Friday, September 21, 2018

Non Linear Constraints in Supply Side Potential

Miles Kimball recently linked to a City Observatory article "If you want less displacement, build more housing". One quote stands out in its simplicity:
If you don't build new housing, you intensify the shortage, raise the rents, and amplify the displacement.
Despite what stands in the way of new housing supply; at the very least, "just build more" logic is easier to discern than the convoluted circumstance of knowledge production. Fortunately, supply side arguments for housing aren't too difficult to decipher. Additional housing is supply side augmentation which contributes to increased output in a linear framework of wealth creation.

New housing not only translates into additional ownership possibilities and marketplace capacity, but also sustains income potential when increasing numbers choose to participate in production. By way of example, a similar linear wealth creation perspective exists for tradable sector gains, in that increased output need not dilute supply side income potential. In these forms of endeavour, wealth creation takes place as a "first mover" framework and accounts for resource reciprocity at the outset.

However, non linear constraints affect supply side augmentation for time based product in non tradable sectors. Since much of this activity remains dependent on other existing monetary flows (instead of initial resource reciprocity), it could prove difficult for knowledge providers to maintain their desired income levels, should the service supply side be significantly augmented. One prime example is physician supply, which might partly explain why physicians can be reluctant to add to their numbers or - in some states - address rural supply side shortages via nurse practitioners.

Fortunately, supply side limits don't lead to negative outcomes in all circumstance - indeed, supply side limits are sometimes invoked to protect natural resources. Still, supply side limits in healthcare have become increasingly problematic, in part because of how its formal capacity has affected societal expectations re knowledge production and application. Despite what professional healthcare has proven capable of, many individuals - and not necessarily low income - try to "get by" with as little professional healthcare as possible over the course of their lifetimes. But other real options for emergency care scarcely exist, and individuals with limited income capacity often require extensive professional assistance at least once, should their lives be in danger. If survival ultimately results in personal bankruptcy, such individuals may feel it to be a personal moral failure, should they end up having to use professional care in emergency situations again.

Plus there's healthcare considerations which affect government spending. Nations which are experiencing aging demographics would like more physician supply side capacity, in spite of the wage levels which general equilibrium revenue can realistically maintain without further deficits. Likewise, while some individuals aren't put off by healthcare costs, they may rely on retirement incomes such as pension funds which are increasingly endangered as a source for out of pocket healthcare expenses. As people age, they often grow resistant to acquiring debt beyond reasonable reach of personal income, some to the point of refusing healthcare assistance in emergency circumstance.

Due to the non linear constraints of supply side augmentation, a new organizational approach is needed which wouldn't dilute the income capacity of today's existing physicians, given their extensive human capital investments and commitments. In a global economy which prides itself on a knowledge based economy, it makes little sense for millions to stand on the sidelines indefinitely, all the while attempting to not even take part in something as basic as healthcare. Physicians could help these millions learn how to heal themselves and one another, as part of a framework which would generously reward mutual exchange in non monetary ways. These efforts would become a direct component of wealth creation, for they make it feasible for the marginalized to create resource reciprocity at the point of mutual assistance.

Knowledge use systems which include healthcare would not only create new supply side capacity, such systems could give participants the courage to undertake projects and intellectual challenges which sometimes aren't possible if health considerations stand in the way of long term workplace goals. Given the strains on today's entitlement systems and the aging populations which rely on them, it's time to build more effective approaches for the production and application of knowledge. Should physicians become willing to help individuals become better skilled in assisting one another, the effects on society as a whole, could be profound.

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