“The economic effect of an exit would depend on what settlement is negotiated, especially on whether Britain would retain access to the single market for duty-free trade and financial services…Most economists favor remaining in the bloc and say that an exit would cut growth, weaken the pound, and hurt the City of London, Britain’s financial center. Even economists who favor an exit say that growth would be affected in the short and medium term, though they also say that Britain would be better off by 2030.”

When polling indicated voters were leaning toward leaving the EU, and bookmakers indicated a neck-and-neck race, investors got worried and sought the safety of U.S. Treasuries. That helped push Treasury yields lower. Rates on government bonds in Europe, and elsewhere, moved lower, as well. In some cases, those rates dropped into negative territory. Barron’s reported more than $10 trillion of government bonds had negative yields last week. Investing in 10-year Swiss government bonds cost investors about 50 basis points, while investing in Japanese 10-year government bonds cost 17 basis points. That makes earning about 1.6 percent on a 10-year U.S. Treasury look pretty good.

Who Cooked Adam Smith’s Dinner?

It’s the title of a new book and an interesting question. The New York Times offered two answers:

“The first is ‘self-motivated economic actors.’ As Adam Smith himself famously wrote, ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’ The second is his mother. Margaret Douglas was just 28 when her husband died and Adam Smith still in utero. At the age of 2, Smith inherited his father’s estate, and his mother saw that he got his dinner for the rest of her days.”

Presumably, Smith’s mother received no wages, so how much was her labor worth? How much is the unpaid work of parents and family caregivers worth? A couple studies have explored the issue. First, let’s consider parents. The Bureau of Economic Analysis reported unpaid work at home would have boosted U.S. gross domestic product (GDP) – the value of all goods and services produced in a country – by 26 percent in 2010. The U.S. GDP was $14,660 billion in 2010. So, the answer is about $3,812 billion or $3.81 trillion. That’s slightly less than Japan’s 2015 GDP ($4,123 billion) and slightly more than Germany’s ($3,358 billion). Let’s turn our attention to caregivers. The AARP Public Policy Institute found about 40 million family caregivers spent 37 billion hours providing care to adult family members during 2013. The value of that care was estimated to be about $470 billion. That’s “as big as the world’s largest company and bigger than Medicaid and out-of-pocket spending on health care.” We’ve mentioned before some experts don’t believe GDP is an accurate measure of economic well being because it doesn’t really reflect the value of all goods and services in a country. Clearly, it doesn’t account for parenting and caregiving although both are important to society’s well being. How much do you suppose volunteering is worth?   ]]>