But has the Great Recession made things worse? In theory, it could do. Slumping investment may slow the pace of innovation. Soaring government debt could raise interest rates. Higher taxes, designed to reduce the debt, might dull incentives to work and invest. More regulation, in finance and beyond, could deter innovation. Workers' skills may atrophy as a result of joblessness. On the plus side, well-targeted government spending on, say, infrastructure or education could boost potential output, while the huge wealth that Americans have lost may induce more of them to work for longer.
That's one of the more spectacularly unconvincing silver linings I've read! The bit about infrastructure is all well and good -- it's conceivable that the recession has created the political will for previously unfeasible public investment projects -- but how can it be true that the recession will make us better off by inducing "more of [us] to work for longer"?
I could imagine some complicated argument about how the recession might induce a kind of cultural shift regarding the retirement age, and how this relates to the long-term solvency of the social security fund. But as one's legal claims to social security money remain the same, that's hard to imagine. A cultural shift about retirement would not amount to the same thing as raising the retirement age.
No, the Economist really seems to suggest that, ceteris paribus, we Americans will be better off working longer. But why? Americans already work more than, say, the citizens of the country in which the Economist is published. And it cannot be the case that we will be better off spending a greater portion of lives in toil for an amount of wealth equiavlent to what we had before the recession.
The basic questions about standards of living -- how much free time do you give up in exchange for how much wealth? -- are still the most important ones. If work were a good unto itself, you could imagine various governments making the world a better place before periodically destroying large quantities of their citizens' wealth.
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