Economics Principles

BASIC ECONOMICS PRINCIPLES RELATED TO CAREGIVING

Taking care of someone who needs care is vital to their survival and well-being, and by extension vital to the community since the community always has members in it who need care at some point. However the care role has been seen as vital to the economy and then more recently not seen as vital.  It is that ignoring of its role that is the issue, the problem that many seek to address.

To look at how formal economics was framed over the years can be useful, to see where it did and did not notice the care role.

a  Timeline

b .Flaws of the main standard for economics tally, the Gross Domestic Product

c. Alternatives to the GDP_

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A. TIMELINE

early societies –  Direct physical care of children, the sick and the elderly was deemed a             woman’s role, while protection and hunting and gathering was the

            men’s role. They two were interdependent.

1500’s – the world’s richest nations are about twice as well off as the

            poorest nations

1600s- Men earned money for their farm and market labor while

            the caregiving role in the home, done by women was not

            assigned monetary value. However the two functioned

            as interdependent. Men relied on women to cook and care

            for others while women relied on men to provide financial

            support. However in reality women also often did some

            gathering as gardeners and took some products to market.

1750 – the world’s richest nations are now five times as well off as

            the poorest nations. The ‘gap’ has increased since 1500.

1776- Adam Smith writes :” An inquiry into the Nature and Cause of Wealth of Nations’             examining reasons why nations differ so much in their wealth, and looks at some

            culture factors.  He observes that people are self-interested but that they

            can adapt to needs of others,saying that when each operates doing what is best

            for himself, this creates good products and fair prices the market determines

            and others also do the same. His theory is that an invisible hand ensures all

            can thrive in this way and that government should not regulate much.

            Economics is more recognized as a formal discipline.

1800s As money was made a more key marker of work and of worth, 

            the care role in the home got devalued and the earner role

            was more praised in economics. The care role was so closely

            associated with women that even if men did it it was not

            seen as important work and whatever women did by extension

            even if in business, was devalued because they were women.

1817  – economist Thomas Malthus studies possible cultural reasons

            for differences in wealth of citizens.

1870- census in US ignores activities done in the home as part of

            the economy 

1890 Marx and Engels say housework is unproductive and encourage all women to             get paid work outside the home even if it is digging  ditches

1900s . The functioning of a family was still deemed a joint interdependence

            where the earner, usually male, was given a family wage by some

            employers and a tax deduction for supporting a spouse by government

            to recognize the additional costs of operating a household of

            several members, some of whom are unpaid.

1905 – Max Weber writes” The Protestant Ethic and the Spirit of Capitalism”

            arguing that a strong work ethic drives successful economics

1920-  Robert Solow, Nobel prize winning economist devalues studying

            culture as a factor of economic growth saying such studies end up

            ‘a blaze of amateur sociology”

1920s  Women ask for equal voting rights with men and the right

            to sit in government to make laws that concern them. They

            are not asking to escape the care role but to be valued

            while doing it.

1930 US – W. K. Kellogg, facing the US Depression and trying to keep his cereal             company alive, shifted the three daily 8 hour shifts at his Battle Creek, Michigan             plant to four six hour shifts. In that way he was able to hire 30 % more people             albeit for shorter shifts. This reduced the city unemployment rate significantly. He             also paid his workers who now did 6 hours shifts, as if they had done 7, for the             first year and by the second year he was able to return them to pay as if  for 8             hours for the 6 hours.  It turned out that with new technology and the new             schedule, productivity was actually up.

1932 US – US Department of Labor interviewed some of Kellogg’s workers and found    that nearly 8% said they preferred having a six hour shift  because it gave them     more time for ‘family activities and home duties and leisure’. One woman said she             was able to get her housework out of the way and still have time to read, walk and             write.  One said she was able to get more caning done and that was a project her       whole family enjoyed.  Others spoke of their sons opening up to talk more freely,   and of feeling that the increase in family time made them better parents. One man             wrote that the six hour shift let his Dad be with his four boys at ages when it             mattered.  In the 1940s a survey found that the clubs, churches, community             service and amateur sports also were thriving with the 6 hour shifts. In the second             world war President Roosevelt mandated a longer work week but in 1945 when             the war ended, staff at Kellogg’s again voted to return to the shorter shift. One             worker said  ” I need the extra money but I need the time at home more,” 

1940s British economists to tally resources for fighting the war count the value

            of all goods and services bought and sold per year. When the war ends

            the UN chooses this same tool to tally the relative wealth of all nations

            and calls it the Gross National Product.  It is assumed to accurately show

            the relative strength of a nation, counting changes in manufacture, production

            and sale of goods. It has  no column to notice any unpaid care roles in the

            economy.

1945  UK During world war II British economists had an idea of add up resources for        fighting the war and they decided to tally two things- the value of  all goods and             all services bought and sold each year. When the war ended the UN chose that             same tally tool to understand relative wealth of al nations in the world and called   it the Gross National Product.  It was assumed to show the relative strength of a      nation, since it showed changes in manufacture, production and sale of goods.             It has no category of unpaid care roles, unpaid household or community work

            or volunteering.

1953 The UN sets up a System of National Accounts as a guide for nations of how

            to track economic activity, recording how production is distributed among

            consumers, businesses, government and foreign nations and how income

            generated is modified by taxes and flows to these groups. It looks at

            how these activities result in consumption, savings and investment.

            The tally does not impute any value to unpaid household labor or volunteer

            work. The system is imitated in most UN member nations and is

            endorsed by the World Bank, the International Monetary Fund, the

            Organisation for Economic Co-operation and Development, and the

            Statistical Office of the European Commission..  The system is updated

            in 1964, 1968, 1993 and 2008 and still does not value or even ‘see’

            unpaid work.

1960s  Some women express desire for more status and some feel

            it is attainable only if they leave the care role and enter the

            paid work world where status and money are already

            given to men. Governments respond to this new move for

            women by creating tax policy to encourage such equality,

            equal pay at job, equal access to business hiring and

            promotion.  The incentives  to do paid work often include

            disincentives to being caregivers at home, with reductions

            in the spousal allowance, with moves away from household

            based tax to individual based tax.

1978 Economist John Kenneth Galbraith in “Almost Everyone’s

            Guide to Economics’ writes “Economists would get a very

            sudden increase in the GNP by discovering and

            including the unpaid labor of women”

1980s – Governments seeing value in having more taxpayers

            short term further create incentives for women to have

            paid work and disincentives to them being caregivesr

            in the home, making maternity benefits but conditional

            on paid work of the new mother, and subsidizing childcare

            costs but only if care is provided by a non family member.

            The role of caregiver is so devalued that is is dubbed

            being ‘just a housewife’ and ‘not working’. Households

            with only one earner or with one full time and one

            part time earner, are penalized with higher taxes.

            Pensions are tied only to earning and are not provided

            for caregivers in the home for their role there.

1985- Canada – general social survey – childcare housework yard work and unpaid care of             seniors are tallied, though not counted as economic activity

1986 – German sociologist Maria Mies writes ” Patriarch and

            Accumulation on a World Scale” arguing that GNP

            does not adequately value women’s care roles.

1988    New Zealand economist Marilyn Waring writes “If Women

            Counted”criticizing use of the GNP as an indicator of

            progress, saying that the way the tally ignores women’s

            roles and the value of the environment has had terrible

            consequences in economics and in globalization. She

            points out that the GNP tally by valuing paid work, makes

            a forest fire look like it is good for society because it creates

            jobs for firefighters even though it ignores the huge loss

            of a forest.  She observes that a woman holding her child          

            is a woman at work and society depends on that work and

            should value it.  She recommends that nations tally

            unpaid work in satellite accounts to the UN System of

            National Accounts.

1991 – The US along with other nations switches from the Gross

            National Product tally to the Gross Domestic Product.

            GNP is the market value of all goods and services produced

            in one year by labor of the citizens .  GDP does the same

            tally but counts production based on geographical location.

            Neither ones counts or values unpaid household labor,

            unpaid caregiving or volunteer work as useful in the economy.

1993 – Robert Putnam writes ‘Making Democracy Work’ looking at the

            role of what he calls ‘social capital’ in the economy. He studies how

            communities were people are outward looking, read more newspapers,

            take part in sports, are part of cultural associations are more likely       

            to vote, to have more efficient local government and to generate wealth

1995- UN Human Development report- observes that women’s unpaid work is worth $11             trillion annually, says only 1/3 of women’s work is paid

1995 UN Platform for Action commits all member nations to do a survey of women’s             unpaid work

1997 – Economist Randy Albeida  writes “Economics and Feminism; Disturbances in the        Field” She notes that care work responsibilities explain time poverty often             experienced especially by single mothers.   Economist Sarah Gammage studies unpaid care work of women in Guatemala..

1998 – Canadian political scientist Isabella Bakker writes’Unpaid Work

            and Macroeconomics” She presents papers about engendering

            budgets and argues that when patients ae sent home from hospital

            to recover from surgery government is assuming that there is

            someone there who will provide the required care, for free.

            She says that government depends on unpaid work like a

            well that will never run dry. She argues that social reproduction

            not power and production should be the focus of global

            economies.

2004 – Luigi Guiso studies how communities with high social involvement of

            citizens tend to invest more in stocks

2006 Economist Nancy Folbre writes ‘Gender, Empowerment and the Care Economy” .             She says that work that involves connecting to other people, meeting their             needs,             care of             the young and elderly and sick is a form of labor to which mainstream             economics does not pay enough attention. She says this omission marginalizes             women and children and undervalues their contribution to home and community.

2008 – Economist Riane Eisler writes  The Real Wealth of Nations: Creating a Caring             Economics” saying caregiving should be made  more visible in  economic tally.             She argues that GPD leaves out the household economy, nature and the volunteer             community and suggests that  social wealth be used as an indicator to show the             huge return on investment of caring for people and nature.  

2010 Canada – the long form census which tallied household work is discontinued. A  Nat             Household Survey to replace does not survey unpaid and household

            work’

2013 – Alberto Alesina studies paid labor force participation of women in Egypt, which             are low, and rates in Namibia which are high. He attributes the difference to the    fact that agriculture in Egypt used ploughs requiring upper body strength men      have, while agriculture in Namibia focused on use of hand held tools at which             women could excel. Study of culture linked to economics was a relatively new             approach.

2015 US Bureau of Labor Statistics survey through time use paid work, personal care,     social activity,  exercise, volunteering and , taking care of children and adults             though these are counted as useful in an economy.

2015 UK economist Mary Mellor writes “Public Money for Sustainability

            and Social Justice” arguing that it is wrong to think of government

            budgets as if they are the same as household budgets.She says

            governments have the authority to issue new money but have

            surrendered this to the commercial banking sector, which

            now lends all the money people owe as debt.  She wants a return

            to the power of government to create a public currency as a debt-free

            supply of currency to prioritize socially necessary expenditures.

2016- (US)  Joel Mokyr writes “A Culture of Growth” suggesting that

            economics should share ideas and not just be  a ‘mindless piling

            up of empirical facts”

2019- (US) Benjamin Enke studied pre industrial societies and found that those

            in poverty were historically more exposed to pathogens, relied on kin support

            more, risked travel less and ended up poorer missing trade opportunities.

2020 – European economics often is more generous in the funding of welfaer

            payments than is America

2020 -Many feminist economists study varied aspects of unpaid work. Subsistence work    such as collecting water to meet basic needs, is a vital activity that has no market             value             assigned to it. Unpaid market labor such as having a family member             contribute to market work of someone else, unpaid is also common.  Unpaid             work includes             volunteer work that benefits nonhousehold members such as         flooding the local skating rink.   There is a new category dubbed ‘care work’ to             mean fostering of close personal and emotional interaction.  None of these             roles is valued in GDP economics.

B. FLAWS OF THE GDP WHERE IT  DOES NOT VALUE CARE ROLES

1. Since GDP only counts flow of money, it treats as valuable any

            paid job.  This implies that a crime wave is good for the economy

            because it leads to hiring more police officers, that having

            people in distress is good because they then purchase more

            medications and hire more personal counsellors.

            It implies that when people deeply in debt turn to high

            interest loan companies that is good for society because

            it gives such loan companies jobs and that when students

            have to pay high tuition and get bank loans that takes years

            to repay this is good for the economy because it generates

            income for the bank that can loan money to businesses.

            Even though post-secondary students mired in debt

            have to delay adult entry decisions into the economy

            such as living on their own, buying  a home, marrying

            or having children the GDP does not count those as

            losses.

            It implies that if children can be lured into buying products

            young, and become a key consumer demographic for

            toys, food, fashion, video games, that that is good for

            the economy regardless of the nature of what is purchased.

2. Since GDP counts money as the marker for useful work and also

            by extension of personal’ worth’, it ignores the value

            of personality and of the emotions that make people

            nurture each other. By devaluing caregivers as

            it deprives the role of ability to function

            in society as consumers, and it demoralizes a vital

            sector the economy depends on .

3. Since GDP is blind to caregiving and volunteer work it deprives

            them ultimately of enough financial and moral recognition

            to be able to function. The state risks ending up having to pay

            much higher costs at professional salary levels to provide emergency care of

            the vulnerable.  The cost of ignoring unpaid labor turns out to be

            higher to the economy that would be the cost of empowering it.

4. Since GDP counts money spent but ignores money that did not

            have to be spent, it counts the cost of fighting disease with

            drugs and surgery but not the value in preventing disease

            with attentive nurturing, cleanliness, good nutrition.

            Since it counts the cost of fighting a fire but does not

            notice the value of responsible land management,   

            crop rotation, planting and prevention of drought

            the tally ends up tilted. Since it counts paid care by

            3rd parties as financial outlay but ignores financial

            sacrifice and imputed costs of unpaid care, its tally

            in the care sector becomes very tilted.

5. GDP that aims at continuous growth of productivity,    

            or goods and services and trade, and that aims at

            ranking nations based on such tallies, creates a cycle

            of its own. The encouraged demand for more products,

            bigger houses, newer cars, latest cel phones and video   

            games spurs purchasing but also competition, with higher

            costs of products, higher costs to operate a business,

            corresponding higher demands for wages to fund the

            rising cost of living, and spiraling inflation.

6 Purchases that are seen as good for the economy may discourage

            time spent without purchased product, so a restaurant meal

            even fast food or take out is seen as better for the economy

            than a home- cooked meal. Care of a child by a paid stranger

            and amusement purchased is seen as of more value to the

            economy than is unpaid family time. Some have observed

            that this has meant a government preference in career over

            family in formal economics.

C. ALTERNATIVES TO THE GDP

Many groups  have noted flaws in the GDP, and its omissions of care roles.  However the expanded or alternate versions have not been officially adopted yet by most countries.

FISH – Fordham Index of Social Health – designed in 1973

            -it includes a count of child poverty, child mortality,

            drug abuse, high school dropouts, income inequality

Gender- related Development Index GDI – developed in 1995

            It tallies the  wellbeing and wealth in a nation and also

            how they are distributed between the genders

Genuine Progress Index GPI – designed in 1994

            It tallies unpaid work, caregiving,crime, family breakdown,     

            volunteer work, pollution, income distribution, environmental

            damage, cost of auto accidents

Gross Environmental Sustainable Development Index GESDI

            It measures 200 nonmarket indicators including literacy, rights,

            justice, resources. The standard of living is a standard of consumption

            not income or wages.

Gross National Happiness Index   used in Bhutan

            It looks at psychological well-being

Gross Sustainable Development Product GSDP

            It measures the cost of growth and examines social costs, health

            costs, environmental impacts, quality of life

Happy Planet Index

            It covers 153 countries and looks at personal well-being and

            life expectancy

Human Development Index HDI – established in 1980

            It look at 177 countries and counts health, education ,life expectancy

Index of Sustainable Economic Welfare – established in 1950

            It looks at consumption, volunteer and household

            work in 17 countries

OECD Better Life Index

            It looks at housing and education

Social Institutions and Gender Index (SIGI)

            It measures gender inequality in social institutions,

            practices and legal norms in 100 countries

United Nations Human Development Index UNHDI

            It measures the impact of economics on people, tallies health,

            education, life expectancy, years of schooling