I think you're immediately and clearly wrong. If workers don't put in the effort, you fire them, or demote them, or pay them less, or give them less hours, or.

I think you're immediately and clearly wrong. If workers don't put in the effort, you fire them, or demote them, or pay them less, or give them less hours, or... all of the same things employers do today. Productivity from fear of loss, I would expect, is inferior to productivity out of hope of gain. If I am motivated from fear, I do not want to be an outlier (I want to be nestled in the group), and I only want to make defensible decisions ("It's not my fault, see?"). And then there's the health effects from stress, the breakdown of group dynamics from members turning on each other, the issues and costs of enforcement of fear-generating policies... So let's not underestimate the costs of fear on productivity. There are also employers who do not fire employees out of generosity - "I don't want to fire that guy, because he really needs this job". Now you can - or suspend without pay or whatever - because you're not throwing them on the street. I can definitely deny that what you propose is a real (expected, since this is all theoretical) cost, and you should, too.