A sideways look at economics

Last weekend, I was reflecting on some of the positives from this lockdown as I sat in the garden soaking up the early summer sun and reading the Saturday paper. The twice-daily meals sitting all together at the table had created a particularly pleasant atmosphere of bonding through a mix of exchange of ideas and jokes. In my son, the forced respite from the busy pre-lockdown routine morphed from the initial slight anxiety about the future into a spur of creativity and renewed independence. Just as I had finished this last thought my eyes fell on a particularly interesting article on the open newspaper (I cannot find the same article I read online, but here it is from a ‘neutral’ non-UK specific source). It reported how a man in France was awarded 40k euros (much less than the 360k he asked for) in compensation for being stuck in a job that he deemed too boring, a first case of ‘bored-out’ (as opposed to burnt out!). Even without disturbing existentialist masters like Sartre or Camus, it got my mind ticking over. My train of thought took a first quick stop at: ‘Thankfully I would never get bored at Fathom!’ breathing a sigh of relief and counting my blessings.

The second stop is where my thoughts eventually got stuck, as I moved from the details of the story to its context. The news seemed tailor-made for a dark comedy. At first I couldn’t get past the tragedy of a man who deemed the overall costs from jumping through endless bureaucratic hoops and enduring the company and costs of lawyers for years (four at least) in addition to performing a boring job, to be 40k euros (or even the 360k he initially asked for). On closer inspection, the mise-en-scène felt eerily familiar. In Italy, for example, such tragedies have been for ever immortalised by the comedy cult of Fantozzi movies of the 70s and 80s (also relatively popular in former Soviet countries).

Less amusingly, the whole tale closely resembled one of the many extreme cases of constructive dismissal (in Italy these are referred as ‘mobbing’ cases): a practice that is unfortunately routinely administered in countries where, by desire or design, there is more of a job-for-life culture. As a result, I became quite curious to see whether this story could perhaps feel a lot stranger to a British person than an Italian. For a start, a quick search of the word ‘mobbing’ on Google Trends highlighted a steady decline in search interest from a very high level since 2004, consistent with the introduction of more flexible work arrangements with the 2003 labour reform in Italy.

Eager for a clearer comparison, I started looking online for articles referencing the French case in both Italian and British mainstream media in order to check some of the readers’ comments. The top comment in the Daily Mail (2374 up votes out of 952 comments) was:

“Why on Earth didn’t he change his job? If he wins this case stand by for several million similar claims”

The second (1510 up votes) was:

“Well you could have looked for another job this is ridiculous”

The third was:

“the world has gone crazy”

The top Google-ranked media link in Italian contained only 17 comments with the top one (six likes) declaring:

“This is crazy”

The second was:

“Well done to him, 40k not even close to enough”

The third was:

“Tomorrow I will also give this one a go”

The reactions were broadly as I expected, particularly among the very-surprised British readers. Among Italians, I was hoping for some references to Fantozzi and some friendly banter with the French. But the sense of resignation about how little reality has changed over time was palpable, both from the more muted overall interest in Italy and the actual reactions there. In both countries, complacency about the status quo is perhaps what surprised me the most, with Brits seemingly taking a flexible labour market for granted and Italians resigned to the idea that an unsatisfactory job, and the alienation and ennui that inspires, is an ineluctable part of life.

Personally, learning the value of changing my mind has been the most valuable and liberating lesson from having experienced both types of labour markets. In particular, the greater incidence of a certain type of corporate abuse, such as mobbing in Italy, and the overall jadedness of workers, does not immediately scream for a call to arms to protect workers more; but it suggests, rather, that personal choices seem excessively stifled.[1] This is true beyond the world of employment and it is a principle that goes to the heart of the very notion of freedom and progress (e.g. divorce laws, universal suffrage) without prejudice for the pursuit of social justice. Indeed, I find politically charged efforts simplistically to pitch the quest for social fairness against personal choices (and vice versa) particularly dangerous and patronising. Yet, this still happens all too often, particularly whenever there are discussions about what constitutes a good, just, fair or efficient labour market. Ever since the work of Pigou and Ramsey in the late 1920s,[2] it has been relatively well established that more elastic factors of production (e.g. skilled, more secure labour) should be taxed more than inelastic factors (e.g. unskilled, more precarious labour). In other words, the debate is a lot less about whether we should protect the more vulnerable or less fortunate through some form of taxation, and a lot more about how. In a world that is moving full-steam-ahead towards potentially automating large segments of the labour market, the debate around fairness and dynamic labour markets will only intensify. In order to tackle the issue effectively, it is important to shed the complacency and the historical baggage around the various versions of the current status quo. I, for one, wish that my generation’s legacy for our sons and daughters should be a dynamic and fair labour market that puts individual choices at the centre and frames them as opportunities rather than risks. Universal income is an interesting and promising first attempt, unsurprisingly championed by northern European economies, but likely only the beginning of a long journey.

At Fathom we regularly have debates on topics such as this and, surprisingly, we seem to find some relatively wide common ground, in spite of an even wider range of views. For example, most of us would agree that a basic income that created a cliff edge at some point on the income scale would be a bad idea as it would risk locking many in a mediocrity trap. At the same time, most of us also see the benefits of some lump-sum transfer (living wage) complemented with incentives for participating in the labour force, not unlike some of the ideas from the late British economist Tony Atkinson. Views start to differ on how progressive this incentive ought to be and on what should be the source of the proceeds for the lump-sum transfer (e.g. income vs capital taxation). We are not going to settle this debate here, but at Fathom we recognise that valuing personal choices starts with making an effort at shaping the prevailing narrative. We hope you will join us in doing so!

 

 

[1] The lack of labour dynamism is often the result of policies which make the search-and-match process between employee and employer much more difficult. This is partly because the opportunity cost for an employer – waiting for a better candidate – is much higher than the opportunity cost for an employee – receiving a better offer. This friction has also implications for equilibrium wages by potentially creating an artificial excess supply of labour, but I digress.

[2] See https://academic.oup.com/ej/article/125/583/235/5076989 for a review of Ramsey’s contribution