Monday, April 27, 2015

Economics: It's About the Journey, Not The Destination

Michael Boskin asks, are the good times over? Well, it depends. Who is still willing to accept the uncertainty and risks that much needed change would entail? Who still wants populations as a whole, to move ahead together? Like so many of late, Boskin cites the fact that Moore's Law cannot go on indefinitely. Did he even need to? I get really grouchy every time someone cites that law. For no version of it has yet been applied to innovation for building components, or knowledge use in applied group settings.

Broad based innovation and economic flexibility, are the long forgotten center of the economic journey. But where is any national commitment to the journey? Right now it's all about bragging rights for the destination. The journey is completely missing from both sides of the political aisle, and the destination for every American girl and boy now appears as though predestined from an early age. You're either "in" or you're "out" so get a grip and deal with it. Grrr...

Why should any of this matter? The journey is where meaningful growth could still occur. It is where people still get second chances and are not forced to reconcile themselves to numbing sameness. It is where the willingness to take risks can mean new beginnings. The journey is where the mysteries continue to is where the noteworthy aspects of human life play out. Unless - of course - today's upscale version of destination zombies, have the last word so as to completely stop the vital processes of economic evolution in its tracks.

True, there are uncertainties in every journey. Who doesn't want certainty? But carried too far, economic certainty stifles both imagination, and the ambition that is part of human empathy. Certainty squanders the gains which the future otherwise could hold. Uncertainty means waking up in the morning with anticipation as to how the day might unfold. It is human nature, to find great energy in the quest to greet the unknown. Whereas a focus on the destination can be sleep inducing, even as it represents the slowly deteriorating end of growth. History tells us that no desired destination ever remains intact, and that things generally turn out much better when no one insists that everyone live the same way.

It is sad that present generations aren't getting the chance to experience life on broader economic terms, and the threat of any closed economy is always a threat to an open mind. Indeed, America was once known as the best place in the world for starting over. The U.S. was known as a place where life felt as though "wide open", and could be defined through a multitude of economic options. Today's America has little room for the journeys which the world still seeks. This also means local economies which have little ability to bend or heal. And when the winds blow strong, what cannot bend or heal, too often breaks.

So long as there are new generations, there needs to be economic activity which remains capable of evolution. Otherwise, the new generations cannot expect to take part to the degree that earlier generations did. Anton Howes makes an excellent point about economic growth, such as I attempted to make in a recent post but he does a much better job of it. From his post, which is also a reprint of a magazine article for the UK:
By far the most important issue for modern economics is the ability to achieve and sustain economic growth. This does not necessarily mean the level of Gross Domestic Product, the total value of goods and services produced by an economy in a given year, but rather the annual increase in the actual living standards conferred by the full exploitation of technological advances...The key point here is that economic growth trumps all other political concerns. 
In this article, Howes also advocates NGDPLT, and notes that monetary policy "potentially renders the debate around austerity meaningless from the point of view of general economic growth". Howes recognizes the fact that innovation remains held back to some degree:
In the long run, finding out what boosts innovation in a society could have transformative effects.
When services formation and building capacity cannot innovate, too much energy is lost in attempts to preserve participation rights for already existing destinations. If there is anything that spirituality can impart to economics, it is the journey of discovery. This is why I have such a strong degree of respect for GDP as economic measure, because fortunately it was formulated with the journey in mind. One can only hope that time value will eventually become a central component of GDP. And also that the GDP measure is able to withstand the withering criticism it increasingly comes under, as multiple observers insist on the markers of destinations, instead.

The journey is also that part of money which can be designated as flow, much as destinations can be thought of as stock. Normally, we "take stock of a situation" in order to preserve flow, but central banking processes have diverted towards protecting stock, while pretending the flow can be (temporarily?!) circumvented. But none of this is about outcome or stock - it is about the ability for populations to contribute to the flow of economic journeys. It is about everyone's ability to take part in - and remain responsible in one's own way - for the outcome.
"...the will of the group is not the outcome. The will of the group is the way that it constitutes itself to decide." - Mike Munger.

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