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3.3: Write an Essay - How the value of labor has changed over time

Time is a scarce resource for every living being. We all have time and need to decide what to do with our time. Our time is finite and no one lives forever.

High time preference is when people prefer the present for the future. Although this can be a fun way of living, it can reside in higher cost in the future. Low time preference is when people are more inclined to think of how to live today in order for their time tomorrow to be not only increase in time, but also of a better standard. People with low time preference are more inclined to save, invest, accumulate knowledge and plan for the future. These people are essentially longer-term thinkers and doers.

People are different but time preference is always positive. Utility today is always preferred to the same utility tomorrow. Individuals always prefer consuming or having a good today over the next years.

It is not for me to judge what is “better”. Only to respect both ways of approaching life. Although, with a lower time preference, it is more likely you improve you life (at least economically and in health) and a with a higher time preference it is more likely your time will deteriorate from day to day.

As human time is the ultimate resource, we continue to find ways of producing more and more as well as our division of labor making the prices cheaper over time. Although, we might not produce as much if we were still on the gold standard. Then people might be more inclined to save rather than produce and consume. After we went of the gold standard, our fiat currencies have been inflating. To think of time preference, lower rates is when society has a high time preference and higher rates is when society has lower time preference.

With lower time preference however, the value of labor goes up as they are more inclined to think of the future and increase capital and improve their knowledge. With higher time preference people tend to have more “fun” today and as a result they become less productive from day to day as they don’t think as much in the long-term.

The value of human labor is subjective, and everyone values it individually.

But, what we can see is that we are able to produce more and more with a lower human time due to increase in technology and division of labor. We have more time for leisure and get more opportunities. This is however somewhat debatable as we are under an inflationary fiat currency that continues to devaluate our purchasing power and therefor lower the value of labor.

With more leisure we also need to find out what we like to do when we aren´t working. Will we lie on the beach forever, we will most likely get bored. This is subjective and some might value their labor even though it generates very little income because it is something they would like to do on their free time while some get a lot of “value” for their labor while not enjoying the present / their work.

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You’re a little bit all over the place in this essay, but I agree with the general message. You didn’t really explain why labor becomes more valuable so to speak, but I think at the end you came to the conclusion that with depreciating currency, labor has been losing value since we moved off the gold standard. All in all, you touched on a lot of the main points from the lecture in unit 3, but the essay was a bit rushed and ideas were floaty.

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A lot of things in this day and age, in business especially, revolve around supply and demand and the 80/20 rule. If there is a lot of supply and the demand is low, then the price with be reduced. If there is low supply and high demand then the prices will be increased. We are seeing this now in the car market, there is a high demand for new cars but they aren’t being produced fast enough so they have to pre-order them. The 80/20 rule states that 80% of something comes from 20% of something. 80% of the wealth comes from 20% of the people. We are seeing these principles in the value of labor and the job world today. With Covid people get paid for not working so what is the point of going to work when they can get paid to sit at home all day. The value of labor is the same to go to work or to sit at home all day. This is a very unique circumstance that we have never seen before until 2020. Usually how it goes is you get the job if you are the most qualified person for it and you start out with a salary. Then if you work hard and execute well you are able to make more money if they think your time and work are valuable enough and make the company or job money. How the value of labor has changed is there are so many more jobs than there were even 20 years ago. With there being more jobs, the number of jobs have rapidly increased and they cause for labor. They are willing to pay more for someone to actually come in and to work than to have that position vacant. Another cause is depreciating currency. People are passing ridiculous new laws to raise the minimum wage to unreal amounts and each day there is more and more inflation and the US dollar decreases in value.

I understand what you are saying in explaining the high & low time preference, some examples would be great. Thank you good work

When looking back in history we can see the different stages of how and when the value of labour changed. Every living creature has a different value to the labour ratio. A lion will spend most of its day conserving energy (labour). It needs to be energized to hunt, to survive.

We go to work to meet our basic living needs (food, water shelter). Extra working hours may need to be considered to purchase our desired and wanted commodities (new car, ….)

We also consider the value of our time. How long is it to travel to and from work? This can be an additional 1-2 hours on top of the standard 8hour workday. This will vary on a person’s travel distance and their time preference.

The advancement of technology has given people a positive and more comfortable way of traveling to and from work. This has given people the opportunity to live further away; have more land, space for family with the same work travel time. However, with a growing population, there are more vehicles and stressed public transport causing delays. Technology must advance at the same rate to meet people’s time preference needs. (higher/ lower time preference depending on values & type of transport)

A motivated workforce increases productivity generating profit growth. Financial growth provides the opportunity for businesses to reinvest back into their infrastructure, operate more efficiently, upskill employees with salary increases, and provide health packages.

However, efficient operations use technology. Such technology will make people redundant. This will lead to human labour reduction. The technology or systems implemented by the motivated employees/ers may be the thing that replaces them.

There are positive and negative views depending on who you ask; the person who invented the solution has shown skill, profited, and excelled in their career. Nonetheless, their role and many others are now obsolete.

Technology advancements can benefit employees by making their jobs easier and more efficient. For example, in the building industry, the invention of the battery provided electric tools. Carpenters have less labour-intensive activities with less stress on their bodies, improving overall health and wellbeing.

Furthermore, with increased proficiency, the cost of production decreases, yet the product sale price can increase. Proving higher profitability. Inflation on materials can be considered in advance and covered. (free market eventually decides what the quality & quantity of products)

Negatively, technology proficiency leads to higher expectations from employees. Time has been saved but demand has increased. The overall outcome is overworked, stressed, and injured employees reducing their quality of time outside of work, due to being tired and in pain.

History has shown a pattern of the consumers who have a high time preference choosing the lowest priced product. The lower price is due to poor quality, cheap materials, and undervalued labour. The finished product is not made to last. We are not concerned, we live in a throwaway society. The product was cheap, we can buy a new one.

An example of this is when manufacturing moved to China. The quality of products and life expectancy of the products changed from years to months. Products were mass-produced at a discounted rate for companies such as Walmart. Demand increased as customers wanted the low price. The impact of a throwaway society is growing waste, pollution, and natural destruction. Recycling is a second thought. We have a high/low time preference of materials (lifecycle)

High-time preference thinking has led to the greatest manmade disasters. Using asbestos, a toxic product in building materials causing death, dams have collapsed with the use of cheap concrete, deforestation caused by demand for livestock land and food, the loss of life due to poor working conditions.

As Charles Darwin once said “It is not the strongest of the species that survives, nor the most intelligent. It is the one most adaptable to change”

Positives

  • increase in productivity
  • increase in working conditions
  • increase in benefits
  • increase in quality of life
  • increase in problem-solving

Negatives

  • wages not keeping up with inflation
  • working faster has negative effects on health
  • less time with family
  • machines & computers can do the same labor for less
  • decrease/increase in value of products

In general, the value of human time has increased. So if that’s the case then maybe the value of labor has increased with it, since labor is our primary tool for increasing the value of our time. Since people value their finite time more than anything (or at least they should), over time we have discovered and created new ways of producing things more efficiently and more quickly, which has substantially reduced the amount of labor/time and manpower needed to do so. The one major thing that seems to have changed in labor is that machines and software do most of it, and could possibly end up doing all of it in the future if the central banks and politicians will stop printing fiat money and allow for deflation.
At the very basic level of human existence, in order for us to survive we must work for it, whether we like it or not. And we usually don’t like it, so we invented machines to do it for us, and because of that we have this amazing world of technology and abundant resources. The only thing we need to figure out now is how to manage all of it properly and not blow ourselves up.

Below is my essay for ECON103: Unit 3 Essay - Value of Labor. Any comments from fellow students is highly appreciated.

As humans evolved and discovered new ways or being more productive, their time became more valuable. In this essay, I try to look at it from three different perspectives: the individual, the collective and the transgenerational.

Initially, the gains in the value of labor probably took place in an individual level, with individuals acquiring and refining their skills. That free time could be then use to communicate those skills to other individuals, so that they could learn those skills even faster and improve them further, resulting in an even more productive group of individuals, and so on. Those same individuals could then use their free time to “tinker” with the world around them, which led to the development of primitive tools that allowed those skills to be potentialized, resulting in the production of even more economic goods in less time. Teaching and the development of tools started as something done leisurely, as telling stories and playing, but as soon as the value of those activities became obvious to the individuals, they turned into independent forces that potentialized the value of human time.

Looking at it from a collective perspective, a skilled group of individuals would benefit from sharing the information on how to acquire new skills and also from producing tools that would make the use of those skills even more valuable. Moreover, those individuals could then specialize in a certain set of skills in which they would be more productive, and then trade the goods produced this way with those produced by people that specialized in a different set of skills. In this sense, the quest of the individuals to make their time more valuable, even when done purely in a selfish manner, creates a stimulus for cooperation with other individuals, which can make the time of each of the cooperating individuals simultaneously more valuable.

Finally, from a transgenerational perspective, the cooperation among individuals and the exponentially larger value created by those interactions soon made apparent that the value created could be spread not only across space (though communication and trade), but also across time, from one generation to the next. The impulse to engage in such activities is probably natural, and derives from our natural instinct of ensuring the continuity of our own species and genetic lineage. This led to the development of specific tools to store information, so that it could be transmitted to future generations, but also to store wealth.

This brief overview on how human time became more valuable over the course of history also underscores the importance of two foundational layers for human development: the communications layer and the monetary layer. The first one is necessary for the dissemination of skills and technologies that improve our productivity and free our time. And the second is necessary for the accumulation and dissemination of wealth through generations. While the communications layer has coalesced into the internet and become widespread by mobile technology, largely escaping the control of any particular group of individuals, the monetary layer is still under the monopoly of nations and governments around the world. It seems that the coalescence of the monetary layer in a similar manner is an obvious and necessary step for the continuous increase in the value of human time and overall evolution of humanity.