PROSPERITY OR SLOTH?
August 17, 2005
Economists have discovered that recipients of windfalls (bequests or lottery winnings) often use their new wealth to purchase a delightful commodity: leisure, says American Enterprise contributor James Glassman.
The theory is simple: the more money you receive, the more likely you are to exit the workforce, and if you remain, the less you will work. This is true for countries such as France, Germany, Italy and Japan where individuals are richer than they used to be and do not work as hard or as long. The result has been slower growth of gross domestic product (GDP) in these countries.
Contrast this with nations like China, Korea, Thailand and the United States. Their less onerous and intrusive economic policies have resulted in tremendous growth, says Glassman:
- Since 1990, GDP in the United States has grown at an average of 3.1 percent annually; in Europe the rate has been 2.1 percent; in Japan, 1.3 percent.
- As a result, GDP per capita in the United States ($38,000 in 2003) has soared past that of other developed nations: $28,000 for Japan, Italy, the United Kingdom and Germany.
Economists are accepting that less-burdened economies produce faster growth, but complacent nations would rather adopt policies intended to redistribute income, avoid the effects of competition and institutionalize long vacations, early retirement and generous unemployment and disability payments. Quite simply, Europeans and Japanese have decided to spend their new wealth on leisure and stress-reduction, says Glassman.
Why haven't Americans done this? The answer lies in the culture, says Glassman:
- Americans tend to be more satisfied with their working lives, even though they receive less vacation time.
- Nearly 53 percent are completely satisfied with their vacation time and only 17 percent are somewhat or completely dissatisfied.
- New immigrants balance out citizens with enough prosperity to opt for more leisure.
Source: James Glassman, "What Do You Do With Riches?" American Enterprise, July/August 2005.
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