COVID tinted glasses

The economy kept working under Covid except when it comes to work

Sometimes just a minor change can make the world seem like a different place. The impact of the Covid pandemic has been anything but small, but it has shown up things about the economy that we would have not noticed otherwise. Along with dealing with the virus itself, the economy has also been made a priority, and government measures have been a trade-off between the two. Yet, a lot of what we think as the economy has actually functioned as one would hope under the conditions. It has not been stocking the shelves and keeping the power on that has been the problem, but rather making sure people have money to pay for these things.

The economy is often seen as the system that provides us the things we need. It is set up in such a way that resources, everything from timber to our time, are put to their best use. The result is that we can produce as much as possible using what we have available. This is important as there is a finite supply of most things and higher prices on more valuable inputs is a way of limiting their use. We can thus consume as much as we can afford while also not going overboard.

When looking at the economy as an efficient provider of products, it has held up remarkably well considering the strains it has been put under. Except for panic buying creating temporary shortages, most of the things we might want to buy have still been available. Even though the shops have been closed during lockdowns in lots of places, we have still been able to order things online. This ready supply of goods for purchase relies on both continued production as well as the ability to get products into the hands of consumers. Everything has continued to function relatively well under pressure, especially when considering more disorderly outcomes could have involved chronic shortages and queuing for essentials.

So, when people talk of the need to keep the economy going, it is not due to us not having enough stuff to buy. Instead, it reflects another function of the economy – providing everyone with enough money for their purchases. This is because without paying people for work, we have no other sustainable way of allocating out the capacity to consume. The economy thus plays the role of portioning out rewards for the efforts that people put into their jobs. It shows how the economy is a mechanism for not only deciding what to put in but also how much each person gets of what comes out.  

In normal times, handing out free money is typically frowned upon, either on economic grounds in that it takes away our incentives to work, or morally in terms of people not being worthy of getting something for nothing. Previously, our treatment of those without jobs has become stricter but Covid has prompted a change of tone with government helping out more so than in the past.

This reversal of trend may be because actually doing nothing has some value at a time when intermingling comes at the cost of spreading the virus. But also being out of work and not being able to find a job is not seen as being the fault of the unemployed when the economy has been partially shutdown. It remains to be seen whether this more generous approach to being out of work will stick. But it seems unlikely since governments will likely have to tighten their belts due to more money going out than coming in.

However, the effects of Covid may mean that we may again be confronted with the question of not having enough work for everyone. The lockdowns have accelerated many trends, such as online shopping and working from home, that are part of a bigger shift in which technological progress may be putting people out of work. Replacement by machine has become more of a reality as computer power now means that an increasing range of tasks from driving and making deliveries to investing in the stock market could be automated.

Just like the lockdown left people without employment, technology may do the same. Without work, people would lack their claim on any output from those still with jobs. On top of this, work is more than just a place to earn a wage but also provides an outlet for socializing and a reason to get up in the morning. As such, many people have struggled with being asked to do nothing and would prefer working through the lockdown rather than taking government handouts.

Part of this is due to a preference for employment as then workers would be less worried about whether jobs would still exist after the lockdown ends. But also the idea of being stuck at home for weeks if not months does not appeal without money to spend or places to spend it. If technology stops people from having a job to go to, we will have to come up with new ways of deciding who should do what and also who gets what.

Perhaps an even bigger question is what will we do with our time even if we have the money to get by. Work has dominated our lives for so long that many could not imagine life without it. The capacity for some people to work from home has been available for a long time but until lockdown forced a change, the uptake was limited as we stuck to the traditional concept of the office job despite the benefits of doing otherwise. As well as bringing the future forward in terms of the advance of technological trends, Covid may also nudge us towards rethinking what it means to work.