Productivity and Economic Self-Recrimination
The Washington Post reported yesterday that the 10-year cost of the coronavirus, in terms of lost economic growth, is $7.9 trillion through 2030. Where does that growth evaporate to? From the article:
The pandemic will hamper U.S. economic growth by reducing the amount of consumer spending and closing numerous businesses, the CBO [Congressional Budget Office] said.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce U.S. investment in the energy sector,” said Phillip L. Swagel, the CBO director and former economic expert at the American Enterprise Institute, a center-right think tank.
Consumers will send less money out into the economy. Some will have less to spend; and of those who still have money, they will be more reluctant to spend it. Businesses, like the energy sector, will make fewer moves (“investments”) that have the potential to create economic activity in future years.
Does the smaller (poorer) economy mean that there will be less time and energy devoted to measurable economic activity in the coming years? When all the data shakes out from the last several months, it will show that lockdowns have stopped whole classes of workers from doing renumerative work, and drastically reduced the productivity of others.
Productivity. This is an important concept for the economic slowdown to come. Productivity is what one gets from work, both individually and collectively, per unit that one gives to it. What I fear is that in the coming years of slowdown, most people will work just as hard or harder (measured in hours, conditions, stress, etc.)–and have less to show for it. They will appear to be “doing” less with the same or more work, because there is less money flowing through the economy overall to be measured as output. It could mean an even-fiercer fight for the scraps that are left. We could be measuring ourselves against the perhaps unrealistic standards of the last decade. This is what it means for the pie to shrink. It also assumes we limp into a future with no meliorative changes in the overall allocation of wealth to labor vs. capital, etc.
If we are going to be less productive in terms of GDP, where does the extra time and effort go? If we are basically certain to be less productive, why not turn away from the activities with a diminished promise of return? Even more, what stops us from turning to work, perhaps less economic work, that is difficult to measure in terms of outputs? If some of us are not working, working less, or getting less from when we work, can we direct our energy to other places, to the more vital but intangible work in communities, families, and even to self-maintenance? Is it to much to ask that people not have to account for their time by accounting standards?
How can we get to a place where lower participation in the economy leads to flourishing by broader assessments?
Even in the social science research, under-employment is usually considered a companion to despair and various social ills. It is rarely considered an opportunity because, empirically, it rarely works out that way.
I wish that the coming slowdown would have these side benefits, but it won’t. Slowdown in economic output cannot possible have good effects when many–most?–people are a few weeks to months away from economic disaster. The treadmill, which slips on its belt more and more, is still our machine. The per capita GDP of a few months ago was the highest it has ever been (around $63k), and still we ended up here, where even slight fallback means uncertainty and suffering for most, and disaster for many.