Do We Really Need to Legislate Vacation Time?
Just when you thought the arrogance of Congressmen couldn’t get any worse, Alan Grayson (D-FL) is going to introduce a bill to require that employers with more than 100 employees give their employees 1 week of paid vacation time.
According to Erika Lovely of Politico (http://www.politico.com/news/stories/0509/22794.html), Rep. Grayson had this revelation that the government should mandate vacation pay while he, himself, was on vacation at Disney World. I understand that he thinks this would be stimulative. His line of thinking probably went like this: “Look at this sea of people. You know how we could really stimulate the economy – especially here in Florida – we should just pay all these people for the time they’re spending here.” OK, it probably didn’t go quite like that, but I just can’t resist poking fun at someone who is arrogant enough to think he should tell all companies how to run their businesses.
The argument actually is something more like this: Rep. Grayson reportedly claims that people would be more productive if they had more time off. Apparently, companies are too stupid to figure this out for themselves, and need the likes of Rep. Grayson to force them to make their employees more productive. Now, I’m going to grant Rep. Grayson credit where credit is due: He started IDT Corp. and has been a successful businessman in the private sector. So, at least he’s actually held a job that didn’t involve telling other people how to live their lives. However, that doesn’t make his bill any less arrogant.
Why does the government need to tell companies to offer vacation pay? If Rep. Grayson, or anyone else, truly believes that companies offering paid vacation time have more productive employees, here’s a few ideas: 1) start a company and offer paid vacation; 2) start a fund and invest in only companies that offer broad-based paid vacation plans to employees; 3) invest privately in public companies that offer broad-based paid vacation plans to employees; 4) give what is known as “angel money” to start-up companies offering paid vacation; 5) start a private equity fund investing in start-up companies offering paid vacation.
If paid vacation really makes employees more productive, then the market has ways to ensure that paid vacation finds its way into more companies. After all, if paid vacation really makes employees more productive, then companies with paid vacation will sweep the floor with companies that don’t offer paid vacation, and those companies will have to adapt in order to compete and stay in business.
Rep. Grayson would do far more good taking his profits from starting IDT (with annual revenue in excess of $2 billion) and investing in companies offering paid vacation, or using his influence in the numerous companies in which he has significant ownership to force them to offer paid vacation. That way, if he’s right, he’ll make even more money, but, if he’s wrong, he’ll lose his own money instead of forcing all investors to try his experiment with their money.
That’s the American way to do things: go out into the world and kick everyone else’s butt by being better, and change the world when your competitors try to imitate you. Did the government have to tell car companies to use a production line? No! Henry Ford went out into the world and just obliterated his competitors by making cars available to more people using a production line. Henry Ford made cars faster and cheaper, and he built a company that traditional car makers of the day simply couldn’t keep up with – Ford dominated the car market by making cheap cars. His competitors (and soon companies in other industries) copied his mass production process using an assembly line – something that is, today, used around the world. This is how Americans change the world: not through legislation.
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Dan is exactly right. Not only is the idea arrogant but there is a cost. It might seem like a free lunch fo employees, but there is no such thing as a free lunch. The cost of employers will be passed along to consumers, to employees in terms of lower wages or fewer jobs, and to the owners of the companies. There is a well known story illustrating how people assume a free lunch does exist. A kid throws a rock at a window and breaks the window. Everyone standing around regrets the unfortunate state of affairs and speaks about what a bad kid the window breaker is. But then up walks a man who purports to be wise. He points out that this is not a bad thing after all. The man fixing the window will get money for doing so. This will then be spent on a new suit, and the tailor too will get money. The tailor will spend money on other items, and the circle of rising prosperity will expand without end.
What’s wrong with this scenario? As the French economist/philosopher Bastiat argued in the 1800s, , “It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented.” And the important part of this is that whatever he would have spent the six francs on would have been more important to him than replacing the window.
Q: How’s Ford doing today?
A: Getting its butt kicked by foreign companies.
Well, Fordhmm, glad to see that you’re at least standing behind what you say by leaving your real email address and real name.
You missed the point entirely if all you’re hung up on is the fact that Ford is not doing well at the moment.
How did the competitors beat Ford? I’m pretty sure they all have production lines, don’t they? The fact that they, at the moment, build cars better than Ford’s successors is completely irrelevant. The point is that Ford’s methods became emulated around the world, and, in point of fact, in other industries.
The point is that Ford made other people change the way they ran their companies not by lobbying Congress or the White House, but by being so much better than his competitors that they wanted to emulate him. Whether he (or his company years after his death) remain standing as king of the hill for life, or whether his competitors use his model, improve upon it, or discard it for a better model and knock him off to take his place at as king of the hill matters not, because he already changed the world.