The power of more work hours

Business Standard, 13 November 2023

N R Narayana Murthy made waves when he advocated 70 hours a week of work for the young.

The hours put in by an individual

There is much merit in high levels of intensity in work. The mass culture extols fun, the work/life balance, and the shallow hours spent consuming the creations of others. It fails to understand asceticism, the importance of concentration, that life is not a spectator sport.

The word `talented' is dangerous and misplaced. Virtually none of us is an Einstein or a Ramanujan. What comes of us is made by work, by marinating in ideas, through the influence upon us of clever people and good people. Edison famously said that genius is 1 per cent inspiration and 99 per cent perspiration. Age as measured in CPU seconds is a better measure than years of experience.

The hours per day through reading and working make skills and capabilities. The real puzzle of life lies in rising above that, to inventing and creating. There also the hours count. When Baba Allaudin Khan was young, he practised 16 hours a day. He was the greatest of teachers of Hindustani classical music, and a key part of his recipe was imposing work/life imbalance upon the children being taught. Amit Varma and I recently did a conversation about an unusual subject, Bruce Springsteen. In his story we see a big role for gritty hard work.

Young people need to clock in long hours: Doing, reading, and thinking. Find the best master and become their apprentice. Surround yourself with clever and good people. The emotional environment matters: Being in the assembly line at Kota is harmful. Pursue the knowledge, not the rank in an exam.

The hours put in at an organisation

There are organisations where key individuals work very long hours a day, where key persons are indispensable. Here, power is often concentrated in very few hands. It is worth sounding an alarm on management. In a well-run organisation, power should be dispersed, no person should be indispensable. In a well-run organisation, there should be sound processes and not fire-fighting. When we see an organisation mired in crisis management and long hours, something is wrong.

Fire fighting and long hours can be done for some years in the zeal to build an organisation. They cannot be sustained indefinitely. A weak firm can hang in there putting in extremes of inputs for some years, and when the intensity cannot be sustained, it will die. Or, the weak firm can graduate to genuine productivity, where it gets the requisite work done at sustainable levels of inputs. With government organisations, there is no competitive constraint, and decades of stagnation with poor outcomes is quite feasible.

The hours expended in a country

Consider a person doing accounting, law, or medicine. Working 70 hours/week generates twice the billing when compared with 35 hours/week. So the individual stands to earn twice as much by working at twice the hours. Does that carry through to the country? Will the Indian GDP double if everyone worked twice as hard?

This reasoning involves a fallacy of composition. Imagine that all accountants work 35 hours/week. When one accountant goes up to 70 hours/week, other accountants have to lose roughly 35 billing hours/week. The choke point in India is that weak growth has given a stall in the labour market; we are stuck at about 420 million persons working. Each one person that is taught a skill tends to take away a job from another person. This is a foundational flaw in much of conventional humanitarian philanthropy.

Is brute hours of the essence in India's becoming an advanced economy? Let's wave a magic wand three times. We will go from 410 million persons working to 820 million persons working, thus ending the crisis of mass non-employment. This is a 2× in the labour. We will also double the hours per week. Thus, overall, we are imagining a 4× in the labour. We will also do the commensurate 4× in the capital (with machines, offices, and infrastructure) so as to keep pace with the 4× increase in the labour. For example, in that imagined India, the market capitalisation of the stock market will be four times bigger than it is today.

It would take quite a magic wand to do these things! In history, there have been episodes where dictatorships imposed immense state cruelty upon a country and generated massive increases of the inputs. With all this huffing and puffing, we would muster a 4× gain in inputs, which gets us to a 4× gain in GDP. Does this get us to match the advanced economies?

No, it does not. The global frontier is the United States, with a per capita GDP of $80,412, which is 8.8 times higher than that in India [see the data]. The most herculean and, admittedly unrealistic scenario, where inputs are mobilised to raise India's GDP by four times does not take us to match the US.

To add insult to injury, French labour law prevents the work week from being above 35 hours/week. French per capita GDP is $58,765, which is 6.4 times higher than that in India. A 4× gain here does not get us there.

India (with a per capita GDP on a PPP basis of $9,183 per year) is very poor when compared with the advanced economies. Even with a 4× gain, we'd be at values like Russia or Malaysia, we'd be much behind the successful advanced economies of the world.

The lesson here is that at the level of the country, India's transformation requires higher productivity, not just more inputs of labour and capital.

Why is India poor? The firms are poorly organised, and fare poorly on converting input into output. In building better firms, we face `how' and `why' questions. The `how' question is: What kinds of governance, strategy, and operations deliver better Indian firms?

And then, we have to go one level deeper to the `why' question. Why are firms currently constructed in India by rational owners of an inferior quality? This story lies in institutions, in the workings of the state, in state coercion, and the rule of law. Vijay Kelkar and I wrote a book about this: In service of the republic: The art and science of economic policy.

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