Only consider how these marketplace requirements presently play out, as Washington "helps" citizens (via subsidies) to engage in the production and consumption of a wide range of arbitrarily limited activities. According to the IMF (from a recent WSJ article), while U.S. debt as a portion of GDP was 93rd out of 169 nations in 2001, the U.S. is in fifth place among large countries today, for debt as a portion of GDP. That's a dramatic change in wealth structure, and one that citizens need to actively change, towards wealth creation which can be reciprocated at the outset.
Meanwhile, differences between wealth claims and wealth origination in general equilibrium, aren't well understood. While reading a post from Tim Harford, "Could We Run the Economy With an App?" I noted that no equilibrium algorithm would be able to take crucial supply and demand differences for aggregate wealth, into account. Still: Why should such important matters be left to algorithms in the first place?
Harford explains that when socialist calculations were being debated earlier in the 20th century, policy makers lacked the computer power to assist their data collection. Of course this didn't stop economists and central planners from imagining the economy as a "series of simultaneous equations for supply and demand". Harford writes:
But the power of computers is growing far more quickly than economic output. Could we build an app to run an economy...? The idea has resurfaced in the writings of two Chinese economists, Binbin Wang and Xiaoyan Li. Wang and Li argue that modern computers make it possible to optimise production in real time, personalised to the needs of citizens. In some ways this has already happened.He cites some of the more obvious algorithm examples. Clearly, platforms such as this can be problematic, regardless of who controls them:
One enduring obstacle is tacit knowledge. A textbook economy of supply and demand curves is, in principle, the kind of system that can be understood mathematically. But as Friedrich Hayek argued in 1945, there is a great deal going on in any economy that cannot be counted or even described.
Decisions to produce, to consume, and to take a risk trying to create something new, are all taken with the knowledge of "particular circumstance of time and place". Wang and Li believe that big data make this once-tacit knowledge explicit; I am not convinced.Nor am I. Harford emphasizes how big data can give the wrong incentives to both public and private interests. To some degree, hierarchical patterns which make claims on our scarce time, will always necessary for the organization of complex forms of tradable sector product. Such patterns never should have been necessary, however, for the ways that people opt to spend their time in experiential circumstance with others. The fact society imposes countless rules on personal discretion, and that too many of us are already judged as incapable of personal responsibility, is beginning to dehumanize us all. These are patterns which - such as Hayek described decades earlier - individuals should have adequate means to discover for themselves.
If today's hierarchical and expensive patterns of social organization weren't enough, many of these service centered activities occur as wealth capture, instead of wealth creation. Fortunately, citizens have an opportunity to think differently about these processes in the near future. Our personal priorities can't safely be left to impersonal supply and demand algorithms which are mostly built to capture wealth. Fortunately, we have the chance to build wealth anew, based on the aspirations and challenges we might experience in the scarce time we actually have. Given the level of debt the U.S. is already experiencing, one can only hope that new means of wealth creation aren't postponed for too long.