Wednesday, January 3, 2018

Can Political Extremism be Reversed?

Might there be a common thread that illuminates similarities between the nationalist extremism of the early twentieth century, and what has appeared more recently? Thus far, many observers remain confident that today's forms of political extremism should remain - at the very least - manageable. But what if this confidence doesn't hold?

Perhaps there's an underlying rationale regarding our present approach to wealth generation versus wealth distribution, which exacerbates political divisions. Even though some supply side advocates are quick to highlight government dependencies, there's too much dependency for already existing revenue, on the part of private interests as well. And both dependencies are now responsible for structural imbalances. Yet rather than challenge excess claims on wealth in relation to new sources of wealth generation, central bankers - in part due to their excessive financial interests - have unfortunately responded with lower levels of monetary representation, particularly since the Great Recession.

Still, many remain unconvinced that those earlier monetary losses matter. These individuals often believe that monetary representation is presently too "easy". Worse, without an adequate understanding of the role a nominal level serves (as a symbol of total and ongoing economic participation), some can be swayed by monetary historical contexts such as hyperinflation, which have no bearing on present circumstance in today's advanced economies.

In all of this: Despite recent economic gains, structural imbalance means long run growth is still compromised to an extent that the marginalized - more than ever - tend to be perceived as a societal burden. And history has shown that if wealth creation is stymied for too long, populations often begin to add more prosperous citizens to their list of perceived burdens. Perhaps the fact so many populations feel threatened - in spite of apparent prosperity - should serve as a call to include all human capital as sources of wealth generation. This, instead of imagining "inclusive economies" as mostly further redistribution from what is already stretched too thin, in the collective imagination of many a taxpayer.

When monetary policy stays relatively tight for long periods, that could be part of the common thread which leads to extremism. After all, more demands continue to be made on monetary representation by all concerned, than central bankers are willing to accommodate, or entrenched interests are inclined to account for. And even though tight money vastly contributed to the Great Depression, it's hardly a simple matter to trace wealth creation in relation to wealth capture for that earlier period. Oddly, similar problems for quantification still exist today, since neither governments or private interests fully account for the ways in which human capital is used at a mere fraction of its full potential.

So why bring up (yet again) tight monetary conditions and lackluster dynamism, if little can be done? Because resignation to structural issues such as this, may worsen nationalistic impulses in the near future. Fortunately, we still have the ability to craft a supply side response which could eventually cut through much of today's divisiveness and excessive blame.

Only remember how long it took over the course of the Great Depression, before the marginalized of the South finally gained economic access, via Washington's commitments to physical infrastructure. How much twentieth century prosperity in the U.S. stemmed from what was essentially an invitation for the marginalized to finally participate, after what had been decades of economic isolation after the Civil War? Recently, while gathering together a near century of immediate and extended family pictures, I was fascinated how that invitation to prosperity played out in those images over the course of the twentieth century, in terms of wealth gains and family outcomes.

Today, much of the infrastructure for potential participation is already in place. Yet oddly, an extended invitation to the full use of knowledge in every community, seems to be the hardest part. But think about who - and what - has become marginalized this time: Cities, towns and rural areas which have little access to the globalized economy of the present.

Hence the new call to wealth creation, needs to take a different form. It now means allowing those who have been left behind, to gain the chance to make full use of their human capital investments and and aspirations. Today, an invitation to take part in knowledge based wealth creation, is the only form of inclusive economy which matters. It is the only one that has any validity, in a time of stretched government budgets. There's even a chance that a broader invitation to wealth creation, could be the best means we have, to lessen political extremism.

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