Friday, November 10, 2017

Are Non Tradable Sectors Capable of Exponential Growth?

In a sense the answer is yes, if one takes into account the potential long term gains for knowledge use and asset ownership which are linked to time and place. Nevertheless, these growth possibilities aren't exponential in the direct (measurable output) sense of tradable sector activity, since some of these technological and organizational gains would not need to be expressed as monetary expansion. In any instance, non tradable sector growth potential, as contrast with more obvious output from tradable sector growth, is relative by comparison. It is also this relative nature that has allowed knowledge providers to obscure the amount of input that has been necessary thus far, to achieve final product or output.

Also important are the "unseen" technological gains that are currently discussed, although with insufficient emphasis on the sectors involved. These gains particularly matter insofar as their non monetary nature should not be rationalized to reduce monetary representation, given the actual responsibilities that economic participants hold. And the same rationale of economic growth from "unseen" technological gains in today's consumption, would hold for future production gains, once they are finally able to accrue to individual production choices. One could also emphasize that technological production gains for all potential producers, are more important (economically) than the current "quality of life" consumption gains for consumers.

Consider why this matters. Today's economy remains stagnant in part because technological support for production capacity is being held back, in relation to technological support for discretionary consumer gain. Yet it is discretionary production gains, which allow individuals to bear responsibility for their own economic participation and access.

The monetary aspect of these supply side circumstance is important as well. Just as we don't need to subtract monetary representation from GDP for the non monetary consumption which results from today's technological advances, neither would we want to add or subtract from GDP, the non monetary technological production gains which could potentially accrue to citizens. Why? Again, the primary stabilizing purpose of GDP is to express the full nature of our monetary commitments to one another. Those economic commitments are for the time and product we either produce or consume, which comes with a financial cost.

Now I need to get more specific, as I wanted to highlight some incremental growth possibilities for the near future. Housing potential is the best and also most accessible example. Even though mass production of housing components is an example of exponential growth possibility over the long term, component production would nonetheless be limited (relatively speaking) in the short term by the actual physical locations in which people can live and work. However, there are a number of ways in which flexible housing components could contribute to economic growth at a higher rate than ownership of traditional buildings.

Replacement capacity is a major source of potential marketplace expansion, because inexpensive flexible housing components would allow individuals with limited income potential to replace older components which no longer function properly. They could be constructed so as to easily snap together, and they would include basic central units which already contain mass produced electrical and plumbing. Building component innovation such as this, would make it much easier for individuals with limited income to replace poorly functioning component units during times in their life when their resource capacity is particularly limited.

Indeed, one of the main problems for traditional housing, is that the fixed and solid nature of houses makes it difficult - for many on fixed incomes - to replace plumbing and electrical elements which have outlived their usefulness. Only recall this occurs too often for many who have long owned their homes, but now rely on social security as a sole source of income.

Component flexibility is important to maintain dynamic and responsive retail or workplace settings as well. Much of today's capital risk involves decision making processes regarding consumer wants and needs, which have become more difficult to "pin down" in recent decades. All too often, business ownership involves unnecessarily high risks, due to the fixed nature of building requirements. Flexible building components would reduce ownership risks so that more aggregate income can remain in play for shifts in business and educational endeavour at local levels.

What about the growth potential of knowledge use? Technology's best long run potential for non tradable sectors, would be in the form of decentralized organizational patterns, where economic time value can overcome the normal constraints of supply side knowledge use capacity. By way of example, knowledge as value in use with time value as the primary economic unit, would allow young students to participate in educational platforms which are wealth building, instead of wealth demanding. Time arbitrage would allow students to turn learning experiences into sources of (gradual) economic stability and human capital investment.

As economies grow, non tradable sectors generally follow the equilibrium creating dynamics of tradable sector activity, which are the primary movers of exponential growth. Recently, however, tradable sector activity has not had the chance to build additional wealth capacity in developed nations. Non tradable sector activity - by using resource capacity to generate wealth directly - could provide the additional impetus to tradable sector capacity which would allow it to resume a stronger growth trajectory. By reducing dependence on tradable sector wealth as a source of revenue, non tradable sectors could eventually reverse the trend of economic stagnation which has been with us since the Great Recession.

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