The Economics Of Indolence

Can less be more? A light summer reflection on the merits of lazy-nomics and its impact on the nation’s ability to grow and compete internationally.

As I write, a blisteringly hot June is slipping slowly into July; England have beaten India in the first of five tests in a match that was played to the last hour of the last session of the last day; and legions of students have piled textbooks into dusty corners to pivot from switched-on-study to deep-chill downtime. This begs a question: what are the economic merits of so many talented, honest and industrious people doing such a lot of nothing for so long? (Teachers included.)

With over 3 million students in the UK aged 16-21 resting across two summer months we foreswear almost 1 billion work hours (admittedly some students work: the best data suggest around 50%). Even if we downgrade this figure to ½ billion, that’s a lot of lost UK productivity - and these are simply students, never mind our wider workforce. We remain a Top 10 GDP nation whose productivity struggles to make the Top 30 (the Manchester United of economies?). Paul Krugman is unequivocal on this matter. “Productivity isn't everything, but, in the long run, it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”

This, however, belittles the usefulness of doing nothing. It can be very profitable if you do it wisely. Any microeconomics student can differentiate between invention and innovation. The former is the genius ability to create something entirely new. The latter is the ability to transform this entirely new thing so that consumers, firms, and Governments will pay for it. Everyone knows of Steve Jobs, but sadly fewer of Chester Carlson. He invented the first photocopier in 1938, but could not bring his invention to market, as august businesses including IBM and General Electric turned him down. A decade later a company that would eventually become Xerox decided that Chester’s invention deserved innovation. The rest is history. Chester died a wealthy man and a respected, generous, and humble benefactor who bequeathed $150m to causes in his care. And Xerox? In 1949 its split-adjusted share price was just $0.014; by 1965 after 15 years selling photocopiers a Xerox share would cost you $215. Xerox did not have the time or spark to invent the photocopier, but Chester did. It took 10 years of his time and then Xerox’s management and money to go from invention to innovation. Great thinkers do just that: they think.

This freedom to invent even shapes economics. John Maynard Keynes was part of the Bloomsbury Group of artists, aesthetes and authors who over a century ago pioneered everything from cubism in art to feminism in society. They sought higher ideals over higher profits. This think- the- unthinkable mindset shaped Keynesian economic ideas profoundly. Their challenges to outmoded Victorian values mirrored Keynes’s challenge to the economics orthodoxy, for example demand-side theory. Virginia Woolf’s novel Mrs Dalloway might appear to share little in common with Keynes’s General Theory of Employment, Interest and Money, but never judge a book by its cover: the inventive thoughts between those covers are what count. Did a falling apple really inspire Newton’s Principia Mathematica? If so, he clearly was doing little else at that moment. Invention may need an allocation of ‘nothing time’, but innovation seldom allows it. An hour with a lawyer from one of London’s ‘magic circle’ firms might cost you £1,500; often charged in six-minute increments. That will most likely maximise profits rather than foster a desire to pause to invent new legal insight. Hurrah for indolence, so long as it is invention inducing.

Additionally, at a macroeconomic level there is usefulness to an economy of having a cadre of people who are temporarily doing nothing, particularly if they are skilled, ambitious and motivated. NAIRU is perhaps one of the uglier acronyms for one of the more useful economic tools. The Non-Accelerating Inflation Rate (of) Inflation was the brainchild of Modigliani and Papademos and built on Milton Friedman’s concept of natural unemployment. In combination they critiqued Phillips, whose curve proposed an inverse relationship between unemployment and inflation. Ultimately, they suggest there is a level of unemployment that will not cause inflation to rise or fall: a macroeconomic ‘goldilocks zone’. Take a whimsical example. I sit just a few miles and - almost to the day - 85 years away from the experiences of exhausted RAF pilots sitting on sun-scorched English earth waiting anxiously to defend the nation. They were mostly doing nothing until that dread moment when a siren would send them scrambling into air to serve their nation. They were a supply of skilled workers meeting a clear and present varying demand for their skills in the skies above. A busy, brave, brilliant pilot may fly for two hours in a day, so essentially needed periods of inaction in between. They were young: often the same age as today’s students and thanks to their selfless sacrifice many would fail to complete their education, or even the full span of their lives. They were skilled, willing and available. In a far less obvious way, so is the current student generation. Should the economy experience a boom we idle bums are ready to meet the need for additional labour without driving up wages, costs and possibly prices (U3/P3 in the diagram below). Our inactivity until needed saves the nation’s inflation. My personal roll call of student jobs includes laying railway track; picking courgettes; and listing the names of letter writers to The Times. Natural unemployment is – naturally – useful to an economy and necessary if we seek the NAIRU target.

A final aside: NAIRU needs a rebrand and this can be achieved simply by rearranging its letters. I suggest the following cryptic crossword clue as a guide.

Economist unravels a ruin to understand unemployment and inflation figures, perhaps? (5) □□□□□

Lastly the economics of laziness can have a ripple effect benefit. As economies move from the secondary to tertiary sectors, we have a propensity to redeploy income generated from our increased added value. We become cash rich and time poor. When did you last peel a beetroot? Change a tyre? Darn a sock? Insert a new fuse in a plug? As I sit at home the gardener chats with our cleaner, while standing aside to make room for a window cleaner. A delivery of ironed shirts nestle in neat plastic sheathes, while discarded Wagamama delivery bags, bowls and chopsticks are diligently stacked for recycling. The Ocado bags are stowed away for return at the next delivery and the hall serves as a de facto Amazon distribution hub. If you are counting that is seven service providers at one house on one day. Why tour the world when it will come to you? And what about me? Oh, I am drafting this essay. By refusing to peel, change, darn or insert, I can write, and people just like me, have created countless other jobs. We have increased specialisation by letting experts excel and keeping novices out the way. Increased efficiencies will produce economies of scale, and the economy should grow, all because of what I am not doing, rather than what I am doing. Boom. This can affect whole industries: India boasts over 2,000 call centres all gladly meeting the needs of overseas businesses that cannot be better served by employees domestically. That is a $30bn double-digit growth Indian industry borne of the fact that firms cannot get people at home who will talk to customers cost-effectively. Your laziness creates opportunity for others.

So, on balance, is indolence the economic silver bullet we have all been missing? Well, no, it is not. The argument concerning time is less than watertight: a wing in rugby holds the ball possibly 10 times in 80 minutes, but if they score a hattrick they probably win the match. Likewise, our brave Spitfire pilot: 30 minutes in the air are worth 30 hours on the ground. Some minutes are simply more productive than others.

As for invention companies frequently now invent as well innovate. It is a ghastly portmanteau word, but the concept of intrepreneurship is a case in point. Colossal MNCs now simultaneously think big; act big and spend big. There are fewer than 10 countries on the planet whose GDP exceeds the market capitalisation of ever-expanding Apple, while the other ‘Magnificent seven’ US tech firms are equally committed to doing more of everything, more rapidly. “Move fast and break things”, said Meta’s Mark Zuckerberg, only for Sam Altman to complain that Meta was stealing OpenAI’s staff with offers of $100m signing-on fees. (More a case of “move fast and steal things” perhaps?) These firms are very good at inventing, innovating, and dominating. Chester Carlson would have been astonished.

As for NAIRU, eyebrows would raise if our unemployment rate rose above 5% but even then, for every lazy person 19 others would have to be economically productive. We cannot all be lazy. Lazy economics borne of affluence ends as soon as the economy falters. ‘Clogs to clogs in three generations’ is an old Yorkshire phrase implying we may end up where our poorer forebears began unless we are careful. Data support this folklore. In the 19th century the UK was the dominant economy; in the 20th the USA: might it be China by the end of this century? Lastly just like economies, people come and go. Senescence comes to us all so we should do our bit to serve our economy by serving our own interests while we can, and expect it to serve us when we cannot. Today’s generation of students is hopefully inventing, working, waiting for work or creating it for others all summer even if they do not realise it. Now my concluding point on indolence will appear just as soon as I get round to finishing this artic…