Thursday, March 5, 2015

The Way Forward is Nothing to Be Ashamed Of

Something about today's limited economic circumstance, almost appears as though a matter of national pride. How so? Consider the way David Beckworth sums up a recent post about market clearing interest rates:
So be careful when thinking about interest rates. They may be negative for good reason.
Indeed they likely are - at least as far as this blogger is concerned. Negative interest rates particularly reflect the specialty marketplace for investment and consumption which Washington, elite associations/unions and crony capitalists have carved up for themselves. As a result, far more investment gets parked in exclusive settings than the actual inhabitants who "live" there. What about investment potential for everyone else? Although - in all fairness - the U.S. is hardly the only nation which painted itself into an economic corner with this strategy. In the meantime, entire marketplaces are missing for those with limited economic means - even as the middle class worries about signaling and positioning in a marketplace it takes for granted.

Of late, elite cronies are blocking the way forward, through their intransigence regarding how society is "supposed" to appear and function. They have also done harm to the public psyche in a larger sense, by generating needless divisions between friends and family members who regularly get caught on either side of the divide. Elite cronies have created default positions for economic survival, and many who do not measure up to these standards get chalked up as losers - sometimes permanently.

How much consumption represents real lifestyle gains, versus unnecessary nonsense that consumers often don't even want? How many individuals with "everyday" intellect could thrive - given the chance - in environments which actually embrace everyday smarts and everyday resources? Instead, the rich and the poor - the smart and the "not" smart - are being pushed further apart by for profit and non profit alike. Business interests ultimately "give in" yet again to wage increases, when they want nothing to do with addressing the structural issues that matter most for income potential.

Discussions regarding income inequality are dangerously misleading, in part because today's governments are entrenched in today's existing wealth formations - particularly land and real estate. All incomes are already used to enhance governments - indeed by the same mechanisms which hard consumption definitions also provide. Today, already existing government wealth would only make land taxation even more problematic for monetary flows in the U.S.*

However, economic stagnation could be reversed through production reform, and the way forward need not be something anyone would be ashamed of. What innovation might actually be possible for building components, infrastructure, knowledge use and services formation? There is tremendous potential to enhance already existing income, in multiple aspects of life.

Hence the ever present arguments as to inequalities are misguided, for the main problems revolve around hard limits as to what citizens can produce and consume. Why would governments be hesitant about production reform? For one, it might not generate "enough" revenue for government. But...but...wouldn't governments also stand to gain from empowering their citizens? In a post which questions "bizarre" income calculations, Scott Sumner recently wrote:
...our bigger mistake is that we are using income as a measure of economic well being, whereas all our economic models tell us that consumption is the appropriate variable.
Under normal circumstance, consumption defines a process which engages time and personal interaction with numerous resource sets. Time use relies on numerous physical elements even now, but interaction with others has become a more important part of the process. Human capital coordination needs to become a part of every economic environment (once again), before individuals can regain the meaning that consumption held in the 20th century. Until this occurs, more individuals than necessary will continue to be locked in prison, eyed suspiciously in the streets, and get caught engaging in illicit activity - in many instances because they have too few options for economic access which reflects their better nature.

Lest anyone think it is impossible to provide service options on more affordable terms, only remember the kinds of ailments which now send individuals to emergency rooms, because there are too few doctors available for anything other than appointments scheduled weeks in advance. Even though options exist in more prosperous regions, by and large they are still not available in rural or otherwise marginal areas - especially during inopportune hours when many now fend for themselves in healthcare emergencies. To be sure, the "best minds" will always be needed for some surgeries and procedures. Just the same, individuals with everyday intellects need to become - once again - a valid part of everyday services needs.

Another aspect of moving forward, involves the hard definitions for today's living and working quarters. Only think of the hours comfortably spent in today's transportation options. These offer multiple ideas for life and work which wouldn't require massive building requirements. Recent crony influenced setbacks for lighting in the U.S. (who can even find reasonable light bulbs now??) could be partially overcome by strong, yet lightweight building components which let in natural light.

Most important, new developments in service and asset formation would bring many back into the economy in more meaningful ways - ways which would also include new investment options that can be generated and managed locally. For local investors who directly benefit from product and service definition, much more than costs are at stake. Sure, these are investment options which would be radically different from what presently exists. But "more of the same" isn't working very well right now.

What's more, even the big investment picture is finally starting to go negative. Washington and others among the elite have known what is at stake for some time, as indicated by the latest round of FOMC transcripts. Talk of "liftoff" is little more than an unfortunate joke. And yet, no one has been willing to admit the real factors which caused this unnecessary economic slowdown, to the public. It is time to move beyond arbitrary dividing lines, which now spell success or failure on stark terms. Indeed, the process to do so should have begun, long before the Great Recession was ever allowed to occur.

*Granted, land taxation has worked reasonably well for regions which adapted it in earlier time frames, where it was utilized to complement other tax strategies. Today - however - business formation is too limited for additions of land taxation on already existing tax burdens.

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