Will Our Grandchildren Work Only Four Hours Per Day?

Authored by Ryan McMaken via The Mises Institute,

Chinese billionaire and Alibaba founder Jack Ma predicted this week that in 30 years, people will be working less than they do now. According to NBC

“I think in the next 30 years, people only work four hours a day and maybe four days a week,” Ma said.

 

“My grandfather worked 16 hours a day in the farmland and [thought he was] very busy. We work eight hours, five days a week and think we are very busy.”

Only time will tell if Ma’s prediction will come true in terms of its time horizon and magnitude. But, if the next century follows the pattern of the previous 150 years, we could be looking at continued and significant reductions in total working hours. 

Some of the biggest gains are likely to occur in the so-called “developing” world, but even the wealthy West will continue seeing gains in this regard. 

For many Americans, at least, comments such as Ma’s may cause them to scoff. Remarkably, there still seems to be an impression among many Americans that they are working more hours now than their grandparents did. 

This is no doubt true in some specific cases, but overall, the evidence is clear that people are working less now than in the past — with the possible exception of the recent past.

Indeed, if we look at a survey or total work hours conducted by Michael Huberman and Chris Minns, we find that total hours worked have declined over time: In Germany, for example, total hours worked declined from 3,284 hours in 1870 to 1,463 in 2000. In Canada, work hours declined over the same period from 2,845 to 1,835. 

workhours2.png

The overall trend is obvious, and only the US, Sweden, and Canada in this sampling of wealthy countries shows something other than a decline from 1980 to 2000. 

From 1870 to 2000, though, total work hours declined 39 percent in the United States, 40 percent in the UK, and 55 percent in Germany. While it’s certainly possible that some Americans may be working as much as their great-grandparents did, overall, most of us work more than a third less time than they did. 

Other studies have shown similar results. 

A study by Thomas Juster and Frank Stafford found that from 1965 to 1981 in the United States, “market work” hours per week fell from 51.6 hours to 44 hours for men. For women, market work rose from 18.9 hours to 23.9 hours. We would expect an increase for women over this period as women began to take on “market work” at higher rates than before.

In yet another study by Mary Coleman and John Pencavel, average weekly hours worked fell for white men from 44.1 hours in 1940 to 42.9 hours in 1988. It fell for white women from 40.6 hours to 35.5 hours over the same period.

Most of this is thanks to continued progress in worker productivity. As recently explained by Ferghane Azihari at mises.org, we work less for more as capital accumulation and productivity increases. Obviously, our standard of living is higher than that of our grandparents. And yet, we’re often working less than they did. 

Moreover, our working lives are shorter than they were in the past. 

As Ben Powell has noted in his work on sweatshops on child labor, wealthy countries enjoy the luxury of eschewing child labor nearly in its entirety.

By the 20th century, thanks to increasing productivity, the adult members of the family could produce enough to pay a family’s expenses in a way that had previously required the labors of the family’s 9- and 10-year-olds. 

It was the decline in the necessity of child labor that made it feasible to finally outlaw child labor in wealthy countries in the early 20th century. Today, labor activists act as if laws prohibiting child labor were the primary driver behind its decline. It is far more likely that the opposite is true. Namely, that growing wealth allowed for more children to leave the work force. Prohibitions on child labor came only in the late stages of this process. Powell writes

In the United States, Massachusetts passed the first restriction on child labor in 1842. However, that law and other states’ laws affected child labor nationally very little. By one estimate, more than 25 percent of males between the ages of 10 and 15 participated in the labor force in 1900. Another study of both boys and girls in that age group estimated that more than 18 percent of them were employed in 1900. Economist Carolyn Moehling also found little evidence that minimum-age laws for manufacturing implemented between 1880 and 1910 contributed to the decline in child labor. Similarly, economists Claudia Goldin and Larry Katz examined the period between 1910 and 1939 and found that child labor laws and compulsory school-attendance laws could explain at most 5 percent of the increase in high school enrollment. The United States did not enact a national law limiting child labor until the Fair Labor Standards Act was passed in 1938. 

And it wasn’t just the children who could afford the new luxury of skipping work.

During this same period, the elderly were beginning to enjoy for the first time the concept of “retirement.”

Just as increased productivity had made it possible too for parents to more fully support children with just the parents’ wages, so too did these gains make new pension programs — both governmental and private — possible. 

After all, the implementation of the Social Security tax would have been a political impossibility in an earlier era when workers were living closer to subsistence levels.Thanks to the surpluses made possible by growing industrialization and worker productivity, both private corporations and government agencies could skim off enough of the surplus to hand over to elderly workers who were no longer actively producing products or services as wage workers. 

Thus, like child workers, elderly workers began to disappear from the work force. W. Andrew Achenbaum writes

In [1890 in the US], about two-thirds of men aged 65 and older were still in the labor force — roughly the same proportion found today in developing countries such as Brazil and Mexico. By 1920, that number had dropped to 56 percent, and by 1940 it was down to 42 percent. Today it is 27 percent.

Today, not only are modern workers working fewer hours in many cases, but fewer workers are necessary to produce at least as much wealth. 

This is especially true when we look at these trends through a global lens. As Powell notes, child labor declines the most in those countries where real incomes exceed $12,000. The number of countries where this is actually the case continues to expand, just as poverty continues to decline in the developing world. 

This isn’t to say that everything is perfect or getting better in every way all the time. Nor are the gains evenly distributed. The relative gains being made in recent decades in the US, for example, have slowed as American workers face greater competition from foreign workers. Gone are the days when the European competition was still digging out from the rubble of World War II. Also gone are the days when workers in places like India and Latin America and China offered little competition. Workers in the Western world once had a near monopoly on the benefits of being in close proximity to the world’s best capital — including the best factories and the best technology. Nowadays, highly advanced production facilities can be found throughout the world. And this means more competition from workers in the developed world. 

Moreover, continued interventionism by states and their central banks may drive real wages and economic opportunities down. Regulations on starting small business, coupled with central-bank driven asset price inflation, takes its toll on earnings for many throughout the world.

Time will tell if war, unchecked government regulation, or some other disaster may put a halt to the declines in working hours we’ve been enjoying for so long. If not, our descendants will be looking back on five-day weeks the way we should now look at the grueling work schedules of our great-grandparents.

 

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Visualizing The Jeff Bezos Empire In One Giant Chart

With a fortune largely tied to his 78.9 million shares of Amazon, the net worth of Jeff Bezos continues to be on the rise.

Just days ago, Amazon shares reached all-time highs after the company’s ambitious acquisition of Whole Foods. This puts Bezos just $4 billion away from displacing Bill Gates as the world’s number one billionaire – and if the stock continues upwards, he could take the title any day.

We’ve previously showed how Bezos built Amazon from scratch, but as Visual Capitalist’s Jeff Desjardins explains, today’s infographic focuses on the extent and reach of Jeff Bezos and his Amazon Empire.

Courtesy of: Visual Capitalist

 

ALL STREAMS LEAD TO AMAZON

Jeff Bezos makes investments and acquisitions through multiple vehicles:

Amazon makes acquisitions and investments that relate to the company’s core business and future ambitions. This includes acquisitions of Whole Foods ($13.7 billion in 2017), Zappos.com ($1.2 billion in 2009), Twitch.tv ($970 million in 2014), and Kiva Systems ($780 million in 2012). It also includes investments in everything form failed dot-com company Kozmo.com (2000) to Twilio, which successfully IPO’d in 2016.

 

Bezos Expeditions manages Jeff Bezos’ venture capital investments. Over the years, this venture arm has put money into Twitter, Domo, Juno Therapeutics, Workday, General Fusion, Rethink Robotics, Business Insider, MakerBot, and Stack Overflow. More recent investments include GRAIL, a startup that recently raised over $900 million to cure cancer before it happens, as well as EverFi, an edtech startup.

 

Jeff Bezos also invests money on a personal level. He was an angel investor in Google in 1998, and has also put money in Uber and Airbnb. (Note: these last two companies are listed on the Bezos Expeditions website, but on Crunchbase they are listed as personal investments.)

 

Nash Holdings LLC is the private company owned by Bezos that bought The Washington Post for $250 million.

 

Bezos Family Foundation is run by Jeff Bezos’ parents, and is funded through Amazon stock. It focuses on early education, and has also made an investment in LightSail Education’s $11 million Series B round.

It’s also worth noting that Jeff Bezos is the founder of Blue Origin, an aerospace company that is competing with SpaceX in mankind’s final frontier.

EARLY GROCERY AMBITIONS

While the Whole Foods acquisition is the latest talking point for Amazon, it is certainly not the company’s first foray into the groceries business.

Interestingly enough, the company actually invested heavily in HomeGrocer.com in 1999, a company that delivered groceries from large warehouses to homes. Sales peaked at $1.5 million per day, but unfortunately HomeGrocer couldn’t make it through the Dot-com bust.

This postponed Amazon’s grocery ambitions, but it wouldn’t stop them.

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Navy Test Of New Anti-ICBM Missile Fails

Three weeks ago, the US military conducted its first successful test of a ground-based anti-intercontinental ballistic missile system that had cost more than $40 billion to develop, with the Pentagon lauding the test as “an incredible accomplishment.”

But the Navy had no such luck on Wednesday following an unsuccessful test of a new ship-based anti-ICBM projectile. As the Missile Defense Agency announced in a press release, the test of the new SM-3 Block IIA missile – which was conducted jointly by the US and Japan’s Ministry of Defense – had failed.

The test, conducted Wednesday, was the second intercept test of the SM-3, and the first to yield an unsuccessful result.  The previous test was conducted in February. The missile is being designed jointly by the US and Japan with the explicit intent of countering the threat posed by North Korea’s increasingly sophisticated nuclear program, according to the MDA.

Here’s the full release:

“The U.S. Missile Defense Agency and the Japan Ministry of Defense conducted a development flight test today of a new Standard Missile-3 (SM-3) Block IIA missile off the coast of Hawaii. A planned intercept was not achieved.

 

The SM-3 Block IIA is being developed cooperatively by the U.S. and Japan to defeat medium- and intermediate-range ballistic missiles. This is a new, developmental interceptor that is not yet fielded by either country.

 

At approximately 7:20 p.m., Hawaii Standard Time, June 21 (1:20 a.m. Eastern Daylight Time, June 22), a medium-range ballistic target missile was launched from the Pacific Missile Range Facility at Kauai, Hawaii. The USS John Paul Jones (DDG 53) detected and tracked the target missile with its onboard AN/SPY-1 radar using the Aegis Baseline 9.C2 weapon system. Upon acquiring and tracking the target, the ship launched an SM-3 Block IIA guided missile, but the missile did not intercept the target.

 

Program officials will conduct an extensive analysis of the test data. Until that review is complete, no additional details will be available.”

 

This was the fourth development flight test using an SM-3 IIA missile, and the second intercept test. The previous intercept test, conducted in February 2017, was successful.

 

Though currently still in the development and test phase, the SM-3 Block IIA interceptor is being designed to operate as part of the Aegis Ballistic Missile Defense system. Currently, the Aegis BMD system operates with the SM-3 Block 1A, SM-3 Block 1B, and SM-6 interceptors.

The Pentagon announced on May 31 that it had succeeded in thwarting a simulated ICBM attack using its Ground-based Midcourse Defense (GMD) system, which the military hailed that as “an incredible accomplishment.”

Riki Ellison, founder of the Missile Defense Advocacy Alliance, described the test as “vital” prior to launch. “We are replicating our ability to defend the United States of America from North Korea, today,” Ellison said.

That test was the first of its kind in nearly three years, and the first test ever to target an intercontinental-range missile like North Korea is developing. Full text of the news release from the Pentagon can be found below:

HOMELAND MISSILE DEFENSE SYSTEM SUCCESSFULLY INTERCEPTS ICBM TARGET

The U.S. Missile Defense Agency, in cooperation with the U.S. Air Force 30th Space Wing, the Joint Functional Component Command for Integrated Missile Defense and U.S. Northern Command, today successfully intercepted an intercontinental ballistic missile target during a test of the Ground-based Midcourse Defense (GMD) element of the nation’s ballistic missile defense system.
 
This was the first live-fire test event against an ICBM-class target for GMD and the U.S. ballistic missile defense system.
 
During the test, an ICBM-class target was launched from the Reagan Test Site on Kwajalein Atoll in the Republic of the Marshall Islands. Multiple sensors provided target acquisition and tracking data to the Command, Control, Battle Management and Communication (C2BMC) system. The Sea-Based X-band radar, positioned in the Pacific Ocean, also acquired and tracked the target. The GMD system received the target tracking data and developed a fire control solution to intercept the target.

 

The primary difference between the two anti-ICBM systems is that the SM-3 Block IIA missile is designed to be launched from a ship, providing the US with more flexibility when deploying it. The GMD system tested by the Pentagon last month is, as its name suggests, ground-based.

 

We now wait to see how the North will respond – specifically, whether the hermit kingdom will follow through with what would be its 10th ballistic missile test since the start of the year.  The US anti-ICBM test follows the death of University of Virginia student Otto Warmbier, who passed away earlier this week after being released to the US for medical reasons. Warmbier had reportedly been in a coma for a year after being arrested in North Korea. His crime? He was caught stealing a North Korean propaganda poster.
 

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James Comey Visits The New York Times

Just hours after President Trump admitted he did not record any of his conversations with James Comey, the former FBI Director was spotted entering The New York Times office, in Times Square, NYC.

As The Daily Mail notes, Comey confessed to being the source of a leak to the Times about private, unorthodox meeting he had with the president before he was fired in June.

Comey, disguised behind dark sunglasses stared straight ahead as entered the Times Square office building, accompanied by his wife Patrice Failor.

 

Unmistakably towering above everybody with his 6ft 8in frame; in a crisp navy suit and tie on one of the warmest days of the year, The Daily Mail reports Comey drew second-glances from some stunned by-passers.

 

It appears President Trump’s warning maybe about to come true…

 

Just when the torents of daily leaks, anonymously sourced lies was slowing to a drip… is Comey about to serialise his brief few weeks with President Trump… or maybe, just maybe, The New York Times wants to investigate a little deeper just what went on with Loretta Lynch…?

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“This Market is Absolutely 100% Going To Crash”

By Chris at www.CapitalistExploits.at

Him: “This market is absolutely 100% gonna crash.”

Me: “You sound so certain?”

Him: “Just look at the valuations.”

Me: “Pricey valuations don’t always culminate in a market crash. There are other factors to consider.”

Him: “Trump trade is over, and I’m now 50% hedged on US exposure and net long EMs. Plus, the dollar is finished. It’s gonna be ugly.”

This conversation went on for some time. I was talking with a well known hedge fund manager (who will remain nameless) and the main topic was the US equity market.

His view is typical, but I’m not sure he’s correct.

Here’s the Dow:

A bull market ever since 2008. Overvalued? Sure, but wait…

Here’s institutional investor sentiment as reported in the FT:

“According to the survey , which questioned about 200 investors who manage almost $600bn of assets, just 10 per cent expect tax cuts to be passed before Congress breaks for a summer recess.”

And here we are looking at the Sentix survey. In blue is the market bias or confidence and in grey the equity market:

The divergence is significant. In short, investors don’t believe in the current bull market. That may be a problem only if everyone is already long. They’re not.

Institutional money is bearish and retail participation at just 54% is a hair off all time lows of 52%. Going into 2008, this stood at 62%. This isn’t how bull markets end, folks. A pause in a rally? Sure, but no stock market crash.

It’s Always Relative

What is rarely discussed is that we live in a relative world, not an absolute one. Only if you’re dining at a steak house, do you have to eat just steak. If you’re sitting at a buffet table, you make your choices based on what’s on offer.

Let’s step out of the steak house and step up to the buffet table.

Let’s look at fixed income. Here’s the yield on the US 30-year:

And the German 30-year Bund yield:

I could toss in the Japanese bond yields and Gilts and you’ll see the same thing.

In fact, let me point out that the Government of Argentina.

Yes, Argentina – a country well known for repeatedly cocking up their finances and defaulting on their debt. Well, they just managed to pull off the sale of a $2.75 billion worth of 100-year bonds with a coupon of… get this… 7.125.%.

Surely, a country with a history of repeated defaults struggled to sell the bond? Nope. According to the FT, “the bond attracted $9.75bn in orders from investors.”

3.5X oversubscribed, folks. Now, ain’t that something?

This is a good opportunity to remind ourselves of something, especially when diving into the EM world. There are a few risks with a bond. There is duration risk, default risk, and the other is currency risk.

Memories are indeed short.

Here is the dollar against the Argentinian peso:

Summary

Equity markets may well be overvalued but realise that capital has to go somewhere and if, like us, you’re looking for asymmetry where risk is low relative to reward, then shorting the equity markets makes bugger all sense in this environment.

I’ve pointed out only two major markets here, albeit the two largest – bonds and equities. But viewing one market on its own is a really dangerous way to look at markets as they are all interconnected and a framework for all the moving pieces is needed. The bubble, in case you haven’t realised it, is in bonds.

Which brings me to my question for the day:

Stocks vs Bonds pollCast your vote here and also see what others would do

– Chris

“Eight times in its 194 year financial history has Argentina defaulted on its borrowings, most recently in 2014 amidst its dispute with creditors from its prior episode of financial ruin in 2001. At its historical pace, the soon to be-issued 7.125s of 2117 (priced at $90 to yield around 7.92%) will default more than four times over before that so very-distant prospective maturity date.” — Philip Grant of Grant’s Interest Rate Observer

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