Juliet Schor argues for shorter working hours as a cure for recession blues:

Historically, market economies have absorbed this displaced labor in two ways. The first is the creative of jobs in new industries making new products. The 20th century brought automobile workers, higher education administrators and medical personnel. But new jobs, spurred on by growth in GDP, are only half the story. The other mechanism for maintaining balance in the labor market has always been reductions in hours of work. Without the advances of a shorter workweek, vacation time, earlier retirement and later labor force entrance, the economies of the OECD would never have attained the “golden age” of high employment that prevailed after the1930s depression. Between 1870 and 1970, hours of work fell roughly in half. These countries have re-balanced the labor market by re-distributing work to make its allocation fairer. We need shorter hours because it is unrealistic to count on growth in GDP to absorb all this current and future “surplus” labor. Rich countries just never grow that rapidly. So the austerity economics that says work longer and retire later has it exactly wrong.

I think this is right in a big picture sense, but wrong as applied to the specifics of the recession. Consider the international data:

I think it’s sensible of the Germans to have taken a lot of the gains from their increased productivity in the form of reduced working hours. But if you look at the German line in detail, you see a cyclical element. Each time a recession ends, it’s associated with an uptick in hours worked. That’s because you do recover specifically from a recession through an increase in the demand for labor that expresses itself first in longer hours and then in less unemployment. Then, in Germany at least, the underlying trend toward less work and more leisure comes back into play.

Which is to say I like Schor’s ideas as a vision of the long-term future of the economy, but for the short-term we’re still just looking for more demand.

Relative to the issue above, I wonder if there’s evidence that tax-and-transfer programs really have become politically unsustainable in a neoliberal era? There are probably lots of different ways you could look at this issue, but at a minimum this paper from Marianne Bitler and Hilary Hoynes (PDF) on what actually happened after welfare reform suggests that there actually hasn’t been much change in total fiscal commitment:

Another way of looking at this is internationally. According to Lane Kenworthy, market incomes for the poor have stagnated across the developed world, but in some countries transfer payments have risen and living standards increased:

This seems very sad to me. Poor Americans could enjoy substantially higher living standards if we did more to enact transfer payments that ensure that the fruits of economic growth will be broadly shared. In some countries, a lot of that happened, and in other countries very little of it did.