Friday, April 14, 2017

Notes on Centralization, Decentralization and Property Reform

In "The Mystery of Capital", Hernando de Soto emphasized government roles in maintaining legal systems of private property for all income levels. Property reforms allow real estate to gain additional market value which extends well beyond the basic idea of property. However, common consensus on the part of everyone involved, is no simple matter. After all, efforts to find common ground, also require centralized factors to come into play as crucial connection points. The representational template which finally emerges, takes time and careful consideration.

Production reform could bring new wealth to all nations, by allowing the properties of knowledge, skill, and human empathy to function as a representational template for time value. Time value as private property, would unleash much of the human capital which remains untapped in the requirements of general equilibrium. Even though ongoing knowledge use management would take place at local (decentralized) levels, getting started is still very much a centralized process.

That doesn't mean governments can't still play a major centralized role, given the global reserves of resource capacity. So long as nations prosper, they can continue to promote tradable sector activity via centralized organizational patterns. The vast mobility of tradable sector activity, and the benefits of scale which still accrue to these organizational patterns, make this a reasonable option.

The Meiji Restoration in Japan included interesting stories about earlier property reforms - especially given their relation to the rapidly increasing tradable sector production of the time. Ronald P. Dore takes a closer look at this changing world, in "Shinohata: A Portrait of a Japanese Village" (1978):
The new government claimed to be re-establishing the centralized government system of the pre-feudal age. The Emperor Meiji was both to reign and rule as none of his ancestors had actually done for the eight centuries of their ritual seclusion in Tokyo. But their more important goal was to make Japan strong...
The pace of change quickened in Shinohata. Farmers were declared owners of the land they tilled - or the land that tenants tilled for them. They were declared free to sell it, free to change their occupation at will. They were given the right to have surnames and to ride horses. Bowler hats and soap and pocket watches and the habit of eating beef; beer, lemonade, steel pens, glass bottles and leather saddles; hops and tomatoes that were called 'send-you-mad-aubergines'; green peppers and grapes and Irish potatoes - the new world was full of all kinds of curious new objects to buy and new crops to try. Farmers were exhorted to grow more mulberry; the market for silk exports to America was expanding. They were exhorted to plant their rice in straight rows so that they could weed the fields with simple rotary weeding try new rice varieties; to select their seed, to try new fertilizers. And if they could make money in some trading adventure, or some new cottage industry, that was no longer in any way a reprehensible failure to observe the duties of their proper station. That was now called 'productive enterprise' and being a 'success'.
Centralization in the above instance took place by peaceful means. The Meiji Restoration brought real economic advantages: not just to areas of high population density but to rural outposts as well.

One could certainly hope that production reform might eventually take place through similarly peaceful means, as automation further defines the traditional workplace. It is possible to move beyond the restrictions of general equilibrium conditions, so that a greater degree of sufficiency and economic opportunity is restored to areas which have suffered since the Great Recession.

Despite the fact government transfers to populations and private interests can't be sustained in the long run, these subsidies were understandable initially, in the face of a quickly changing economic landscape. Now, it is time to act. Instead of the extensive tax commitments of schools as hopeful economic access, make learning part of the mutual assistance that people provide for one another through the course of a lifetime. The idea of education needs to be restored to recognizable local systems in which learning has specific economic and social context, to participate in community.

Mutual employment as locally managed, would make it possible for citizens to hold the idea of local and global as both capable of providing beneficial outcomes. Civilizations thrive, when open economies thrive. But in order for this state of affairs to continue, policy makers can never afford to forget, how important it is for all citizens to remain connected to the entire process.

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