Friday, September 22, 2017

Some Thoughts on Dynamic Property Ownership

Part of the decline in economic velocity over time, can be attributed to difficulties in making the most of property ownership, especially for properties which are mutually owned by family members. Even though housing has mostly become associated with consumption in the present, some still rely on mutually owned personal (family) property as primary production means for goods or services.

However, it can be especially difficult for lower income levels, to successfully work out disputes regarding the use and/or control of mutually owned personal property. Due to the inflexibility of legal ownership guidelines, family owned resource capacity can end up utilized at a fraction of its true potential. Too many people have lost everything - time and again - for no better reason than family members could not, or would not, agree among themselves regarding common usage for mutually owned property.

In recent years I've suggested a flexible institutional structure for property use, which could make more dynamic forms of property ownership possible - especially for physical assets as utilized by individuals. Property ownership of participants within an equilibrium corporate structure, would function like the pieces of a dynamic jigsaw puzzle, which allows property holdings to adjust for group and individual work/life patterns, as they change and evolve. The ownership process begins with each participant's basic level of property acquisition, which corresponds with entry into time arbitrage via peer to peer educational assistance.

These base property holdings would function as a form of group insurance, via replacement base building components in the event of natural disasters and the like. Basic levels of services access in the course of one's lifetime, would coexist alongside this (time value backed) property insurance pool.* While specific locations are sometimes important in their own right, often the specific geographic location is a second consideration. This way, each group is able to retain its ability to shift holdings for life and work patterns so that families and individuals who have shared time based obligations, can remain in reasonable walking and/or commuting distance from one another.

Often, ownership is not so much about a specific building component or property, but one's ability to utilize buildings and property so that their personal efforts and risks in relation to others, aren't unduly compromised. If specific properties in this setting function as dynamic jigsaw puzzle pieces, one might imagine building components in this context, as similar to Lego pieces. While many properties would closely correspond to changing life/work settings, other more permanent property designations would provide ample room as well, for the personal expressions which personal ownership can beautifully impart to the landscape.

Dynamic property ownership would reduce the legal problems which arise when physical property ownership is subject to the inevitable risks of life. While divorce is among the greatest risk for lower income levels, these groups are at greater risk from the vicissitudes of nature as well - particularly floods. With more viable options for individual ownership, it would become a simpler matter for many individuals with small incomes, to remain economically engaged for the full duration of a lifetime.

*Additional ownership beyond the base insurance levels agreed upon by individual communities, would function as more normal aspects of property ownership.

Thursday, September 21, 2017

Economic Settings vs the Realities of the 75%

Who are the 75%? These are essentially the individuals whose paid work tends to fall short of meeting the expected general equilibrium costs for housing, transportation, and healthcare. At issue is the fact that over time, all of these costs need to be met to effectively participate in the workplace. Today's core income structure in particular, which generally provides full time work (with benefits) for college graduates, is the approximately 25 percent of the population which can meet these responsibilities. A lack of flexibility in non tradable sector setting requirements, has only made it more difficult to match the aspirations of employers and employees, across a full range of skills.

Just the same, there's still a lot of wishful thinking, in that too many municipalities and governments continue to plan budgets as though a much larger percentage of their populations held core workplace responsibilities. As Brink Lindsey recently wrote, regarding the core workforce which has tightened since the new century:
Outside a well-educated and comfortable elite comprising 20-25 percent of Americans, we see unmistakable signs of social collapse.
As the reader may note, I'm also being generous in the assumption that 25 percent of populations can easily afford today's general equilibrium expectations. What if the problem of inadequate workplace revenue for infrastructural maintenance, could be met via more college graduates? Existing businesses can't just readily add more core workplace compensation, because more personal ability becomes available for hiring potential. By way of example, the Economist writes:
So far, university degrees have been a reliable proxy for skill but this may change as artificial intelligence starts taking away jobs from white-collar workers. Projections from America's Bureau of Labour Statistics show that four of the five fastest growing occupations in the country involve personal care; none of these jobs requires a bachelor's degree.
There are three primary issues at stake, regarding future potential matches between individuals, communities, and workplace expectations: housing, transportation, and healthcare costs. Let's consider how these structural elements are currently playing out. As it turns out, the first two have been simpler to subject to external design than the latter, hence new corporate municipal structure is most likely to focus on basic reduced non tradable sector costs for housing and transportation which also make it possible to hire sufficient employees without extensive compensation.

Nevertheless, these arrangements to reduce costs for future employees, may still carry the unspoken assumption that already existing supply side healthcare will also expand to meet their needs. Hence new community design stops short at the third non tradable sector element.

How do these recent corporate efforts for new community, compare with citizen led initiatives for small community formation? While spontaneous citizen led initiatives may seem insignificant (compared with corporate design); again, insufficient local healthcare, presents the same institutional barrier.

None of these new community groups - large or small - have been able to effectively change the costs or access of their healthcare outcomes. After the flower children of an earlier era (60s and 70s) moved into rural areas, many of them returned to the cities, once they realized their offspring lacked access to local doctors. Recently retired like minded individuals who seek cooperative living patterns, face similar problems now. These groups come together, yet once a participant begins to need more than simple healthcare assistance, is compelled to return to the already strained service networks which neither national or state governments have been able to effectively coordinate. Whether new community is large or small, the lack of healthcare as an integral component of system design, is a major inhibitor to new community options.

Spontaneous community becomes most viable, when local participants can directly contribute to new production potential. In the present, the greatest opportunity for doing so, exists in time based knowledge product. The equilibrium corporate structure, by focusing on healthcare production alongside more focused design for housing assets and transportation needs, could provide means for today's 75 percent to meet their basic responsibilities. One might say that current corporate efforts to streamline transportation and housing, are two thirds of the way to better equilibrium definition. By making time based services production a part of local non tradable sector formation, the 75 percent could make it to the goal line.

Tuesday, September 19, 2017

Time Centric Economic Development

Economic time value as a parallel component (alongside money) for societal coordination, could make it simpler for economies to remain in dynamic patterns. For instance, the incremental ownership aspect of time arbitrage, in which one "owns" knowledge to the extent they incrementally use it, could also add much needed velocity to GDP. Time centric economic development, would generate new knowledge use patterns which provide institutional options to the knowledge which inadvertently ends up caught in the passive revenue flows of domestic assets.

Time centric economic development could eventually help us break out of what have become static roles for knowledge use. Limits to knowledge use now contribute to economic stagnation, since productive agglomeration has become closely tied to specific geographic locations. The potential of the digital realm to bring dynamic knowledge use to all corners of the globe, only highlights the current breakdown in knowledge use patterns which has instead taken place.

Since there are hard limits on the groups which can work in areas where knowledge wealth accumulates (via valuable real estate), the potential of long term economic growth remains at stake. It would be far better for all concerned, if knowledge benefits could also accrue to the purposeful activity of informally defined groups. Personal time value as a wealth building commodity, would allow knowledge to function - once again - as ongoing informal activity. Indeed, knowledge wealth accumulated for millennia on similar terms, before knowledge use processes were circumvented by extensive 20th century limitations for economic participation.

Meanwhile, the combined efforts of many groups for the coordination of knowledge, are accumulating like so much sediment at the end of today's major knowledge use arteries. As different groups continue to separate from one another by skill level, it only becomes more difficult to coordinate for total skill capacity across groups. Kevin Bryan explains how path stickiness has occurred, in today's major cities:
Much of the developed world has, over the past forty years, pursued development policies that are very favorable to existing landowners. This has led to stickiness which makes path dependence more important, and reallocation toward more productive uses less likely, both because cities cannot shift their geographic nature and because people can't move to cities that become more productive.
By way of example, the recent concern that society may be "running out of ideas" goes back to the fact that too much resource capacity is caught in institutional formats which are no longer able to make room for the knowledge based aspirations and challenges of individuals who lack advanced degrees. When knowledge use becomes mostly professional activity made possible by graduate level degrees, the results tend to be either skill access struggles (healthcare), or constantly debated professional opinions (formal education), much of which resembles a Winchester Mystery House, in which knowledge fills halls, stairways and rooms, but otherwise has few viable places to go in which it is capable of benefiting anyone.

Knowledge use now faces these unexpected limits, in large part because of its external dependence on other existing revenue. Unfortunately, when money becomes the only means by which a society can coordinate economic patterns, too much revenue eventually pools into the passive asset holdings of location bound real estate. Time centric economic development, in which time becomes a unit of commodity wealth alongside money, could help to prevent these losses in economic velocity. Since time arbitrage would also be asset backed (via flexible building components and infrastructure), new productive agglomeration could occur with a mere fraction of the infrastructure that is presently necessary.

Time centric economic development could allow groups to maintain the use of knowledge via the coordination of multiple skill levels across group participants. This process would allow knowledge to continue dispersing so as to activate further activity, through the "vehicle" of time as commodity based wealth.

We need better institutional means by which cumulative knowledge has a chance to remain accessible to all who find it useful, practical, and beneficial. Knowledge use systems could be designed in ways that should one group become unable to maintain the use of knowledge in certain specific settings, the knowledge at stake could readily be absorbed by other groups which operate within the same systemic design.

Sunday, September 17, 2017

Monetary Rationale for Time Value as Commodity

How did so many of us become convinced that gold standards are "bad"? Could it be they are simply outdated, or is something else at stake? In a thoughtful post, Josh Hendrickson concludes:
To assess whether the gold standard, or any monetary system, is "good" or "bad" requires careful consideration of the institutional characteristics of the system. A gold standard can work quite well within the right institutional structure. But the same could be said for a fiat regime. To argue that one or the other is inherently bad - or worse, claim that everyone agrees with you - is to do a disservice to those who want to learn about monetary economics.
Regular readers aren't surprised that I'd also like monetary economics to be expressed in ways which at least make basic sense to the public. For one thing, the more a given population understands about the basic workings of their monetary system, the more likely they may be inclined to trust their own governmental institutions.

One of the most useful aspects of today's fiat monetary systems, are their flexibility. As services have become more dominant components of developed economies, fiat monetary regimes help to streamline the process of incorporating time based services and knowledge use into a broader monetary framework. Why don't we tell simpler institutional stories which might encourage citizens to be more confident in these systems?

Meanwhile, the effects of services dominance on equilibrium conditions have yet to be broadly discussed, and even some economists and central bankers don't appear to be comfortable with the monetary claims of services generated wealth. Perhaps we would benefit from a closer look at how services sector dominance influences macroeconomic outcomes, particularly effects on long term growth and overall debt load structure.

Many have wondered why central bankers still use inflation targeting, instead of a more precise tool such as a level nominal target. It could be that inflation targeting serves as a foil for central bankers to dismiss the recent complications which today's services dominated economy present for overall macroeconomic structure. Just the same, avoidance such as this needs to be dealt with, especially since central bankers haven't been faithful to a full level of monetary representation, in terms of what is being produced by all concerned.

Real economy conditions have only become more important, for the maintenance of an appropriate monetary standard. Gold standards existed in a historical framing when not only was wealth more closely associated with commodity dominance, this wealth was easier to measure and ascertain. Indeed, some economists would still prefer a commodity standard in the present. Wikipedia explains that in a fiat standard, the value of currency is set by the federal government, and continues:
Not long ago, America's monetary system was built on a commodity standard, where the value of currency depended on a fixed exchange rate between money and a single good or a basket of goods.
Compared with a fiat monetary standard, a commodity standard was relatively simple. One could assemble a broad sampling of commodities and regularly manufactured product, and glean a reasonably good approximation regarding the dimensions of an equilibrium, in which both manufacturing and services sectors basically circulated revenue flows in balance with each other.

In spite of the flexibility they contribute to spontaneous coordination at a national level, fiat monetary systems tend to distort this circulatory balance in ways that many groups have reason not to completely trust. As governments switched to fiat monetary regimes and set about utilizing extensive debt formation for time based services, an element of uncertainty was introduced, regarding reliable equilibrium dimensions. While a nominal level target is best equipped to represent equilibrium dimension, central bankers may doubt the ability of their governments to maintain present conditions for time based services contribution, to wealth creation in general. In spite of this recalcitrance on the part of policy makers, it remains vital to get monetary representation right, for the wealth and economic activity that people seek to create.

Part of the problem, is that too much services generation and knowledge use have proven notoriously difficult to measure. How many other resources are expected to be redirected, for any given unit of time based service product?

Personal economic time value, as a wealth generating commodity unit, could eventually lend better measurement capacity for knowledge use and overall economic stability. How so? As an internally generated, non debt producing unit of commodity wealth which is accounted for at the outset, time arbitrage could contribute to reliable general equilibrium dimension in the same (primary market) capacity as traditional manufacture. Time based commodity units would eventually help to restore circulatory balance between primary market wealth creation, and secondary market wealth circulation.

Even though fiat monetary systems are reliable for the external compensation of knowledge use up to a point, these highly specific skill rewards aren't fully accountable at the outset. Consequently, fiscally compensated time based product contributes to a debt driven equilibrium which distorts the true capacity of monetary flow potential. Time arbitrage would be instrumental in returning to a status in which equilibrium capacity could be more readily determined.

While fiat monetary regimes are still quite useful in the present, they cannot simply continue as open checkbooks which don't determine the nature of ongoing debt formation in relation to overall resource capacity. By utilizing time value as a commonly held commodity, time based services generation could eventually place less demand on overall monetary representation, thereby generating more public trust in knowledge generation processes.

Friday, September 15, 2017

Some Healthcare Musings and Market Possibilities

Single payer healthcare is back in the news, since the introduction of a "Medicare for All" bill by Bernie Sanders. In an article for Bloomberg, "Incentives Are All Wrong for Single-Payer Healthcare", Tyler Cowen writes:
It's worth thinking through why some single-payer systems, such as those on the European continent or in Hong Kong and Taiwan, seem to work. Typically these systems were instituted while health-care costs were still fairly low, and then kept down by government fiat. The U.S. is not in that position, and it's hard to see doctors and hospitals -- powerful lobbies -- going along with significant cuts to their payments.
Essentially, most special interests in the U.S. are important parts of the "buy in" for legislative results. Tyler Cowen continues:
When it comes to access, the major problem in the U.S. is distributional: Some of the poor have insufficient access, and arguably some of the well-off have insufficient access, and arguably some of the well-off receive healthcare at too low a user price. Given Americas' love for consumption, it's probably too late to fix the latter problem.
However, there's somewhat of a paradox in the "Americas' love for consumption" argument. There are many potential treatment options across the spectrum, besides what may be suggested in the doctor's office. Many such options also happen to be less expensive. Nevertheless, alternative treatments and remedies have been systematically devalued as long as anyone can remember - not just by healthcare practitioners but in particular by major media sources. While this barrage of reasoning helped to reduce marketplace competition for professional providers and pharmaceutical remedies, it simultaneously made too many people who often couldn't pay for formal healthcare, more dependent on a system which in many respects wasn't structured to include them.

For decades I've observed the effects of "alternative healthcare product is bad/worthless/dangerous" reasoning, in spite of the fact formal healthcare has its own risks. Risks go with the territory! And while the intent of many healthcare professionals may have been to preserve the loyalty of high paying customers, they inadvertently gained the loyalty of low income customers who not only lost faith in lower cost alternative options, but also tended to prefer guaranteed access to treatments with built in higher costs.

Indeed, the government fiat which Cowen mentioned in the above quote, probably makes it simpler for other governments to include older tried and true methods alongside current medical remedies and procedures. Given the chance to visit other countries, I like to imagine that I would not encounter the negative media attitude towards informal and alternative methods, which exists here.

Healthcare in the U.S. is a more substantial problem at an equilibrium level, than elsewhere. Once governments set up processes in which they are expected to "give something back" (subsidies for those who can reciprocate) for legislation, that's difficult to change.

Regular readers know that I have high hopes for knowledge use systems which could incorporate the practical from modern medicine, alongside tried and trustworthy methods from the past. Interestingly enough the "single payer" framework suggested a suitable framing for small group approaches: Contributions from "single disease" specialists. Where once such specialization would have been impractical in small or local settings, the digital realm means new horizons for the cross fertilization of approaches and remedies, across local knowledge use systems. Not all research and development which takes place via time arbitrage, need be local in nature.

Of course, no participant need concentrate on a single disease, if they wish to continue. Rather, a single disease approach would provide means for individuals to gain solid economic footing at an early stage in their incremental learning process. Some participants could make a single disease focus their healthcare contribution for aggregate group efforts, while others may choose to expand into further healthcare studies.

In his above linked post, Tyler Cowen mentioned Medicaid expansion as an option. However, as noted by Dana Goldman at Brookings, the first "go to" of Medicare has its own problems:
People also forget that Medicare is a hidebound system. It took Congress more than 40 years to offer a prescription drug benefit, for example. Physicians are paid using an arcane system developed decades ago and that has now ballooned to more than 140,000 procedures codes, all of which is supervised (and gamed) by physicians themselves. Standard private sector cost-saving measures, like competitive bidding for routine services, are rarely used.
There is a better way - called universal catastrophic coverage - which borrows from both progressive and conservative playbooks. It would combine the federal guarantees of insurance for all with the cost controlling benefits of insurers competing for that business.
While universal catastrophic coverage sounds promising, the main problem for implementation, still goes back to the way our "rewards for all" system was developed. Likewise, today's formal healthcare specialists need to focus their efforts on what clearly pays in the marketplace. And because of the costs of their education, most specialists need our government to maintain the subsidies which are already in place.

Time arbitrage could finally allow individuals to focus on healthcare issues which don't provide the same profits. How so? Since time would compensate time, system participants would be able to pursue research and development which isn't profitable in general equilibrium conditions. Plus, healthcare participants would be able to allocate time to individuals where it is most actively sought. We don't really know what time would be sought, because time based compensation has often been allocated according to institutional needs instead of the personal needs of provider and recipient. Fortunately, by making each individual an active component of wealth creation, there are market possibilities for healthcare which have yet to be imagined.

Wednesday, September 13, 2017

Asset Ownership is Key for Base Velocity

In particular, stable levels of base velocity are necessary, for lower income levels to reliably participate in the economy. One might also distinguish this base velocity from low income discretionary spending, which is of a more random nature.

One way to generate stronger base velocity, is to support knowledge use as an ongoing economic learning process which begins in youth. Asset formation would take place alongside mutually held time commitments, while time arbitrage contributes to personal autonomy by allowing shared daily routines to function as incremental economic processes. In recent years, I've suggested incremental asset ownership for individuals who sometimes struggle to maintain a full plate of financial obligations. Simple and flexible building components, could encourage individuals to discover and maintain levels of ownership and participation which work best for them, at different points in their lives.

When ownership options such as these are lacking, many individuals tend to end up in solitude and dependence, who otherwise could have remained socially and economically engaged. It's a reality which creates problems in terms of both basic levels of economic velocity, and production potential. Since this lack of full economic participation has yet to be addressed, the fallout of lost access generates additional burdens for higher income levels - both in taxpayer obligations and the additional costs of social separation. In some instances, a dearth of productive economic environments, ultimately translates into indirect but real lost wage capacity, for higher income level groups.

Structural considerations such as these should be taken into account, in that they provide a broader framing for related concerns regarding future wage potential. The Hamilton Project is just one of the latest groups to convene and discuss "What can and should be done to promote the economic growth that will lead to higher earnings for more American workers?"

Without sufficient base velocity for lower income levels, there are general equilibrium effects which negatively impact both nominal and real wage potential. When supply is already restricted for non tradable sector product, wage increases do nothing to increase access to non tradable sector product. This is the supply side reality in basic amenities, which consequently impacts discretionary income for higher income levels. If supply remains restricted in basic housing assets or time based services, wage increases alone cannot contribute to marketplace formation.

Tyler Cowen noted an example of supply effects on general equilibrium in a recent post. He stressed that relatively lighter regulatory environments can create positive "unseen effects", which increases supply so as to reduce the pressure on the most expensive markets within the same general equilibrium.

What Cowen highlighted in terms of housing, has a similar general equilibrium equivalent in terms of taxpayer obligations for the negative externalities attributable to those who lack economic access. A better way to address wage issues, is through equilibrium growth potential where it is most clearly missing. Again, attempting to do so via the demand side is misleading, since government redistribution doesn't create additional supply for either housing assets or time based services formation. A more appropriate government role, would be to give a green light to new institutions which generate dynamic economic conditions for lower income levels.

Granted, higher income levels sometimes face wage constraints which impact discretionary income. But the main reason for this reality, are non tradable sector supply side limits on production requirements and economic participation. Even so, quality control requirements such as these should not prevent higher income levels from full economic participation. Whereas, when lower income levels lack economic access, they are less able to contribute either to non tradable sector activity via base velocity, or tradable sector activity via discretionary income velocity.

Kevin Erdmann continues to press for broader ownership of housing assets as well. Recently he wrote "This is your occasional reminder that the stagnation we are experiencing is housing." Nevertheless, this lack of housing for individuals and families alike, is matched by a lack of personal participation in services generation. Indeed, services capacity which is capable of creating new wealth, would likely contribute more than the 1 to 2 percent of additional GDP which Erdmann believes would be possible through better housing access.

No discussion re aggregate wage levels is realistic, so long as economic velocity remains too low to generate economic complexity for lower income levels. This loss of economic capacity affects income potential along the entire spectrum. Even though general equilibrium is too tightly defined to accommodate incremental growth, new growth is possible via defined equilibrium settings which would once again generate base velocity for lower income levels. Once lower income levels become better able to meet working and living requirements, these groups will gain new options for discretionary income. What's more, discretionary gains for lower income levels could eventually translate into positive effects for the discretionary income of higher income levels, as well.

Monday, September 11, 2017

Personal Economic Interaction Can Be Regained

Are we purposefully eliminating ourselves from direct interaction with others, both economically and socially? At MIT Technology Review, David Byrne writes:
We are beset by - and immersed in - apps and devices that are quietly reducing the amount of meaningful interaction we have with each other. 
What if tech development has an "unspoken overarching agenda", as Byrne suggested, to reduce direct forms of personal communication? In other words, what if the ongoing reduction of human activity (in the marketplace and otherwise) turns out to be a feature, instead of a bug?

While some reduction of interpersonal activity has been intentional, it helps to remember how our present economic alignments inadvertently encourage social isolation. Society remains in a position where it's still necessarily to treat compensated personal interaction as an institutional cost, rather than a personal source of wealth potential. Meanwhile, the same technology gains which previously led to both increased wages and output, now mean less human input in relation to output, in a services dominated economy.

Nevertheless, an increased degree of involvement on our part is key, if we are to maintain a dynamic presence in our own economic settings. Fortunately, one means to do so, is by generating new interpersonal economic value. Indeed, we can do so not just through mutually allocated time for daily routines, but also the less routine experiences we seek via the assistance of others. Fortunately, time value as a commodity, could make our purposeful time with others, a direct component of both wealth and economic freedom.

For our time value to gain personal and social economic relevance, we transform it from an institutional cost into a shared resource. In order to do so, we purchase the time value we hope to gain from others, through the personally invested time of our own. While this time arbitrage process becomes recorded and categorized, it also gains monetary backing. Those who take part in the process, present mutually held time preferences as a commodity value constant, so as to grow the knowledge use network.

The challenge of making one's time valuable for others, would lead to a level of competition in services generation which otherwise isn't possible, whenever time based services have to rely on external resource capacity for skills compensation. And presently, firms which might otherwise choose to preserve human interaction to the greatest degree possible, remain threatened by directly competing firms which choose to reduce the need for human interaction. By making time value capable of purchase via the time of others, more individuals would gradually gain the option of preserving personal interaction at higher levels, in both the workplace and elsewhere.

Much of this comes down to the conscious decisions we can individually and collectively make, about the value of our economic time. There are two obvious essential areas which define interpersonal time based product:  Practical product, and experiential product. When time value cannot be bargained for directly (via the time people have at their disposal), certain forms of practical product deemed particularly important, will slowly but surely undermine the ability of a given population, to engage in experiential product which includes direct human interaction. Which is vitally important, because high levels of experiential product which include human interaction, are one of the most important markers of any civilized society.

Earlier this year, Alice Rivlin at Brookings, in "Seeking a policy response to the robot takeover", concluded her article with these thoughts:
If the enthusiasts of smart machines are right, the truck drivers are just a small fraction of the workers soon to be displaced by a new wave of technological advance. Americans will be forced to face up to the daunting challenge of what we want our society to be when we no longer have to do hard boring jobs like driving a truck. We have to figure out new ways of developing and adequately rewarding the skills that only humans have, like emphathizing, nurturing, and fostering athletic skills and artistic creativity. That is the particular challenge posed by smart machines. There are no easy answers to this challenge, but focusing on the soon-to-be-displaced truck drivers is a good place to start.