Monday, August 29, 2016

Make Room for Incremental Economic Growth

For as long as anyone can remember, gains accruing from economies of scale, meant ever higher expectations for the terms of economic engagement. Yet as standards of living rose from these gains, so too did the resulting marketplace "designs" of countless rules and regulations. Economic participation gradually became associated with environments which - while well suited for  higher skills levels and income - lost the flexibility that made a wide range of activity possible for all income levels.

Why should it be necessarily for formal economies to be solely defined, according to the wants and needs of higher income levels? Making room for new, more incremental patterns of growth, would allow individuals to switch gears as needed, while going through the course of one's life. After all, this important issue is not strictly associated with any specific class or skill set, but the changing conditions which everyone experiences over time.

Only consider the reality that - should non tradable sector requirements not be subjected to cost reducing innovations - many returns on investment have diminished just the same, over time. Less investment return in aggregate, means less ability overall to support rigid non tradable sector structures. For instance, the return on investments has changed in recent decades, according to Managerial Econ:
If someone today invested $100,000 in a balanced portfolio of stocks and bonds, they could expect a return of $21,800 over the next two decades after costs. Ten years ago, that same investor might have expected to make $60,000, and three decades ago $150,000.
One way to respond to this situation of course is, life goes on. And even without structural change: while most individuals would continue to take care of basic issues, many would drastically reduce the time based services of others along with other forms of experiential product. Yet why should such marketplace losses be necessary, when product formation could be preserved through organizational capacity which requires less initial investment?

Further, no one should expect already existing institutions to directly bear the burdens, of what is already reduced revenue for the requirements of today's budgets. New institutions would be better positioned to respond to resource flows which have dramatically changed. By generating formal economic environments which encourage the participation of lower income levels, public and private financial burdens alike can eventually be eased.

Doubtless there'll be plenty of teeth gnashing in the years ahead as more pension programs come up short, reducing other ongoing resource flows in the process. Even though there's plenty of blame to go around as to inflated expectations, the best response now is to move on, and recognize that earlier organizational patterns for capital and resource flows, need to futher evolve. Let's get beyond the blame and recrimination, and find broader means for economic sustainability than are currently in place.

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