Speaking in a recent interview the founder of IT company Infosys Mr. Narayan Murthy said,
“My request is that our youngsters must say ‘This is my country I want to work 70 hours a week’,” he said, adding “this is exactly what Germans and Japanese did after the Second World War.”
“I hope our corporate leaders will be able to address our youngsters and say ‘For the first time India has received certain respect. This is the time for us to consolidate and accelerate the progress and for doing that we need to work very hard; we need to be disciplined and improve our work productivity.”
Working those extreme hours, he added, will define a culture that ultimately improves India’s government by setting an example.
“Our culture has to change to that of highly determined extremely disciplined and extremely hardworking people, and that transformation has to come to youngsters because youngsters from a significant majority of our population at this point,” he added.
He added his view that long working hours will help to propel India to become one of the world’s top two economies in coming decades.
How much truth is there in whatever Mr. Murthy said in this interview?
Matt Ridley in his book Rational Optimist: How Prosperity Evolves presents a ton of evidence showing how over a period of the last two hundred years Western societies have lifted the standard of living of their people and the people of the world by reducing the number of work hours required to produce various economic goods.
Over 10,000 years ago, there were fewer than 10 million people on the planet. Today there are more than six billion, 99 percent of whom are better fed, better sheltered, better entertained, and better protected against disease than their Stone Age ancestors.
The availability of almost everything a person could want or need has been going erratically upwards for 10,000 years and has rapidly accelerated over the last 200 years: calories; vitamins; clean water; machines; privacy; the means to travel faster than we can run, and the ability to communicate over longer distances than we can shout. Yet, bizarrely, however much things improve from the way they were before, people still cling to the belief that the future will be nothing but disastrous.
As Matt Ridley and other scholars like Ludwig von Mises and Murray Rothbard have shown, progress is when prices of economic goods are continuously falling every year. This fall in prices of both producer and consumer goods will raise the standard of living of people; it will raise the real income of people. There are two ways in which prices can fall in a secular trend. Let us see them.
There are two sides in every market exchange which determine the price of any given commodity: the goods side and the money (common medium of exchange) side. Both sides’ demand and supply factors combined together determine the price of a given commodity in question. Let us take an example of an apple. Ceteris paribus, an increase in the production of apple will reduce its price. Consistent rise in the production of both consumer and producer goods over the period of last two centuries has lifted the standard of living of the West first, and then of the rest of the world, when the West colonized the rest and gave it the gift of its technological and human capital inventions. The question now arises as to why production increased in the West. The answer is capitalism.
Production increases when factor productivity increases. Labor and land productivity can only increase when a capital good is used with it. Capital good is not a natural factor of production like land and labor as it is not available in nature. We, humans, will have to produce it first in order to use it with land and labor later on. I do not have time and space to discuss the lengthy process of capital good accumulation here but, in a nutshell, a prior production of more than what we consume, saving that unconsumed part of our production/income and successfully investing it in capital accumulation is required to increase future societal wealth. All these processes of capitalism require a population with a high average IQ and the ensuing culture of low societal time preference. The West had both of them available while the rest lacked them. Without a culture which promotes the virtues of capitalism, increasing production is impossible. And without higher production, lowering prices and raising the standard of living of people is impossible.
Zero Inflation (No Increase in Money Supply)
For prices to fall over a period of time it is also important for the money supply to remain constant as the other side of the demand and supply factors in an exchange represent the money commodity. Just like any other commodity exchanged on the market, money’s price (purchasing power) is determined by its demand and supply. Ceteris paribus, a rise in the supply of money will reduce its purchasing power i.e., compared to the situation before the rise in its supply money now will buy fewer goods in exchange. For the standard of living of people to increase it is necessary for the money commodity to either preserve its purchasing power or that purchasing power rises with time. Money’s purchasing power cannot remain constant or rise in an environment where the Indian central bank RBI is continuously creating more rupees out of thin air. RBI’s inflationary policy is the main reason why the standard of living of Indians is so low and they have to work a higher number of hours to eke out their subsistence level living. RBI is enemy number one of the Indian people, and RBI is wholly owned by the Indian central government. Indian government uses RBI to siphon off money out of the pockets of Indians for its own benefit. Inflation is a tax in disguise.
Looking at the above discussion, if Mr. Narayan Murthy really wants to see progress or become one of the world’s top two economies then he should demand RBI to immediately stop printing money. He should also ask the Indian government to stop interfering in the working of the economy and society. He should put his money to work in advocating an unfettered free market economy in India. He should spend his money on changing the growth inhibiting culture of India. Bigger efforts are needed to increase the IQ level of average Indians. His wife Sudha Murthy goes on everywhere to promote a vegetarian diet. While a vegetarian diet as her choice is not a problem at all, pushing vegetarianism on other Indians and politicising food choices is a huge problem. On a strict vegetarian diet the IQ level of Indians is not going to increase; meat consumption is essential for that. Mr. Murthy and his wife should spend their time and money to promote such a wholesome diet.
Mr. Murthy rightly mentioned improving work productivity as one of the major goals, but then he wrongly thought that working for more number of hours is increasing work productivity. It is not. It is exactly the opposite of improved work productivity. Improved work productivity means laborers are producing more in fewer numbers of hours. Economic efficiency means more output using less input. As I discussed above, to increase workers’ productivity it is necessary to combine their labor with physical capital goods and human capital which will give them the knowledge and skill to use those capital goods. Without human capital importing and using foreign technology will be completely useless as the unskilled labor force of India can’t utilize the full potential of those technologies to increase their productivity. The lack of human capital in the Indian labor force is the reason why the Indian economy and society are both degrading. Mohandas Pai – who served as HR head and CFO of Infosys – has highlighted this key problem in one of his recent reports where he said,
India no longer enjoys the advantage of demographic dividend as it’s saddled with crores of youngsters with low skills unsuited to the economy, claimed a human resources and education expert. The Chairman of Manipal Global Education, T V Mohandas Pai claimed that the country already has ten crore people in the 21-35 age-group with bad skills, unsuited for the economy.
Accumulation of both physical and human capital in turn needs prior saving and sound investment, as I mentioned above. Saving and investment in the right channel of production at the right time requires a capitalistic economy; an economy where the government doesn’t interfere in the working of the economy and society. If Mr. Murthy is serious about India’s progress then he should put his money and mouth into dismantling the big Indian government. He should oppose the heavy centralization of the Indian economy and society that is going on right now. He should advocate for dismantling the big tax regime in India.
Working for 70 hours a week is not going to make India a superpower or one of the top two economies of the world. Such working hours only represent corporate slavery. A progressing economy and society are signified by fewer working hours, and above I discussed what is needed to be done to reduce working hours. Mr. Murthy should understand these basic economic facts and argue for the same.