Steve H. Hanke: It’s Time to Change the Calendar, Once and for All

2019-01-08 IMI

This article appeared on Forbes.com on December 20, 2018.

Steve H. Hanke, Member of IMI International Advisory Board, Professor of Applied Economics at the Johns Hopkins University.

For more than 500 years the most popular and influential book after The Bible was The Golden Legend by Jacobus de Varagine. At the end of the 13th century, Varagine was grappling with how medieval Christians perceived time: he mapped the liturgical calendar and the stories of feast-day saints associated with it. The book was bestseller.

Flash forward to today, we now waste a great deal of time fumbling around with the flawed Gregorian Calendar. For one thing, new calendars have to be printed ever year. What a waste of both time and money.

But, this isn’t the only cost dished up by our Gregorian calendar. Indeed, there are a number of problems and inefficiencies associated with the it. Under the Gregorian calendar, the scheduling of the days for holidays, sporting events, and school schedules — to name but a few — must be redone each year. What a waste of time and money.

The Gregorian calendar also causes confusion when it comes to the age-old idea of ‘time is money.’ For example, to determine how much interest accrues for a wide variety of instruments — bonds, mortgages, swaps, forward rate agreements, etc. — day counts are required. The current calendar contains complexities and anomalies that create day count problems. In consequence, a wide range of conventions have evolved in an attempt to simplify interest calculations. For U.S. government bonds, the interest earned between two dates is based on the ratio of the actual number of days elapsed to the actual number of days between the interest payments (actual/actual). For convenience, U.S. corporates, municipals, and many agency bonds employ the 30/360 day count convention. These different conventions create their own complications, inefficiencies, and sometimes, arbitrage opportunities.

Specifically, discrepancies between the actual/actual and 30/360 day count conventions occur with all months that do not have exactly 30 days. The best example comes from calculating accrued interest between February 28th and March 1st in a non-leap year. A corporate bond would accrue three days of interest, while a government bond would accrue interest for only one day.

Other calendrically financial problems are also generated by the Gregorian calendar. For example, back in 2012, Apple was caught up in a quarterly reporting fiasco. Following its Q4 2012 earnings announcement, Apple suffered its worst one-day loss in four years, as a result of the company’s failure to meet Wall Street’s expectations. This was largely due to a simple calendar-generated error — most analysts failed to account for the fact that Apple’s Q4 2012 was one week shorter than the same quarter the year before.

At the root of this error is the 13-week quarter problem. Apple, like many other companies, defines its fiscal quarters in 13-week periods. With the Gregorian calendar, this requires the adjustment (the addition of an extra week every five or six years). Apple added the extra week in 2011, and many Wall Street analysts failed to pick up on this calendrical change between 2011 and 2012.

The past 400 years have only seen a handful of cohesive efforts to standardize the modern calendar or iron out the practical kinks of the Gregorian calendar. Unfortunately, none have yet succeeded — resulting in a system whose ineffectiveness has been accepted to the point of disregard. Still, there are valuable lessons to be learned from past attempts at calendar reform.

The crusade for calendar modernization found one of its most prominent champions in nineteenth-century industrialist George Eastman, the founder of the Eastman Kodak Company. Driven by a desire to create a more business-friendly calendar, he developed the “Eastman plan.” It was one of the first cogent models of a fixed (or permanent) calendar and was designed to eliminate the practical and financial inefficiencies generated by the Gregorian calendar system. Under the Eastman plan, every May 1st would be a Tuesday, for example, and every holiday would fall on the same day of the week each year.

However innovative, the Eastman plan was in many respects crude, failing most crucially to account for and preserve the Sabbath. Like many past attempts at calendar reform, the Eastman plan was doomed by its failure to address religious and cultural concerns. Indeed, one of the major criticisms of such calendar reforms is that they interfered with religious days of rest, which play an integral role in the organization of economic activity, i.e. “the work week”.

To solve the problems generated by the Gregorian calendar and avoid the Sabbath pitfall that plagued George Eastman, I, along with my Johns Hopkins colleague and Academy Professor of Astronomy Richard Conn “Dick” Henry, developed the Hanke-Henry Permanent Calendar (HHPC).

The HHPC offers a comprehensive template for revising the contemporary Gregorian calendar. It adheres to the most basic tenet of a fixed calendar: every date would fall on the same day of the week every year. So, New Year’s Day would always be a Monday. The year would be divided into four three-month quarters. The first two months of each quarter would be made up of 30 days; the third would have 31 days. So, each quarter contains 91 days resulting in a 364-day year comprised of 52 seven-day weeks. This is a vital feature of the HHPC: by preserving the seven-day Sabbath cycle — and so not inserting “extra days” that break up the weekly cycle — it would avoid the major complaints from ecclesiastical quarters that have doomed all other attempts at calendar reform.

There would be a disparity between the necessary length of our calendar (364 days) and that of the astronomical calendar (365.24 days). The HHPC would account for this by tacking an additional week on to every fifth or sixth year. So, there would be an extra seven days added to the calendar in, for example, 2020, 2026, 2032, and so on. This additional week would serve the same purpose as the extra day we count in a leap year in the present system and keep the calendar in line with the seasons.

The introduction of the HHPC will create some transition costs. It’s what I call “Niagara Falls Transition Troubles”. When asked to describe his experience of going over Niagara Falls in a barrel, the somewhat dazed daredevil said, “above and below the falls, it was calm, but the transition was a bitch.” Yes, transitions can be difficult, especially when it comes to something as ingrained as our conception of time. For example, and contrary to popular belief, when Pope Gregory XIII mandated the imposition of the Gregorian calendar, the transition was not immediate.

The story of George Washington’s birthday sheds light on just how long the transition actually took. The typical American calendar has February 22nd as the official birthday of the nation’s first president, but the Washington family Bible points to a different date. The actual date was recorded as “ye 11th day of February 1731/32.” The difference reflects the hesitant nature of the British colonies to accept the reformed calendar of Pope Gregory XIII. As a result of the decision to use the calendar system of Julius Caesar, Britain and its colonies were literally “behind the times.”

However, after many years of rejection, Britain and its colonies accepted the Gregorian calendar, in 1752 — admitting that their system needed to be changed. It was not until the 20th century that Russia and several other countries also finally abandoned the Julian calendar. This explains why the October Revolution of 1917 really took place on November 7th. These historical anecdotes show that calendar systems do expire, and eventually new calendar systems are accepted.

There is no reason why calendrical change cannot occur more quickly today. In the past, new calendars have been mandated by emperors, like Julius Caesar, and ecclesiastical authorities, like Pope Gregory XIII, and so forth. Today we have social media. If the Hanke-Henry Permanent Calendar goes viral, and that might just do the trick, it would break the grip of the world-wide consensus that embraces a second-rate calendar imposed by a Pope over 400 years ago.