Thursday, July 12, 2018

Focus on the Whole. Why Isn't it Sustainable?

Instead of seemingly endless cultural debates about our differences, why not focus on the "whole" of our economic reality. Why has it become so fragile? Let's get to the bottom of this. We also need an understandable framework for structural issues (especially debt formation) at a macroeconomic level, so as to make a well reasoned economic response. Populists, with all their inconsistencies and wrecking ball proclivities, will only become more popular in the years ahead, if we can't get real about structural problems that are beginning to undermine too many aspects of our organizational frameworks. Many of our institutions are aligned in ways that existing revenue won't be able to maintain, much longer.

Of course, facing up to reality involves combined political efforts where overstretched budgets are concerned. Otherwise, explaining the bad news to one's constituents and taking the appropriate action, means a likely removal from public office in short order. However, so long as neither party dares to have honest conversations with the public, it will only become more difficult for governments to follow through on their promises, in the years ahead. Why not save face now, while it's still possible to do so? If our fiscal affairs aren't carefully managed in the years ahead, they will certainly unravel in ways that cause more pain and hardship than should be necessary.

In the meantime, elected populists are giving in to the temptation to stress political "gains" which are mostly figments of the imagination. Once governments give up on promoting new forms of wealth creation, and instead struggle instead over still existing revenue flows, there's little time left to lose for a meaningful response to systemic burdens. Even though the Great Recession provided a "warning shot", most economists have been slow to encourage new forms of wealth creation which requires less debt to take place. Economists have an important role to play, in promoting more diverse means for generating wealth. Otherwise, policy makers and the business elite aren't necessarily likely to take such options seriously.

Despite the fact some structural problems aren't amenable to centralized reform, there is much that could be accomplished through experimental versions of decentralization at the margins. It's particularly important for instance to address the reality of wage divergence, so that future forms of social and physical infrastructure can reflect these realities. Perhaps such efforts could take the form of production reform zones, for the use, application and preservation of knowledge.

Rather than taking a wrecking ball to global wealth, as some populists are seemingly inclined to do, why not try a "blank slate" approach in local environments where the results can be observed. By way of example, perhaps some outmoded organizational methods even deserve a wrecking ball: No one in their right mind, today, would build Department of Motor Vehicle offices (HT Marginal Revolution) where people have to stand in line a full day (or more) in hopes of securing an appointment. Instead, for individuals who still have the patience and fortitude to drive, why not simply allow them to split the time required with others who could locally maintain digital databases which take care of whatever registration citizens actually deem necessary. The use of our time as a completely accountable "tax", would serve as an important vote for such processes. There would be no cross subsidies, with our time as a recognizable percentage of a local "tax" base. Alas, whenever we allot tax dollars to government and/or special interest activities performed on our "behalf", too much of the revenue gets diverted to competing claims. In these instances, the extremely fungible nature of money works against us.

It's time to create simpler means for going about our days and getting things done. Meanwhile, too many aspects of life are being subjected to the wrong kind of complexity. Even though it's no longer feasible to build bridges across political divides for budgetary needs as they currently exist, ultimately, we could dramatically change many organizational patterns which governmental budgets are expected to support. With a little luck, technology, innovation and local experimentation can create a more sustainable whole for all of us, before populists have the chance to tear the existing whole apart, piece by piece.

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