If you’re working 20% less than your competitor, you will fall behind. There’s no amount of mental gymnastics one can do to reconcile that fact. And if true, then the market should resolve this.
I worked a 4 day work week at one point. My counterargument to this is that most people aren't productive as they think they are. I feel like most people only actually work half the time they say they do. When I was working 4 days I got more done. This isn't speculation. My hours were tracked and my billable hours went up. My deadlines remained the same but I had less "fuck around" time.
I agree, I also think the original point doesn't take into account burnout and employee retention. Even if the premise that people were doing 80% of the work were true, how does that stack up against how long they're willing to do the job for/how much it costs to replace them. I've seen companies refuse raises, only to go on to spend multiple times what the raise would have cost recruiting and training a new employee