This article originally appeared in National Review Online
In 1930, John Maynard Keynes predicted that over the coming century, per capita income would quadruple and that work hours would plummet. Jerry Brito observes that while this first prediction has essentially come true, the second prediction has come true in a more roundabout way. For large numbers of workers in the affluent market democracies, and in particular workers in knowledge-intensive services, the distinction between work and leisure has blurred. Professional pursuits for the most privileged workers often align with basic desires for stimulation, challenge, and camaraderie that would be met one way or another, whether on the job or off. Brito cites himself as an example of this phenomenon, as the bulk of his professional work consists of activities that he would happily engage in were he a wealthy retiree.
Tyler Cowen has discussed this same landscape in the context of “threshold earners,” i.e., people who choose not to maximize earned income, but rather to improve their quality of life. Tyler suggested that as the number of single-occupancy households increases, the share of threshold earners would increase as well, as one of the main drivers of the desire for income gains is to care for dependents. And one of Tyler’s central preoccupations is the increase in the quality and variety of leisure and consumption experiences, an enormous boon to novelty-seekers. This development implies that the opportunity cost of a work-centered lifestyle has increased, at least for the novelty-seekers who benefit from it the most.
While Jerry Brito and Tyler Cowen are optimistic about the prospect of a world in which the distinction between work and leisure has collapsed, Rob Horning offers a contrasting view. Brito and Cowen are both enthusiastic consumers and users of social media, which they see primarily as a means of discovery. Horning, however, sees social media as a means of harvesting the labor of individuals hoping to achieve self-actualization on behalf of profit-making enterprises, both directly (as Facebook and Twitter profit as their users deepen and enrich their platforms) and indirectly, as the constant process of public reinvention and taste-making helps spread new modes of consumption via viral means. I’ve expressed some gentle skepticism about the Horning thesis in the past, but the idea that social media transforms “living labor” — or self-defining activity, which includes the kinds of leisure Brito and Cowen prize most – into “abstract labor” that, as he puts it, “can be an input to a profitable production process,” is insightful. Consider, for example, a little start-up called Mass Relevance, which harvests publicly-available user data from Facebook and Twitter to provide media companies and other clients with a rich portrait of how consumers think. Horning’s deeper point, however, is that social media is both a homogenizing force and a force that produces “an urgent need to manufacture new distinctions,” as social media participants compete to demonstrate their uniqueness. A crude way to put the difference between Brito and Cowen on the one hand and Horning on the other is that while the libertarians are inclined to believe that work is becoming more like leisure, the critic of capitalism is inclined to believe that leisure is becoming more like work.
And finally, to pivot back to Brito, the idea that some workers are choosing to earn less in return for the opportunity to engage in more self-actualizing and stimulating forms of work raises interesting questions about the tax-and-transfer state. When high human capital individuals choose not to earn as much as they can, they are making a decision to avoid paying taxes, whether or not the tax question is top of mind. The elasticity of taxable income varies across groups, as Matthew Weinzierl explains in his work on tagging, and it also varies across societies, e.g., because younger people have a more elastic labor supply than older people, there is reason to believe that labor supply in older societies in more sensitive to the tax rate. In a similar vein, changes in marginal tax rates might not have a big immediate impact on labor supply, as work patterns arguably have at least as much to do with family obligations and identity as they do with after-tax income, at least in the short-term; yet they might have a bigger impact over time, as individuals and larger communities adjust their expectations. (See Arpit Gupta’s post summarizing Raj Chetty et al. on evidence from Danish tax records.) That is, higher marginal taxes might foster a society in which mothers and fathers are more likely to want to spend another hour with their children than another hour at work, or in which people prize access to positional goods that money can’t buy (or money can’t buy easily) rather than more accessible modes of consumption. This could be a salutary development in some respects, but it will presumably mean a somewhat smaller pie, and somewhat less scope for redistribution, as money is fungible in a way that networks, relationships, and access are not.