Wednesday, October 18, 2017

Rights to Heal Need Not Counter Physician Authority

As if there wasn't enough political discord in Washington already, the evergreen issues of healthcare access have resisted resolutions as long as anyone can remember. I'm now halfway through "The Social Transformation of American Medicine", which explains some of the reality behind the struggle. Even before considering the arguments Paul Starr put forward, I didn't feel comfortable about proposing knowledge use that would only counter the approach by which organized medicine developed in the U.S.

Since healthcare became one sixth of the economy some years earlier, scarcely anyone believes it should demand more resource capacity than what has already transpired. What level of healthcare can our government realistically maintain, especially while more revenue is diverted to military purposes and tax relief? Could the distinct possibility of diminishing government revenue for healthcare, be behind some of these recent layoffs? Meanwhile, unpaid medical bills are on the rise as well.

Yet earlier attempts at reform, some in the guise of making healthcare more "efficient", often included organizational changes which would have reduced the ability of physicians to define their own work environments. Only consider however, that the same autonomy physicians preserved for themselves, is the same autonomy that so many individuals would like to experience for themselves. Are there ways to "bottle" or provide an institutional framing, for what physicians have managed to achieve for themselves? Instead of yet another reform attempt which would reduce physician autonomy, why not use their success as a reference point, for the delicate balance of interdependence and autonomy which we all seek in the workplace and in our personal lives.

Another problem, is that physicians - like others who offer high skill knowledge product - mostly utilize knowledge and skill in a price making context. Price making need not be problematic at a macroeconomic level, when the product in question is only a small part of marketplace structure. But now that healthcare has expanded to one sixth of the economy; the price making that takes place, especially when knowledge is utilized in a secondary or dependent market position, puts additional pressures on general equilibrium circumstance.

The fiat monetary systems which originated in the twentieth century, also contained a built in flexibility which allowed government debt to contribute to vast progress in healthcare. Now, however, political pressure is beginning to limit this flexibility. We don't know yet, the degree to which presumed limits to growth will affect the organizational capacity of healthcare in the near future. Just as healthcare practitioners felt the need to restrict supply in the Great Depression, similar rationale can arise during periods of economic stagnation, especially given the possibility that stagnation will be with us for a while. Are there means to overcome these limits, without further straining the institutional dynamics already in play?

Time arbitrage for the use of knowledge, would not be in competition with the functions of healthcare practitioners, since time preferences would reimburse skill sets instead of money. In other words, economic unit of account and exchange functions would be assigned to mutually coordinated time units, while money simultaneously reimburses time as new commodity formation. The changing "time prices" for specific skills sets, would provide useful clues for educational options in each group. Since each local group uses the time at its disposal, no debt formation takes place. Hence time units (time purchases time) become a direct component of wealth creation, which in turn allows knowledge use to assume a primary marketplace position.

Also important is that time units in this capacity can function like the price taker positions that are often found in tradable sector activity. It becomes possible for participants to do so, because - like tradable sector commodity pricing signals - the participants become aware of the potential equilibrium dimensions of time aggregates - only the process occurs locally, rather than globally. In this capacity, healthcare as time arbitrage also does not compete with traditional healthcare, since it generates new organizational patterns from knowledge use which do not require the resource capacity of general equilibrium.

Much has changed, since earlier periods when physicians found it necessary to reduce the numbers of their ranks as means to gain status. No one need question the quality product which physicians brought to the marketplace in the last century, and other groups which seek the right to heal would augment these valuable skills sets, not attempt to replace them. In the not so distant past, people from all walks of life in the U.S. could still aspire to a life of respectability and usefulness. By no means would a renewed right to heal, based on personal desire to help others, diminish the status and respectability of those who have made such tremendous sacrifices to make the most of their human capital.

Monday, October 16, 2017

Only 25% Can Support Non Tradable Sector Requirements

For centuries, the quality product of skilled craftsmen was associated with the consumption options of discretionary income. However, early in the twentieth century, quality healthcare in the U.S. - with its deep learning requirements - became the primary healthcare product option for all income levels, whether or not they had significant discretionary income. This "all or nothing" approach to skills capacity and utilization, which began in earnest even prior to the twentieth century, is gradually being reflected in our housing market offerings as well.

We're used to thinking that money for extensive deep learning requirements, can always come from "somewhere". But how true is this now, especially as governments increasingly struggle to subsidize healthcare, and healthcare insurance can scarcely remain within budget without plenty of assistance from healthy individuals? What happens to the concept of complete taxpayer obligations for government supported knowledge use, when only a quarter of the workforce has access to the core workplace positions that are the main revenue source for this organizational pattern?

Not long ago, Brink Lindsey wrote an article which particularly emphasized the core employment that actually exists in the present. Yet this core revenue, is what society has come to expect for the vast majority of today's non tradable sector requirements. He refers to "a well-educated and comfortable elite comprising 20-25 percent of Americans" which are thriving", yet outside of this group one finds "unmistakable signs of social collapse." Might the main reason for social collapse, be due to the fact that peripheral employment revenue is not deemed a worthy source of wealth creation, by our non tradable sector institutions? Given this circumstance, is it any wonder the focus instead has been on creating "livable" wages?

And I highlight 25% here as a hopeful estimate, given the 20% extent of core employment which could be the near future low end of this economic reality. As Lindsey stressed, the definition of working class has changed. Furthermore, he believes the loss of jobs these groups once performed, should be a social positive, instead of a negative.

Is it possible to bring more meaningful work, to those no longer expected to perform the mind numbing work that was once such an important part of the workplace? One can at least hope. If only a quarter of the population can support the status quo through core employment, perhaps the remaining three quarters will finally get the chance to generate new and more sustainable forms of wealth, beyond the status quo.

Saturday, October 14, 2017

Monetary Policy and the Politically Possible

Would temporary price targeting be an improvement for the Fed? At the very least, it could provide limited means by which central bankers are better able to manage problems at the zero bound. Even though "temporary" seems like so little, especially since prices aren't the most relevant consideration, temporary price targeting might be politically feasible. Hence Scott Sumner was encouraged at a recent conference, by a paper which Ben Bernanke presented (Here's an abbreviated version).

Granted, temporary price targeting is a long way from the level nominal targeting rule that would be preferred by many market monetarists. Nevertheless, this may be a step in the right direction. Of course, it's worth pondering: What is it about a nominal level target - especially one that takes nominal income into consideration - which appears politically unfeasible? Or, why is a broader commitment to the maintenance of total spending capacity, still being rejected?

Perhaps the nature of the dominant services economy is part of the problem. Unlike the readily quantitative output of tradable sector activity, much of what takes place in non tradable sector activity - particularly time based services - tells few stories about output that are recognizable in terms of aggregate resource capacity.

However, there's another aspect of this problem as well, which might help to explain some of the ambivalence central bankers appear to have, regarding the stability of aggregate spending capacity. How much nominal income - in aggregate - actually derives from price taking, as contrast with price making? The reason this question is important, is that price taking is a more reliable means of coordinating resource capacity according to broader resource realities.

Whereas price making in terms of nominal income, derives from personal positioning and power in the marketplace. So long as tradable sector activity was dominant, more nominal income derived from price taking for wages and income. It's far simpler to achieve the price taking mechanisms of broad resource coordination, when commodity use definitions for final product are not tied to specific time and place. But with the increased dominance of non tradable sector activity, more nominal income - particularly that of high skill knowledge use - is presently in a position to require demands on resources which don't necessarily reflect aggregate resource capacity. Indeed, the recent income dominance of high skill time based service providers as price makers, could also be amplified by tax law changes.

Only consider that some of the conversation in FOMC minutes in the lead up to the Great Recession, seemed absolutely outrageous. How could policy makers actually laugh, for instance, over the predicament of healthcare practitioners who, due to monetary tightening, were losing customers for elective procedures that were dependent on disposable income? It's hardly irrational, to question whether nominal income demands on general equilibrium in the form of price making, are part of what make central bankers reluctant to consider nominal income as a reliable component of monetary stability.

Thursday, October 12, 2017

Does Economics Derive From Normative Foundations?

Perhaps positive and normative economic statements aren't even really all that different, according to a recent paper which was noted at Marginal Revolution. Nevertheless, plenty of economists have long been leery of economic thought with normative implications, since "shoulds" and "oughts" sometimes include an ideological lens which distorts economic framing and the actual resources involved. In particular, Arnold Kling voices his doubts about normative sociological arguments. Recently he wrote:
Mainstream economists do have contempt for sociology. When Robert Solow wanted to write about the causes of sticky wages, he apologized for doing "amateur sociology".
Yet sticky wages - whatever their source - involve more than supply side or policy "shoulds" or "oughts", given the implications they hold for consequent resource capacity and monetary flows. While positive economic discussion is defined as objective and fact based, normative economic dialogue is said to be subjective and value based. Nevertheless, the most obvious long term relevance of sticky wages, occurs via fact based outcomes.

At first glance, resource scarcity may appear as though mostly relevant for positive economic framing. But once resource scarcities become driven by artificially restricted supply side means, they include normative underpinnings (societal assumptions re economic value) which affect the practicality of consequent positive - or normative - economic arguments.

One reason economic discussions could be objectively framed for so long, is the nature of tradable sector activity, which remained dominant for centuries. Since tradable sector product "escapes" so many specific time and place connections, it likewise escapes many of the normative associations of these relatively fixed attributes.

So what has changed? Since today's dominant non tradable sector activity emphasizes both specific time and place, subjective considerations are becoming more relevant. While this circumstance is not particularly helpful at political levels (to say the least), it does highlight the relevance of individual interaction in local settings. After all, time as an economic unit, includes experiential desires and aspirations as part of economic processes. It makes a lot more sense to leave room for "should" and "ought" in individual conditions, than in general equilibrium circumstance.

In order for normative discussions to gain more practical value, why not focus on potential and specific resource use means (what could work), instead of broad generalizations about what doesn't work. For example, when we highlight factors which prevent economic participation, make the moment count, by addressing at the same time, potential means by which individuals might discover new and lasting economic connections.

Tuesday, October 10, 2017

Time Based Product Affects Aggregate Demand

To what extent does time based product, bear responsibility for lost aggregate demand? This matters, in that high skill services product now requires more revenue and investment, than actual output can readily account for. What we don't know in this regard, continues to translate into increased debt loads as well, for the hidden costs of human capital.

Yet it is no simple matter, to determine the degree to which high skill time based product could be reducing either marketplace output, or potential labour force participation. Even though knowledge capture means less production and consumption of time based product than would otherwise be possible, this "lost demand" factor - due to existing supply side limits - is only part of the story.

Today's organizational patterns for time based product are not only incomplete, but they also turn what could have been discretionary consumption, into non discretionary consumption requirements. Yet it is discretionary income which has the potential to expand the marketplace, thereby generating additional (sufficient?) revenue for non tradable sector activity.

If full marketplace representation was actually in effect for non tradable sector activity and its corresponding non discretionary income, such income diversions might not be so problematic. However, the fact that more revenue is gradually being required for what is still translating into less non tradable sector output, is effectively a reversal of long term progress.

High skill time based product, also serves as a specific geographic and time oriented marker, which in some instances affects how much economic activity occurs within specific time frames. Consequently, the non tradable spatial element, means product formation which is of a more fixed nature than what occurs through tradable sector organizational patterns, given the fact tradable sector activity is not time or geography dependent.

In order for tradable sector activity to provide a sufficient counter to the fixed points (and revenue relationships) of non tradable sector activity, tradable sector organizational patterns need enough dominance so that aggregate demand is not ultimately lost to the insufficient supply structures of non tradable sector product.

Fortunately, there are organizational means which could diminish these spatial limitations, in both time based services, and the housing assets which are now following high income levels too closely. A different approach is needed, to generate new growth beyond the non tradable sector activity which is responsible for excessive limits on aggregate demand.

Even though demand constraints on time based product are problematic for consumers, they are responsible for other pressing concerns as well. Not only have these non tradable sector limits encouraged central bankers to scale back on potential long term growth, they also contribute to serious budgetary issues at the national level. Bottlenecks in both time based product and housing, are translating into further difficulties for Republican policy makers, who are still attempting to subsidize both. In an article for Bloomberg, Michael Strain writes:
The way to keep critics from assuming the worst about your intentions is to say exactly what you want to do.
Alas, saying what government actually means to do is difficult, especially a national government which is compelled to offer something for everyone who is in a position to give back. Nevertheless, governments now face their own extensive non discretionary budget requirements, which include heavy doses of 20th century quality standards for input driven time based product.

These 20th century requirements have gradually become less affordable for the 21st century, especially given the fact of economic stagnation. Granted, no one wants to take away superior quality product, when and where it remains possible to provide. Just the same, why not begin the process of building new forms of quality product which are less budget dependent, so that time based services will not have to make such extensive future claims on aggregate demand.

Sunday, October 8, 2017

Deep Learning in a Time of Increasing Automation

Might deep learning roles continue to evolve in future workplaces, so as to include individuals and not just machines? To what degree will we retain the ability to choose areas of deep learning which also hold economic and social rewards? Answers to questions such as these, are important for people from all walks of life.

One reason it helps to distinguish potential rewards factors, is that so many individuals (wherever possible) choose deep learning for purely personal rewards, even when monetary or social rewards aren't part of the equation. While individuals have pursued deep learning through books for centuries, the digital realm now offers far more extensive possibilities.

Nevertheless, there's a paradox in this recent digital bounty. How do we fully appreciate these added learning possibilities, given the fact there are somewhat limited means to make deep learning count for society as a whole? Given these circumstance, digital learning possibilities don't seem as advantageous as would otherwise be the case. While the internet enables personal learning challenges; by the same token, it's no simple matter to share in personal knowledge quests or applications with others, without the requisite degrees. Also, some who are naturally inclined to pursue informal learning for personal rewards, may struggle to continue these quests during life periods when one's basic ability to survive is being tested.

Consequently, individuals may not be able to sustain either informal or formal deep learning, especially when they choose intellectual paths where economic rewards are not likely. Yet no longer is this merely a problem for "impractical" deep learning, as more pragmatic and hands on forms of deep learning will increasingly face the inroads of workplace automation, in the decades ahead. We have been caught in too many debates about the relative lack of economic value for many disciplines, when in reality, automation continues to erode the aggregate economic value of our supposedly most pragmatic fields of study.

Hence one of the main challenges of our time, is to create new knowledge use platforms which can better integrate both deep learning and learning specific formats into our social networks - especially since automation will take advantage of both. Since automation will do some of the heavy lifting for us, it will become easier to set aside time in a day for interaction which is low skill but holds other personal meaning. Even though full monetary rewards aren't possible for these forms of knowledge networks, we can still do a better job of securing survival means, so that individuals might continue pursuing deep learning, who do so for the emotional and intellectual rewards of the challenge.

What about deep learning in knowledge use systems? Deep learning would be compensated in small increments, as time arbitrage smoothes the human capital investment costs of deep learning through peer to peer assistance. Plus, deep learning is not always a necessity to participate in time based service interaction, since complicated but learning specific material can be divided into components which simultaneously generate more consumption access - much as earlier divisions of factory labour meant greater access to an expanded tradable sector marketplace.

Even though technology will likely negate some of the monetary compensation for deep learning, we can respond by exploring how we most want deep learning to contribute to our interactions with others. When we replace the concept of labour with the concept of time value, we have a more rational response to the roles we might assume alongside technology. Time value as a commodity unit, serves as a vessel in which experiential and pragmatic knowledge use can take place.

Best, by placing the economic value on the reality of our mutual time preferences, we give ourselves a break and remove the necessity of determining the level of skill that is supposedly "necessary" for each reciprocal interaction. These expectations for specific skills levels have proven problematic, for they have assumed the provider has all the pertinent knowledge input (both in education and healthcare) while the recipient has none. The reality has often been quite different.

Saturday, October 7, 2017

Organizational Patterns and the Safety Net Factor

Are we as modern as we believe ourselves to be? In a recent post, Shane Parrish notes some of the organizational patterns in use today, and finds interesting parallels with the ways people structured their daily activities in Victorian London:
Would you be surprised to learn that in Victorian London (the nineteenth century), the vast majority of people ate their food on the run? That ride sharing was common? Or that you could purchase everything you needed without ever leaving your house?
Parrish also emphasized that since no safety net existed for many individuals, the competition to sell was fierce. Then, he continues:
Maybe ways of organizing come and go depending on time and place. When things are useful, they appear; as needs change, those things disappear. There really is no new way of doing business. But we can look at the impact of social progress, how it shapes communities, and what contributes to its ebb and flow.
Is nothing really "new under the sun"? If there's "no new way to do business," I believe that may only apply in a general sense. After all, business organizational patterns which provide mutual assistance in the form of time based safety nets, are conceptually different. And if people can plan for their safety nets at the outset, they become more likely to sell the scarce time to others which they are most inclined to part with, based on their underlying priorities. Those time preferences don't necessarily follow the same patterns that employers tend to seek. Unlike the government redistribution which subsidizes time based production, this time arbitrage process would need no redistribution, for it makes new wealth possible via internal coordination.

Consider why internal coordination makes such a difference. Even in the best of circumstance: Should automation take the place of extensive workplace participation, the resulting guaranteed income would not suffice for the time based product which individuals still seek. Put simply: Redistributed revenue can't sufficiently scale to match the present day requirements of today's non discretionary consumption patterns. Which is particularly why new organizational patterns are needed, for the kinds of services many individuals would prefer not to have automated.

Why has the need for new organizational patterns not become more evident, already? Those who are empowered for decision making processes such as these, are the ones least likely to experience these kinds of time based coordination problems. Many would instead seek to redistribute income, after automation reaches a certain point of marketplace and workplace saturation. Meanwhile, policy makers have not really remembered how difficult it is for lower income levels to access a full range of time based services which others take for granted.

Also important, is the fact spontaneous resource coordination processes continue to shift upward. In some ways, this process has actually been going on a long time. For example: In the 19th century, physicians finally gained the ability to drop their lower tier of healthcare practitioners which included people from all walks of life, even as they moved their middle tier group (some education) to a level which approximated higher levels of skill. More recently, particularly since the Great Recession, mortgage availability is no longer available for those whose middle class standing has not also shifted upward. It's too easy to forget that everyone needs useful economic functions and ownership options, whatever one's level of ability may happen to be.

Expecting everyone to shift economically upward is nonsensical. The fact that aggregate income can't accomplish this for everyone, has led to many irrational outcomes. Perhaps our environments would be more rational, if the economists who argue against raising minimum wages (which does make sense for full economic participation), would also invest in non tradable sector asset and consumption opportunities for small incomes. After all, no safety net can really be effective, so long as non discretionary costs are not taken into account. It's time to organize more life patterns so as to reflect the income that many individuals actually receive.