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Home-Work: 25% of GDP

I wrote recently about the fact that non-remunerated work--anything that doesn't involve a money transfer--isn't included in GDP. So painting your mother's house, fixing your car, or cooking dinner isn't reflected in that key measure of our prosperity and well-being--even though that work quite clearly contributes greatly to our prosperity and well-being.

Which got me wondering: how much of that type of work do we do? And what's it worth?

The American Time Use Survey (ATUS), conducted by the U.S. Bureau of Labor Statistics, measures the amount of time people spend doing various activities such as paid work, childcare, volunteering, commuting, and socializing. (PDF) I extracted activities that most of us would call "productive."

2007 average hours per person (over age 15) per day
Housework    0.64
Food preparation and cleanup    0.52
Lawn and garden care    0.21
Household management    0.14
Purchasing goods and services    0.78
Caring for and helping household members    0.53
Caring for and helping nonhousehold members    0.2
Volunteering (organizational and civic activities)    0.16

Total hours per day    3.18
Total hours per year    1160.7

There are approximately 200 million Americans over age 15, meaning that we put in something like 232 billion home-work hours per year.

Value at different wage rates
At $5 an hour    $1.2 trillion
At $10 an hour    $2.3 trillion
At $15 an hour    $3.5 trillion
At $20 an hour    $4.6 trillion

This last--$20 an hour--was the median hourly wage in America for 2007 (not including benefits). Half the people make more, half the people make less.

Okay, the official GDP for 2007 was $13.8 trillion. Add $4.6 trillion and you get a total GDP of $18.5 trillion.

Home-work makes up 25% of that total GDP.

Now you have to figure that Europeans--with their shorter work weeks and long vacations--have a lot more time for home-work than we do. That may go a long way to explaining why the quality of life feels so gosh-darned good over there, even while their official GDP per capita hovers at 75-80% of the U.S.

If you truly believe in family values, those are some numbers worth pondering.

Medicare: Government Does It Right

I recently had occasion to go through two years of my 84-year-old mom's medical and insurance statements, to be sure that everything was kosher and that insurers were, in fact, paying all the bills they were supposed to be paying.

You've undoubtedly attempted similar, so you can imagine that it was a daunting task--trying to cross-reference all the providers' bills against the insurance statements.

All I can say is, thank god for Medicare.

The bills and statements from private providers and private insurers were nightmarish--mostly just dollar amounts (often lacking dates of service) attached to cryptic codes--often providers' internal codes unrelated to standard practice codes. If I'd been relying on these private statements alone, it would have taken me at least week to sort through all the statements--searching the web to track down those codes, and spending hours on hold with all the providers and insurers.

Happily, the Medicare statements made it easy. They are clear, well-laid out, and fully informative (in plain English)--exactly the kind of statements I insisted on when I was running a company. I was able to cross-check all the private statements against the Medicare statements to figure out what those private statements were actually referring to, then determine if private insurers had covered their share.

Thanks to the Medicare statements, I got the job done in a few hours.

Then, this fall it was time to choose a Medicare drug plan for my mom. Guess what? Medicare has the best insurance comparison engine, hands-down, anywhere on the web. You enter the prescriptions you currently take or expect to take, and it throws up an easily apprehensible list of insurers, sorted by your total costs per year and including quality ratings for the insurers. You click deeper for details on each, compare them, or jump to their sites for more info.

No private entity is offering anything even approaching this site. Market incentives?

So when somebody tells you that you can't trust governent to do anything right...well, you won't convince them because it's a faith-based belief...but you can take comfort in knowing that they're just plain wrong.

Europe vs. U.S.: Family Time Versus Four-by-Fours and Two-by-Fours

Finally! Someone has come back at me (well he didn't know he was talking to me) with the key, perhaps-trumping argument on my Europe vs. US longatribes. I gave this argument away in a previous post, hoping someone would pick it up, but have yet to hear it well enunciated elsewhere.

Summary of my arguments: the US and Europe have been growing at the same rate for decades, despite huge disparities in tax burdens (28% versus 40% of GDP), and profound, systematic differences in social support systems. Sort of suggests that their system is not the disaster, growth-wise, that many like to believe it is.

Ian Maitland (I'm assuming it's this Ian Maitland) comments on a Brad DeLong post:

Brad writes: "Studies of the relative aggregate efficiency levels of the economies of the US and EU come out... inconclusive--not finding that the EU is depressed by 30%."

How does that square with this (from The Economist, "Old before their time," 5-11 March 2005, p. 73)?: "In the post-war years to the 1980s, the world's richest economies were mostly converging towards similar levels of income per person. During the 1990s, however, that convergence came to a halt. Nowadays, income per person in the euro area is around 30% less than in America... And average growth rates in the euro area lagged behind
America's in the ten years to 2003."

Brad says that: "Western Europe ... has chosen politically to have a lot more leisure time than the United States."

Isn't it more accurate to say that Europe has "chosen politically" to take away people's choices, say, regarding whether or not to continue working after they are 60? In the same article we read: "The OECD has attempted to measure the implicit 'tax'on working for someone nearing retirement age.... For 55-year-olds in Germany or France, this implicit tax amounts to 50% of the average wage for people in that group. For 60-year-old Dutch people, the loss of benefits is 90% of the wage; Belgians face an effective tax rate of 80%. Faced with such arithmetic, why should older people bother to work?... If the EU does reduce the obstacles to work, many Europeans might still choose to toil less than Americans. But that would be an entirely different matter--a choice made freely, rather than in response to powerful government-supported incentives."

Okay, point by point:

Economist: "In the post-war years to the 1980s, the world's richest economies were mostly converging towards similar levels of income per person. During the 1990s, however, that convergence came to a halt."

Correct. (Though I'd say the catchup ended in 1980. They did hit almost 90% of US GDP in a couple of years in the 90s, but right now they're about even with '80.)

There was a big, easily explicable European catchup effect for three decades after the war. They've been pretty much stuck, comparatively, ever since.

Economist: "average growth rates in the euro area lagged behind America's in the ten years to 2003"

As I demonstrated, you can cherry-pick your periods as you wish. Which is what our Economist correspondent did here. While I rarely recommend ignoring The Economist, you really should so in this case.

Economist: "Nowadays, income per person in the euro area is around 30% less than in America."

The numbers I've run suggest that Europe runs more like 25% behind, but that's just noise. This is the crucial question for all us teat-sucking socialists: Why can't Europe catch up?

There are many many factors, but it's really a simple answer, and both Ian and Brad are right: each "capita" works less in Europe than in the U.S. This is both a good and a bad thing.

I like Bernard Wasow's quote:

Between 1970 and 2000, GDP per person rose by 64% in the United States and by 60% in France. In America, this came about because productivity per worker rose by 38% and hours worked per worker rose by 26%. In France, it came about because productivity rose by 83% while hours worked fell by 23%.

The Europeans prefer free time, while American's prefer big houses and big cars. Fine.

But the fact is--and both Brad and Ian stipulate to this, at least implicitly--to a great extent the society you live in imposes that choice on you. Sure, Europe has in many cases removed the option of people choosing "whether or not to continue working after they are 60." But the U.S. has effectively removed the option of working 35-hour weeks and taking six-week vacations. (Milton Friedman's obsession with coercion is well-placed, but he fails to realize--or at least acknowledge--that coercion goes beyond the physical; any economic system is coercive.)

Europeans have chosen leaders who instituted policies that provide (and to some extent require) what they care about. Ditto in the U.S.

But preferences are changing in this country, and globalization is coercing those changes--especially on those of more modest means. The quarter-acre lot with two or three cars is beyond the reach of most people these days, absent dual incomes and long hours/multiple jobs.

Given that reality, more people are liking the looks of the European system. Yeah, you have to give up the house/castle idea. But what do you get in return? The time to do things that---pretty much everybody agrees--actually provide a joyous life. If I have to be coerced, that's what I'll choose.

One last thing that really sticks in my craw: Each society is free to choose what it prefers. But when Europeans have so much time to spend with their families and friends—and when they do in fact use that time for that purpose (think: long, liesurely afternoon lunches at tables filled with loved ones, lounging in pleasant city courtyard cafes as your neighbors stroll by to chat)--how dare American get-back-to-work conservatives crow about their devotion to "family values"?

"Visiting the iniquity of the fathers upon the children, and upon the children's children, unto the third and to the fourth generation."

It is both triply appropriate and at least triply ironic that this quotation (it's Exodus 34:7, KJV) should lead off the first posting to this blog. First, because it's all my father's fault, rest his soul. (Isn't everything? <g>) Everything you read here started with him. All of it: with one three-word opening line.

Ben Roth was a classic, do-gooder Jewish lawyer in St. Louis in the sixties, seventies, and eighties, working pro bono all over creation, for Legal Aid, the ACLU, the Health and Hospitals board...you get the picture. At one point he received a lifetime achievement award, or something like that, from the ACLU of Eastern Missouri. When he stood up for his acceptance speech (oh how I wish I had a copy of the whole thing), he opened with the words,

"My fellow conservatives..."

With all those bleeding-heart, knee-jerk liberals in the room, it brought the house down. But then he went on to explain that he was really quite serious. The ACLU, he said, perhaps more than any other American organization, was and is devoted to preserving the values of the founders, as embodied in the Constitution and in the Declaration of Independence. (Though as Gary Wills explains in Lincoln at Gettysburgh : The Words That Remade America, it took Lincoln and the Gettysburgh Address to effectively incorporate the latter into the former, giving the beliefs about equality that are embodied in the Declaration true force of law. More anon on that, in a later post.)

The ACLU is a deeply conservative organization. It is all about protecting the values upon which this nation was founded--liberty, freedom of speech, religion, the press, and assembly--from dangerous radicals like John Ashcroft, the rest of the current Bush administration, and their more fervent supporters.

The people who today call themselves "conservatives" are not just radical attackers of civil liberties. They are opposed to the most fundamental America values, values that are shared by the huge majority of Americans--today and yesterday. Whether it's preserving the wealth of our environment for our children's children's children (now that's conservative), fiscal prudence (can you say deficit spending? Ten trillion dollars?), world stature and credibility (what world stature and credibility?), or corporate giveaways, the current administration is about as "conservative" as Michael Milken and Attila the Hun. They don't deserve the moniker, and it's up to us to take take it away from them.

Because we are the true conservatives.

Which brings us to the second appropriate irony. By opening with this biblical quotation, I am taking the very text that the so-called conservatives claim as theirs and theirs alone, and using it to show how horribly wrong their words and deeds are. Because if their radical trajectory continues, today's iniquities will be visited upon the third and the fourth generation in a very sad way indeed. Our grandchildren's grandchildren will be left with a country bankrupt, oppressed, stripped of its wealth and beauty, scorned by the world, and crushed in recompense for the sins of our generation. (Ding dong. China's calling...)

The "conservatives" have no exclusive claim to the wisdom of the Bible, or to any other wisdom. If we want to take back the mantle as protectors of America's values, we need a leader who can champion the progressive values embodied in Christianity and every other religion, and trumpet those values like a clarion call, in the very language that the conservatives have co-opted as their own. In the very same way, we need to call on the deeply conservative values of the American people--a conservatism devoted to traditional progressive ideals of equality and fairness--co-opting the very language of conservatism that has been twisted, distorted, and turned on its head by those who claim to be conservatives.

We need to pull their "conservative moral values" rug right out from under them.

Because we are the true conservatives.

The Exodus quotation is approriately ironic in at least one more way. My dad was Jewish by descent, but he had about as much truck with Judaism as he did with any other religion--which weren't much. (I had four atheist grandparents, so don't expect to see me running for office any time soon.) But when I turn to see what he has given me, and what I will give to my children, I need look no further than Exodus 34:7. For if anything in this posting rings true for you, it is because my father visited his beliefs, his values--and yes, his iniquities--on his children.

Because he was a true conservative, and he shared it with his son.

So as I said, it's all my dad's fault. Everything you've just read started with those three words of his. The sins of the fathers shall indeed be visited upon the children, yea, unto the seventh generation. Pity my poor kids...