the 0:17:32.720 --> 0:17:35.960 extra profits for companies, this is how they would put it. Instead, 0:17:36.040 --> 0:17:39.440 you have all workers do less work and they're still 0:17:39.440 --> 0:17:42.199 able to be paid the same because of that. If 0:17:42.240 --> 0:17:45.960 you like automation dividend, does any is any of that coherent? 0:17:46.040 --> 0:17:49.520 Do you think from ancon economist standpoint that idea and 0:17:49.560 --> 0:17:52.400 of course I immediately think it sounds great in principle, 0:17:52.560 --> 0:17:54.359 but how would it work on a kind of company 0:17:54.400 --> 0:17:56.800 to company level? But sort of if you're taking a 0:17:56.880 --> 0:18:00.960 very macro view, is that a coherent thing to think about? 0:18:02.280 --> 0:18:04.159 So I think that you have to look at it 0:18:04.160 --> 0:18:07.199 in terms of productivity and not in terms of automation. 0:18:07.560 --> 0:18:09.320 The thinking about it in terms of automation will get 0:18:09.320 --> 0:18:11.560 you in trouble because automation is difficult to measure and 0:18:11.640 --> 0:18:15.080 even more difficult to produce. In other words, suppose that 0:18:15.160 --> 0:18:18.679 automation comes in and drives a lot of people's wages 0:18:18.720 --> 0:18:21.600 down because suddenly the technology is substituting for people instead 0:18:21.640 --> 0:18:25.240 of complementing them. Then no wages are going down. And 0:18:25.280 --> 0:18:28.000 then you're asking, okay, so wages went down, should we 0:18:28.040 --> 0:18:30.959 actually make people work fewer hours? Well that's a double whammy, right, 0:18:31.000 --> 0:18:33.440 Your wages went down and you can't work as much. 0:18:34.320 --> 0:18:36.919 But if you look at it through a productivity lens, 0:18:37.359 --> 0:18:40.760 you say, okay, would making those people work less actually 0:18:40.800 --> 0:18:44.000 increase their productivity, which would increase their wages and partially 0:18:44.000 --> 0:18:47.120 counteract the effect of automation, So they could be doing 0:18:47.160 --> 0:18:49.760 fewer hours for the same productivity and the same wages. 0:18:49.800 --> 0:18:52.080 I guess that's the model. Well, right, I'm saying that 0:18:52.240 --> 0:18:56.199 if you if you don't increase for our productivity and 0:18:56.280 --> 0:18:58.920 you restrict hours, if people are paid by the hour, 0:18:59.040 --> 0:19:02.600 you're reducing pay. Only if people are paid to sort 0:19:02.640 --> 0:19:06.600 of a fixed monthly or weekly salary, will that maintain 0:19:06.760 --> 0:19:09.480 their incomes for less work. You've also got to think 0:19:09.480 --> 0:19:12.680 about how these people are getting paid and what what 0:19:12.720 --> 0:19:16.040 the pay structure is there. As for you know, automation, 0:19:16.600 --> 0:19:19.000 there's the question of what automation will do. If automation 0:19:19.040 --> 0:19:22.080 starts actually reducing aggregate employment and there's a whole bunch 0:19:22.119 --> 0:19:25.680 of people who are just unemployed in the street, well 0:19:25.720 --> 0:19:28.840 then you might want to cut people's hours or days 0:19:28.880 --> 0:19:32.000 of work just to force companies to sort of overstaff. 0:19:32.720 --> 0:19:34.760 You hire hire two people to do the job you'd 0:19:34.800 --> 0:19:37.720 hire one person to do before, and if you want 0:19:37.720 --> 0:19:39.880 to keep everybody in work. And of course then there's 0:19:39.880 --> 0:19:42.359 also the answer question of do we actually want work 0:19:42.440 --> 0:19:45.399 to be the model going forward of who deserves what 0:19:45.560 --> 0:19:49.080 in a society. Do we want to go to a 0:19:49.160 --> 0:19:52.119 universal basic income where people get paid just for being themselves, 0:19:52.520 --> 0:19:54.399 or do we want to sort of stick with the 0:19:54.440 --> 0:19:58.080 traditional industrial age model of those who do not work 0:19:58.760 --> 0:20:02.080 neither shall they eat. I think that's a biblical quote 0:20:02.240 --> 0:20:05.879 and a quote from the Soviet Constitution, so well, I 0:20:05.880 --> 0:20:08.040 think it's it's a reminder. It is like we've almost 0:20:08.040 --> 0:20:10.200 come back to some of the issues that that John 0:20:10.240 --> 0:20:14.240 Maynard Kane's mentioned in the essay that I mentioned at 0:20:14.280 --> 0:20:16.640 the beginning of the podcast, which was thinking about how 0:20:16.640 --> 0:20:19.919 the world would change when where we've had all this 0:20:20.040 --> 0:20:23.119 increase in productivity and he felt we just wouldn't need 0:20:23.160 --> 0:20:25.160 to work very much. You know, all of these debates 0:20:25.160 --> 0:20:30.320 about automation and the future structure of the economy do 0:20:30.440 --> 0:20:32.280 make us think about the place of work in our 0:20:32.280 --> 0:20:35.280 lives as well as wages, although I think we're probably 0:20:35.280 --> 0:20:38.280 still pretty focused on them too. Noah Smith, thank you 0:20:38.359 --> 0:20:40.640 very much. I hope we get you on the podcast again. 0:20:40.840 --> 0:20:43.720 We we've we've enjoyed that, We've enjoyed having you, and 0:20:44.040 --> 0:20:46.840 we'll continue debating. Thank you very much. I really appreciate 0:20:46.840 --> 0:20:56.240 you having the Well, it wouldn't be Stephanomics without some 0:20:56.320 --> 0:21:00.399 more breaking news on trade wars. Donald Trump opened a 0:21:00.400 --> 0:21:03.440 whole new front in his trade wars in the last week, 0:21:03.560 --> 0:21:08.119 this time against Mexico or Mexico. Economy reporter Eric Martin 0:21:08.240 --> 0:21:10.160 was on his way. He was on a plane from 0:21:10.320 --> 0:21:13.520 Mexico City to New York when the news broke. Eric, 0:21:13.640 --> 0:21:17.680 What on earth has happened, Stephanie. It's been fascinating, really 0:21:17.720 --> 0:21:21.840 astonishing turn of events last Thursday with this teriff threat. 0:21:22.119 --> 0:21:26.360 Now that tariffs don't actually go into effect until next Monday, 0:21:26.440 --> 0:21:30.359 June tenth. So what's happening now is Mexico has a 0:21:30.480 --> 0:21:34.520 delegation of the highest level in Washington meeting with the 0:21:34.640 --> 0:21:39.480 US Trade representative, with Agriculture, with Department of Commerce, with 0:21:39.600 --> 0:21:43.120 Homeland Security, trying to convince them to get the President 0:21:43.400 --> 0:21:46.439 not to actually follow through with this teriff threat. Just 0:21:46.480 --> 0:21:49.040 remind us what he said sort out of the blue. Well, 0:21:49.080 --> 0:21:52.800 the President on Thursday afternoon said that he plans to 0:21:52.840 --> 0:21:56.800 impose a tariff beginning at five percent next week, in 0:21:56.920 --> 0:22:00.359 ratcheting up to twenty five percent by October. A less 0:22:00.400 --> 0:22:05.000 Mexico does more to stop undocumented immigration to the US. Now, 0:22:05.000 --> 0:22:07.320 this issue has been a thorn in the side of 0:22:07.320 --> 0:22:10.879 the president for years. It's been an irritant something that 0:22:10.920 --> 0:22:15.240 he mentioned even in his campaign launched speech in But 0:22:15.359 --> 0:22:17.119 this is one of the first times we're seeing a 0:22:17.200 --> 0:22:20.560 very clear linking of the trade in immigration issues. And 0:22:20.600 --> 0:22:23.040 you're normally you're in the US at the moment, but 0:22:23.080 --> 0:22:25.280 you're normally sitting in Mexico City. How has this gone 0:22:25.320 --> 0:22:29.639 down in Mexico. Well, it's been an absolute bombshell. Uh. 0:22:29.840 --> 0:22:33.960 Mexico had just sent the updated naft and after two 0:22:34.000 --> 0:22:35.960 point oh the U s m c A to its 0:22:35.960 --> 0:22:40.400 Senate for debate and ratification. And in fact, the Deputy 0:22:40.440 --> 0:22:44.840 Minister of Foreign Relations for North America was already scheduled 0:22:44.840 --> 0:22:46.800 to speak to the press in what was supposed to 0:22:46.800 --> 0:22:50.360 be a celebratory event about this document, this treaty having 0:22:50.400 --> 0:22:54.479 been sent to lawmakers. Complete change of plans with the 0:22:54.520 --> 0:22:57.480 president's tweet. This came out of nowhere. Mexico was not 0:22:57.600 --> 0:23:01.360 expecting this, There was no warning. We saw a significant 0:23:01.600 --> 0:23:04.680 drop off in the selloff in the peso on Friday, 0:23:04.720 --> 0:23:07.720 the currency at its worst day since October. Just a 0:23:07.800 --> 0:23:11.400 really remarkable turn of events. And what does this mean 0:23:11.560 --> 0:23:14.359