GDP during a crisis

Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.

The 2007-09 recession involved a financial crisis, high unemployment, and falling prices, and was named the Great Recession. Our current recession is still without a name.

A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment indicators instead. Other signs of the recession include:

• Declines in real (inflation adjusted) manufacturing, wholesale-retail trade sales, and industrial production.
• Extended declines in production, employment, real income, and other indicators.

The Pandemic Lockdown in the U.S. directly affects the livelihood of a shocking 80% of American workers who work in retail, real estate, education, entertainment and restaurants.
Many of these offices and stores are not going to open after that.

• In Europe, The north of Italy, which is the main tourist hub, is seeing a collapse in economic activity, along with Germany, which is falling at a steeper rate than the United States. Even countries like Japan, which are not hit that hard, are about to witness an apocalyptic fall.
• In India, with the abrupt 21 days shutdown, which was recently extended by another 19 days, only a small percentage of the 1.3 billion population is covered by any social security, and millions of daily wage or migrant workers, have no hope, future or place to stay.

On 29th October 1929, the infamous crash of Wall Street happened, where 30 million dollars were lost in a week, leading to customers rushing to withdraw their money, known as the ‘bank run’.

The entire world felt the capitalistic fall and realized that a boom leads to a bust, eventually. The disastrous effects felt around the world showed how economically interconnected the world had become.

In 1933, then-President Franklin Roosevelt promoted his recovery path of Relief, Recovery and Reform, to give shape to the slow and arduous reform process that will take decades.

The proposed three-phase plan will allow many businesses to open in the first phase.

Schools and daycare centers can open in the next phase. But that means millions of working parents could be asked to return to their jobs before they have someone to take care of their children.

In the early phases of reopening, businesses could be required to operate at a reduced capacity.

Offices might operate in rotating shifts, but other businesses could have a harder time. Restaurants may have tight profit margins even in better times. Operating at half capacity may mean working at a loss.

Societies of the past and present are just complex systems comprising of people and technology.

Although we have better technologies, we are not immune to the threats that faced our ancestors. If anything, our technological abilities bring more challenges. Our globalized economic system may be more likely to cause a crisis to spread.

Although there is no conclusive explanation of why civilizations collapse, there are factors that can contribute.

• Climatic change can result in disaster, resulting in crop failure, starvation, and desertification. The Akkadians, the Mayan, the Roman Empire, and many others coincided with abrupt climatic changes.
• Ecological collapse theory: When societies overdo the carrying capacity of their environment, e.g., excessive deforestation, water pollution, soil degradation, and the loss of biodiversity.
• Inequality and oligarchy: As a population increases, the supply of labor outstrips demand, workers become cheap and society top-heavy. Political violence follows.
• Complexity: Accumulated complexity and bureaucracy eventually leads to collapse. The returns from complexity eventually reach a point of diminishing returns, causing collapse.
• External shocks: War, natural disasters, famine, and plagues. The Aztec Empire was brought to its knees by Spanish invaders. Early agrarian states were passing due to deadly epidemics.
• Randomness: Collapse is often random and independent of age.

• In 1885, socialist William Morris proposed that in the factories of the future, employees should work only four hours a day.
• In 1930, John Maynard Keynes predicted that advances in technology would lead to an age of leisure where people might work 15 hours a week.
• Since the early 2010s, these ideas have been developed further, creating a growing critique of work as an ideology, and exploring alternatives to work.
• Post-work offers enormous promises: In a life of much less work, life would be calmer, more equal, more communal, more pleasurable, more thoughtful, more politically engaged, more fulfilled.

The work ideology is not natural nor very old.

• Before the modern era, all cultures thought of work as a means to an end, not an end in itself.
• Once the modern work ethic was established, working patterns started to shift. Between 1800 and 1900, the average working week shrank from 80 hours to 60 hours, and in the 1970s to roughly 40 hours.
• In 1979, Bernard Lefkowitz related in his book that people who had given up their jobs reported feelings of "wholeness." During the same period, because wages were high enough, it became possible for most people to work less.
• During the 80s, work ideology was reimposed by aggressively pro-business governments who were motivated by a desire for social control.
• By the early 21st century, the work culture seems inescapable.

The measures to stop the spread of the virus are well-known by now: staying home in lockdown, working from home as a default option, schools switching from physical classrooms to e-learning models.

Not every country has been able to make these choices fast, due to a combination of hesitation, inaction, and paralysis. Before any decision is made, the first thing to do is determine what needs to be done and at what pace and scale.

As the current health crisis steamrolls into an economic crisis unparalleled for the last 100 years, the decline in economic activity is already at par with the great depression.

This crisis of global proportions requires resilience, both for near-term issues like liquidity and cash flow, as well as long-term issues like uncertainty, personal financial stress and recovering from multiple challenges that were already present and are now further complicated due to the pandemic.

Before the pandemic, only 4 percent of the US workforce worked from home at least half the time. However, the trend of working from home had been gaining momentum for years.

It is estimated that within a couple of years, 30% of people will work from home multiple days per week.

• Before the pandemic, a lot of company management and leaders were skeptical regarding remote work. But the skepticism will go away because companies recognize that remote work does work.
• The economic impact of the pandemic will likely force employers to cut costs. They may reduce their rent by letting workers work from home instead of layoffs.
• Employers had to spend money on new technology and equipment to work from home - a departure from the norm.
• Employees themselves are also spending more money to create better home offices.
  

The National Health Service (NHS) was established in 1948 and is funded from general taxation. Before the NHS, people were expected to pay the hospital or a private doctor if they needed to use medical services.

WWII necessitated government-supported medical services to become freely available for everyone.

Recessions and the lack of jobs that ensues can lead more people to pursue education. This progress also affects subsequent generations.

A more educated workforce tends to make an economy more productive and profitable. The knock-on effects include society's health, lower crime rates, voting, and volunteering.