Monday, July 6, 2015

Where Does Sustainability Begin?

Sustainability is often spoken of as "protecting the environment". However, this intention is somewhat vague. After all, this language suggests what shouldn't be done, instead of seeking the positives which could take place regardless of "undesirable" elements. Those who have kept up with my posts, know that I usually speak of environment - and sustainability - in specific local and economic context.

The difference matters, because stewardship of the environment involves multiple incentives, in terms of both practical and experiential goods. Sustainability is not just about "needs" of the earth, because those needs also correlate with the ways that individuals interact with their environments. Once populations have a chance to flourish, they promptly turn their attention to making certain the earth can flourish as well. Beauty - both natural and planned - arise from circumstance which have to begin from pragmatic understandings.

Too many are inclined to gloss over the need for economic sustainability, as a vital factor of the earth's relative condition. When people suffer, the earth is going to reflect that suffering - even if only indirectly. Recently I came across an expression which seems apropos: "The earth doesn't need saving - we do." "Saving" should not be simply thought of in religious or ideological terms. Economic terminology is also important - because ultimately, one's survival depends on economic circumstance.

Unfortunately, the personal perspective for survival has too little economic context, in the confused dialogue of the present. Often, the individual impulse to thrive gets defined as greed. Or worse, others insist that personal perspective doesn't even matter, for the goals of the majority. In all of this, a reactive mentality is becoming more commonplace. When people begin to focus on the negative, that negativity will be reflected in too many physical environments as well. This is why I suggest thinking about sustainability on economic terms.

Consider the fact that political parties attempt to gain progress by the use of force. For instance, instead of creating sustainable economic options, opposing factions have preferred to cancel out what they perceive as negative, rather than building new positives. Why not build walkable communities for living and working, instead of imposing more limits on fossil fuels production which is already needed? Be proactive, not reactive!

Another problematic response has been tight monetary conditions, which are imposed on those who don't meet government mandated consumption levels. Many environments are already showing the effects, as populations struggle to meet lifestyle expectations mostly designed for middle to upper income levels. There is far too much hand wringing about the ones who need help getting to the "appropriate" level of lifestyle, instead of efforts for more inclusive lifestyle options which do not need such high resource utilization.

Sustainability begins with everyone. Design a world which does not require pensions in order to live a decent, respectable life. It serves little purpose to chastise or threaten the dismantling of institutions which are only following the incentives that have already been established. Instead, change the incentives, to provide more inclusive means for both survival, and economic choice.

Sunday, July 5, 2015

Notes on Decentralization and Centralization

Complex economies which include a wide range of income levels, need centralization and decentralization, for economic balance and stability. However, the structural components which could make decentralization possible, have yet to be developed - at least in the U.S. Also, these forms of decentralization would primarily exist as relative degrees of separation, "cocooned" within the larger centralized institutions of the present.

Decentralization in complex economies, means determining the resource use capacity which is best suited for local management, versus resource patterns which work effectively through centralized structures. Since non tradable sectors rely on resources and time value that are closely associated with individual effort, these are the areas which could benefit most from decentralization.

Time based product has unfortunately been subjected to centralization, in many areas of the economy. As a result, lower income levels do not have adequate access to services coordination. Knowledge use systems would allow fuller engagement in time based production capacity, than is possible through the institutions which have mostly centralized. Opportunities exist to tap into local time and knowledge value - not to consolidate organizational capacity for a services marketplace, but to fully engage it.  Think - perhaps - of an overlay safety net, with the "small economic weaves" of time arbitrage which would mean fewer individuals falling through the "holes".

While governments have attempted to coordinate time based product (safety nets) for citizens, not enough time aggregates are fully engaged in the process. Government centralization in this regard might be likened to a safety net - only with the weave of giant, widely spaced ropes. In other words the net is strong, but many individuals are falling through the broadly spaced weave, just the same. Local safety nets for time value, would generate a strong "weave" - one with fine and closely spaced "threads" which are difficult to fall through.

Governments and other institutions flourish when they get the components of centralization right, because tradable goods respond well to the consolidation of knowledge use, human capital and economies of scale. So long as governments focus on their natural strengths, they remain able to encourage a marketplace which increases both aggregate supply and aggregate demand. It is only when governments attempt the same process of resource consolidation for non tradable sectors, that aggregate supply and aggregate demand are both diminished in the marketplace.

Friday, July 3, 2015

Greece: What Role for Services and Assets Wealth?

The economic story that is Greece, provides valuable clues about the challenges all nations face in the management of their economic destinies. Present day economies are complex, and this doubtless affects why some nations aren't comfortable with the prospect of internal monetary management. All the more so, given the added dimensions of government participation in macroeconomic policy from the 20th century forward.

This probably accounts for the fact that some countries would just as soon take their chances on outside judgement calls, in terms of monetary policy. Only consider Puerto Rico, and the fact that while countries (and states) often desire complete sovereignty, a sufficient understanding of monetary economics is needed, to successfully "take the leap". Furthermore, populations need to be able to trust both governments and central bankers to do what is right in this regard, as well.

A common argument regarding Greece in recent years, goes to the heart of their economic structure and preferences for wealth formation. Why has Greece preferred (relatively speaking) asset and services formation over the kinds of production associated with the "maker" economy of traditional manufacture? In recent years, the role of services has become increasingly questioned, and not just in Greece by any means. The knowledge and skill set losses of "austerity" can multiply, if and when they are not effectively generated on monetary terms from the supply side. This has not happened for Greece. Consequently, many business leaders and services professionals have left for more lucrative environs, which contributes to the deflationary spiral of both supply and demand.

Germany - of course - is a prime example of the now preferred "efficiency model", which has emerged in the continuing asset uncertainty since the Great Recession. The assets to services wealth model, also reflected in nominal income as the backbone of local and national non tradable sector wealth - suffered quite a hit to its former respectability. How accurate is this negative perception, not just for Greece but other nations as well? It depends. Asset wealth in the form of housing, lost much of its momentum because of strict definitions for codes and regulations. Also, Greece faces continuing services cutbacks and losses of normal business formation, which are directly tied to tight monetary conditions. How can Greece emerge from these circumstance, to rebuild the kind of economy its population needs most?

Before anyone is tempted to dismiss the wealth potential of services and asset creation out of hand, think about the real wealth gains they represent - so long as any economy remains in structural balance. Assets to services formation as a unique structure which depends on local circumstance. These circumstance sometimes include a historical and geographic context which contribute economic value as well. Greece - of course - has all of this in spades, but it needs reliable monetary policy, in order to maintain the vitality of tourism as an active component of ongoing wealth.

Cultural tourism is an especially lucrative option to various aspects of traditional production, so long as the monetary flows which result are understood for the wealth capacity they actually hold. For instance, in countries which rely on natural beauty for a substantial amount of tourism, this does not translate into wealth capture on the part of local populations in quite the same sense. Which also means that governments often take responsibility for the preservation of natural beauty, when other forms of local organization for this form of experiential good are not possible.

How to think about local wealth capture in terms of monetary policy? There is a monetary role for services combinations as they relate to local asset formation, in local circumstance which exist independently of other production means. However, what has stumped me for the last few years is that I thought the services to asset structure needed to exist in a parallel circumstance to traditional manufacture, in terms of monetary value.

Now, I am not quite so certain, because there is the added component of time value in local circumstance which is always capable of generating a unique equilibrium on its own. Time value seems to correlate more closely to ongoing and endogenous asset formation, than the windfall nature of other resource capacity. This, in spite of the fact that (exogenous) concentrated wealth windfalls can create environment (hence economic) imprints which last for centuries.

Parallels are important between the wealth value of traditional production versus assets and experiential goods, but mostly in terms of the time aggregates which are available on the part of a given population. What is confusing in this regard, is that tradable goods of traditional production have relative value constants which apply across national boundaries. These relative valuation constants for tradable goods, are part of what makes it tempting for nations to "bite off more than they can chew" in terms of economic responsibility.

Why so? The asset to services structures of local economies are not constants at all. They have unique wealth value imprints, which need to be acknowledged and categorized for what they actually represent. The attempt to impose minimum wages across a multitude of local wealth imprints, is just one example of overreach on the part of national governments.

The valuation differences between tradable and non tradable sectors are vitally important. They make it difficult for governments with different asset to service structure imprints, to combine fiscal and monetary policy within the same common resource pool. Importantly, regions, states and nations with different services structures still have means to do so - if and when they desire. However, in order for long term debt and budget trajectories to remain in balance, the valuations of local non tradable environments need to be determined at local levels of coordinated activity and then internally accounted for. Otherwise, the assets structures which correlate with daily activity, do not have a chance to gain balance with services and time management flows.

Not only do the monetary flows of asset holdings need to be accounted for locally, but also the group aggregates which contribute time based services product. Otherwise, there are problems both in terms of supply and demand, for knowledge use and time coordination in the workplace at national levels. National and international monetary flows function best when they are utilized primarily for tradable goods sectors. The unique value imprints of non tradable wealth will eventually cause monetary imbalance at various points, when combined with the national and international flows of tradable goods and commodities.

Greece still holds great wealth in terms of natural beauty and cultural resources. Now, the challenge is to learn how to reconfigure the kinds of economic activity which so many local settings continue to make possible. Most important, is to disentangle both services and asset formation from the international monetary flows of tradable goods production. Greece is right to want an economy more in line with its already existing potential. Just the same, some understanding is needed, regarding valuation differences for the tradable and non tradable sectors, and how that might affect service formation in the future.

What are some of the more obvious lessons which Greece holds for others? The U.S. in particular, needs to examine local conditions more closely in regard to a decreasing labor force participation rate.  Certain areas in particular have too little economic access. Unfortunately, the War on Drugs was the wrong response for poverty stricken areas - a problem which is becoming even worse by the increasing use of civil asset forfeiture. This latter response is even more alarming than the first. The lack of revenue for needed services, is causing governments to take money and other resources from their citizens with too little cause, in many instances.

There is too little actual coordination between asset formation and the services which populations seek. When any community goes too long without this coordination in local assets to services formation, governments begin to cannibalize various aspects of existing local wealth in order to maintain needed services - as is now occurring with civil asset forfeiture. Few other societal breakdown symptoms are as unsettling as the frightening reality of civil asset forfeiture. Governments will need to allow service formation in the future, on terms which do not destroy public trust and confidence. The asset forfeiture problem exists at such a deep level that - even though it is addressed in economics blogs - most of the social and communications media is not willing to discuss it at all. And this, in a society which seemingly complains about everything else in the political arena!

To sum up, Greece is right to focus on the kinds of wealth formation which are natural extensions of their own cultural heritage. Clearly, not every nation should expect to maintain a traditional production advantage, relative to other nations. However, Greece will need to be able to structure a knowledge based services based economy on more practical and accommodating terms. This also means finding ways to include more citizens in the knowledge based work of the future.

Furthermore, local asset structures need to reflect the reality of income potential as it actually exists. Greece is now in the unfortunate position of losing too much of its productive services capacity. The services structures which can be retained (on asymmetric terms) in the immediate future, are not necessarily those which work to the benefit of the public. However, what appears as austerity, does not necessarily have to be so. This is an understanding which all governments need to gain, in order to plan for sustainable budgets over the long term.

Wednesday, July 1, 2015

Midweek Market Monetarist Links and Summaries - 7/1/15

Six years, and still household portfolios have not fully recovered normal liquidity levels (David Beckworth) http://macromarketmusings.blogspot.com/2015/06/the-long-unwind-of-excess-money-demand.html
Were policy errors responsible for the break up? David makes this argument in a new working paper: http://macromarketmusings.blogspot.com/2015/06/was-grexit-invevitable.html (and Pethokoukis highlights the summary)

Had he lived longer...would he have provided ample monetary stabilization? (David Glasner) http://uneasymoney.com/2015/06/24/the-great-but-misguided-benjamin-strong-goes-astray-in-1928/

At the very least, these correlations provide more clarity than one country samples (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/mark-sadowskis-correlations-deserve-a-response.html David Comerford also responds at his blog.
Doesn't the size of government really matter...for fiscal spending?http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/fiscal-policy-and-indifference-about-the-size-of-government.html
For Greece, it was a long time coming: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/bank-walks-and-options.html
Convert and destroy, or print and spend? http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/seigniorage-transfers-and-runs-on-common-currencies.html
Waiting for things to get worse is not a good strategy: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/the-bank-of-canadas-stitch-in-time.html

How is the economy going to strengthen further, if the Fed is not intent on actually making this happen? (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/24/what-the-fed-wants-the-fed-gets/
One rate move this year...or two? https://thefaintofheart.wordpress.com/2015/06/29/new-con-game-in-town-naming-dots/

Japan's debt is presently too high for other options to suffice (Scott Sumner) Keynesians should have supported the 2014 Japanese tax increase
...but what does this mean for government consumption? Are Keynesians moving towards a consensus on deficit reduction?
A recent cover story for the Economist, sounds market monetarist: When the paradoxical becomes mainstream
What to make of Fannie Mae and Freddie Mac asset sales? Federal Revenue in 2013
With a little luck, a return to drachma and free market reform: Showing your displeasure
What accounts for the difference? The American/European divide on Greece
Is a supply side solution possible? What Greece needs
What does "I told you so" really accomplish? Confirmation bias and bubbles

Scott at Econlog:
In response to a commenter, I don't favor an interventionist monetary policy to fix recessions
There are similarities in these two years, in terms of austerity: 1937 and 2013
What happened to mass transit infrastructure in the U.S.? Why can't we have nice things?
Why the failed welfare states of southern Europe? Europe's soft underbelly
Radical debt reduction would leave room to do fiscal stimulus during downturns: Macroeconomics in small economies

Perhaps the only "surprise" is that it took so long (Lars Christensen) http://marketmonetarist.com/2015/06/27/the-end-game-or-a-new-beginning-for-greece-we-have-seen-all-this-before/
At the very least, Grexit will remove the "monetary straitjacket" http://marketmonetarist.com/2015/06/28/how-the-recovery-will-look-like-when-greece-leaves-the-euro/
Hopefully, Greece will be more fortunate this time than Argentina: http://marketmonetarist.com/2015/06/28/remember-the-corralito-lessons-on-greece-and-argentina-from-the-new-york-times/
What are the mechanisms for sovereign defaults? http://marketmonetarist.com/2015/06/29/we-need-a-mechanism-for-sovereign-debt-crisis-resolution/
And now, http://marketmonetarist.com/2015/06/29/the-race-to-default-is-it-time-for-puerto-ricixt/
Lars takes a look at the latest numbers: http://marketmonetarist.com/2015/06/30/hypermind-prediction-nearly-50-probability-of-grexit-in-2015/

(Mark Sadowski) A simple baseline VAR for studying the US monetary based and the channels of monetary transmission in the age of ZIRP: Part I Part II is here

"There is widening inequality among capitalists" (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/the-era-of-idiosyncratic-risk.html
Kevin takes a closer look at changes in overtime pay: http://idiosyncraticwhisk.blogspot.com/2015/07/wages-profit-overtime-pay-and.html

The plan is a bit too detailed and technical to be good marketing for the public (Bonnie Carr) https://dajeeps.wordpress.com/2015/06/28/eu-ten-point-plan-for-greece/

The last thing central bankers need to do right now is raise rates (Benjamin Cole) https://thefaintofheart.wordpress.com/2015/06/29/the-bank-of-internal-settlements-proposes-sadomonetarism-to-promote-recovery-higher-inflation-what-greek-crisis/

Justin Irving is reasonably confident the Fed won't go too far astray, in raising rates: http://economicsophisms.com/2015/06/28/raising-rates/

Also of interest:
Lorenzo provides some basics: http://lorenzo-thinkingoutaloud.blogspot.com.au/2015/06/thinking-about-states.html

If banks could make money "out of thin air"...why bank runs? (Tim Worstall) But this is impossible under modern monetary theory!

Tuesday, June 30, 2015

Wrap Up for June '15

Perhaps there will be a silver lining, for the storm clouds which still threaten Greece. Whatever the eventual outcome, this beautiful country serves as a reminder that solutions don't come easy for any country which delays structural change too long. Their dilemma is the same that many other nations could ultimately face, when supply side constraints and limitations are not promptly dealt with.

Once structural imbalance reaches a certain point, there is no return to the relative simplicity of earlier circumstance. Even so, political factions have too little reason to find compromise while there's time to do so. Perhaps worsening political scenarios partially account for a more civil dialogue between economists in recent years. One senses a shift in focus away from broad interpretations of fiscal and monetary policy, to determine how those differences actually matter.

Some considerations for the organization and (initial) outcomes of domestic summits:  What are the possibilities for new communities in given locations, and are local conditions conducive for long term growth? Before setting down roots, who needs to be consulted and why? How valuable might the opinions of experts be, as compared to the crowd? This article also gives an interesting perspective on expert assistance: http://johnkamau.blogspot.com/2015/05/nairobi-was-built-on-wrong-place.html

It will be quite a relief, when education returns to personalized instruction in challenging settings instead of this. Plenty of Democrats and Republicans probably agree with these sentiments. http://www.alternet.org/education/corporations-profit-standardized-tests

I'm surprised that the U.S. has avoided this trend, at least thus far: http://www.bloomberg.com/news/articles/2015-05-28/worldwide-elderly-crime-rates-increase

Taking a long view of structural stagnation - that of the Middle East Timur Kuran (2004 JEP) http://pubs.aeaweb.org/doi/pdfplus/10.1257/0895330042162421

In 22 of 33 cities, wage growth remains below prerecession level. http://blogs.wsj.com/economics/2015/06/03/here-are-the-u-s-cities-where-wage-growth-has-lagged-job-growth/?mod=WSJBlog

How much will the ACA cost large employers over the next decade?http://www.shrm.org/hrdisciplines/benefits/articles/pages/aca-costs-employers.aspx
Healthcare is not just problematic in terms of consumption expectations, but also the ways which healthcare is expected to be produced. Malaise among medics: Doctors desire vocational purpose

A recent lecture from Amartya Sen: http://www.newstatesman.com/politics/2015/06/amartya-sen-economic-consequences-austerity

This short article is simply a young person's lament of not being able to learn practical things in school. Even though I thought her complaint was quite valid, some of the many comments were brutal. The "do it yourself" conditioning of recent decades, runs deep. When people told her to figure out things on her own, she replied that she had. But that's just the thing. Why, in a time of diverse and complex economies, should it be necessary to do everything oneself?

Free marketers speak often, of the spontaneous economic coordination which makes life so much easier in the present. There's just one problem - for the time and knowledge one accesses on a daily basis, this spontaneous coordination has practically become non existent. In some respects, the beneficial impact of today's economy is mostly limited to traditional manufacture and tradable goods.

Is it too much to ask for the spontaneous coordination of time based product, as well? Isn't it odd that even though no one is expected to put together their own toaster, people are expected to figure out anything involving time and information on their own? Unless - of course - said activity involves formal schooling, healthcare or the workplace, which is but a fraction of the constant issues which arise in one's daily life. A marketplace for time would preserve economic diversity, so that we don't have to do everything ourselves if we don't want to. The whole point of a truly productive and beneficial economy is to have that choice.

Planning and financing from the elite is not the way for lower income levels to rebuild their lives, or the neighborhoods they live in. Urban renewal in Philadelphia

Just 19 days to build a 57-storey tower! Chairman Zhang's flatpack skyscrapers
And this robot builds a steel bridge: http://www.iflscience.com/technology/robot-going-3d-print-steel-bridge

"Don't needlessly annoy readers before you get to your point" http://johnhcochrane.blogspot.com/2015/06/noah-smith-writing-lesson.html

One can only hope it's bluster and little else. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/26/texas-wants-its-gold-back-wait-what/

What makes the U.S. more problematic in terms of labor force participation, than other developed countries? Some aspects of this situation remain a mystery. http://blogs.wsj.com/economics/2015/06/26/the-u-s-stands-out-on-labor-force-participation-rates/?mod=marketbeat

Monday, June 29, 2015

Design for Economic Freedom

What does economic design have to do, with the freedom to interact meaningfully with others? Plenty. I have as much appreciation for Adam Smith's "invisible hand" in the economy as anyone. Just the same, spontaneity in the marketplace can be difficult to come by, when governments and special interests hijack the nature of product formation and infrastructure options. Unfortunately, excessive control in this regard has been going on for a long time.

Adam Smith also wrote about the multiple instances when governments and business interests refused to be supportive of free markets for manufactures and exports. Even though governments have made considerable progress in this regard for tradable goods, other design innovations are long overdue - especially for knowledge use and the asset formation of non tradable sectors. What would be required, to generate the economic freedoms which could better preserve political and economic sustainability?

There are several basic principles involved, beyond the need to match and coordinate time arbitrage equally to generate new wealth. Most important is the right to produce, on the part of as many individuals as possible in any participating system. Production of time based service product is completely different from production of product which benefits from scale, because more personal involvement is needed for time and knowledge based product - not less. And more time based product involving skills capacity, means more individuals and human capital involved in economic life, not less. Because matched time becomes new wealth, these forms of knowledge use and skills capacity are beholden to no special interest or benefactor, beyond the local systems which make them possible.

While production reform is important for time based knowledge use, skills sets, and services, production rights are also important for basic structural innovations within any given community. Knowledge use systems would seek to locally define product through as many means as possible, and through the assistance of as many individuals as possible. However, these forms of product diversity are not to be confused with tradable goods, which for the most part would continue to be sought both regionally and internationally on the part of knowledge use systems. Production reform is needed mostly for non tradable sectors.

A second principle for economic freedom, is that of the right to consume what one wants. Importantly, the right to market one's ideas and product comes first, before lifelong consumption of knowledge based services is a realistic possibility for lower income levels. Also, a clarification: the right to consume is not to be confused with claims on what governments have sought to make available in the marketplace, such as "rights" to healthcare which is already in short supply within primary equilibrium. Individuals need alternative equilibrium options, in which they are able to produce the knowledge sets and services they desire.

A third principle would be a broader understanding of wealth which exists beyond monetary terms. Even though one recognizes that money is only a part of wealth, there have been too few means, for anyone to turn this wisdom into something more concrete. Time arbitrage would eventually allow other factors of wealth to come into play beside monetary compensation, and monetary policy would also face less pressure to solve social issues which lie beyond its reach.

Another aspect of economic design, is the need for a structural response to changing trends in consumption. Baby Boomers have understandably become more pragmatic in recent decades, and in any circumstance, one generally decreases spending as they age. But pragmatism on the part of youth is a new development, which speaks volumes as to what production reform needs to take into consideration. Without a doubt, some of the frugal spending habits of today's youth will persist through the course of their lifetimes. A recent Time article listed 10 ways how spending patterns have changed for millennials - three of which I will touch on here.

First, millennials have become somewhat wary of investing, in terms of equities. Even though the Great Recession was (ultimately) contained by the Fed, the fact that monetary policy suffered a severe initial setback, is now reflected in lowered expectations on the part of those who were just getting started in the workplace. Now, some among this group will save for retirement by putting their money into a sock drawer, instead of normal investments.

Granted, some of the younger millennials will have more faith in the economy, as workplace opportunities have improved of late. Even so, those who were getting started during the initial downturn, will likely seek more practical environments than are currently on offer in the marketplace, for the rest of their lives. Because of these circumstance - if for no other reason - there needs to be regions where both housing and knowledge based services innovation are allowed to take place. It is wrong for nations to expect populations to wait for years or even decades for a stronger economy, when better results could be generated much sooner without the needless sacrifice.

Also, the Times article spoke of a lack of spending for both housing and cars among millennials. While some will eventually commit to traditional housing and cars, low cost commuting options are needed for transportation, besides the dedicated roads and highways for automated vehicles. Again, the highly debated transportation of the future will become feasible options in cities, rather than outlying areas. Many who live in rural areas will need substantial changes in density and infrastructure patterns, in order to gain economic diversity where they already live.

In summary, economic design needs to respond to the kinds of choices that people are now able to make, which in many instances won't be similar to upper income spending patterns. Some will still seek higher income options, but others will want choices designed for more practical and flexible ends. As things stand now, primary consumption choices in non tradable sectors do not offer much in the way of economic freedom. There's a reason why Milton Friedman said of freedom, that it is a rare and delicate plant. Indeed...one that too many still take for granted.

Saturday, June 27, 2015

Some Thoughts on Government Roles

What are practical debt load structures in the 21st century, for national governments? How have government visions and budgets changed since only a century ago? What kinds of revenue can governments expect to gain in the near future, as traditional labor force participation continues to decline? What do governments now expect to accomplish, long term? Might the intentions of Washington become easier to recognize, in terms of actual obligations and revenue?

Granted, there's some wishful thinking in the first paragraph of this post. Just the same, what governments are expected to provide on behalf of citizens is no longer well understood. It's time to go back to the drawing board and answer some basic questions about government (and citizen) responsibility, before political parties implode any more than they already have. Why not tend to structural concerns before it becomes impossible to do so in any reasonable manner?

Even though the U.S. still has some "breathing room" before serious budgetary problems appear on the horizon, too much of present day fiscal policy is now redistribution and subsidies - all of which prevent a smoothly functioning marketplace. Much of this is also connected to a dysfunctional healthcare system, with imbalances that are spreading through multiple institutions. What role - if any - did these services asymmetries play in Washington's decision to take a more active role in housing wealth?

Without a doubt, more resources are needed for impending services shortages, than further taxation can provide. What - then - of Washington's most recent Fannie Mae and Freddie Mac strategies for housing wealth? Even though government's participation in housing assets could (theoretically) assist in needed services funding, citizens are right to question Washington, regarding their intentions with this additional money.

How much? Contributions in recent years included more than $100 billion to deficit reduction, in 2013 alone. This windfall from Fannie Mae and Freddie Mac, represents considerable change in recent deficit structure. Thus far - however - deficit reduction has not even translated into additional assistance from Congress for the Veteran's Administration. How does anyone know that increased government involvement in wealth creation will translate into more efficient outcomes, if the most deserving individuals of all are still in desperate need of healthcare?

If this were not enough, the economy as a whole is still held back, by tightly defined notions as to what growth is supposed to represent. The housing market is not the growth mechanism it once was, as traditional housing becomes limited in prosperous regions. Washington also took responsibility for housing at a time when the marketplace was in drastic need of supply side reform. Housing in the U.S. has yet to benefit from either mass production or innovation, which means reduced consumption for both lower income and (what would be) first time home buyers.

Washington will continue to have adequate access to monetary flows to provide services for higher income levels. However, polarization in income levels and and reduced participation in the present housing market, will make it more difficult for Washington to provide services for lower income levels in the years ahead. Instead of relying solely on consumption capacity to meet its obligations, Washington needs to make room for the productive capacity of its own citizens, to generate a new services marketplace. Is it possible to move beyond political posturing so this can happen? Let's at least try.