Sunday, October 19, 2014

Knowledge: "Free"...or Free to Use?

Some clarification is in order, regarding my promotion of knowledge use., exactly? Not in the sense of "wresting" current knowledge holdings from their owners. Rather, basic knowledge concepts should be freed so that individuals can carry out everyday complex tasks without ending up in a bind. While individuals are often able to do so for themselves, there are too few means to do so for others - particularly in a compensated services context.

Knowledge use on economic terms does not have to be an "all or nothing" endeavor, as it is often presented in the U.S. And much can be done to make information gathering processes an easier enterprise. Particularly given the fact that people define and organize knowledge spontaneously, when given the chance.

Local service formations need simple versions of credentialing, which citizens can feel comfortable with. Dedicated research paths are also needed in knowledge use systems. This would provide recorded studies and applications not only for local residents, but for participants in other knowledge use systems as well. Sometimes, individuals would need to "reinvent the wheel" if knowledge cannot be "begged or borrowed" for important tasks. Doing so might not be so bad as it seems, because moving ahead to get the job done - however possible - could discourage some of the rampant knowledge theft of the present.

Also, I am equilibrium sensitive in terms of knowledge and skills valuations. Services require more money in some places by virtue of the real estate they operate in. Much of government debt is a result of trying to cram more customers (and/or patients) into high value areas, than limited real estate formations can realistically hold. The present service equilibrium is the obvious place for recently developed concepts and the latest (presently defined) research. What exists in this regard needs to remain intact as a separate knowledge entity, for it remains supported by international wealth.

In some instances, state of the art services formations could reach out to assist the development of services marketplaces which don't have access to international monetary flows. Doing so would help them as well, for they have been subjected to government demands to serve more than is actually possible. Places which would be building a skills base from scratch, need to tap into knowledge use which more closely matches local resource capacity and the abilities of local citizens. Gradually, that limited skills capacity would evolve and grow.

Imagine for a moment: communities already in place, which have generated comprehensive knowledge use systems. What might happen to some which are particularly successful? Would they be tempted to enclose the knowledge sets that their own citizens gradually constructed? Of course, in a sense this is what has already happened - albeit in slow motion - as institutions came to define the knowledge which was allowed, and consequently gained government's backing.

Once knowledge is separated from the value of our time, it is not easy to get either of them back. And that is the present dilemma. The importance of keeping open avenues for knowledge is paramount. By making knowledge use more free, the best compensation of all would be the greater time value, that can recreate the missing marketplace.

Saturday, October 18, 2014

Income Inequality Rationale: Cover for a NIMBY Nation?

Inequalities which result from unnecessary limitations in knowledge use, start to have cumulative repercussions with the passage of time. Knowledge use limitations also include NIMBY reactions to economic access which takes a myriad of forms. Often the intent behind access limitations can be deceptive, thus not amenable to easy solutions. After reading an article about no compete clauses, I thought about that article in relation to Janet Yellen's recent speech on inequality. Just like the neighborhood variety, the rationale basically comes down to...growth? Perhaps, so long as it doesn't disturb my own back yard.

When NIMBYs multiply, growth - and the monetary policies associated with it - don't inspire as much support as before. Of course when the growth stops, everyone looks around the room to see what they want to grab - hence today's renewed income inequality debate. Silicon Valley has been one of the nation's last remaining bastions for equality of opportunity, in knowledge use. Even though knowledge use had long since been limited for individuals - particularly in services - at least business wealth formation had not suffered that fate to the same degree.

Increasingly, that has changed. Many now turn to governments, to form knowledge enclosures for their own personal gain and survival strategies. Few other strategies create such a stranglehold on economic growth. When people cannot even utilize or share the knowledge they need most, does anyone wonder why more suffering is the result? How does anyone help others, if they have lost the means to help themselves? Here's Janet Yellen, in a speech to the Federal Reserve Bank of Boston:
The extent and continuing increase in inequality in the United States greatly concern me...I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity.
Again, as I indicated in my last post, there needs to be organized action on this front so that monetary authorities can return to the job they are actually assigned to do. For instance the Fed's option to maintain economic stability through aggregate spending capacity, sometimes seems as though a distant hope. They don't need to be blindsided by misleading arguments on income inequality as well, particularly when the public is already expecting them to take a more active role in financial concerns.

Presently, I want to give Janet Yellen the benefit of the doubt, for she comes across as someone who is concerned about inequality for the right reasons. Hence my problem is not so much with the fact she decided to speak about it, but that her words will be subjected to interpretations that can mangle logical thought processes in a hurry. Piketty's recent book has already been mentioned in at least one article which covered her speech, and doubtless there will be other mentions.

Just like Piketty, too many elite want to generate yet more redistribution in the name of inequality - all the while pretending they didn't benefit from the most recent round of tax hikes and knowledge use exclusions. Too many ladders have already been pulled up, too many doors to economic access have been closed...let alone the zoning restrictions in place all around. Does collective guilt account for a rising chorus to raise wages? Extra dollars in the paycheck is not much of a consolation prize, for the egregious theft of knowledge use which has already taken place.

One only hopes that Washington will not take seriously the solution that Piketty thought was appropriate for income inequalities. But governments may well try to do so, if others do not step up first to offer specific courses of action. When alternatives are not forthcoming, many special interests will ultimately go along with government, in order not to have their own sense of order disturbed. Alternatives need not be perfect, and they can develop slowly. But they need to be established, so that Washington will not keep returning to non solutions.

Friday, October 17, 2014

Where Is Supply Side "Forward Guidance"?

For some time, there has been a lack of supply side momentum in the U.S. economy. As public and private institutions became less able to adapt and innovate, central bankers maintained demand on a steady course for a consumer driven economy. But with the Great Recession, central bankers stumbled as they overreacted to supply side issues. Even as the Fed concentrated on improving monetary policy afterward, supply side issues still weighed heavily on the reluctance to maintain growth. Of course the U.S. is far from alone in this regard - even so, that is no excuse.

Yet who is in any position to promote widespread cooperation and coordination in this regard? Never mind an Ebola czar! A czar to repair systemic supply side breakdowns - particularly in non tradable sectors - would make a lot more sense. Perhaps because there's so little forward momentum in supply side terms, the marketplace hangs on to every Fed utterance, to determine the degree they will continue to support monetary demand conditions.

Instead of maintaining monetary stability, the Fed continues to get distracted with responsibilities which should have been assigned elsewhere. If monetary policy were a dependable (i.e. boring) process, more business activity could be safely undertaken, with the knowing that adequate monetary flow would be present to make success more likely. Because of ever changing discretion that is not well accounted for, uncertainty on the part of private interests is further reflected in Fed uncertainty, in a negative feedback loop.

This leaves forward guidance as a continued emphasis on demand based consumption growth. However, that also means the same government responses which made little sense prior to the Great Recession. In these circumstances, it is difficult to know whether the Fed can be relied upon, so long as discretion trumps a rule to maintain a level for aggregate spending capacity. In spite of the dominance of the supply side, they remain hobbled by the fact that few can form any group consensus which reflects local economies and the possibilities held therein.

By hardening their institutions and their gains, many among the supply side - and also governments - have turned their backs on the future. The rejection is so strong that it has upended a lot of monetary common sense rationale which existed prior to the Great Recession. Because so many components of the workplace and marketplace are stuck in yesterday's patterns, no one really knows where to begin the process of untangling them.

Hence many supply side factions leave it to the government to assure the public that growth can slow down yet all will "be well". How do Republicans expect to win "no growth" campaigns while the economy "dog paddles" its way into the future? Apparently by making the opposition look even worse. Looks like there's going to be a lot more moral and smear campaigns that are not very inspiring for voters, at this rate.

Everything about this scenario is completely unrealistic. No nation can expect to remain secure and stable, by averting its eyes from declining growth. The voices of those who are trying so hard not to be left behind, need to be taken into consideration and acted upon. Real strength - the kind that molds the character of steadfastness - happens when populations are not afraid to turn around to retrieve those who have stumbled and fallen.

Granted, there are always going to be ebbs and flows in economic activity. But this decline is completely unnecessary, given the resource potential - let along the human capacity - that is currently being wasted. Not only is the threat of decline being ignored, central bankers are trying to gloss over it as though the economy is returning to normal.

Should nations give up on continued growth and further economic integration, that means populations take the chance of giving up on themselves. There's just no good reason for doing so. Millions of individuals are still being impacted by the fact that nothing has really been done, and this is no time for political factions to stand in the way of progress. Forward guidance should not be offered up as false promises in hopes the patient will not go into cardiac arrest. There needs to be real action behind the promises.

Governments and central banks can no longer use the rear view mirror to determine what lies ahead. While neither cannot be expected to play central roles in production reform, the efforts of others to move forward will at least need their blessing. If factions among the existing supply side cannot begin the process of renewed growth, others can begin the process in their stead. Time is of the essence. Anyone who is displaced by automation in the years ahead, will need viable alternatives that offer new hope. New growth need not disrupt what already is, but it needs to progress beyond today's limitations, just the same.

Thursday, October 16, 2014

"What Do You Know?!" in Knowledge Use Context

More of a mindset than a strategy, knowledge "certainty" often occurs without a lot of conscious intent. Who is certain...and why? Hence, this post also serves to give a "button pushing" phrase the benefit of the doubt. Given the right circumstances, plenty of certainty about one's subject matter makes a good conversation starter. That in turn, means further impetus for dialogue and exploration which otherwise might not occur. In other words, "annoying" perspectives can provide a point of entry, for knowledge use in action.

Sometimes, "What do you know?!" is implicit in the course of conversation, as a form of hidden opposition. Or, the person who asks, doesn't care to hear what someone else thinks. When this happens, other issues may be at stake besides knowledge certainty. In one (of a series) Muppet Commercial for Pizza Hut, Miss Piggy "slams" Jessica Simpson, with this question. Whereupon Jessica good naturedly pulls out a blackboard and shows off her math "smarts", of all things.

That commercial stuck in my memory, in part because the context was apt regarding what often happens to economic access. Initially, I had utilized the question as a (book) chapter name during an early phase of this project. Which as my readers know, it's a good thing I've been able to blog. Because my thought processes continue to evolve, quicker than I've been able to organize them in a readily recognizable format.

To a degree, limits in ordinary discourse reflect the larger limitations for knowledge use which are also imposed by the elite. Much of today's suppressed economic growth, resides here. Even in my youth, "What do you know?!" was a phrase that students used to insult one another.

Everyone knows someone who doesn't hesitate to tell us that we don't have enough information to make a reasoned assumption. What's more, the conclusions we have already arrived at are faulty, and therefore need to be amended for the more up to date, conclusive, or otherwise higher quality information that the other party has exclusive access to. We should be glad that they are so sparing of their time to clue us in!

Indeed, they might well be right. What's more, when anyone is exposed to the "higher wisdom" in a somewhat aggressive form, many are more inclined to remember the exchange. Fortunately, the experience may spur one to action as well - whether that action is geared towards or against what one hears. Or, in some instances, what one deciphers may need to be defined with further clarity or in broader context. At the very least, forceful delivery can make it easier afterward to think about the exchange with a healthy dose of skeptical doubt.

Passive forms of "What do you know?!" can be more confusing, hence possibly detrimental in some instances. The message in general is that one might be smart, driven, focused or whatever...but how can it really be expected to matter in the "scheme of things"? This is the subtle message many receive when they are young from family and friends, which can also manifest in a degree of uncertainty should one want to attend college or start a business. By no means is this scenario limited to environments where family and other close relations have not experienced some degree of success.

While one associates motivational factors as problematic for lower income levels, low expectations can result from other circumstance as well. For instance: to what degree were low economic expectations an emotional adaption to the Great Depression? Doubtless, some from the "Greatest Generation" experienced difficulties in such a way, that they consequently expected offspring to make pragmatic decisions and not "reach for the stars". Today's younger victims of the Great Recession, will be more likely to pass low expectations to at least some of their offspring as well.

Hence, "overly assertive" individuals may propel one to pursue more expansive versions of life, while the second knowledge use mindset can actually discourage one from doing so. Yes, the second group will be more easygoing and reasonable in some important respects. When economic times are relatively normal, "going with the flow" can be a very good life strategy. However these are not normal economic times, and going with the flow today can mean losing one's financial position in a hurry. Sometimes a benign approach can stand in the way of one's ability to succeed.

So the "What do you know?!" crowd can spur one another on, whether or not they agree. The fact that opposing viewpoints energize each other mean that success is possible, particularly if no one viewpoint completely cancels the other. It's the moving forward aspect of dialogue that provides hope, and the recognition that action need not rely on a single "end all be all" point in the discussion. Fortunately, there are environments in which dialogue can further evolve - even when institutions which try to maintain "official" versions, would just as soon everyone wrap up the discussion.

Wednesday, October 15, 2014

Midweek Market Monetarist Links and Summaries - 10/15/14

Lars Christensen provides plenty of related links with this post, as well:
Sometimes, bad deflation can "hide" behind what normally represents a positive supply shock:

Note to Krugman: money supplies were not sustained (Marcus Nunes)
When Yellen was worried about rising wages and salaries...
If monetary policy is "powerless"...why did he accept the job?
There's a big difference between the two:
Has it really been 16 months since "taper talk" started?
NGDP just makes more sense:

The good, the not so bad, and the ugly (Scott Sumner) Our great, horrible, indifferent labor market
Noah Smith, Scott's "doppelganger": Great minds think alike
"'s the hawks we need to fear." Are the Doves dishonest?
Scott explains a site called Hypermind: Another NGDP futures market
Recession began earlier in Europe than in the U.S. Why are economists in denial about the eurozone?
Timothy Lee explains Scott's New Zealand market:

Scott at Econlog:
Two "bones to pick" with Yglesias: A certain laxity in word choice
Not on the same page? Obama and the Fed aren't even "in the same library" Economics is symmetrical
There's no need for monetary policy to be held hostage to politics: No hawks or doves, just owls
What keeps the ECB from moving forward? You know you're in trouble when even the Italians won't inflate

Helicopter money without a level target, only increases government liabilities (Nick Rowe)
Coordination problems and fallacies of composition:

A nominal target provides a smoothing process in the event of a negative supply shock (Bill Woolsey) Salter and Hogan on NGDP Level Targeting

So far so good, and perhaps any "rough spots" won't be so bad as the last time (Ravi Varghese)

Shale oil gets plenty of respect! (Benjamin Cole)
According to "Fishy" figures, truck drivers in Texas must be living "high on the hog".

Where are the principles that could assist the supply side of the economy? (Bonnie Carr)

Inconsistent expectations are not helping economic matters right now (David Glasner)
If expectations and plans are not consistent, how can resources be used optimally "or even at all"?

Home prices are still being suppressed (Kevin Erdmann)

Evan Soltas notes the recent drop in oil prices: Here's James Hamilton's post:

Ben Southwood set some Austrians straight, in response to Sam Bowman's NGDP primer last week at ASI. (George Selgin also in comments)

Also of interest:

The poor should also have the right to buy and sell, in the Middle East and in North Africa. (Hernando de Soto) "Economic hope is the only way to win the battle for the constituencies on which terrorist groups feed."

Like Philip K. Howard, I believe that legal matters should be a lot simpler:

Property is...respect!

Tuesday, October 14, 2014

Notes on The Missing Marketplace

Where to begin? New economic structures could use a lot more variety, perspective and depth. When it comes to the marketplace, individual perspectives - which can be so interesting and refreshing - tend to be missing as local options. Too many edges have been dulled from all or nothing forms of competition, and political framing.

This particularly holds true, when considerable time use is involved in product formation. In the event that domestic summits become possible, a lot of free association about desirable product formations needs to take place - especially in service based terms. Society seems to be in one of those rare moments when even "muddling through" services possibilities could still prove productive. Why? Because services have been structured by dictates - rather than individual initiatives - for so long.

Most baby boomers remember, how many forms of product were once whatever people wanted them to be. Just the fact the marketplace held intrigue and unexpected diversions, gave people ample reason to step beyond their comfort zones and associate with one another on a regular basis. Some of that earlier civility and trust...argh, the reader gets the point. Once again, populations need to recreate their marketplace so that it include activities people desire to engage in, rather than what is foisted from outside or elsewhere.

Main Streets of the 20th century were especially about retail. Indeed, it's a pity that too many Main Streets of the 21st century have mostly lost the retail they once had. Other than occasional anecdotes re earlier Main Streets, the more recent U.S. economy has mostly been focused on Wall Street. And yet people by their nature still experience life according to what happens locally - even in a digital world. Too many means for local dynamism have either dwindled, or else become "false fronts" of economic vitality.

Why have so many people abandoned even the concept of Main Street? True, much about the economy is now international. Just the same, much of local economic "emptiness" reflects decisions made by local economic actors in conjunction with special interests. What do individuals want most from services that just is not happening? What kind of service environments might be possible that inspire people, rather than being handed to them in terms of appropriate protocol? How might differences between public and private spaces take shape (particularly in walkable terms), and how strong should those definitions be? How to connect the two?

Formal education scarcely hints at the knowledge use projects, which individuals could create. Only think of the non fiction subject offerings of good bookstores, to get an idea. Anyone who appreciates how to books, knows how much potential for applied learning also exists in those pages. Spend an hour or two in high quality bookstores and one can only imagine what could be locally generated: the wealth of knowledge contained within those bookstore walls is scarcely even hinted at within the confines of many classrooms. And who can be expected to take it all in? That's just the point. Education needs to be about reaching for the branches that contain the nuggets of life that call out to the individual.

Challenges can be built into the time use product which individuals offer to one another. To date, existing institutions are making the mistake of assuming that only certain minds are needed to do the "important" work. That's the danger of allowing work and consumption patterns to be completely defined beyond the level of the individual. Should the missing marketplace be abandoned too long, and populations became increasingly polarized, the brains of some portion of the population might start to atrophy. We're still headed in that that really a good idea? Does it make any sense for centralized control to allow such a thing to happen?

Individuals could - instead - give one another the opportunity to continue growing mind capacity. For one thing, this would likely prove more productive than many might imagine. Anytime that anyone is less bored, they are also more engaged with life. Given the chance to procure matched skills sets with others, many would spend time preparing for compensated work options that are stimulating and meaningful - not the opposite.

Too many have been taught, lectured to and otherwise reasoned with that getting "a life" means "getting real". Supposedly, that includes forgetting about work choices one considers appealing, challenging, or desirable. True, there may not be existing workplaces which are willing to make a place for those efforts on one's part. But that doesn't mean individuals aren't capable of making room for desirable work options among themselves. What is the workplace, if not a vital component of the marketplace itself? Nothing about what product is supposed to represent is written in stone.

Time is the most valuable resource we have, and yet societies have forgotten how to maintain its centrality in economic life. Not only are personal time commitments demanded through strict consumption patterns, but others claim time value in ways that denigrate our own by comparison. When skills of some participants stand out so as to negate time use value on the part of others, anti-markets have in effect been generated. There are few tasks more needed in the present, than to rid the marketplace of these anti-market concepts which destroy aggregate time value and human identity.

When too many individuals do not have economic access, it can also become difficult for monetary policy to keep nations out of recessions. The more that aggregate time use is represented, the more that monetary valuation can be ascribed to other resources and commodities as well. Indeed, without a reliable compensated time use base, entire consumption patterns tend to be left out of the economy.

Monetary policy needs to make room for new economic formations and human initiative. The main thing that is still missing, is the measure and value of time on the part of many individuals. People's lives are on hold until they can once again become a productive part of economic processes. After all, this is the starter mechanism for their own personal and social lives. If anything has become evident in recent years, it is that real recoveries need to be applied, not just talked about and wished for. To be sure, labor in the workplace is not needed in the ways it once was. That means better means of economic engagement need to be found, for which automation has already opened the door.

Monday, October 13, 2014

Services as Growth: A Response for Dani Rodrik

Dani Rodrik is understandably concerned, in a post which asks, "Are services the new manufactures?" In spite of the services growth of developed nations in the 20th century, services potential for the 21st century has become somewhat uncertain. Both healthcare and education have largely evolved in fiscal settings. This in turn, leaves much of their sustainability subject to the ebb and flow of industrial patterns. Consequently, the fiscal nature of any nation's most vital services, makes them a difficult driver of growth when it is most needed. That is particularly the case, when governments also have limited access to international monetary flows.

Manufacturing growth is beginning to plateau in developing nations. And as Rodrik stressed, a new model for growth is needed, in order to move forward. At first glance, services seem as though an obvious candidate. However, he questions the ability of services to provide the productive framework which would be necessary. One could say that even though services are greatly needed, they do not yet have the internal drivers to make them capable of dispersing throughout populations under their own steam. Fortunately, there are ways to make this happen.

I believe that services formations can eventually become a central component of stable economic environments. Indeed, knowledge based services could eventually provide growth on more substantial terms than what has already been achieved. To be sure, a lot of services production reform would be involved, to make it happen. Just the same, populations today have the digital capacity to make these transitions at local levels, if they are willing to try.

What, then, would be the primary stumbling block for many governments? In services based terms, there is a great need for decentralization, for services involve intricate knowledge use at local levels. Decentralized or local service patterns which match resource availability, would remove many services from government control. Still the impetus is needed, for that is the same control which puts hard limits on present day services capacity. These limits have also meant that some cities and regions are continuing to lose their economic viability, in the U.S. Services have simply not been amenable to centralization in the same ways as product which is separate from time.

When it comes to time use that's necessary for unique and individualized product, more time participation (by all concerned) in production and consumption is better - not less. That's also the path to renewed growth. However, matching time use for production and consumption, needs to be approached in ways which do not leave residual debt, in aggregate. After all, it is that residual difference between time value, which has limited service formations unnecessarily. To be sure, many differences exist in skills aptitude. But these can be coordinated in the digital age, in ways which would not have been possible, before.

Knowledge use decentralization would be capable of generating economic growth where little currently exists. What's more, this growth would be capable of involving local citizens in locations around the world, at high skill levels. Most importantly, this form of decentralization can positively impact government budgets, to the degree that they are willing to monetarily back local systems for services growth.

How can this activity take place on monetary, instead of fiscal terms? One's matched time use choices are backed through local coordination, which takes place throughout ongoing schedules. In order to capture productivity in services, each individual hour becomes a central point in arbitrage networks. This makes it possible to track local knowledge use in community efforts, through time. Education is built into knowledge use systems so that high skill services and production become possible in relatively small population densities.

By matching aggregate time use directly - hence no residual time "debt" involved - human capital becomes a direct wealth formation instead of being totally dependent on production residuals or government redistribution. More services are possible through this method, in that participation (consumption and production) is better dispersed. This provides the production efficiencies that in turn allow services to become self supporting.

Because services provisions are directly provided, citizens only need to pay for them once, through the (individually) planned use of their time. This makes a tremendous amount of taxation unnecessary for services. Also it would take much of the uncertainty out of aging, as local support systems would remain in place where one lives. Knowledge use systems makes it profitable for all to be directly involved in productive time options. As a result, no longer would extremely limited numbers of service providers need to take care of the many.

Services can be directly linked with local production factors, so that local citizens would come to understand monetary flows that both are capable of generating. This in turn would prevent various factions from setting up consumption specifications that do not match local resource options as they presently exist. One might say that local forces of cost push inflation versus demand pull inflation, would become better understood within the same local context.

Until now, decentralization has often not been seen as a positive, in that it tends to be associated with informal and unproductive economies - i.e. those where individuals do what is necessity to scrape by. While developing nations are most often thought of in this context, examples abound in developed nations as well. These informal economies often do not have direct connections to the already existing equilibrium, which is what can also make them vulnerable to terrorism and other destabilizing activities in general.

Hence it would be advantageous for any government, to utilize local services coordination systems for knowledge use, through direct monetary means. These coordinated services and production systems could provide economic access for all local citizens who wish to take part. What's more, such systems could eventually prove capable of providing the services they need most.