Wednesday, May 26, 2010

East and West and Time Preference

Time preference, "the preference for present satisfaction over future satisfaction or present good over future good," is the key to understanding our economic predicament, suggests Gary North — Why Asia Will Overtake America. "How is it that Asia has had a huge trade surplus with the United States?" he asks, answering himself:
    Because its people work long hours. They are finally getting access to capital. This capital increases their productivity. The tools they need to compete are made available through thrift. Then they put capital to use in a long work week. They have little time for leisure. They are at work many hours per day.

    In contrast, Americans are losing capital through consumer debt and withdrawal from the labor force. I don't mean unemployed people. I mean underemployed people. The person who watches TV for 4 hours a day is consuming his most precious capital: time.

    When we see a society committed to work, we see a society that has the basis for economic growth. If people work hard to get ahead, they will accumulate capital. Their work will become more efficient. If they work merely to buy spare time for play, then they will not experience economic growth.

    Asia is growing economically, because of the people's future-orientation. The United States is barely growing, because of its present-orientation. We see this in the waste of time associated with entertainment. This is a culture-wide phenomenon. It has been accelerating in the West for at least 85 years. The rise of radio and the movies marked the transition. World War II delayed the advent of the entertainment culture. The 1950s produced the first teenage subculture. It had its own movies, music, and entertainment. Why? Disposable income from parents and part-time jobs. The money went into our pockets. That was my generation. We spent as children spend, but we spent more money than children ever had spent in history. We got used to entertainment. The counter-culture, 1965–70, was even more committed to entertainment. It even turned cultural revolution into entertainment....

    Once China's real estate bubble has popped, it will be time to move capital into the region that is committed to future-orientation. These people are not just hard workers. They are not merely high-return workers when given capital. They are uniquely future-oriented.
Not to toot my own horn, but I take as much overtime work as I can find, and my American and Canadian colleagues think me crazy, without even knowing anything of the outside work I have done. While they complain about long hours, I ask for more. I do so without sacrificing time for my family, which is why I alone welcome the split shifts everyone else dreads.

Perhaps it's the combination of my Protestant upbringing and my Korean wife that compels me. Stakhanovite though I may appear, I'm not; it's the capital, not the labor, I seek. And I don't seek stuff. I don't give a hoot about the latest electronic device. (I was recently laughed at for mistaking Wii for the first person plural pronoun.) "He who dies with the most toys wins" strikes me as the stupidest statement in all of human history, and the fact that an American likely made it a source of shame. I'm thinking about my later years, the house and small farm I'd like to own, and my kids' futures.

Sure, this time spent blogging could be spent more profitably, but I'm enough of a Catholic to know that leisure cannot be discounted, and this blog's Newstex syndication allows me to bring in enough money for a book every couple of months, which, remembering the value that books once held, is nothing small in my opinion. Furthermore, the work I do, teaching English to Koreans, is not that taxing; I like what and whom I teach. Time preferentially, I think I may be living in the best of both worlds.

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Anonymous Tom Piatak said...

Your blogging is certainly not a waste of time--far from it.

7:37 AM  
Blogger The Western Confucian said...

Thank you, sir!

8:34 AM  
Blogger xavier said...


Yes working long hours has certianly boosted their productivity but at the cost of a demographic winter that'll hammer them very hard.

Taiwan has the lowest birthrate in the world.
Japan is dying and the productivity is actually stagnant
China- 'nuff said
Burma: please
Vietnam: the corruption and croynism have stagnated the dream.

Also I don't see much innovation except from the Japanese. I see a lot of tinkering and improvments of existing technology but no world changing ideas

10:53 AM  
OpenID arturovasquez said...

Priorities: It comes down to what you want your society to look like. If you want people to be a bunch of working robots, sure, why not work sixty hour weeks? I think that is what is wrong with society.

Pundits accuse people in Mexico and Latin America of being lazy. Fair enough. I like my luxury, and I like to think I work hard. And I wouldn't want to go back to living in Mexico either. But at the same time, what is the point of life if I just adopt the gringo Protestant work ethic? The people who die having worked the hardest still die. Your kids might be a little more secure, but unless you die a millionaire, they are going to have to work just as hard or harder than you did. And so on ad infinitum. Doesn't seem like a good philosophy of life to me.

And I could care less what this does to society in general. Prosperity and hard work for what? To be prosperous enough to have enough weapons to invade other countries? Or to be wealthy enough to look down our nose at people who are poorer than us? No thank you.

7:37 PM  
Blogger The Western Confucian said...

I'm obviously conflicted. I once had a post titled "The Mexican in Me" referencing one of expat Fred Reed's articles on his adopted land, explaining that folks there work hard enough to make ends meet and stop there to enjoy time with family and friends.

He gave the example of a successful car mechanic. An American might want to open another branch garage in a different town, whereas the Mexican would be content with what he had, and spend his leaiure time with family and friends. I'd probably take the Mexican route.

But here in Korea, I don't take the route many of my fellow gringos take here, and fill their free time with downloaded TV shows from back home on electronic gizmos that will be obsolete in six months.

11:02 PM  

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