We are mostly a bunch of disgruntled workers even if you are responsible and respond to Theory Y Management. We are probably pretty professional and responsible in the job, even though we are prone to grumble and complain. What are the usual refrains? Overworked and underpaid…. Of course this has a lot to do with capitalism and the entrepreneurs take the risk and hence all the reward while the workers only receive a fraction of the reward, but we have almost cast-iron certainty of that fraction. This phenomenon did not start today, so why then do most workers out there feel that they are working harder and harder then ever before?

Surely there must be some rational explanation on this silent question that we seek in our hearts and exchange among friends and partners. Is it really that the world is getting tougher and tougher like one of those dungeons whose walls start to hem you in and eventually squeeze you flat? As always there is a rational answer to everything. Things should not always be attributable to the whims and fancies of a divine being. So let me give you my take on why we all face this squeeze in life.

There are basically three reasons for this

There are still those among us who see a handphone as an evil device, one that restricts personal freedom and eats into our liberty. These folks may just be the enlightened ones while the rest of us succumb to the device of convenience. Now our loved ones and friends can find us whenever their whims and fancies dictate. We are instantly connected to anyone who knows the couple of digits that can track us down. Unfortunately this applies not just to our loved ones and friends, but also to our bosses and colleagues.

And the list does not end, besides the handphone, other similarly "damaging" devices include email, laptops, blackberry devices and other devices that support this instantaneous communication or perpetual connectivity to the world. The internet, HSPDA modems, ultra portable PCs, WiFi and more are also culprits.

Well, for that matter, it was not long ago when the facsimile machine was such a culprit. But what we have today dwarf its impact.

In the past, a business proposal had to be painstakingly typed on a typewriter, bound up and then mailed or hand delivered from the proposer to the receiver of the proposal. If the receiver was not in the office, he would then only read the proposal when he was next in the office. If there is great distance between proposer and receiver, the proposal takes time to travel that distance.

That certainly sounds very painful. We could barely imagine it in this time and age.

What happens now, is that a proposal is typed on a personal computer, a desktop or a laptop. And yes, everyone types to the speed of a super secretary. Thus at this lightning speed, the proposal is typed and formatted and even checked for spelling and grammatical errors. Then the proposal is sent, via email, to anywhere in the world, regardless of what the receiver is doing or located. This delivery process barely takes seconds. And even though the receiver is not in the office, he can also receive it effortlessly on a mobile device.

That is really the marvel of the communication age. Instantaneous. I cannot repeat this word enough.

But it is because everything happens at this instantaneous speed that we also have to respond accordingly or at a compatible speed. Suddenly the pace of work increases many many fold. Previously in a work day, you could only do so many things, because things took time to happen or arrive. Now when everything happens at a click of the mouse or tap of the button, it is no wonder and no brainer, that we have to work harder and harder and harder. This increase is many fold all thanks to instantaneous communication.

So really is instantaneous communication making our lives better or worse?

Beyond the sexy Management Theory and the powers of communication, good old Economics Theory also provides some answers in this debate.

We are in an era of unprecendented of sustained high prices of oil. This high price of oil creates inflation that spreads to every part of the economy and every person. This is because oil is basic to power generation and transport which are basic to any active economy. No economy or city around the world can exist without oil or any other fuel.

So when this very basic raw material is inexplicable expensive for whatever reason over a pretty sustained period of time, there is only one outcome – inflation. Inflation is worsened by the fact that the global economy and global trade is today more linked and extensive than before. When oil prices go up, the effect is felt everywhere and by all industries. We have seen commodity prices go up as well as asset prices. All this can eventually be linked to inflation and sustained high oil prices.

Unfortunately or fortunately, depending on which side you are on, wages are more sticky than these other prices. Wages tend to be adjusted on an annual basis and so they have more rigidity than other factor prices. But unfortunately there are a lot of us who earn wages rather than take the profit after paying off wages.

The real effect of this is that our real income level falls as inflation spirals. Because our adjustment in wages is usually on an annual basis, it is harder for real wage increase to measure up with inflation. Of course, that is even before mentioning stingy corporates or entrepreneurs who will only pay their workers what is absolutely necessary to keep them motivated or maybe just sufficiently motivated to stay in the job. Or worse case, just a bit more than their replacement cost.

But getting back to the point. When your real wage drops or when costs of consumption increases, you get less total utility than before. Assuming you still have to put in the same amount of work at the workplace, your work per unit of utility is now increased. This increase in work per unit of utility just convinces your mind that you are working harder and harder. And that is because you are getting rewarded less and less for every unit of work.

We can discuss this logically and rationally, but at that end of the day, we are still victims of this economic phenomena.

Another wonderful economics concept – scarcity. With scarcity, we have to exercise choice, because we do not have the resources to do everything. No matter how rich or poor you are, you face scarcity of resources, be it money or time. Of course, it is of utmost importance to state that the rich do not experience scarcity as intimately as the poor. That is because they are able to pay for someone to outsource their chores (maid), pay for someone to outsource their activities in life (private bankers, butlers, etc) as well as pay for things to be done faster (express services, higher quality services).

And really you cannot blame the rich if they fail to understand scarcity. Because the truth is they have more resources and thus do not appreciate scarcity as much as the poor. With scarcity, comes choice and with choice comes prioritization. The poor man does not think too much about what to eat. He eats whatever he can afford and probably whatever is on the dining table. The rich man ponders to no end about what to savour in his next meal. He may even journey or search to great extent just to satisfy his taste buds, rather than his gastric juices.

So when the rich person decides what to eat between three food items, he can really afford to purchase all three food items, taste a bit of each before deciding which one to constitute his main meal. He also has the time to agonise over each of them to no end, before finally deciding. And maybe if he does not reach a satisfactory conclusion, he can try again and again and again.

Contrast this to the poor man who can only afford one of the food items. He quickly prioritises his purchase either by lowest absolute cost or by utility per unit cost. He is in fact a much better decision maker and prioritiser than the rich person.

It is only logical that your boss is richer than you. That is because she is paid more than you. This problem is further acerbated by the fact that your boss might be more wealthy than you in addition to having a higher income.

All things being equal, your boss does not appreciate scarcity as much as you do and does not prioritise or make decisions better than you do. Often the boss will ask for more information and agonise over these information before making decisions. This agonisation and further scrutiny does not sit well with the subordinate, because of his relative scarcity in life. He does not have the luxury that the boss has. Hence he feels more hard-down and overworked. This contributes significantly to the feeling that he is working harder and harder and harder.

Of course if the boss knows which project to focus on and prioritise, then this is less of a problem. But really, when a boss is not inclined to appreciate scarcity as much as you do and believes that every project requires a minimum level of endeavour and diligence, you can be quite sure that your boss is pretty well to do. And this wealth and income level of the boss and her corresponding appreciate of scarcity is the reason why you are working harder and harder.

What can we do? Should we blame the rich? Should we overthrow capitalism? Nothing much anyone can really do, except hope for more income inequality reduction policies from your government. Though in truth, these policies often pale in capitalized economies which are characterized by increasing income inequality gaps.

Well, it is certainly no comfort to those workers, even if you understand from my article why you are working harder and harder. Only if you gain utility from more knowledge and understanding of the world, which of course is the reason you enjoy reading Oaktree Research.

Any opinions or comments ?