Every silver lining has a cloud

In economics, there's nothing fully good.

From the department of counterintuitive findings come two findings showing the downsides of good news.

First up, the Washington Post reports on a new explanation for why it is that people start to die when the economy gets better. For every percentage point decrease in the unemployment rate, there is a 0.004 per cent increase in the number of deaths (a low, but statistically significant amount), which corresponds to about 6,700 dead people.

Suzy Khimm writes:

In a new paper, researchers argue that economic boom times create a scarcity of caregivers in nursing homes, raising the mortality rate through a disproportionately high numbers of deaths among the elderly.

The Center for Retirement Research explains that a strong job market creates “greater scarcity in front-line caregivers in nursing homes, which may cause more deaths among the elderly.” When the overall unemployment rate goes down, for instance, employment declines are particularly noticeable among certified aides and nurses in these facilities.

Meanwhile, in Investors Chronicle, Chris Dillow addresses the upside of a downside (so to speak).

Since 2007, labour productivity has fallen in the UK, meaning that the one hour of work now produces less output than it did five years ago – 3.4 per cent less, to be specific. This is pretty bad news. Historically, a lot of growth has come from population growth. A more populous country can make more stuff than a smaller one, after all. But now that much of the west appears to have a stable population, we need productivity to grow if we are to have any growth at all. If we can't have more people making stuff, we need to have each person making more stuff.

But this prductivity slump isn't entirely bad news:

If the relationship between GDP and employment in the last four years had been the same as it was in the previous 20, there would now (mathematically speaking) be 3.1 million fewer people in work. If all these had registered as unemployed, there'd be 5.8 million out of work - an unemployment rate of 18.2 per cent. Imagine the political effects of that.

On his personal blog, Dillow elaborates:

You might think that the very fact that workers are more productive in this alternative universe would cause firms to hire more of them. But things aren’t so simple. Firms only hire if they anticipate sufficient demand for the additional output. And where would this demand come from? The tendency for higher unemploymentwould depress consumer spending. On the other hand, it’s likely that business investment would be higher - not least because a world of growing productivity is a world in which there are more investment opportunities and easier access to finance.  But as business investment is only 8.3% of GDP, it’s unlikely that it would be so much higher as to create three million jobs.

Sometimes, good news can be bad news, and bad news can be good.

We may not be getting more productive, but there's an upside to that. (Getty)

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
Show Hide image

What do Labour's lost voters make of the Labour leadership candidates?

What does Newsnight's focus group make of the Labour leadership candidates?

Tonight on Newsnight, an IpsosMori focus group of former Labour voters talks about the four Labour leadership candidates. What did they make of the four candidates?

On Andy Burnham:

“He’s the old guard, with Yvette Cooper”

“It’s the same message they were trying to portray right up to the election”​

“I thought that he acknowledged the fact that they didn’t say sorry during the time of the election, and how can you expect people to vote for you when you’re not actually acknowledging that you were part of the problem”​

“Strongish leader, and at least he’s acknowledging and saying let’s move on from here as opposed to wishy washy”

“I was surprised how long he’d been in politics if he was talking about Tony Blair years – he doesn’t look old enough”

On Jeremy Corbyn:

"“He’s the older guy with the grey hair who’s got all the policies straight out of the sixties and is a bit of a hippy as well is what he comes across as” 

“I agree with most of what he said, I must admit, but I don’t think as a country we can afford his principles”

“He was just going to be the opposite of Conservatives, but there might be policies on the Conservative side that, y’know, might be good policies”

“I’ve heard in the paper he’s the favourite to win the Labour leadership. Well, if that was him, then I won’t be voting for Labour, put it that way”

“I think he’s a very good politician but he’s unelectable as a Prime Minister”

On Yvette Cooper

“She sounds quite positive doesn’t she – for families and their everyday issues”

“Bedroom tax, working tax credits, mainly mum things as well”

“We had Margaret Thatcher obviously years ago, and then I’ve always thought about it being a man, I wanted a man, thinking they were stronger…  she was very strong and decisive as well”

“She was very clear – more so than the other guy [Burnham]”

“I think she’s trying to play down her economics background to sort of distance herself from her husband… I think she’s dumbing herself down”

On Liz Kendall

“None of it came from the heart”

“She just sounds like someone’s told her to say something, it’s not coming from the heart, she needs passion”

“Rather than saying what she’s going to do, she’s attacking”

“She reminded me of a headteacher when she was standing there, and she was quite boring. She just didn’t seem to have any sort of personality, and you can’t imagine her being a leader of a party”

“With Liz Kendall and Andy Burnham there’s a lot of rhetoric but there doesn’t seem to be a lot of direction behind what they’re saying. There seems to be a lot of words but no action.”

And, finally, a piece of advice for all four candidates, should they win the leadership election:

“Get down on your hands and knees and start praying”

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.