HOWEVER, it's probably not a good idea to actually operate that way due to perverse incentives for things such as burning themselves out, and coming to work while hacking up a lung and infecting all your other employees. I'm just saying that there's at least some logic the idea, and I don't think your point makes his argument ridiculous.
On an different note, 'other countries do it' is not a great argument. The general standard of living between the US and any given European country overall favors the US... depending on which factors you consider important. YMMV. They also suffered from the great recession for longer in most cases.