Friday, October 31, 2014

Wrap Up for October '14

Depending on the neighborhood one lives in, Halloween may still be a major event. It practically rivaled Christmas for some of us when I was young: plenty of houses had candy and most kids in the neighborhood were out to find it. So I've always been sentimental about trick or treaters on the hunt. The youngest ones ones still check out this neighborhood - generally with parents close nearby - and there'll be a north wind to cool off some of the "stuffier" costumes. To all my readers, a Happy Halloween.

As for getting "spooked": at least my laptop - which I'd only had for 13 months - didn't decide to turn into a zombie today! Yesterday - however - meant a trip to town to see if anything could be done (nope), and fortunately I had already looked into the Chromebook option. So far so good. Not only is Chromebook much easier on the budget, I had already gotten to the point where Google search, gmail, the Chrome browser and the Blogger format were primary online tools. All of which are basic components in these laptops, and the Google docs app is "waiting", once post ramblings become better organized. I'm just glad that the whole package is simple for a low techie, because tech issues borrow too many of my (limited) brain cells as it is and I want them back.

Jobs jobs jobs. I'll look on the bright side. At least it's only one in four!
http://blogs.wsj.com/economics/2014/10/01/one-in-4-u-s-metros-has-fewer-jobs-than-5-years-ago/?mod=WSJBlog
Another look at the metro bright side: http://blogs.wsj.com/economics/2014/10/29/jobless-rate-below-5-in-nearly-one-third-of-u-s-metro-areas/?mod=marketbeat

Early this month, Scott Sumner went for "the big ask" (i.e. the NGDP futures market), and I came across an interesting article about the "art of asking" at the same time. Some readers might want to save it for future reference: https://medium.com/@sarahkpeck/the-art-of-asking-or-how-to-ask-and-get-what-you-want-9e7455ca375b

This isn't the kind of local planning that is particularly constructive...AEI highlights some of the "wrong" ways to do local public corporations.
http://american.com/archive/2014/october/the-redevelopment-racket

AEI also brought journalist Scott Beyer to my attention, earlier in the month. Beyer has an interesting take on car subsidies for lower income levels, which otherwise cannot afford cars and don't do well with city transportation offerings which take long commuting hours. This makes sense for some workers who need access to cities which have little interest in creating higher densities.

Beyer provided his own Charlottesville VA as an example. I had already noticed the transportation problem in Charlottesville, when I checked it out as a potential place for living and working, last year. Charlottesville is just one example, why many who decide to be "car free" seek to live as close to city centers as possible. Of course such centers are desirable marketplaces for all income levels. Which is why new communities with coordinated production and services centers could be wildly popular, if done right.

Ben Southwood speculates whether improvements in human capital were responsible for greater longevity. Sounds pretty reasonable to me.
Longevity and the rise of the West

Different population trends for U.S. and Japan:
http://libertystreeteconomics.newyorkfed.org/2014/10/demographic-trends-and-growth-in-japan-and-the-united-states.html#.VDZ-p_ldVS1

One wonders why bankruptcy filings are still so high in some of these states...
http://www.creditslips.org/creditslips/2014/10/bankruptcy-filings-are-low-but-not-everywhere.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditslips%2Ffeed+%28Credit+Slips%29

Earlier in the month I linked to this article in a post but it is worth noting again here. Also noteworthy is the sandwich non compete clause: http://www.theatlantic.com/business/archive/2014/10/how-companies-kill-their-employees-job-searches/381437/?single_page=true

Atlanta Fed has a new data tool for labor force participation http://macroblog.typepad.com/macroblog/2014/10/whats-behind-declining-labor-force-participation-test-your-hypothesis-with-our-new-data-tool.html

Good leadership link: 4 Biggest Myths About Being a Leader

Dani Rodrik looks at growth prospects in Africa
http://assets1c.milkeninstitute.org/assets/Publication/MIReview/PDF/42-54-MR64.pdf

...as the U.S. slowly drifts into political circumstance that few actually want:
http://blogs.wsj.com/economics/2014/10/24/wessel-todays-deficit-is-not-the-problem/?mod=WSJBlog

Did contractionary monetary policy increase inequality in the U.S.?
http://www.voxeu.org/article/monetary-policy-and-inequality-us

Some of the research about the effectiveness of QE: http://blogs.wsj.com/economics/2014/10/28/how-effective-were-fed-bond-buys-a-qe-research-bibliography/?mod=marketbeat

While it would be a bit odd to be met at the door by this robot, I would welcome help for finding small items few retail clerks have the time to keep track of!
http://www.businessinsider.com/lowes-new-robot-retail-worker-2014-10

Everything Deirdre McCloskey
http://www.deirdremccloskey.com/

Wednesday, October 29, 2014

Midweek Market Monetarist Links and Summaries - 10/29/14

"The notion that exchange-rate depreciation to avoid deflation is a beggar thy neighbor policy or a warlike act could not be more wrong." (David Glasner) http://uneasymoney.com/2014/10/22/currency-wars-the-next-generation/
The letter viewed inflation as the problem, at the moment when inflation could be the solution: http://uneasymoney.com/2014/10/28/just-how-infamous-was-that-infamous-open-letter-to-bernanke/

Marcus Nunes responds to a post from Brad Delong: http://thefaintofheart.wordpress.com/2014/10/23/theres-no-proper-inflation-target-just-a-proper-nominal-spending-level-target/
Inflation just doesn't tell the story: http://thefaintofheart.wordpress.com/2014/10/25/with-incredible-headlines-like-these-who-can-believe-inflation-is-the-proper-target/
And this story has a sad ending...http://thefaintofheart.wordpress.com/2014/10/25/while-they-bicker-the-zone-flounders/
Both Cato and Brookings are taking action: http://thefaintofheart.wordpress.com/2014/10/25/responding-to-circumstances/
...only they didn't wonder why demand was weak! http://thefaintofheart.wordpress.com/2014/10/26/the-riksbank-thinks-inflation-is-a-price-phenomenon/
Some thoughts from a local resident: http://thefaintofheart.wordpress.com/2014/10/27/what-the-election-result-in-brazil-means/
Marcus highlights a good Forbes article and illustrates with divisia M3 charts: http://thefaintofheart.wordpress.com/2014/10/27/some-are-having-second-thoughts-about-the-stance-of-monetary-policy/

Use the model that is "less wrong" (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/stability-and-robustness.html
An appearance on Boom Bust: https://www.youtube.com/watch?v=fRoW-NrSgYQ&feature=youtu.be

"It's not coherent" (Scott Sumner) Did QE worsen inequality? That's not even a question.
Good news? Hmm...Layoffs reach the lowest level EVER
What are recessions "good" for? Turning up inflation a bit. The problem with procyclical inflation
South Dakota? Wow. I can't even imagine a state with no income tax or personal property tax. What's the matter with Kansas? (big government)

Econlog posts from Scott Sumner:

Monetary economics is not like everyday morality.
The great sin, the even greater sin, and the enlightened path
The Fed got lucky. My naivete about government officials
I like this closing line: "You may not care about monetary policy, but monetary policy most certainly cares about you." The ECB has an inflation target. How do the Germans propose they hit it?

(Britmouse) New data for low level breakdown of GDP http://uneconomical.wordpress.com/2014/10/24/uk-2014-q3-nominal-gva-early-estimate/

Musings on inflation (Bonnie Carr) http://dajeeps.wordpress.com/2014/10/24/does-fiat-money-equal-socialism/
NGDP and the "little trees" at the forest floor in need of sunlight:
http://dajeeps.wordpress.com/2014/10/25/somebody-save-me-from-the-price-level-discussions/

Does QE "steal" brain cells? (Benjamin Cole) http://thefaintofheart.wordpress.com/2014/10/24/professor-john-cochrane-and-money-manager-peter-schiff-agree-zero-percent-hyperinflation-ahead/
Unemployment does not correlate well with inflation: http://thefaintofheart.wordpress.com/2014/10/29/central-bankers-are-blind-to-new-phillips-curve-or-just-sadists/

Also of interest:

Arnold Kling provides a good list for staying true to one's principles: http://www.arnoldkling.com/blog/luigi-zingales-on-economists-capture/

Tuesday, October 28, 2014

Compensated Time Use is a Leap of Faith

Why so? It's not something that a society necessarily has to do, by any means. Only the best...please! Even discussion about compensation is generally an exercise in limited context: i.e. tending to abject poverty, etc. Which makes the idea of general income for everyone seem all the more odd, except perhaps in the context of robots taking over employment in general. What if time use might actually be a valued product in its own right? One way to gain time value perspective is this question: What don't robots provide...that we want? Are a lot of answers quite different? That is really good.

All too often, the fact that compensated time use could go beyond alleviating poverty may not be considered. How to think about different applications for wage subsidies, for instance? Either a subsidized wage or basic income could still impose the limits of a fixed income, because of other limitations in one's environment. While this may not be problematic for the older worker who has already learned how to make do with less (and has plenty of previous experiences to lend to present circumstance), it could definitely pose problems for the younger worker. Here is a Wikipedia explanation regarding basic income:
A basic income is typically intended to be only enough for a person to survive on, so as to encourage people to engage in economic activity.
Yes...but is there already local economic activity to be had? One reason why recipients need this is the fact economic activity exists elsewhere. The local setting is a vital part of any compensated time use consideration. For instance, the fact some versions would be offered to all is impractical, in the sense of growing an entire equilibrium to benefit an ill defined margin. If there is to be agreement on some form of compensation, it needs to be considered as more than a corner solution. This is why I suggested working within "tiny" (replicated) equilibrium in yesterday's post, so that additional compensation need not stretch the whole.

Social security in the U.S. has worked somewhat like a basic income. The fact that Social Security might not offer the same advantages for seniors in the years ahead, points to problems with basic income for similar reasons. In some zip codes, local tax requirements are already approaching existing levels of government compensated Social Security. While this may not problematic for those with additional retirement preparation, many are not in this category. Therefore compensated time use is not just an issue for individual needs, but also the ability of municipalities to plan for their own futures.

This is why local means of production and services need new frameworks, so that consumption needs can once again be an aspect of local resource capacity. The limited compensation of time use would go much further under more inclusively designed regulatory environments, even without substantial personal investment for retirement. Coordinated settings for new consumption/production potential would provide greater flexibility for basic time use compensation (in this instance, time use arbitrage) than would otherwise exist.

Just as important, locals who are investing for (human capital) time use gains, would be investing in the technology of their environment at the same time. The real leap of faith is taking advantage of what technology has already provided for freed time, and what it could still offer if given the chance.

Should individuals regain confidence in time use as product in its own right, technology would no longer be perceived as something which holds back human potential or economic access. Such good fortune would be nothing short of a revolution, as to how many non tradable goods would eventually be defined. If people are able to regain trust in the abilities of others in their own midst, such a revolution is possible.

Monday, October 27, 2014

Needed: Conscious Echoes of a Larger Whole

How to envision economic growth, in a time when many are opposed to further expansion because of potential effects on what they already hold? In part, the knowledge that is still needed, represents an inward journey which GDP can also account for through time aggregate measure. The expansionist or commodity based growth which could accompany this, would be in better balance because it would occur at a more basic level.

Think of economic relationships as relatively unconscious patterns which - for long periods of time - are capable of working reasonably well. It is only when those existing patterns reach certain stages of maturity, that a rising price level for a widely diverse whole may appear detrimental to additional inclusion. And yet, further growth is always needed in order for systems to maintain their inherent dynamism.

If growth cannot take place through the primary equilibrium, the whole may need to generate miniature, somewhat conscious replications. Tiny and relatively complete wholes in terms of assets/production/services formation, can generate new growth. They can also provide ample evidence that a nominal level target matters in more than one dimension.

This economic expansion can take place in small "growth burst" environments, which can rise as they develop and slow as they mature. In the meantime local density potential is filled and further complexity is generated. At a certain point, the internal growth of knowledge use would become more important than locally needed production. Tiny local equilibrium (with its tiny monetary transmission) can grow without engendering traumatic shock on the part of tight money advocates. It would be growth which does not make the general equilibrium margin appear as though needing to encompass monetary policy "infinity". Many replications would stay relatively small, particularly the communities with walkable centers.

The unconscious element of a marketplace - i.e. primary equilibrium, is desirable in many respects. After all in the right circumstance it offers great flexibility, which contributes to countless collaborations and interactions among individuals. The fact that large systems work best with minimal conscious coordination, provides strength - as evidenced by the failed planned economies of the twentieth century.

What can be done, then, when primary equilibrium either needs to change or continue growing? Small local templates can be generated, which allow freedom of both individual and group action. Free markets also mean determining how to engender the participation of as many as possible. Perspective as to earlier circumstance is also important, to determine how varying approaches were once able to work well together. In primary equilibrium (i.e. international monetary flows for services), earlier approaches still work, but in a less dynamic state.

Most recently, production and manufacture were able to (widely) contribute to reliable services systems growth for more than a century. They were able to do so, providing multiple private interests had ample room for further growth in their own right. This long lasting production and manufacture trajectory also created the growth trajectory for GDP and output, which the U.S relied on until the Great Recession.

Only now has that earlier growth mechanism been cast into doubt. As a result, services systems now need to be able to generate further wealth through their own steam. Because services such as healthcare and education are so closely linked to government activity, it is difficult for them to make the transition in a broad based setting. The transmission mechanism of the monetary system still has considerable bearing on this relationship as well.

By no means is this the first time that the need for economic evolution has only been partially met, particularly given political realities. Yet the potential for combining past lessons with future possibilities, is often missed. Why? When push comes to shove and hard times call for structural reform, often the interests of those in power overcome rational suggestions. As a result, inclusive measures capable of honoring the economic intent of the individual, get pushed aside.

Indeed, maintaining economic complexity and vitality, seems to suggest creating conscious echoes of the larger whole. The best part? One need not know how much time to utilize, how many resources to add, or how much money to contribute to the economic picture. Rather, a well defined path for the ongoing "dance" of time and resource use, is primary. In this sense, a (miniature) nominal level target is not so much a hard rule, as it reflects the current environment of economic possibility - perhaps a monetary "season". Given the chance, money stands at the ready, for what people actually want to do. From "The Lost Writings of Wu Hsin" (HT Farnam Street):
There is a natural rhythm to the workings of the world. Some are discernible while others cannot be discerned. It is the dance between the two that creates action.
How to consider a nominal target in this context? First, the inclusion of all participants makes the natural intersection of resource and time use easier to balance, which in turn provides a reliable measure. Locally recognized (and recorded) price levels are generated in time use and asset structures, which develop and mature over time. Meanwhile, the more "porous" or "open to the world" component of the local price level follows tradable goods, as they are integrated into the local assets to services equilibrium. The rise and fall of local growth trajectories would provide clues as to how various elements interact and affect growth, for the primary equilibrium.

System wide recognition of equilibrium "spin-off" makes it possible to approach a number of problems which are difficult to tackle on their own. Local equilibrium would make taxation more effective for needed services. Just one example: the underemployed and the poor face considerable taxation on both income and consumption. And yet their tax contribution is subsumed into a mega structure which can neither effectively utilize the "small" contribution (so large for the poor) or provide real value to those who are expected to pay it.

Yet populations remain caught up in asking why disadvantaged groups cannot adapt to the existing equilibrium. The question becomes unnecessary, when equilibrium is in greater need of "adaptation" than those who cannot readily enter. No one yet knows what the important services and knowledge work of the 21st century may consist of. No one can be certain yet, what the still missing marketplace actually wants and needs. But at least monetary compensation efforts can begin, as new participants stumble their way towards a more inclusive services and production environment.

Why should anyone go to the trouble to generate a more conscious form of economic circumstance? No one has to, by any stretch of the imagination. Still, doing so would allow our economic reality to move beyond the apparent stage of decline which some now insist is inevitable. To be sure, there is inevitable decline in many things and many aspects of life. But the idea of economic decline is not only premature (no asteroid on the way that I know of). It also ignores the hopeful realities of millions of individuals who by no means are ready for decline to be imposed on them by others. Indeed it is wrong to do so, for all too many in this world are at a stage of growth which has scarcely begun.

Sunday, October 26, 2014

International Monetary Flows, Assets, Local Investment Patterns

This post serves in part as a continuation of thoughts from my last post, regarding services and aggregate spending capacity. How do international wealth flows generate such dramatic differences in monetary valuation for non tradable goods? After all, this is not an issue which nations face for tradable goods - hence the more understandable contribution of tradable goods to GDP by comparison.

Differences in pricing structures particularly show up in asset groupings which are directly exposed to global investment wealth. Fortunately, asset pricing can readily adjust to changing equilibrium valuation. Whereas primary services on prime real estate, can generate valuations which are difficult to reconcile across geographic boundaries. The fact governments run into problems with one size fits all services pricing, is just one of the resulting problems. One ends up with a wide funnel with a very narrow opening, which also distorts time sequencing for GDP measure.

In a sense, successful regions also comprise a completely different real estate marketplace. Prime workplace access is but a partial consideration for price levels, in that value resides first in scarce geographic factors. Unique regional combinations for knowledge use affect GDP more erratically, than if basic economic services were more widely dispersed. Hence international investment contributes to the already complex role, which fiat money plays in the economy.

One thing to consider about the primary equilibrium of production and services as influenced by international flows: In the U.S., the most important knowledge use which has been possible (of late), mostly corresponds (value wise) with the total amount of production and manufacture which is internationally held. Even school taxation dynamics mirror global wealth holdings, in that real estate values also reflect whether residents can access global wealth flows.

Meanwhile, primary investment equilibrium is out of balance, until local economies can establish knowledge and production patterns which make them more self reliant. Policymakers are trying to determine how to add more people to the numbers already in the city, even as cities protest suggested changes in transportation accommodations and density requirements. What's more, nimby reactions reflect existing circumstance which need to be considered. How have residents of already thriving regions gained entry, and to what degree is further integration possible? There will be times when already existing densities need to be maintained, and new communities will need to start from scratch.

How to think about present day knowledge use capacity, in aggregate wealth terms? Today, knowledge use as applicable to the larger society, has become mostly driven by institutions which have collectively limited growth. That in turn limits knowledge use at the moment it is most needed. Even governments now tell their populations to scale back on the dreams of the twentieth century.

Knowledge use did not always have to wait for someone else's approval, nor should it have to, now. Especially given the fact that knowledge is always capable of acting as a wealth starter in its own right. Knowledge use at many points in history has percolated through society, based on individual time freedom. That freedom in turn was often the result of personally held investments. Today, primary wealth exists in housing. But present day housing requirements do not leave many resources within one's reach. Hence, a single home investment is often not capable of freeing one's time use for desired ends.

As twentieth century institutions took on the roles of hiring and monetary compensation, it became more difficult to engage in primary economic activities involving knowledge use on one's own. Circles of local investment, production and knowledge use need to be restored, so that individuals can begin from a young age to reserve time use freedom. Even though local time arbitrage can provide monetary compensation and economic access, local investment options sometimes mean pursuing the work that matters most. Some will always be happier working with resources through their own means.

Local investment holdings would make it possible to pursue personal challenges which cannot always be compensated by others - especially during formative stages of development. Generating locally held diverse investment, would allow even small investors to free up needed time. This in turn would spur new economic endeavor which has been subjected to gridlock in recent years.

Friday, October 24, 2014

Services and Aggregate Spending Capacity

While I might not go so far as to call these concepts covariate relationships, services factors affect aggregate spending capacity to a considerable degree. Since I am convinced that a nominal level target can provide the most reliable measure of monetary activity, I also try to "connect the dots" between institutional gridlock and the havoc it can play with monetary stability.

There is a simplicity to the nature of the NGDP level target which can be difficult to decipher, especially for anyone who has thought differently for decades. Even so, the efficacy of the measure has been questioned, as income potential turns into a moving target. What concerns me is that some central bankers may be tempted to change a fiat monetary regime back into a no growth commodity standard. In the latter, income aggregates might not hold the central position that they need, for optimal resource utilization.

In part, some policy makers appear to have grown weary of the "shenanigans" of a consumer driven economy which - among other problems - allocated for service needs too randomly in the twentieth century. As growth trajectories have "downshifted", a considerable amount of money remains parked to protect the asset structures already generated and claimed in earlier debt formations. Some onlookers remain confused, in that a vast degree of money was created which nevertheless didn't spread through the economy. What appears as though loose monetary policy remains deceptively tight, even in the U.S.

If this were not enough, services growth has been difficult to track or measure in relation to more familiar economic indicators. Unfortunately, since these inadequate dynamics are proving so difficult to change (or understand), central bankers appear as though backing out of earlier wealth formation in slow motion. Yet they do so with no "plan B" to move forward again, which only leaves them trying to restart the same mechanisms which broke down the first time. Not being able to see beyond the failed plan A, leaves central bankers in "stealth mode". This "stealth mode" - refusing to allow a return to the earlier growth trajectory or explaining what happened - has still not gotten the attention it deserves.

Inflation targeting can also downplay the earlier centrality of individual participation, in a time of growing automation.The sticky nature of institutional gridlock in the marketplace certainly isn't helping matters in this regard. Hypocrites of all political stripes nonetheless try to maintain a services marketplace for themselves, even as they insist on no more growth or services for anyone else.

Why is aggregate spending capacity - which relies on targeting the intersection between economic participants and resource use - so important? Fiat money also represents a relationship where income sets up recognizable geographic patterns between asset formation and broad services flows. This pattern is more complex than a commodity standard, where "formal" economic flows (from production and commodities) don't have the same middle class assets to services capacity. Also the pattern is only partially complete, in that many services formations still rely on international wealth flows for their monetary valuation.

Earlier commodity standards often relied on a less developed marketplace - consequently with less need for knowledge use and skills capacity, other than what was demanded by production and manufacture. Even though today's production requires high skills, it does not require a large labor force.

Working the land was still a viable survival option, before economies grew more complex. Importantly, earlier agricultural ties are inadequate for populations which appear as though "not needed" in the workplace. This is why it would benefit both developed and developing nations to seek means to open the service marketplace to broad citizen participation. In the process, monetary flows could be stabilized, as informal markets become integrated into the broader economy. Broad based knowledge use in the marketplace is important not just for a civil society, but for human aspiration as well.

I am quite skeptical, as to whether developed nations would remain monetarily stable by opting to return to commodity standards. Why then, might that even be a possibility? Earlier income expectations are slowly whittling away with inflation targeting, along with gradual removal of monetary flows as debt structures are decreased. Nations also react to disinflation by paring back services. But instead of "giving up" on full scale service formations, services need to be reconstructed on monetary terms so as to become a central component of the marketplace. This would prevent the loss of countless hours of investment in human capital.

Until structural change is possible, services formations in some instances will continue to decline relative to population. Just one unsettling example of this discrepancy: I live in a state where mothers can now leave newborn infants at any number of public places if they don't have the means to take care of them. That law was intended to keep as many infants alive as possible, to make the best of a bad situation. Even though the law is helpful in some respects, it is incredibly sad that populations have resorted to such measures - all the while pretending that services are not really a necessary part of the marketplace. The fact that Obamacare cannot be expected to work, only means that people need the right to heal, once again.

Solutions are not "found" for government budgets or anything else for that matter, by pretending that missing marketplaces do not matter. Pretending only generates political nonsense and unnecessary personal hardship. Only consider how today's low labor force participation was once not so problematic, in that direct possibilities for resource use were often possible until the early twentieth century. It would be quite difficult today, for the U.S. population to return to informal economic circumstance.

How, then, to revive formal labor force participation? This needs to happen, if developed nations are to maintain a robust fiat monetary standard into the future. The good news is that time use aggregates and knowledge use potential are nowhere near utilization capacity in the present. Both represent an abundance of wealth which can be tapped for new community formation. Time arbitrage can maintain assets to services equilibrium, albeit in revised income/consumption versions from that of the twentieth century. Local economies can provide complete investment, production and services functions which also augment the existing international equilibrium.

Service formations need the accountability of production norms much as any other manufacture, if knowledge use is to remain a widespread component of wealth formation. Matched time use would allow that to happen. Knowledge use systems as newly generated growth could protect fiat money structures, by making certain that services remain a vital component of economic activity at all levels of income.

Services need to become directly created wealth, so that they are not limited to the largess of government or private industry. The additional income potential of services would also allow aggregate spending capacity to maintain monetary stability. Let's hope that the role of income as central to nominal targeting remains intact, in the years to come.

Thursday, October 23, 2014

Notes on Economic Platform Potential

Since Jean Tirole took the recent Nobel prize for economics, I've been musing over unexplored possibilities for platform concepts. As Vox noted (Yglesias), one of the more important papers for Tirole is in regard to the two sided marketplace of platform competition. Much of today's platforms exist for digital and far flung markets. But what about sparse economic activity in general, at too many local levels? One way to think about platform potential, is in terms of knowledge use systems and time use aggregates. To what degree could multi-use platforms improve - and transform - local government, citizen and marketplace functions?

Done right, platforms could increase production and competition along a wider scale They would allow more precise frameworks for resource capacities, which would also increase the velocity of transactions that occur among populations. One could also think of this as microeconomic attention to aggregates which further leads to macroeconomic gains - a link which could be encouraged by monetary policy. One reason local knowledge use platforms are needed to assist governments and central banks: all too often, it is difficult for either monetary or fiscal policy to adequately reach economic conditions in underdeveloped areas*.

Multi use platforms (which include both production and services) could provide greater labor force participation, particularly in regions where complexity in economic environments is lacking. Domestic summits would provide means for exploring underutilized resources which would benefit from new adaptations. Local economic platforms are also needed to break up some of the polarities which are increasing between urban and rural populations: polarities which only serve to make political conditions more problematic than they already are.

Not every present day platform is helpful or "complete" in the sense of transaction potential. When do platforms limit economic participation? To a degree this is true of the Amazon platform for books, which because of the marketplace it serves, generates scale factors which can sometimes discourage authors and economic activity (particularly dispersed bookstores) at the margins. This may not be so much Amazon's fault, as it is a paucity of local platforms for diverse low risk competition.

While transaction limitations re Amazon may seem counterintuitive in that one can order books from wherever they are, one problem is a lack of sufficient incentive. That is particularly the case in areas which already have limited economic activity. Many books - particularly those with high value - serve highly specific purposes. Yet one may not be inspired to buy books that would personally matter, unless friends speak of them, or they are discovered on bookstore shelves.

Some centrally designed platforms do not always come into contact with the ongoing patterns of our lives. As such, they may tend to capture already existing markets, rather than expand market growth. There are many competing interests for one's time (and purposes), which don't link up well to other time commitments. Still, the obligations one already has are not always optimal. Only consider the platform of LinkedIn, which has more social than economic value. A good economic platform is one in which - because of the correlated resource paths it delineates, makes it worthwhile to commit to time use which adds further depth.

In fairness I want to note that bookstore loss (or author market share in general) isn't just problematic in the sense of present day Amazon dominance. Knowledge use environments had begun to centralize, long before their platform came along. As to the "helpfulness" of good non fiction, individuals had knowledge use limitations in local settings, unless they were employed in high skill occupations.

What's more, even gainful employment could still mean "bare bones" knowledge use applicability. It is in the context of (hopeful) wider knowledge use at local levels that I hope for a resurgence of the bookstores which once dotted the landscape. Despite a present day lack of belief in books, they were the best representation of full scale entrepreneurial knowledge product the world has even known. Most schools are but a bare whisper of this wealth. Only consider that a resurgence in bookstores would assist real transaction gains in time use - i.e. the growing "manufacture" of human capital.

One aspect of platforms is the degree to which they are able to connect disparate elements to central infrastructure components. A good example involves decision making processes on the part of domestic summits for walkable communities. The walkable transportation component would be central. Hence other resource options would factor for it, in terms of time use coordination aggregates and density considerations.

Preexisting economies of scale need to be considered. Are economic platforms set up to enable a region or area to generate more transaction potential? If so, the proposed infrastructure seeks to make it easier for local competition which would like to remain in competition with one another. What's more, this is a kind of competition which provides tremendous benefit for consumers and locals. This is not the negative "bicycle with training wheels" interpretation of entrepreneurship that some imagine. After all, this form of business longevity comes not by government's bequest ("beneficial" regulation that excludes others) but instead exists on everyone's behalf - i.e. beneficial regulation patterns that include others.

The distinction matters, in that many larger platform formats end up as monopoly defaults by which all players are then expected to comply with. The monotony of monopoly! Whereas some participants wish to compete on terms in which creative destruction is not just about knocking down competition levels. While this involves settings of - say - either business people or teachers who appear to desire low risk environments, that doesn't mean these individuals don't want to explore or take chances. They just don't want to fail every time they try to do so. Fortunately, entrepreneurs are not the only ones who create platforms, by any means. And sometimes, platforms need to be built for entrepreneurs to generate economic growth.

After years in both employed and self employed settings, a few words about the desire for risk. Much of this comes down to factors which include the desire for challenge in one's workplace, whether that challenge is already being met, and the degree to which one might be compelled to shift from an inadequate setting. How those factors interact has considerable bearing on the risk any individual may take over the course of a lifetime. Some of us still desire to take on risk when life suggests we slow down, just the same! Suffice to say that thinking about platforms is interesting.


*Regarding underdeveloped areas of the U.S., I don't mean in the sense of rural areas not being "rural" anymore. Rather, they could further evolve greater (lifelong) economic depth which would embrace local knowledge use and services. That would provide balance for local tax burdens and obligations - particularly in today's local school environments. Graduation often means being cut off from daily routines and local activities, with little else meaningful to take their place. Even as school cultures dominate many of these small town environments (education monopoly), too many of the resources they demand never effectively benefit the student's life, afterward. That can be a long term problem not just for individuals but also the sustainability of communities in general.

Wednesday, October 22, 2014

Midweek Market Monetarist Links and Summaries - 10/22/14

For the BOC, the promise extends from the past period to the present, but not the future (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/paying-back-the-loan-of-forward-guidance.html
No Operation Twist allowed in this set up: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/dumb-questions-about-forward-guidance-in-new-keynesian-models.html
It's very easy to get the signs confused: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/sign-wars-with-price-level-targeting.html
Expectations about "counterfactual conditionals" are just airy fairy! http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/inflation-derps-are-people-from-the-concrete-steppes.html

How well does John Cochrane understand the New Keynesian model? (Josh Hendrickson) https://everydayecon.wordpress.com/2014/10/17/in-defense-of-neo-fisherism/
Nick Rowe's interpretation: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/john-cochranes-monetary-policy-with-interest-on-reserves.html

Still scraping bottom with a flawed monetary regime (Scott Sumner) The real problem with Fed policy
When loose lips sink ships...The Fed finally says "enough"
And, Quick update on NGDP futures
Scott highlights recent posts from Ben Southwood and Sam Bowman at Adam Smith Institute

At Econlog, Scott makes some market predictions: It's the economy, stupid
Because of housing, Texas has less poverty: http://econlog.econlib.org/archives/2014/10/housing_and_pov.html
NGDP is a monetary concept: http://econlog.econlib.org/archives/2014/10/nominal_gdp_is.html
Did the Bush tax rebates actually work?

No time for "policy normalization" (Marcus Nunes) http://thefaintofheart.wordpress.com/2014/10/16/are-we-back-in-old-times/
Some never realized that long term growth fell away from its long term trend: http://thefaintofheart.wordpress.com/2014/10/16/plossers-six-year-meme-sooner-rather-than-later/
Bullard sent the stock market on a wild ride this week: http://thefaintofheart.wordpress.com/2014/10/16/bullard-needs-psychiatric-meds/
Oil prices? This time, deflation is involved: http://thefaintofheart.wordpress.com/2014/10/16/oh-my-when-you-reason-from-a-price-change/
Has the implicit nominal target been abandoned? http://thefaintofheart.wordpress.com/2014/10/21/does-israel-want-to-become-sweden/
Escape (from ZLB) as attributable to...WWII? http://thefaintofheart.wordpress.com/2014/10/21/a-faustian-reading-of-history/

Unfortunately the UK is no longer "boring"! (Britmouse) http://uneconomical.wordpress.com/2014/10/17/time-to-take-the-inflation-target-seriously/

Lars Christensen puts together some adaptations:
http://marketmonetarist.com/2014/10/19/time-for-the-fed-to-introduce-a-forward-looking-mccallum-rule/

If only Tyrone had written this post instead of Tyler (Cowen), but alas that was probably not the case. Scott Sumner replies here, David Glasner here, and my response is here.

Labor?? Who needs it...(Benjamin Cole) http://thefaintofheart.wordpress.com/2014/10/17/richard-fisher-declares-class-war-dallas-fed-chief-warns-wages-rising-faster-than-prices/
Confusing logic: http://thefaintofheart.wordpress.com/2014/10/19/professor-john-cochrane-says-chairman-paul-volcker-had-it-backwards/

Tim Worstall defends market monetarism in a Forbes article: http://www.forbes.com/sites/timworstall/2014/10/17/europe-doesnt-have-a-debt-crisis-europe-has-a-monetary-crisis/

Also of Piketty interest:

Bill Gates provides reasonable framing: http://www.gatesnotes.com/Books/Why-Inequality-Matters-Capital-in-21st-Century-Review

"Picking" on Piketty! http://thecolbertreport.cc.com/videos/e301vf/thomas-piketty

Tuesday, October 21, 2014

Aggregate Transaction Potential > Exports Potential

Don't get me wrong. I'm not saying there's anything wrong with exports - only that exports don't always have to be the indicator of growth and prosperity one might expect. Indeed, if multiple nations were to attempt an augmented exports strategy at once, problems with aggregate demand might ensue for some of them, as David Glasner noted. Hence my concern about a recent post from Tyler Cowen, which posed exports as a potential solution for nations in need of structural reform. My question: why does no one consider serious domestic structural reform, instead?

Any ability to reflate economies also depends on how many transactions are actually taking place in given populations. Gains in production - while they are always desirable - does not address this issue directly. What's more, sets of regulations tell stories about the kinds of transactions that are even possible. And yet, regulations represent many things that governments would just as soon forget or not have to deal with, about the marketplace.

Perhaps the wish to make things a bit simpler than they actually are, is responsible for renewed export dialogue. However, it would be more practical for policymakers to consider what populations might actually be capable of, instead of lecturing them about circumstances of which they have little ability to act upon.

In response to Tyler Cowen, Nick Rowe points out that regarding gains in overall economic activity, it does not matter where transactions actually originate. Scott Sumner also touched on monetary factors regarding exports potential with Nick Rowe in comments, in a response post for Tyler. If monetary policy does not reflect supply side efforts, in terms of output and representation, it is as though they did not even occur. Hence monetary policy has the "last word" in this situation.

Of course as my readers know, I am particularly concerned with the structural nature of potential output. Tyler's approach - rather than considering export potential impartially, seemed to be oriented towards dismissing the IS-LM model. While I don't have strong feelings about the model and agree with Tyler that credit and finance are quite muddled, I'm not sure how that has direct bearing on supply side considerations in this instance. What's more, I am also concerned that such an approach can give supply side ideas a bad name. There are far too many blogs where I do not feel comfortable expressing supply side ideas in comments, as it is.

However - and this is too often missed or glossed over - supply side efforts need to be focused more on increasing transactions among all participants. When this occurs, aggregate demand is easier to regain, particularly in depression circumstance. Nick Rowe also pointed to the fact a domestic side of this story needs to be taken into account. In the sense of individuals trading with one another, exports are not even strictly an economic function. As far as I can tell, exports would be considered a component. As Scott Sumner also indicated in this early post:
Macroeconomics should be about aggregates, not components of spending. 
When it comes to the missing marketplace, nothing could be more true. When too many vital transactions between individuals are undone - when labor force participation falls - the purpose and meaning of money can also be forgotten. Even though the periphery is suffering the most, they serve as a reminder for other nations, what happens when policymakers neglect to seek means for economic inclusion at local levels.

Monday, October 20, 2014

Investment, Inequality, and Economies of Scale

Admittedly this is an odd post title, and I'm trying to integrate somewhat layered concepts (or perhaps nested) as well. So hopefully this post will not be too convoluted!

Resource use densities tend to agglomerate, and in the process, generate inequalities in both investment and production structure. Where does that pose problems? For inequality, it mostly depends on whether product formations are important components of basic consumption. Nations remain in a high point of a long scaling up process for resources in general. The result is - however - a bit different from Piketty's wealth conceptualization. Because many investments are internationally held and structured, their benefits accrue to participants in the same international (further scaled) context.

The good news? Some of these investment and production processes can be readily scaled to local levels, with few negative effects on profit formation. However, doing so could meet with some resistance. This is particularly true for knowledge based services, which tend to organize their marketplace from already existing wealth densities. Most of these further concentrate holding positions for resources, rather than dispersing service production and consumption where it is needed. The fact services are organized in this manner is why I am highly skeptical of many government redistribution patterns. Thus far, government redistribution mostly serves to intensify the process of resource density agglomeration.

It is far better to counter these densities through the creation of decentralized services and production zones at local levels. That would allow smaller economies of scale to prove advantageous for all participants in these local patterns.

Investment options for new systems communities - in spite of their "closed" nature, would make it possible for local economies to move from dependence to interdependence with larger economies. Local investment opportunities (beyond housing in particular) would also allow local participants of all income levels to retire without reliance on government assistance. Only consider that higher income levels need not rely on housing investment to the same degree as lower income levels, because of their access to international wealth flows. In a sense, local residents would become their own government, as co-creators of wealth and community.

How, then, can local economies do a better job of reaching out to international economies than is now the case? First, consider the ways in which local economies need to remain open to the world. Chief among these is accessing the knowledge and skills capacity which can come from anywhere. One reason nations are reluctant to do so now, is that immigrants are more often perceived as a drain on services than an add to services. By integrating services into aggregate time use context through skills arbitrage, each human component "add" becomes a plus, rather than a minus. Also, few in the U.S. are aware of new infrastructure patterns that other nations are generating for different income levels

Through local production diversity, local economies could benefit from production gains wherever those gains from come from, instead of blocking them out. This is particularly true for resources which could augment local production patterns. By maximizing local investment potential and competition in diverse settings, products from without would become inputs that add to production capacity, rather than being perceived as threats. When technology is capable of retooling at basic levels, no one product line needs to be paramount. This in turn makes low cost production possible for local and regional needs.

Local diversity in production makes it easier to envision high skill levels in time arbitrage, as well. Populations would likely concentrate on generating product which is not as easy to acquire from other regions and nations, without paying more than they would expect to pay for local production.

Inequality is best addressed by populations having input into not just consumption, but also production. The twentieth century focus on government as "protecting citizens" in consumption based terms has not always turned out well. Fortunately, technological gains make it easier for citizens to once more become part of production processes.

What would be the "closed" aspect of new systems communities? Production and consumption functions would also be a recognizable whole, in that the monetary flows necessary for this process would be measured at local levels. This is possible in that - through time arbitrage - services formations would become a direct source of wealth in their own right. In some instances, combined knowledge use patterns would also become capable of acting as dynamic community starters. These are methods which could not only address a lack of labor force participation, but some important aspects of inequality, as well.

Sunday, October 19, 2014

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

Some clarification is in order, regarding my promotion of knowledge use. Free...how, 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: http://marketmonetarist.com/2014/10/10/soon-everybody-will-be-scared-about-currency-war-again-we-should-be-celebrating/
Sometimes, bad deflation can "hide" behind what normally represents a positive supply shock: http://marketmonetarist.com/2014/10/14/tighter-monetary-conditions-not-lower-oil-prices-are-pushing-down-inflation-expectations/

Note to Krugman: money supplies were not sustained (Marcus Nunes) http://thefaintofheart.wordpress.com/2014/10/09/and-now-the-ss-explanation-of-the-crisis/
When Yellen was worried about rising wages and salaries... http://thefaintofheart.wordpress.com/2014/10/09/yellen-the-phillips-curver/
If monetary policy is "powerless"...why did he accept the job? http://thefaintofheart.wordpress.com/2014/10/10/another-see-no-evil-monkey/
There's a big difference between the two: http://thefaintofheart.wordpress.com/2014/10/11/which-austerity-fiscal-or-monetary/
Has it really been 16 months since "taper talk" started? http://thefaintofheart.wordpress.com/2014/10/14/the-fed-tightens-and-then-is-surprised-with-the-outcome/
NGDP just makes more sense:http://thefaintofheart.wordpress.com/2014/10/14/the-mythical-phillips-curve-or-the-tangible-ngdp/

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
"...it'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: http://www.vox.com/2014/10/14/6969645/gabe-newell-ngdp-targeting-scott-sumner-futures-market-new-zealand

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) http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/helicopters-redemption-and-the-target.html
Coordination problems and fallacies of composition: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/10/the-representative-agent-does-not-know-what-he-is-doing.html

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) http://insecurityanalyst.blogspot.com/2014/10/its-not-time-to-worry-yet-they-wont-do.html

Shale oil gets plenty of respect! (Benjamin Cole) http://thefaintofheart.wordpress.com/2014/10/10/the-federal-reserve-board-hates-north-dakota/
According to "Fishy" figures, truck drivers in Texas must be living "high on the hog". http://thefaintofheart.wordpress.com/2014/10/11/inflation-in-dallas-richard-fishers-home-is-soaring-to-1-2-the-fed-bank-president-calls-for-monetary-tightening/

Where are the principles that could assist the supply side of the economy? (Bonnie Carr) http://dajeeps.wordpress.com/2014/10/10/gops-11-principles-for-american-renewal/

Inconsistent expectations are not helping economic matters right now (David Glasner) http://uneasymoney.com/2014/10/08/aggregate-demand-and-coordination-failures/
If expectations and plans are not consistent, how can resources be used optimally "or even at all"? http://uneasymoney.com/2014/10/14/hicks-on-is-lm-and-temporary-equilibrium/

Home prices are still being suppressed (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2014/10/framing-is-everything-housing-and.html

Evan Soltas notes the recent drop in oil prices: http://esoltas.blogspot.com/2014/10/disinflation-here-we-come.html Here's James Hamilton's post: http://econbrowser.com/archives/2014/10/lower-oil-prices

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." http://online.wsj.com/articles/the-capitalist-cure-for-terrorism-1412973796?mod=WSJ_hp_RightTopStories%20

Like Philip K. Howard, I believe that legal matters should be a lot simpler:
http://www.theatlantic.com/politics/archive/2014/09/fixing-broken-government-put-humans-in-charge/380309/?single_page=true

Property is...respect! http://sweettalkconversation.wordpress.com/2014/10/14/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 direction...is 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.