Sunday, August 21, 2016

The Hidden Value of Discretionary Income

Statistically speaking at least: we've been told that this is the best possible time to be alive, in terms of overall quality of life improvements. Clearly, free markets have greatly contributed to a positive outcome. Why then, is so much societal angst directed towards free markets and globalization alike, in such a fortunate historical moment?  In today's developed economies, a growing lack of discretionary income (due to regulatory non tradable sector crowding out), contributes to much of today's uncertainty. And a lack of discretionary income, also means a lack of possibilities in terms of major life options.

Some of our most significant quality in life gains, have taken place on terms which leave too little room for personal negotiation in the marketplace. Further: important though they are, some of the more significant earlier improvements have been blocked from further innovation. I am particularly concerned about a lack of plumbing and electrical innovation, as contrast with ongoing technological gains elsewhere. Indeed, Robert Gordon's emphasis on plumbing systems and electrification as some of the most beneficial aspects of 20th century innovation, highlights this irony. Instead of collectively throwing up our hands and insisting innovation's best days are past, why not redefine building component functions on more accessible terms, and in ways that allow building technology to respond to changing economic circumstance.

Since building innovation processes have yet to occur  - either in terms of mass manufacture which includes built in tech design or 3D print local adaptations, everyone's freedom in terms of discretionary spending and personal choice, has been compromised. Low tech and resource intensive housing for all, was a realistic response when given population sets had more exposure to international resource capacity than is presently the case. It was that additional exposure across multiple income levels, which accounted for some of the discretionary spending that made the twentieth century a high water mark for a myriad of life options, among lower income levels.

Community design with flexible components would restore discretionary choice for lower income levels. More discretionary income, means more spontaneity and more life challenges become possible. It should go without saying that people simply feel better when their ongoing obligations are balanced with interesting variations in routine. But this fact may not have had adequate consideration, since non tradable sector wealth capture has reduced spontaneous marketplace choice, time and again.

As a baby boomer, I can attest to the nature of greater discretionary income in earlier decades which contributed to the allure of many a Main Street, in communities of all sizes. I suspect it is easier for everyone to feel more positive about free markets, when a sufficient degree of discretionary income can alleviate daily burdens at all income levels.

Another important aspect of discretionary options is in terms of knowledge use. Knowledge has valuable experiential qualities, for individuals from all walks of life. However, when the most "valuable" knowledge is sold purely as a form of economic access, for many this will crowd out the desire to learn, simply for the love of learning. Already, too many aspects of experiential knowledge have lost much of their allure and wealth potential in the marketplace. In order for knowledge acquisition to continue as a vital economic function, societies need to make certain that the primary knowledge use of non tradable sectors, doesn't crowd out the allure of knowledge as discretionary choice and experiential good.

In summary, lack of discretionary income becomes problematic, when loss also translates into fewer life options. Already, political struggles regarding public choice options in particular, have become quite intense. What if less non tradable sector regulation meant more discretionary income and lifestyle options? What if people became less compelled to dictate their beliefs and preferences to one another? Perhaps there is a connection between these two seemingly unrelated circumstance.

1 comment:

  1. Deregulate. Everything. If I have a truck, I should be able to haul stuff for a fee. If I have a bus and insurance, I should be able to take people on a tour of the Adirondacks for a fee. If I have a bottle of nail polish, I should be able to paint nails with it for a fee... and so on. All free from government intervention in my ability to survive.

    The only moral alternative to the kind of deregulation necessary as not to interfere with every individual's ability to survive would be to knock off the bubble fear mongering and print adequate levels of the green stuff so that government assistance programs become irrelevant for everyone but elderly, orphaned, and disabled.

    There is absolutely no reason for anyone to be struggling with starvation in this land of plenty, except for the things we appear to accept government at all levels having done to us.