Given these dramatic changes, policy makers need to update their economic thinking of work in society and find policy solutions that better reflect the unfolding changes of big tech and innovation that includes shifting the debate on digital from micro to macro and rethinking how the distribution of the economic benefits of digitalisation can be translated into an inclusive growth model.However, addressing the economic uncertainties of a digital era is becoming more difficult, for centralized economies in which both time based service product and housing costs representative of time and place, have gained a dominant structural position. These forms of product often don't benefit from additional output in ways that naturally stimulate additional revenue for wages, taxation, or other societal needs. In other words, the response to "Where is the path?" (for greater inclusion) in these circumstance, might be "you can't get there from here"!
Alas, it could occasionally become necessary to "start the trip" from somewhere else. At the very least, decentralized options for new employment and infrastructure potential, could make it possible to create stronger marketplace integration and vitality. Sometimes - just as Diane Coyle seemed to suggest in a recent post re work in digital times - it's not enough to simply hope for more inclusive economic conditions and expect a meaningful response. Just the same, this changed structural circumstance has few obvious fixes that readily translate into policy objectives. Hence policy makers may instead opt to give a green light to a new institutional context, in which decentralized possibilities for economic engagement could be explored.
Only consider how intangible forms of production have created a backlash of relatively tight monetary policy, partly due to the increased difficulty of redistributing either wages or providing support for existing infrastructure via centralized means. By way of example, how to think about this argument from Florian Ranft?
A straightforward solution would be to simply readjust the tax burden between capital and wage income. As machines become better at substituting human labour, sustaining a high level of taxes on worker's income may not be a good idea, potentially driving unemployment and inequality.Unfortunately, "one size fits all" taxation models worked better when when more tangible forms of tradable sector production - for instance - could be further sourced for revenue and redistribution. Whereas today's machines and automation frameworks may instead augment professional income hours which bear little connection to output gains. Capital enhancing machinery was certainly easier to tax, when it held direct responsibility for aggregate output gains. And 21st century human capital - in relation to earlier capital frameworks - has essentially become a taxation boondoggle.
Meanwhile, lower income level taxation is also where citizens have few means of access to the legal workarounds that are enjoyed by professionals and corporations alike. What much of this boils down to, is the fact less tax revenue will be available than governments now expect to access in the near future. As more residents become responsible for the infrastructure of their own environments, they will need to be able to assume greater roles in the simplification and design of local infrastructure. It's past time, to explore new avenues for building components and infrastructure which allow communities to better represent a full range of income levels.
In all likelihood, the most effective decentralization models of the near future, will be those which - instead of relying on random taxation measures to tend to ongoing needs - instead find ways to generate more marketplace diversity for local infrastructure, building components and time centered services, on direct terms. This would include integrating available revenue for community obligations into local ownership patterns. By making all local participants owners and co-creators, economic inclusion would indeed become a viable option. Nevertheless, the process will likely become somewhat different from the taxation and redistribution expectations of the present.
Granted, it's easy to think of approaches such as tax simplification as ways for individuals with high income levels to escape "undue" governmental burdens. But the reality is that a more carefully thought through approach, would bring a full range of economic activity within reach of all income levels, many of which experience little gain from the governmental taxation they're presently expected to bear. Done right, the tradable sector activity which scales in tangible ways could serve well into the future as supportive of centralized power. Still: It's the intangibles which can be the undoing of advanced economies over time, if and when citizens lack means to more carefully manage the resources they actually have at their disposal.
Ranft, in the above linked CapX article, also mentioned the possibility of "plural ownership models". Here, the most important question for such endeavour might be "Does the product in question already have the capacity to scale up?"
If it does, there may be little need for communities to organize cooperative settings around these products and goods. Future governments should maintain some leeway in the redistribution of revenue derived from tradable sector output gains, so long as open global trade remains actively encouraged. It's product which isn't readily amenable to scale, that occasionally benefits from the assistance of local cooperative effort. Ultimately, we would all benefit from a better understanding when local economic coordination can assist both citizens and aggregate output, versus the traditional economic framing in which spontaneous coordination for production, will fortunately suffice.
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