62 Business The EconomistJune 29th 2019
21$12trn deployed by American mutual and
exchange-traded funds, just $4.5trn could
be invested in partnerships. Many manag-
ers of the remaining $7.5trn would like a
chance to do so: since Blackstone an-
nounced it would convert to a corporation
in mid-April, its share price has risen by
24%, during which time thes&p500 index
has only risen 0.5%, adding $11bn to its
market capitalisation. Ares, a mid-sized pe
firm, was the first to turn its partnership
into a corporation in March last year. kkr
did so last July. Mr Schwarzman confesses
that Blackstone might have been better offmaking the switch sooner.
Imminent incorporation has prompted
investors to take a second look at Black-
stone, says Michael Chae, the firm’s chief
financial officer. There is plenty to like.
Blackstone has pushed into a wider range
of asset types, starting with property in- Today property accounts for one-third
of its managed assets, as much as tradition-
al pe. Most of the rest is spread across gso, a
private-credit business that the firm ac-
quired in 2009, and a fund-of-funds opera-
tion that invests in a selection of hedge
funds. Lastly, Blackstone has launched
funds to invest in biotechnology firms and
is offering insurers funds tailored to their
desired return profile.
A greater number of funds has allowed
Blackstone to finance bigger deals. In June
two of its funds joined forces to buy 179m
square feet (16.6m square metres) of ware-
house space for e-commerce. A greater
variety, meanwhile, means it can offer in-
vestors a bigger choice of time horizons.
The lifetime of a typical pe fund is around a
decade: the firm will deploy capital over
five years and hold on to its investments
roughly as long. Blackstone now offersBartleby The American exception
Economist.com/blogs/bartlebyA
mericans like to work hard where-
as Europeans prefer a more leisurely
life. That is the widely held perception of
the continental divide in business cul-
ture. But it has not always been the case;
40 years ago, there was precious little
difference between the two.
In his new book, “Spending Time: The
Most Valuable Resource”, Daniel Hamer-
mesh, an economist, examines how
work and leisure patterns in America
differ from those in the rest of the devel-
oped world. In the first half of the 20th
century the American working week fell
sharply from nearly 60 hours to around- By 1979 the average worker in Ameri-
ca put in around 38.2 hours a week, simi-
lar to the number in Europe.
That is where the figures started to
diverge. For a while, the American work-
week got longer, reaching 39.4 hours in
2000, before falling back to 38.6 in 2016.
The main difference, however, is holi-
days. In the 1980s Europeans began to
take more annual leave but Americans
did not. Over the year as a whole, Ameri-
cans average 34 hours a week, six more
than the French and eight more than the
Germans.
What explains this gap? Some point to
cultural factors but, as Mr Hamermesh
points out, it is hard to see why American
culture suddenly diverged from that of
the rest of the world in the past 40 years.
Others point to lower taxes, which raise
the value of putting in the extra hour. Yet
American taxes were lower than Euro-
pean rates back in the 1960s, when work-
ing hours were similar. Another poten-
tial explanation is that a decline in trade
union membership has weakened Amer-
ican workers’ bargaining power—except
that unionisation rates in France and
America are not far apart.
A more plausible reason is policy.
There is no legal requirement to offer paid
holiday in America, whereas France man-
dates a minimum of 25 days, and Germany,- Famously, France also limits the work-
ing week to 35 hours. Mr Hamermesh finds
similar examples in Asia. In the 1980s and
1990s Japan passed laws reducing the
standard working week from 48 hours to - Beyond that, workers were entitled to
overtime pay. A similar process occurred
in South Korea between 2004 and 2008.
Employers responded by cutting hours;
workers earned less as a result but surveys
found they were happier.
In America, by contrast, champions of
workers’ rights have recently focused on
raising the minimum wage (so far to little
avail at the federal level, though some
states have enacted more generous wage
floors). Wage gains have certainly skewed
toward the better-off. The median Ameri-
can worker makes about $20 an hour while
the worker at the 95th percentile makes
$62. That is a ratio of 3.1. Back in 1979, the
ratio was 2.2.
These higher wages do seem to have
had an incentive effect. High-paid employ-
ees work eight or nine more hours a week
than the lowest-paid. In part, this may
reflect the low earnings of part-time
workers, who have grown as a share of
the workforce. Either way, the gap has
widened since the late 1970s.
But don’t shed too many tears for the
wealthy. They may work more hours, but
the poor often work more inconvenient
ones. It is a myth that well-paid workers
put in more hours at the weekends or at
night, Mr Hamermesh says. Cleaners and
food-delivery people tend to work when
it is dark, not bankers.
So what is going on? John Maynard
Keynes, an economist, dreamed that his
grandchildren would be working only 15
hours a week. But the decline in hours he
predicted slowed after the 1970s. This
may hint that 35-40 hours is close to the
most efficient working period. Any more
and workers become too stressed; any
less and companies lose too much pro-
duction. But it is also a sign that Keynes
was wrong to think that society would
place a high value on extra leisure.
In the developed world most workers
have more than enough to feed them-
selves and their families. But they still
want “positional” goods—homes in a
nice part of town, holidays in sun-
drenched resorts and possessions that
demonstrate their social status. Prices of
these goods will be pushed higher, driv-
ing status-seeking employees to work
more hours to earn them.
So whatever labour-saving gadgets
Silicon Valley dreams up, future gener-
ations will probably still have to put in a
long shift. But Americans could enjoy a
bit more holiday. Those who agree ought
to ask their politicians why those pesky
Europeans deserve more rest.Workaholism is a recent development