The 'Thing' Economy and the 'Care' Economy
The newest conventional wisdom insists that voters are angry because the economy is bad. However, through the last 30 years of ups and downs in the unemployment rate, there really haven't been any periods of great economic satisfaction. Sure, a few years ago, we had the great internet bubble when both computer geeks and financial types got rich quickly, but most families still struggled with too little money, too little time and too much debt. Of course, rising unemployment and cutbacks in government spending make everything worse, but it has been a long time since people were optimistic that their children would enjoy greater financial security than they had.
The problem with current efforts to recycle the Clinton-era slogan, "It's the economy, stupid," is that we really have two different economies. The first is the one that economists always talk about; we can call it the "thing economy" that produces computers, petroleum, autos and missiles. The thing economy is the envy of the world since we have successfully harnessed science and technology to make marvelous machines with greater and greater efficiency.
The second economy is the "care economy" in which people take care of each other and of the natural environment. The care economy includes child raising, childcare, care for elderly relatives, education, health, pensions for the elderly, the criminal justice system, religion and the arts, and all of our expenditures to protect the environment.
To be sure, these two economies are interdependent and interconnected. Without people who are educated, healthy, and sane, we couldn't produce all those marvelous things. And if the thing economy were not efficient, we wouldn't be able to feed and clothe all of the people who are working in the care economy. And, of course, our official economic accounts treat these two economies as though they are one; they do not even attempt to measure their relative size.
If they did, the results would be surprising. The care economy is huge. It is well known that our statistics on Gross Domestic Product completely exclude the unpaid labor that both men and women do in the home-meals, laundry, care for children, and home and yard maintenance. Estimates suggest that the value of this activity could add close to another 50 percent to total GDP, especially if one also includes all the hours spent in volunteer activity and community endeavors. If one adds to this the 13 percent of GDP that we spend each year on medical care, the 6-7 percent of GDP that we spend on every form of education and training, the 7-8 percent that we spend on pensions for the elderly, as well as the billions that we spend on the criminal justice system, funding the arts and religious institutions, and protecting the environment, it seems clear that both in dollar value and in cumulative hours, the care economy is at least as large as the thing economy.
But here is the problem. The strategies that we have been following to increase efficiency in the thing economy often do not work to make the care economy work better. Even worse, there are several ways in which the growth and development of the thing economy actually undermine the care economy. And undermining the care economy means that we end up getting lower quality education and health care for each dollar we spend. It also means a growing "care deficit": Millions of people are not getting either the care they need or are getting caught in a fierce time bind as they juggle to balance work responsibilities and care responsibilities. It is quite possible that this systematic undermining of the care economy is what is making people irritable and angry -- both in "good" economic times and in "bad."
The obvious way in which the development of the thing economy undercuts the care economy is through the misorganization of time. Several generations ago, we had a simple way of coordinating the two economies. Men worked in the thing economy and women worked -- usually for no or little compensation -- in the care economy. This system "worked" to produce high quality care, but at an enormous cost -- women's opportunities were severely restricted. Hence, this system fell apart as women pressed for equality and the thing economy pulled millions of women into both part-time and full-time jobs. Now, we have the social ideal that all adults should be in the paid labor force until retirement age. Average annual hours of paid work by women have risen dramatically, while those for men have barely changed. The consequence is that millions of families are incredibly harried and are constantly forced to shortchange their care responsibilities.
These intense time pressures have huge costs. The continuing stress of balancing work and family takes a huge toll on our mental and physical health and is linked to rising rates of substance abuse. Moreover, the strains on family life make it harder to keep relationships together. And then, rising divorce rates and ever smaller household units lead to even further time pressures as the vicious cycle intensifies.
All this produces the second undercutting dynamic -- unproductive cost cutting. We have all become more dependent on paid workers to produce some of the care that we need for ourselves and other family members. But when the principles of efficiency from the thing economy are applied to this part of the care economy, the results are often disastrous. In the thing economy, we can keep labor costs down and press workers for more output without sacrificing quality by using increasingly sophisticated technologies. When we do this in the care economy, we get diminishing quality of care. For example, badly paid and badly trained childcare workers or nursing home workers usually produce poor quality care because technology is largely irrelevant. And the resulting institutional failures generate other kinds of costs, from toddlers who do not get the kind of stimulus they need, to the elderly who suffer medical complications because of abuse and neglect. And, of course, worrying about the poor quality of institutional care becomes another huge source of stress.
The last undercutting dynamic can be called "unproductive spillovers." It is most obvious in our system for providing health care (and also evident in many of our environmental problems). While our scientists and physicians have made some extraordinary advances, it is apparent that transferring the for-profit model of the thing economy into the health sector has produced a variety of negative consequences. We have more than 40 million people who lack health insurance and many others whose access to health care is highly uncertain. We also know that the multiple levels of administration and bureaucracy add enormous inefficiencies and drain resources that could be used to provide more and better patient care. Finally, the uncoordinated and often chaotic system for delivering health care both undermines the quality of care and has become another huge time drain for families. Hundreds of thousands of patients are forced to become experts on their own diseases and on the health care system just to find their way to quality care.
The only way these serious problems of the care economy currently enter our political debates is through the issue of whether private or public provision of services is preferable. But privatization is not the solution; in health care and nursing homes, it is part of the problem. Yet it is also obvious that public provision is not a panacea; there are plenty of examples of poor quality public care.
The real problem is that we have imagined that if we get the thing economy organized properly, then the care economy will take "care" of itself. But this is an illusion; the logics of the thing economy are systematically undermining the effectiveness of the care economy.
What we need are new policies that can reintegrate these two warring economies into one unified structure that is efficient in producing quality things and quality care. This requires abandoning the foolish notion that whatever is good for General Motors or General Dynamics is good for the whole society. The string of recent corporate scandals should be a sufficient reminder that when markets are left on their own, small groups of insiders can become enormously rich at everyone else's expense. Who benefits, for example, from the extraordinary success of one giant retail chain that is famous for its low wages and miserly employee health care plan? Certainly not the communities that are forced to subsidize this corporation by providing health care to the firm's large number of uninsured employees. Certainly not the competitors who are being forced into bankruptcy because they are more decent towards their employees. It is both inefficient and immoral for society to give corporations free reign to engage in these destructive forms of cost shifting.
And, in fact, we have abundant evidence that firms can be highly profitable while providing their employees with decent wages and access to quality care. Many of our most dynamic and innovative firms have, in fact, created caring communities for their employees -- attending to the difficulties of balancing work and family, supporting the ongoing development of employee skills, and facilitating improvements in employee health behavior. These policies could and should be pursued more generally since a unified economy would benefit from the enhanced productivity of well-cared-for employees.
But skeptics will immediately note that we live in an era of tight budgets -- can we really afford to create this unified economy? Yes, and in fact, it is actually both realistic and urgent because effective care foregone in the short term means higher costs in the long term. When we fail at early detection with physical and mental illnesses, we obligate ourselves to pay much larger costs down the road. When our schools fail large numbers of young people, we end up paying down the road to expand our prison system. Economizing on these types of care is the purest instance of false economy; it is penny wise, pound foolish.
We already spend so much on the care economy that we cannot afford to keep making the same mistakes. Think, for example, of the health care dollars that we spend each year to respond to work-related stress. Wouldn't it make more sense to try to save a large portion of those outlays by taking steps to reduce the amount of job-related stress? Or think of the not-so-hidden epidemic of addiction to prescription drugs; wouldn't it be better to create a more caring and less stressful society where fewer people were tempted to "solve" their problems through the magic of chemistry?
What is involved in creating this unified economy? A full road map is not possible here, but we can identify three basic principles that should guide the process of unification. All of these principles depend, in turn, on the recognition that the regulation of market activity is absolutely indispensable if we are to create a humane and effective economy. This fundamental truth has been obscured by thirty years of celebratory rhetoric about the magic of free markets and the extraordinary gains that come from the individual pursuit of self-interest. But the lesson of our most recent series of corporate scandals is that the pursuit of self-interest quickly degenerates into criminality in the absence of effective systems of regulation. If we are to remain a civilized society, we have to abandon the fashionable rhetoric of "deregulation" and recognize that government regulators -- whether they are meat inspectors, bank auditors, enforcers of labor standards, or even tax collectors -- are actually quiet heroes defending our society from the insidious threat of runaway greed.
Hence, the first principle emphasizes the importance of regulations that protect and strengthen the care economy. We have constructed such regulations on occasion -- most recently when Congress passed the Family and Medical Leave Act -- but each effort encounters fierce resistance from those who claim that it is both unfair and economically irrational to impose any new costs on private businesses. But it is also wrong that businesses be allowed to impose costs on their employees that undermine the care economy as, for example, when employees are unable to honor their commitments to children and aging parents. As with any regulations, the task is to find the proper balance of these conflicting interests, but to do this, we have to abandon the fantasy that the care economy can survive without being nurtured and supported. For example, we desperately need rules that would keep large firms from expanding their market share by pushing labor costs and benefits to the lowest levels possible.
The second principle centers on the urgent need to reorganize our society's way of managing time. Both the thing economy and the care economy depend on human beings who are constrained by the scarcity of time. Whatever startling gains have been made in productivity, we haven't extended the 24-hour-day by a single second. And new technologies like the cell phone and e-mail are increasingly eliminating the divide between work time and private time. It is hardly controversial that the resulting time squeeze has become a pervasive source of misery and stress in our society. But despite many creative ideas for reconstructing our time economy, we have made very little progress because of a continuing reluctance to impose any new costs on employers. And yet this is extremely shortsighted since employees who were less stressed by problems of time management would certainly be more productive.
Finally, we have to change our way of thinking about the true requirements for quality care. The fashion for some time has been to think that health and education, for example, are just businesses and that tough systems of cost accounting and the use of performance indicators such as the number of patients treated or student test scores will get us the results we want. But the triumph of this bean-counting approach has resulted instead in rushed medical appointments where patients are allowed to discuss only one concern per visit and classrooms where teachers have no time to cultivate curiosity and love of learning because they must teach to the next round of standardized tests. The techniques of the thing economy simply don't work for producing quality health care and education. We have to return to the individual -- the patient or the student -- and figure out ways that each client, working in close cooperation with trained professionals, other clients, and volunteers, can become healthier and wiser.
Much more work has to be done to translate these principles into concrete policy proposals that could be debated in the political arena. And even more effort will be required to overcome the resistance to meaningful reform. But there is great leverage that comes from recognizing the problem of the divided economy and creating a positive vision of a unified economy in which the creation of quality care and the making of things are no longer in conflict. The result would be a moral economy that could reconcile our desire to prosper with our deepest moral and spiritual impulses.
Fred Block teaches economic sociology at the University of California at Davis. He is also a senior fellow with the Rockridge Institute.