Massive Economic Growth and Technological Progress - Essay Example

Massive economic growth and technlogical progress have brought us to the point where we should be enjoying increased amounts of leisure and increasedsatisfaction from it but sadly this is not the case. Discuss. Introduction Considering leisure as a normal good, its demand would continue to rise as income rises and as long as income continues to rise, pressure for leisure time has to increase. As industrialization started, most of the production processes were being automated to replace labour by technology. Spending on leisure goods and services increased steadily and long term trends indicate shrinking work hours, increasing early retirements and expanding holiday entitlements. The leisure age has not happened and in the United Kingdom there are signs of reduced leisure and increasing work (Bartolini, 2007). The Neoclassical economic analysis makes the assumption that individuals make the decision between work and leisure time allocation. The opportunity cost of any time spent in leisure is the forgone earnings. Increase in earnings for all allocation of time would increase cost per hour used in consumption by a similar percentage for all goods and services (Becker, 1965). One will continue to work as long as the benefits outweigh the benefit of leisure if one behaves rationally. The more the leisure time becomes scarce, the value of leisure time increases. Understanding time allocation Considering a range of commodities, c1, c2…., cN, indexed by n. utility is determined over these commodities. As Becker proposes (1965), each commodity n is produced with a combination of market goods (xn) and household members’ time (hn), such that cn = fn(hn,xn). For instance, a commodity may be a meal. The inputs are; time spent cooking, time spent eating and ingredients. In the Beckerian model, market labor is one of the many uses of time that finally produce consumption commodities (Aguira& Hurst, 2006). With economic growth and technological progress we expect to be enjoying increased amounts of leisure and increased satisfaction but this is not the case. As show in the figure below, leisure time is reducing. Figure 1. Trends in leisure. Adapted from “Trends In Time Allocation: A Cross Country Analysis”, Department of Economics University of Oxford. Economic growth and technological progress are biased toward producing goods rather than leisure. What are the reasons for failure of industrialism to maintain its promise of increasing leisure? With the current technological advancement why are people still experiencing time pressure? What make people work so hard in economies which are growing ever more productive? If one spends less time working, one will accumulate less but have more time for leisure (Bergh, 2011). Research shows that people will rarely stop working when they have free time, instead they will yearn to get more. Working extra hours gives people the opportunity to earn more (Mark & Hurst, 2006). With continuous technology advancement, many people even work when they travel. The advancement of technology has led to the development of air transport and electric transport which is faster compared to what used to exist (CM Law, 2002). Unfortunately, these reduced hours have been translated to working hours in order to expand income. The trend for participation in all sports has shown a significant decrease, from 46% of adults in 1996 to 43% in 2002(Fox & Rickards, 2002). The current growth model entirely depends on what is transacted in the market; this is the reason why growth has not been able to fulfill its promises of greater leisure. Growth generates negative externalities. The two kinds of negative externalities are: a positional one and those that reduce the availability of free goods as intermediate or final goods (Cowling & Poolsombat, 2007). The figure below shows the average working hours per week in UK, and it doesn’t seem to be trending downwards as opportunities for new work arise. Figure 2. Actual weekly hours worked by full time employees in UK. Adapted from, Work and Leisure. The table below shows hours per week spent in “Leisure” over time: full sample, males and females. Leisure measures 1 is the total time spent on social activities/entertainment/relaxing and active recreation. For the full sample leisure measure increased by 5.1 hours per week. Leisure measure 2 incorporate leisure measure 1 and time spent eating, sleeping and personal care. Leisure measure 2 increases by 5.6 hours per week between 1965 and 2003. Leisure measure includes leisure measure 2 and time spent in primary and educational child care. Leisure measure 3 increased by 6.9 hours per week for the full sample. Leisure measure 4 is the residual of total work (Aguira& Hurst, 2006). Positional externalities When one is interested in their relative position rather than absolute position in an economy then that economy is positional. In the case where one is interested in relative wealth and not absolute wealth, then an increase in one’s income reduces the well-being of others, thus generating a positional negative externality (Deem, 2002). Positional competition causes individuals to work harder to accumulate more. In an economy of this kind the well-being of everyone cannot improve at the same time. Externalities reducing free goods These externalities are as a result of reduction of social and environmental capital. The growth process generates negative externalities which reduces the capability of the environment to produce free goods (Beckerman, 1992). The negative externalities of growth are that the market has the capability to supply costly substitutes for the free goods diminishing. People are forced to buy costly goods to maintain their well-being and the output of the goods increases. Growth generates negative externalities and negative externalities generate growth (Department of Economics University of Oxford, 2011). People end up working hard and saving more to substitute free goods with costly ones in the present and also in the future. Thus an increase in one’s income does not increase leisure time as it is used for substitution. Negative externalities motivate people to strive for more money (Sloane, 2006). Social and environmental devastation followed the industrial revolution. Apart from private wealth, social wealth also includes environmental and social capital. But one can only accumulate private wealth. Negative externalities forces people to over work and over-accumulate. Thus growth is coordination failure (Frankenberg, Smith, & Thomas, 2003). The dark side of growth Using growth as a substitution process model, one way to motivate people to work hard is to create a condition where almost zero goods and services can be obtained for free. That it is almost impossible to acquire well-being in ways that do not pass through the market and therefore well-being can only be purchased (MUlligan, 2002). It is this way that free goods which become scarce for the following generation and luxury goods for the one after that. For instance, people spending lots of money to evade an unlivable environment they have created (Binswanger, 2006). The continuous increase in the prices of goods and services is another reason why people are still working more hours. The growth of technology has seen high level of innovations. As the economy grows and new products being manufactured, the income of people has gone high, at the same time, the process of the goods has shot up (Layard, 2005). The levels of government taxation (both state and federal) have gone high. It means that increases in income have been substituted by increase in government taxes and prices of goods and services. With continuous upsurge in the prices of goods and services, most people are left with no option but to work extra hours (Nazareth, 2010). Urbanization Economic growth and technological progress led to movement from rural to urban areas with an aim of finding greener pasture. This movement resulted into the development of towns and cities. Cities are environments constructed for the purpose of work. With urbanization most people often prefer spending their leisure hours involved in social activities (Ekins, 2002). Most of these social activities require money which means that one must try to get extra income. Touring other parts of the world is quite expensive and requires a lot of money that can hardly be raised (Nazareth, 2010). Citizens are therefore left with minimal option rather than to work extra hours to raise money. Even those who go for holidays often carry with them gadgets (products of technological growth) to help in monitoring how their businesses are performing. The development of technology entails the advancement of consumer goods (Vogel, 2011). Most people are often amazed by new technological advancement such as personal computer, digital camera, internet among other technologies. Therefore, the only way people must maintain this level of technology is to work more hours. There are a myriad of economic uncertainties which people face. To a number of people, their marginal propensity to consume is mainly to provide some of the human fundamentals. During the industrial revolution, there was higher economic growth that made people work low hours. This later changed as people realized that it was necessary to have more income. Most experts are often required to work extra hours given that there are focal points, which they are the main trustees. Reduction in trust among humans makes it necessary to install security cameras and to develop of contracts which are costly (Osberg, 2004). Thus free final goods or intermediate goods are being substituted by costly goods as growth take place. Conclusion Massive economic growth and technological progress have brought us to the point where we should be enjoying increased amounts of leisure and increased satisfaction from it but sadly this is not the case. As we can deduce from this paper, the leisure enjoyed by the average American has increased over the last forty years. Women for example have increased both their market labor and leisure. Any definition that differentiate leisure from work is subjected to judgment. As we can conclude from the different measures of leisure used in this paper, leisure measure 3 which includes child care is increasing from the year 1965. No matter the measure of leisure in consideration, the fact remain that within the last 40 years changes have occurred in the allocation of time. Massive economic growth only account for private wealth and does include social and environmental goods. Growth only enables the accumulation of private wealth. The accumulation is through substitution of free final or intermediate good with costly goods. As the economic growth take place it is accompanied by devastation of the environment and social practice. Growth leads to substitution of free goods with costly ones and substitution generates growth. This paper also holds that technological progress and massive economic growth should increase amount of leisure but this is not the case as discussed in trend of leisure. References (n.d.). Aguiar, M., & Hurst, E. (2006, February). 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