A 20 hour work week would be common in the free market

While still steadily increasing, our standards of living today are much lower than they would be in the absence of government taxation, regulation and the public provision of goods and services such as electricity, health care, judicial services, and policing services to name a few.

During periods when our standard of living is improving we expend decreasing amounts of energy and labour to attain a certain amount of leisure time, the latter which is a consumption good.

Because the government debt must be repaid.

As an example, before the day of rail transport, people expended more labour to move a product from one place to another.  It may have taken 80 hours to move a tonne of bricks from Johannesburg to Pretoria.  Today, this takes no longer than a day.

It means man has become many times more productive with the invention and production of rail and truck transportation.  For one, significantly more time has been freed up for leisure activity.  Exactly 60 hours, in this hypothetical example.

Before the day of rail transport, very little was paid in the way of taxes to the state.  For interest’s sake, in South Africa in the late 19th and early 20th centuries taxation took the form of mainly import duties and property taxes.  (Let’s forget for now that taxpayers were the largest contributor to building rail in the first place – which means taxpayers living outside of town who didn’t require or want the benefits rail would bring to urban centres, had to pay for it, no matter what.)

The crux of the matter is this: the more efficient and productive society becomes, the more the state can take in the way of taxes without anyone noticing.

For example, today I require 80 man hours to get something done, next year with a different tool I can do the same amount of work in 20 hours.  75% less time is now expended on producing a good than before, and I have 75% more time to spend on leisure.

However, slip a tax rate of 5% in here, and you now don’t have 75% more time for leisure, but 70% more time for leisure.  The state has stolen some of your leisure time in the form of making you work more hours to fund its expenditures.

The Free Market Foundation estimates that as South Africans we work from January until May to pay the government tax bill.  That’s 42% of the year that is spent working not for yourself, but for the government.  Adding the inflation bill on here would tip the scale over 50%, but we’re not getting into that right now.

One or two generations before us the head of a low to middle income family could work a 40-50 hour week and acquire enough resources in payment to sustain a family of 5-6 people. However, today both heads of a low to middle income household are required to work a 40-50 hour week to sustain a household of 5-6 people.  That’s a total of 80-100 labour hours.

Despite all the technological advances and the abundance of goods and services that have freed up significant time by increasing our productivity exponentially, one family works many more hours to maintain a certain standard of living today compared with half a decade earlier.  It means people today expend double the labour hours to achieve the same relative return on labour compared with half a decade ago.

Free-market time.

In the unfettered free market without government taxation and regulation our guess at HA is that the head of a family of 5-6 people would today be working in the region of 3-4 hours a day or 15-20 hours a week to maintain a certain standard of living.  Yet this is only a guess intended to get the point across that in a period of rising productivity and no or low taxation, prices tend to fall and real wages increase, increasing the standard of living of the broad population.

What will always and everywhere be true is that as people become more productive, their average work week will decline over time, if the goal was only to maintain a certain standard of living.

During the industrial revolution in Britain the average work week was in the region of 80 hours, while child labour was also commonplace.  Today minors are barely allowed to work and British adults have a state regulated maximum work week of 48 hours per week (which you can opt out of, but the point should be clear).

If Britons paid less in the form of taxes they would most likely today be working in the region of 30 hour work weeks without sacrificing any of the modern luxuries and products available.  In fact, it would be more likely for us to have even more technological advancements, a wider array of goods and services, and a more abundant standard of living than we presently have if tax rates were lower and incentives to compete in the market place were greater. For one, just freeing up the vast labour resources tied up in the public sector would see it diverted to and applied to more productive uses in the private sector that will over time translate to an increased standard of living.

I can hear some responding: “Yes, but the state provides goods and services for those taxes we pay such as healthcare and public transport…” True, but very few will argue with the statement that the private sector is more efficient at allocating these resources and providing these goods and services, which implies that the private sector will provide these goods and services at a lower cost than the government presently does.  This again means shorter work weeks to pay for health care and transport in the absence of state provision of these services.

The most important point to take home is that owing to very heavy regulation and taxation by the state, our standard of living has in fact deteriorated over the past 100 years, relative to what it otherwise would have been in an unfettered free market.