Thursday, December 28, 2017

Post Highlights from 2017

Since there was an overall increase in page views starting about midyear, and I wanted a fair representation of the full year, a bit of guesswork is involved as to post favorites.

Market Position Matters, for Output Potential  Why would policy makers subsidize demand, even as they cooperate with private interests to restrict supply for the same product? Often the market position of the specific sector (primary or secondary), provides clues. Whereas advanced economy government subsidies once supported tradable sector activity which benefited from expansion, today's most likely beneficiaries of government subsidies (non tradable sectors) don't necessarily benefit from marketplace expansion.

Notes on Investment vs Consumption Outcomes  How could we do a better job of visualizing human capital in terms of marketplace options? How to reconsider time based product which does not benefit from gains in scale, so that it might become simpler to quantify?

Jobs Are Also a Cost. How to Respond?  Expanded job opportunities are logical when they follow new wealth creation. Nevertheless: When market observers accuse governments of being illogical in hiring that doesn't generate new wealth, are the same observers also cognizant of missed potential for new wealth which could be reducing employment potential? Fortunately, new platforms for wealth creation are possible, so that individuals do not always have to wait for other institutions to make the first move. Time as an economic unit, can function as a commodity in the form of coordinated mutual employment. Workplace participation could ultimately be restored at community levels by making it possible for everyone to bear mutual responsibility for job costs, via the opportunity costs of their own time use preferences.

What if Governments Owned the Robots?  Much of today's automation is associated with procedures which reduce costs rather than increasing output. Consequently, automation (or robots) doesn't always lead to the increased output which would be necessary for further redistribution. Instead, more of today's automation benefits accrue to the (robot augmented) income of high skill service providers. Indeed, this wealth source is hardly what most people envision, when they discuss robot taxation or consider government supported robot ownership. Alas, productivity is no longer a simple matter of increased output.

Aggregate Time Value: Demand, Supply, or Both?  Granted, we need economic participation to be possible on more productive terms than is presently the case. And there will be times when we need to split the difference on how productivity is conceptualized, depending on the institution. Nevertheless, should our institutions allow us to lose too much aggregate time value in the form of supply, we cannot expect to maintain the economic stability of aggregate demand, indefinitely.

"Equal" Income Presupposes Abundance. Equal Time Value, Scarcity  Income based approaches to inequality, don't get at the underlying problems of our actual time scarcity, in relation to what non tradable sectors and governments expect of us. One approach to inequality, would be for those with limited incomes to contribute to non tradable sector activity outcomes, via the time they actually possess.

Time Value in Relation to Total Factor Productivity  During historical moments of tradable sector expansion, it's often possible for societies to coordinate economic participation, based largely on the new wealth that is being generated. But once the monetary flows of non tradable sector activity begin to dominate, that creates excess demands on existing wealth. Hence societies may need additional means to generate wealth as a point of (reciprocal) origin. Economic time value  - given today's high levels of human capital investment - is an obvious choice.

Why Are Normative Healthcare Arguments So Confusing?  Too much healthcare discussion takes place as though supply side limits were not actually in effect. How does one redistribute from a supply side which is constrained at the outset? Over the years, recurring discussions as to what "should be" (at the microeconomic level), have been squelched via legislation. And many of these earlier efforts are already forgotten, once normative arguments resume in a broader societal context.

Deep Learning in a Time of Increasing Automation  We can't expect to continue deep learning as a "race against the machine". Yet the deep learning we continue to embrace, needs a stronger economic context in terms of personal experiential value.

Only 25% Can Support Non Tradable Sector Requirements  Why isn't this growing discrepancy more obvious? Some of it is hidden by debt and financial structures which smooth non discretionary consumption capacity. Nevertheless: Useful though our financial tools have been, they can't fill the gaps between institutional expectations and actual income capacity for the long term. Before any society can expect to meet its infrastructure maintenance needs, it has to make certain its aggregate income capacity and non tradable sector requirements are reasonably well aligned.

Medicare Cutbacks? No Rationale for Monetary Tightening  Even though healthcare in the U.S. lacks full marketplace capacity, this sector is far from ready to accept limitations in revenue capacity (note recent hospital consolidations). Yet central bankers have been too quick to use Washington gridlock re healthcare policy, as yet another judgement call to reduce overall monetary representation.

Can General Equilibrium Wealth Become "Overfished"?  Up to a point, the secondary market activities of asymmetrically compensated time, government redistribution, credit formation and financial instruments can work alongside tradable sector wealth to define general equilibrium. However, if these forms of wealth capture are excessively preferred over new wealth generation that is free of debt or redistribution, the common pool of circulating revenue may experience greater demand from all participants than central bankers are willing to accommodate.

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