A Modest Proposal


Tyler Cowen remarked offhand the other day that “The long-term consequences of a slightly lower growth rate are in any case troubling, no matter how well a society works at any moment in time.” Will Wilkinson made the case for economic growth at some length on the Cato blog. And, certainly, a rapidly growing economy is an excellent thing to have and I’m not the sort of person inclined to say, “hey — we’re really rich by historical standards, let’s leave well enough alone.” Still, it doesn’t make much sense to look at something and proclaim it good and important without saying good and important compared to what. The issue, always, is what kind of tradeoffs people think we’re making, or could make, and what are the merits of those tradeoffs.

To take an example, at least part of the reason France is poorer than the United States is that the French policy environment is designed in a variety of ways (workweek limitations, vacation mandates, etc.) to encourage people to spend less time working and more time engaged in leisure than is the American policy environment. France could generate more GDP by shifting policies to encourage people to spend more time doing paid, market workand less time doing other stuff.

The American policy climate is much more work-oriented but we, too, have failed to adopt work-maximizing policies. Surely if we thought about it creatively, we could come up with lots of ways to get people doing more paid work and less other stuff.

When thinking about this, it’s worth keeping in mind that not all non-work is really leisure in the traditional sense. A lot of it is just non-market, non-paid household production. One clear step in a pro-growth direction would be a universal publicly financed system of day care and preschool either through a voucher system, some form of publicly-managed institutions, or a combination of the two. That would be helpful for single parents or existing dual-income families, but would also encourage more female labor-force participation both in terms of stay-at-home moms entering the labor force and in terms of women who already work trying to go for longer hours. It encourages labor force participation both directly by facilitating it, but also because of the universal, taxpayer-financed structure of the proposal. In essence, you’re paying for daycare (via the IRS) one way or the other, so anyone who doesn’t take advantage of it is losing out.

Somewhat similarly, in almost every state you need to pay sales taxes on prepared food and meals at restaurants, but can buy groceries you cook at home tax free. This tax-preference for amateur, unpaid, home-production of food vis-a-vis purchasing cooking on the market has a clear anti-growth bias. The treatment of the two categories of food could be equalized. Or we might even consider giving tax preference to prepared foods versus home-cooked ones to really ensure that we’re maximizing work and minimizing leisure and home production.

For that matter, federal, state, and local governments actually spend non-trivial sums of money positively encouraging people to engage in unproductive leisure activities. We could close the National Parks to human visitors and leave them as pure refuges for wildlife. Public beaches, similarly, should be shut down, along with conventional city parks. Urban parkland could be auctioned off, and the money thereby earned (along with the money saved by not operating so many facilities in the National Parks) could go into a trust fund that aims at slowly purchasing up privately owned beachfront property in order to close it down and eliminate these dark temptations to leisure.

No, no, obviously I’m kidding here. We shouldn’t shut down parks.

The point is simply that leisure — what people do when they’re not working — is a somewhat tricky subject. Lots of endeavors have value to people without necessarily having monetary value. Other times, it’s a bit hard to say. Things like cooking at home can be pleasurable, leisure-esque entertainment activities. They can also be dull drudgework undertaken due to a lack of sufficient funds for available alternatives. And the distinction, as regards to cooking, isn’t always obvious. Similarly for time spent taking care of children.

Interestingly, I think technological advancements are, in many ways, further muddying the waters here. Most peoples’ blogs, I would say, count firmly as hobbies, things they do just for their own amusement. Other blogs — Josh Marshall’s or Andrew Sullivan’s, say — are definitively professional activities, work done as the primary means of earning a living. Lots of others (including this one) are somewhere in the middle — they have some monetary value and some value as loss-leaders for other paid work while also still having a lot of aspects of a pure hobby endeavor.

One aspect of the internet, however, is that it makes it much easier than it was in the past to gain an audience for your hobbies since the distribution costs and necessary capital investment are tiny. So you have lots of blogs that are pretty definitively hobby endeavors from the writer’s point-of-view but are still read by non-trivial numbers of people. A site with 500 readers a day isn’t going to earn any money, but 500 people isn’t nothing, and the site clearly has some kind of value to those 500 people. And if you have thousands — tens of thousands — of sites operating on those terms, well, then, there’s a lot of activity happening whose value isn’t really being captured by financial exchanges.

And one could say the same of YouTube gambits like the Tony Blair video I linked to earlier. Or public Flickr pages. And, of course, there’s open source software. As it happens, relatively few people use OpenOffice or NeoOffice instead of the Microsoft juggernaut, but they’re honestly just as good. One could imagine a situation in which a few large institutions dump Microsoft, adopt the open source alternatives, and it leads to a tipping point that destroys the economic viability of non-trivial portions of the closed-source software market. Something like that would register in the macroeconomic indicators in a pretty odd way even though the value would, in some sense, still be there.

Marx’s badly discredited theory of value seems to me to have some relevance in that sort of thing. A copy of OpenOffice has basically no exchange value but does have considerable use value. Maybe. Or maybe that’s the wrong way to think about it.

One way or another, though, it’s long been known that our main economic statistics — including, most prominently, GDP — have flaws as metrics. We use them, though, because they work pretty well and because nobody’s devised superior alternatives. There’s no guarantee, however, that the extent to which things like GDP, the CPI, and other main indicators are imperfect metrics will stay constant over time. Technology and society change, and things that used to be good satisficing tools could become quite bad ones.