Tuesday, December 10, 2019

Defined Equilibrium and the Generational Debt Burden

Given all the discussion regarding a more sustainable use of earth's resources, one might expect more concern about sustainable long term budgetary strategies as well. Why, then, hasn't this been the case? Part of the problem, is that governments and populations are overly reliant on long term debt for the funding of high skill services generation.

However, this approach leaves too much applied knowledge vulnerable to the limits of asymmetric reciprocity. Too many debt instruments now discourage symmetric resource use for services generation. Alas, debt as services "solution" encourages a societal perception that carefully managed national budgets aren't as important as other aspects of sustainable resource use. Even though monetary representation (in its most immediate and usable form) reflects direct resource reciprocity, a substantial amount of monetary representation supports less direct means of high skill services funding.

And, in part because of the future reciprocity expected of services debt, monetary representation of the latter is less likely to be kept in active circulation in the economy, than the former. When money becomes "sterilized" on such terms, it may actually be designated as a measure of current value, instead of as a current medium of exchange (This process also prevents nominal inflation at a general equilibrium level, but simultaneously deflates investment capacity). Part of the impulse to sterilize money is due to the lack of immediate reciprocity for services generation. Hence some monetary representation (also reflected in divisia) can actually obscure the crucial role of money in wealth creation via immediate resource symmetry. Chances are, it will be a while before differences in monetary divisia roles become more apparent, since monetary representation is still evolving in response to recent services dominance in general equilibrium conditions.

In all of this however, future generations are expected to pay for many high skill knowledge based services being provided in the present. This being the case, is it any wonder that while younger generations are concerned about earth's sustainability, they aren't particularly worried about long term budgetary sustainability? Especially if policy makers aren't attempting to reduce the burdens of future generations in this regard! When every political party starts to run with the money while in power, what would make free college for all any more egregious than other forms of budgetary excess! Since younger generations have been sorely compromised at basic levels of governmental policy, that could explain why they no longer find a middle ground in policy making, all that compelling.

Unfortunately their lack of concern is quite understandable. That said, I still believe in long term approaches for long term debt burdens. Let's face it, Keynes probably didn't emphasize that "In the long run we are all dead" because he didn't care about the long run. Rather, he may have been worried that economists wouldn't continue making strong enough contributions or adjustments as needed, to help ensure economic stability for the long run. Call me old fashioned perhaps, and not sufficiently cynical given present political circumstance, but I still worry that if long term debt burdens are not soon addressed, much of today's economic prosperity will eventually unravel. Regular readers also know I doubt we can still tend to these issues on general equilibrium terms in a complex economy. Which is why I suggest local defined equilibrium settings, to help maintain and preserve long term economic stability.

For the most part, the general equilibrium conditions of many nations have become too complex to respond well to ideas - economic or otherwise - which could readily be applied to a structural whole. Indeed, some even complain that there is a dearth of new ideas! Chances are, what's really lacking are suitable settings where new ideas could readily be tried with minimal repercussions if they don't work out. Governments need to give their citizens permission to conduct local small experiments via new economic platforms, instead of subjecting entire nations to economic experiments which are more likely to end up as social disasters. Plus, governments are increasingly exposed to competing factions which prefer different approaches to economic engagement. Why not try different approaches in small community settings, instead of attempting to impose a one size fits all economic pattern on a diverse citizenry?

While local versions of defined equilibrium would create boundaries for time based services coordination, these new communities would remain open to surrounding economies, especially for tradable sector activity and global ideas re infrastructure potential. Still, these communities would reject forms of non tradable sector rigidity which made debt burdens so intractable in the first place. Hopefully, new economic options for non tradable organizational capacity, might eventually lessen society's dependence on debt formation. Affordable building components and reciprocal symmetry in services generation, could give governments much needed possibilities for the problems of long term budgetary debt.

Thursday, December 5, 2019

The "Greener Pastures" of Market Flexibility

With the advent of NIMBYism and protected knowledge sources, we sometimes forget how earlier forms of market flexibility made it easier for individuals to move more freely from place to place. How might we recreate "greener pastures" for new economic opportunities, especially for those with the greatest incentive to put them to good use?

The mid twentieth century U.S. economy was a time of considerable market flexibility, which helps explain some of the nostalgia surrounding this period. Clearly, its tradable sector dominance also contributed to social mobility. What were relatively flexible organizational patterns and divisions of labour in particular, helped local environments adapt to changing economic and social circumstance. Small business production was extensive, and it made feasible a wide range of wealth creation diversity. Even the smallest and most isolated of communities were often able to create their own roles, in what was an open and dynamic domestic economy.

Chances are, today's sticky domestic markets are a bigger problem for social mobility than is generally recognized. While social mobility is more often described as realizing income gains over time, our ability to move about freely as needed without accruing excessive costs or personal risks, is likely just as important. How much social mobility is negatively impacted, by the rigid requirements of non tradable sectors? Especially since these sectors tend to set the rules for economic participation in general. Even though tradable sector factory closings are an obvious hardship, citizens of hard hit regions face additional long term difficulties, when they try to start over in new environs only to find the costs of economic engagement beyond their reach. Unfortunately, non tradable sector rigidity is shutting off too many economic opportunities in domestic markets.

An interesting way to think about these issues, is the nature of risk taking in light of current market barriers. How so? Presently it is not uncommon, to hear that people aren't as willing to invest or take risks as was once the case. Yet this supposed lack of desire to invest further for continued economic progress, links economic stagnation with an assumed unwillingness on everyone's part. But why expect millions who are basically satisfied with their lives, to be the primary risk takers in society?

Plenty of individuals who are willing to assume risks and invest in new possibilities, aren't being noticed. Paradoxically, many who seek greener pastures are derided for doing so. Supposedly they aren't the ones to be pursuing better realities! Perhaps instead of expecting the already successful to do the heavy lifting of innovation and furthering progress, we might ask them instead to have more patience with others who aren't quite as content with present circumstance. We might discover how people who are content with their gains, could become more willing to make room for others who wish to create successes in their lives as well. In many instances, it simply isn't necessary for everyone to struggle with competing platforms and goals in the same physical locations. No one need force extensive market changes on those who understandably resist, when new spaces could be freed instead, for greener pastures of economic opportunity.

Monday, December 2, 2019

Transportation is Both Basic and Discretionary

How do we categorize the importance of transportation in the context of everyday life? More specifically, what do we need to utilize transportation for, in any given moment? By clarifying differences between basic and discretionary transportation options, we could better determine, how the physical layouts and transportation grids of new communities could reflect such roles as well.

As it turns out, commutes for daily routines vary considerably, from the transportation networks we now rely on for longer road trips. Alas, 20th century transportation networks - designed with automobiles in mind - created spatial settings which don't really distinguish between the two! Consequently, the same highway systems that can be so advantageous for discretionary and occasional travel, tend to be commuting headaches wherever people routinely come together to get things done. Some basic rethinking is needed, to retrieve commuting options which take less time than what is now frequently necessary.

What are some differences in transportation needs? One might imagine a spectrum which on one end contains daily non discretionary travel commitments, versus a totally discretionary "vacation of a lifetime" on the other. Points along the middle of our transportation spectrum could be occasional visits to friends and family at a distance, plus similar excursions of limited duration and expense.

Fortunately, the more discretionary aspects of this transportation spectrum are still served reasonably well by state and national highways, here in the U.S. Even so, some disparage today's interstate systems, and reason we would have been better off had they never been built. While I'm convinced many highways are practical and useful, they've still muddled how we once went about getting from point A to point B on a daily basis. Since roads for automobiles went through so many cities and towns instead of around them, the physical proximity people need for many daily interactions has long since been compromised. Yet for now, what's done is done. Many local commutes will remain lengthy in the foreseeable future, and millions will bear responsibility for high transportation costs, since so much private property fronts the thinly spread densities where people expect to get things done.

Ultimately, greater efficiencies in local commutes would involve a rethink for private property coordination, so that closely spaced population densities will once again prove feasible in small towns. What many new communities would want to achieve, is greater accessibility for services workplace densities in particular. It will be interesting, to observe whether some settings might eventually prove similar to walkable communities before the automotive era. How might neighbors shift what were earlier coordination patterns for physical production, towards new combinations for time based services production?

One major challenge is the need for more flexibility in private property ownership, so that optimal densities for current life goals and responsibilities are feasible in a community core.  How so? Consider that in many private property arrangements, getting from point A to point B takes more time due to the need to commute around residents who reside between those points, but aren't part of the coordination factor therein. Indeed, some residents who aren't locally engaged during normal work hours where they live, lose valuable time commuting elsewhere as well! If short commutes to get things done (by all concerned) is understood as an important community goal, flexible ownership patterns toward this end, could prove easier to achieve. Property ownership deserves commute considerations such as these.

Granted, millions of individuals will continue to prefer the spread out densities made possible by automotive transportation, and understandably so. Still, many others could benefit tremendously from walkable communities which don't require automobile ownership. Desirable though it is, automotive transportation should no longer have to be necessary for individuals to maintain their autonomy and personal connections with others. Recall as well, that while public transportation, taxis and new companies such as Uber are viable options to auto ownership in cities, they simply aren't practical in many small places where it can be difficult to make a profit.

Walkable communities would make life more affordable for those with limited sources of income. Plus a simpler infrastructure approach would lessen the burdens of many a municipal budget. Doubtless, plenty of exploration will be needed, before new communities can transition to walkable core settings which restore economic engagement at all levels of society. In time, however, closer densities for living and working could lead to newfound vitality and more sustainable small towns.

Friday, November 29, 2019

Wrap Up for November 2019

Once a minimum wage has been raised, it is no simple feat to bring old jobs back.

Do low interest rates impact productivity growth?

Why do people treat countries as if they were anecdotes?

Perhaps the future of transportation is rethinking the places we wish to connect.

Hardly anyone is willing to seriously address the explosion in federal spending.

A major part of today's inequality is actually due to wide variance between companies, and the extent to whether they rely on intangibles. Plus intangible assets are not well suited for debt finance and traditional investment.

It's very unlikely the entire Internet would just stop. But what if it did?

What is given up when deep organizations become more flexible?

"The Global Equilibrium Real Interest Rate: Concepts, Estimates and Challenges"

"Now that the US is no longer the world's undisputed technology leader, US President Donald Trump and his advisers don't want to compete according to a rules-based system. Their goal is to contain China's technological rise." Even if doing so sets back an early 5G rollout in low income countries.

The biggest problem for rural police departments is a lack of qualified officers, especially considering the pay disparity with larger cities.

Alas, and sadly, this was explained to me by members of extended family nearly forty years earlier.

"Decades before environmental organizations and governments encouraged reuse, recycling, and circular economies, the wiping-rag industry had mastered the art."

Tim Harford notes the importance of the weakest link theory.

Success regarding job retraining for mature adults in the U.S. has been mixed.

Gregory Mankiw explains why he is now voting as an independent.

It seems David Graeber has written the most contentious economics article of the year. Both Noah Smith and Scott Sumner respond.

While substitution has its limits, a wealthy country has more economic options, when a diverse range of commodities and goods means that many of them consequently gain luxury status.

When tax forfeiture goes too far.

Workplace certificates might also position college students to more successfully complete their degrees.

David Beckworth and Binyamin Appelbaum discuss The Economists' Hour: False Profits, Free Markets and the Fractured Society.

Pessimism is more of a problem for capitalism, than for socialism.

Has the world gone mad? Cullen Roche provides some clarification.

"...workers with graduate or professional degrees will be almost four times as exposed to AI as workers with just a high school degree."
Their report also breaks down the exposure of different areas of employment to AI.

In what context is money mostly just a medium of exchange?

The natural rate of employment is not a straightforward concept.

Agnes Callard explains that no one is entitled to gratitude, remembrance or appreciation:
Write something worth reading. Put your ideas out there and hope that someone will make something of them. Give with an open hand and stop thinking about the tokens with which you will be repaid. Be happy to be worth stealing from. The future owes you nothing.
Completed suicides are rare, which helps explain why they are so vividly remembered by those who try to help.

Gregory Mankiw also suggests it's not a good idea to punish the frugal with additional taxation that the spendthrift is able to avoid.

Arnold Kling notes that new methods of classification are needed for an increasingly intangible economy.

Why are mandatory eye exams necessary?

Perhaps decades will pass before AI can really transform the economy.

Might MMT reasoning become an inevitable budgetary result? A CNBC article highlights a recent paper from the Federal Reserve of St. Louis, re national debt.

Monday, November 25, 2019

What's the Point in Work With Limited Pay?

For some - regardless of past earnings - this question may appear to have a simple answer. There isn't! Yet plenty of work we perceive as either enticing or necessary, takes place via no monetary compensation to speak of. How to think about this reality?

What encourages us to choose the work we are willing to do, regardless of compensation? After all, much more is at stake than a "fat" paycheck. By way of example, voluntary work we deem desirable, may either contain the internal reward of intellectual challenge, or represent our sense of duty to others. For that matter, work of a seemingly mundane nature is worthwhile, since daily chores and routines play important roles in maintaining our connections to our environments. Some will likewise sacrifice reliable paychecks to work on autonomous terms, particularly since doing so makes it simpler to juggle competing responsibilities.

Nevertheless, we find most aspects of work more meaningful, if we aren't constantly having to worry about keeping a roof over our heads and food in our pantries. Should low pay work appear insufficient for meeting basic needs, some will refuse to work for others on those terms. And yet there's plenty of work needing to be done, which for the most part can only be paid poorly. Consequently, progressives and conservatives alike are discussing the possibility of creating either "living" wages, or else wage subsidies as government support for employees (via their employers).

Even though I'm pessimistic as to whether either approach is actually feasible, I'm an optimist about the possibility of creating local environments which better reflect low to mid range wage capacity. Supply side innovation for our non tradable sectors, could create greater personal security and stability, for those whose primary work only gains minimal monetary compensation.

So: Consider the range of work possibilities we might consider for ourselves if we don't also have to worry about keeping a roof over our head, and food in our pantry. Would relative financial stability change our mental framework as to what is possible?

Regardless of automation and AI, modern day economies are likely to need a full range of skills complexity in the near future. That said, a lot of employment options may not pay quite so handsomely as before. One problem in this regard is that existing municipal government budgets may become stretched to the breaking point - an event would lead to knock on effects elsewhere in the economy as well. Even though millions continue to seek high compensation for personal levels of high skill, the reality is many budgets will come up short for this human capital approach. Indeed, while lower skill work has been displaced to some degree by automation, AI is a more recent technological development which could impact high skill levels, especially if it becomes utilized in response to budgetary limitations.

Eventually, more cities and communities are going to need to redirect extensive resource capacity to basic elements of infrastructure maintenance. Hopefully, this will encourage the creation of infrastructure and services which don't cost so much to operate and maintain in the first place! Once we have more local settings which are easier to maintain, more individuals may ultimately find value in pursuing intellectual endeavour which does not necessarily come with a large paycheck, or a pension for that matter.

Another consideration, is that the twentieth century redefined how we perceive many non pecuniary obligations to others. These cultural shifts are quite substantial and are still having ramifications. One reason a marketplace for time value is needed, is to restore important forms of mutual assistance which have essentially fallen by the wayside. Also, the use of skills arbitrage for widespread employment, has contributed to increasing physical distance from friends and families as we age. Time arbitrage - given its encouragement of physical proximity for economic activity - could help restore mutual assistance in ways which allow us to rebuild trust locally.

Should people refuse to work for "peanuts", often there are good reasons why. Fortunately, we can create new forms of institutional means which make it more worthwhile to do so. One important aspect of these processes is greater economic security, via innovation for more affordable local environments. Plus, we commit to a restoration of personal workplace autonomy, for participating individuals. Why so? Only recall that one's ability to personally manage workplace circumstance, is a major reason why people are often willing to work for less money. And even though making room for the personal autonomy of others would include occasional inconveniences on our part, only recall how much we appreciate it, when others extend to us, the same privilege of personal autonomy.

Thursday, November 21, 2019

Frontiers For Basic Gains Are Also Progress

What makes the possibilities of frontier so important for the progress of nations? Much more is at stake, than frontier progress which expands opportunities for human wants along the margins of a given equilibrium. While this high income approach to economic progress has been dominant for some time, something is missing. Our non tradable sectors have paid scant attention to millions who would more fully participate in the economy, were they able to do so. What about the wealth potential of newly generated local settings which could encourage low income groups to fulfill basic life goals? After all, this approach would ultimately create more consumers able to encourage the growth frontier of "cutting edge" at the margin, once millions of individuals gain sufficient footing in more basic endeavour.

Chances are, the frontiers which matter most, are those which include starting points for the innovation of need based circumstance. Part of what makes these kinds of frontiers so important, is their potential to allow people of all income levels to more directly manage and create their own life circumstance, thereby contributing to economic growth in the process. Too many such opportunities for self control of local environment, have instead been given over to special interests, redistribution and subsidies, in the belief that experts "should" instead be managing the circumstance which low income groups face.

Indeed, innovative gains which contribute to basic life conditions, are also those which add to economic growth in ways that can actually surpass what occurs along the"cutting edge" of a given equilibrium margin. Alas, the latter more often involves shifts in wealth and resource capacity from one form of consumption to another. Only consider how the relatively recent frontiers of the New World also created new opportunities for citizens to start over in need based terms. Ordinary citizens of those frontier days, often had the good fortune to play starring roles in these earlier stories of new wealth creation. One of the primary challenges of our time is to create new forms of economic frontier, where gains in the innovation of basic needs on the part of everyday citizens, continue to define how we experience our world.

All too often, experts assume that basic economic settings where ordinary people might gain a new lease on life, are a thing of the past in modern day economies. However: Even though immigration is a good solution where possible, it should not be relied on as a sole means of economic escape from conditions that aren't conducive to survival and human thriving. Especially since immigration has only become increasingly difficult for many would be emigrants. Perhaps we could set ourselves an easier task, by creating new forms of economic frontier for beginning anew. In these local settings, many aspects of regulation would be greatly simplified so as to encourage basic innovation on the part of those directly involved.

Let's not assume that need based economic gains are a part of the past, especially in advanced nations where this approach to progress has mostly been abandoned. There are simply too many citizens and communities left behind, to focus all efforts for wealth frontier on further gains for higher income levels. Chances are, need based frontier for wealth creation could be just as useful and practical as ever. Basic human needs in general, could greatly benefit from occasional examination and social adaptation. Modern day economies should not remain limited to a focus on expanding the wants of higher income levels. The economic needs of lower income levels and the potential for supply side innovation in this regard, will always hold relevance in the continued pursuit of progress.

Friday, November 15, 2019

Why Do Services Need Monetary Equivalence?

Much of today's political chaos, can ultimately be traced to struggles over who retains access to high skill knowledge. Consequently, it helps to consider: How much of this skills capacity might be artificially scarce?

Still, artificial scarcity was built into quality services product for understandable reasons. Originally, professional services were largely intended for citizens with relatively high income levels in prosperous areas. Over time, however, professional services provision gradually became the norm, replacing the mutual assistance which citizens with limited incomes had long provided for one another. Even though the move from mutual assistance to professional activity has been a centuries long transition, the real turning point towards complete professionalization began about fifty years ago.

By the late seventies, professional healthcare had mostly replaced the last vestiges of local and less formal services options. Nevertheless, the details as to how skilled forms of mutual assistance were legislated away, aren't really well known. Even the latter stages of these transitions were scarcely noticed, since the professionalization of services in general, benefited from widespread media support.

What is belatedly apparent, however, is that when production rights are withdrawn from groups lacking the money for extensive human capital investment, markets for useful services are going to suffer. Fortunately, what has become a woefully insufficient services marketplace, can be addressed. But doing so means not being afraid to explain to citizens what actually happened. The less blame in this regard, the better. Forgiving what happened, means we get the chance to create a more productive and hopeful future. We now have the opportunity to create greater economic meaning for time value, and doing so would extend the skills capacity needed for today's knowledge based economy. Much of this skills capacity will also need to take place on non pecuniary terms capable of creating monetary equivalence.

Why so? Healthcare is mostly a dependent secondary market. Since much of it relies on government support, periods of slow economic growth impact the revenues actually available. Consequently, even though demand continues to grow - especially due to aging populations - healthcare providers have limited ability to expand supply side capacity via the same pricing terms. Yet how could healthcare providers be paid substantially less, if their human capital investment costs remain relatively fixed?

For the U.S. in particular, present day organizational capacity was created during relatively long periods of increasing tradable sector growth. This organizational capacity was also accomplished via strong price making mechanisms, especially in the latter decades of the 20th century. Now, in certain respects the price making approach has reached its natural limits, given other near future budgetary obligations. In other words, even though more capacity is needed, revenue can't realistically grow to meet that demand. Consequently, services demand now needs to be met by different means than what have occurred in the U.S. thus far.  This is the dilemma many high skill providers currently face. What can be done?

The moment is right, to create human capital organizational patterns which include reliable and easily defined non pecuniary rewards. This approach would help compensate the fact that healthcare as a secondary market position, cannot respond to further demand with full monetary compensation for an expanded supply side. Non pecuniary rewards would create greater monetary equivalence for those willing to participate in healthcare, through new forms of organizational capacity.

Services such as healthcare could gain greater monetary equivalence by increasing time value as part of an applied knowledge continuum. This process could be undertaken with relatively minimal costs for human capital investment. Education for services skills would be integrated into local communities and their workplaces. The symmetry of time arbitrage would allow education and other services capacity to function as components of wealth creation, instead of simply more demands on other existing wealth.

Such an approach could be a tremendous boost for communities which presently lack the resources necessary to compensate today's high skill knowledge providers. Plus, monetary equivalence for human capital investment via non pecuniary means, could help stabilize skilled services markets in general. And in modern economies, services stabilization is certainly important for wealth stabilization as a whole.