The Paid Vacation Laffer Curve

Yglesias makes a perfectly sound point in this post about paid vacation:

A paid vacation is a kind of accounting fiction — you continue to draw a paycheck (and health care benefits, etc.) even while you’re on vacation. But nobody’s going to pay you to go on vacation. You’re paid for the work that you actually do.The money you get on your vacation days is part of your payment for the work you do on the other days. Over the long run, if the government mandates a certain number of paid vacation days, then positions that currently offer fewer vacation days [than] that will become less lucrative.

Things like this assure us that Matt isn’t economically illiterate. But to some of his commentators, economic literacy amounts to treason. Witness Bloix:

At one point, Matt was an intelligent moderate liberal. All of sudden, he’s a wingnut spouting moronic right-wing talking points.

Incredible! Bloix, like a number of other commenters, seem peeved that Matt did not mention that productivity and wages could go up, due to happier, better-rested workers. And even if productivity did go down, wages could be kept constant by cutting executive pay, or shafting shareholders. Why are you such a wingnut, Matt!?

I like the point about highly tanned, highly productive workers, since it strikes me that it turns on something very like the logic of the so-called Laffer Curve. At the “no vacation” limit, you don’t get zero productivity, but the workers may be worn down, demoralized, listless, and perhaps even spitefully sluggish. At the “permanent vacation” limit, you do get zero productivity, since no one is ever at work. Somewhere in between is the productvity sweet spot. I suppose it is easy to imagine that we are currently at a point where more vacation would give us enough extra productivity to compensate for the time off. More productivity from less working! Like more revenue from lower taxes! Damn right-wing talking points.

Now, since companies obviously have no incentive to hit the productivity sweet spot, since companies don’t like making money, we may indeed need the government to step in here and make sure we all get the vacations our employers would give us if they had any reason to try to get us to really put our shoulders into it. Naturally we can be sure the government will find the optimal vacation sweet spot. You can’t buy bombs with taxes on unrealized profits!

Whetever you do, don’t tell the Chinese about weekends off!

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