...Yes, thankfully, only eventually. Civilizations generally prosper for a quite a while before the Taxman wins out. And, the prosperous good times generally last long enough, that to see the real connections between redistribution patterns alongside limitations in knowledge use is an "inconvenience" to the status quo. If we could condense the idea of economics to the thought of a small village where a few locals have a locked money (skills) chest which is mostly brought out for special occasions and bragging rights, i.e. honorary healing perhaps, it becomes easier to see how eventually no one really gets healed anymore. And that's healing in a direct sense...let alone the healing that needs to happen between disciplines where sickness generally occurs in a body's connecting points. Much of economic life is like that as well.
Better than any science fiction novels, which provide better opportunities for retreat and reaction than real offense (yes I'm diehard non fiction), are the countries which show - how in fact - good things do eventually pass. Being the oldest by ten years, one might say my brother was lucky in any number of respects, for he had a chance to learn not to do what I generally learned from doing...yep, the hard way. (By the same token I inadvertently tend to make people grateful for what they have...) And so Greece is like the "older sister" that my country would do well to learn from (HT Marginal Revolution), in terms of safeguarding what we still have even in the face of inevitable change.
By no means do I mean any literal translation. For one thing, many in the U.S. do not have the same kind of close association with agriculture - on any number of levels - which people in Europe have, and thus job market hopefuls here are highly dependent on the knowledge based skills they still hope to tap into, in the 21st century. What encourages me, as to the above link, is knowing that not every intelligent individual in Greece has "left the premises". And by no means should anyone leave their knowledge skills unused, just because one's nation is finally falling down in the job of supporting said skills. It's mostly a matter of thinking about knowledge skills use differently. Plus, anyone who has been keeping up with these posts knows I'll be "hunting" for further rationale as to starting from the same vantage point, in terms of knowledge use, because I believe a whole new world of potential is opened up by doing so.
However, it's not so much the healthcare angle I wanted to touch on here as the educational angle, which is also a continuation from an earlier post. Even though the monetary valuations of teachers are not so limiting (for economic access) as some skills sets, we are nonetheless running into limitations problems as to actual ability for students to hope for teaching positions, even with a PhD. As for new educators still capable of being "folded in", monetary rewards are no longer as reliable, given the associate positions which are the most commonly available in the present. And in the humanities, fewer students than ever major in these areas for fear of not finding work afterward.
Communities have the capacity to stabilize education and make it far more relevant (especially in economic terms), but I want to address some important underlying questions which don't always make into the discussion. First, how do we not only preserve, but also expand those aspects of education which hold such meaning for educators, students and peer to peer participants at individual levels? Social settings matter, although not necessarily in the forms we tend to utilize now. Much about the settings we think of as "holding" education need to be reconfigured into wider definitions of both form and space, especially in that some of the more public settings involving large groups need to move towards special occasion and other spontaneous gatherings.
What really matters is getting away from sterile routines where knowledge is taught with little immediate purpose or larger connection, something a charter or private school could be equally as guilty of as any public school. (Jonathan Finegold's quote of the week seems appropriate here.) While it will always makes sense to bring individuals together in similar timelines, they need to be able to easily adjust for individual circumstances, and ongoing activities which do not necessarily involve entire groups. Just the same, the process of reestablishing community trust at local levels, also means making much of the environmental redefinition of both work and education activity as public in orientation as possible.
A second question: how to further integrate local efforts into a collective societal level? Not just in the sense of coordinating both ongoing education and work with the use of our own time sets, but making this activity renewal a way to actually solve larger issues that today's institutions grapple with mostly in their protected domains. Somehow, we can evolve the idea of education back into the idea of ongoing community economic activity of all kinds: therefore not just in the limited sense of apprenticeship connections with business, by any means.
The school experience is quite important for anyone, even those of us who didn't necessarily feel like a central element in the process, perhaps! Rather than abolition of schools in community (which only hurts them further), the idea is to make them more open, informal and casual in broader orientation, while somewhat more formal and specific in individual orientation and work/activity related contexts. In other words, break apart the silos so the real work of life can once again take place amongst the grounds that exist between them. By so doing, the arbitrary timelines of graduations and consequent social exclusions those graduations imply, can also fall away. Which would also mean the ability for all members of community to remain in combined processes of coordinated work and related education at any point in their lifetimes.
One of the greater paradoxes of late is the implied need to let go of the greater hopes for our own efforts, which were supposed to be so important in the first place. And the fact that we believed our own abilities important enough to invest in, should tell us that what we deem vital is indeed important to others as well. There are ways to make that knowing matter, for all who believe it is worth the time to invest in knowledge - whether by money, or by the use of our own time and dedication. When nations can not realistically support their citizens efforts, by no means should a nation's cities and individuals be crippled because of the lack of resolve on the part of their power holders for economic progress.
Sunday, June 30, 2013
Saturday, June 29, 2013
Skills Sets and Time Choice Optimality in Arbitrage
While the blogosphere is a bit slow, this is probably a good time to get into more basic aspects of my work in some upcoming posts. How might we think of skills arbitrage differently from - say - the skills we utilize for a job, the way we would pose our skills identity in a resume, or even the skills one might imply from similar groupings in time barter? While most of these are based on valuations derived from societal factors (i.e. exterior valuations), the skills arbitrage sets which we consider under a total or common pool composite, are based on interior valuations which make the best use of our personal time primary, to the greatest extent possible regarding what is "doable" with others (agreed upon by both parties) at any given moment. Again, the fact that we approach our time use from the same starting point makes it not only possible to seek out those who utilize time from similar (multiple) levels of engagement, it also allows us to make better educational choices for time use in an overall sense.
Oftentimes a resume, in that it asks us to list what is relevant regarding our provisions for the workplace, is not so much about us. Rather, it is about what we have actually been able to contribute to the companies or individuals which hired us. In other words, while some of our skills may be reflected in a resume, chances are they could be a limited aspect of our abilities. What's more, those aspects do not necessarily have a practical, primary or even ongoing component in our daily lives. Or, if our paid work is of a more practical nature, there's a good chance that in our off time both our minds and metabolisms will understandably crave the chance to do something completely different. Being able to do so - in turn - further energizes us for the paid work we undertake.
What's more, our skills sets beyond the identity of paid work are not just about hobbies or extra interests, which once were a part of resumes. Skills sets are everything about the ways in we actually approach our lives. Not only do we change skills sets over the years which we routinely tap into, the ones we are the most adept at are not necessarily those which provide the greatest challenges for us in the present. Some of those more substantial "natural talents" may not even be among the ones we are conscious of, such as the individual who normally manages household finances, for instance. Plus, we do not have to be particularly good at a given skill in order to enjoy it and even to spend time with others engaged in that skill, in some way. We forget sometimes that learning processes don't necessarily "happen" amongst two individuals of noticeably different skill levels, but just as often between people who are approaching similar experiential or validation processes through other aspects of commonalities. Equal time arbitrage matching allows this to happen in recognizable, thus measurable form.
One of the bigger problems with skills barter in particular (besides government interference which shuts barter down, of course) has been the limited terms in which people tend to approach it - that is - mostly as an attempted replica of what people do in the workplace...only without the money attached. This becomes a problem in that what people are really trying to do is gain the better arbitrage for the value they perceive a "job" set as holding in the workplace, instead of the optimality of their own internal time structure as coordinated with that of another. In other words, the arbitrage value for skills barter is perceived as external to the agreed upon setting, whereas skills arbitrage represents not an external optimization in an immediate sense, but an optimization of one's own time use given the most important challenges of the present, as able to gain match potential to others with similar sets of challenges.
For instance, even though music has been a big part of my life, I finally reached a point (ten years ago) when it became apparent that I would need to set aside the time once given to music, for the new sets of challenges in my life which took me in a very different direction. That doesn't necessarily mean I wouldn't teach piano again, (along with music theory) to someone in the present if circumstances permitted. It only means that teaching piano is no longer a practical primary skill set I would reach for in arbitrage settings, unless it was in fact the main skill request by someone who was high on a list of my own time priorities for other reasons.
The reasoning (behind such a decision on my part) matters for anyone who is seeking the best means by which to apportion their time in overall context, and there are multiple facets to the reasoning process. Part of my personal reasoning, for instance, had to do with the actual importance music once held for me, let alone the separate fact that it was no longer able to remain viable in an economic sense. How so?
The way we approach a discipline is very important, given the degree to which it demands our mental faculties and how others expect us to apportion our time for whatever reasons. In that sense, familial or societal "permission" are quite the same (Or, a partner saying "no" to our going back to college is like the workplace which demands at least 40 hours of our time). A most appropriate example in this regard are doctors. As they find their time choice options further decreasing, some are now simply choosing to opt out of the profession altogether. What's important in this regard is the degree of sacrifice a discipline requires, and why in fact the expected sacrifices and requirements actually exist in the first place. For doctors, the basic problem ultimately became an exterior (societal) imposition of time sacrifice, rather than time choice. However, unfortunately, the societal response was also rational, given the self limiting nature of healthcare skills sets from decades, even centuries earlier.
For myself - as regards to the practice of music - there was also an interior time "imposition" which mattered in a very different form: one that existed because of the additional role music also held for me in a creative sense. When we find ourselves compelled to approach life in creative ways, to a degree that is an innate impulse. In other words, such a faculty exists even if we don't particularly like what results from its use! Consequently, we inadvertently end up challenging status quos which we don't particularly want to upset. For me, an early experience in that regard was with a music theory teacher who became frustrated when I wrote songs with minor fifths, even though there was supposedly "no such thing".
What that also meant in a larger sense (for time priority) was that music mattered to me - a lot. The problem in that regard was that if I gave a little time to music, I would often end up wanting to give more time to it, which represented an imposition on what finally became more important responsibilities, as the opportunity costs of remaining in college in the early seventies were a bit higher than the present in wage based terms (long story short...the "you need to be a secretary" lecture). Only when the choice of office work became unsustainable a couple of decades later, did I finally return to music in a serious manner (along with bookselling) and continued until the changes of the 21st century proved too great for many musicians to commit to staying with a band. And my back "gave out" when I tried to move keyboards and equipment around on my own for too long.
In other words, many different kinds of factors come into our choice sets: some of which are because of our own internal circumstance and valuations, and some because of the external circumstances and valuations of those around us. If it is not always possible to think about the differences, to a large degree that has been because of the fact that valuation of our skills sets have been societally externalized for so long. That's the part which will need to change. In the next post I'll explore some more skills options choices also from an educational perspective.
Oftentimes a resume, in that it asks us to list what is relevant regarding our provisions for the workplace, is not so much about us. Rather, it is about what we have actually been able to contribute to the companies or individuals which hired us. In other words, while some of our skills may be reflected in a resume, chances are they could be a limited aspect of our abilities. What's more, those aspects do not necessarily have a practical, primary or even ongoing component in our daily lives. Or, if our paid work is of a more practical nature, there's a good chance that in our off time both our minds and metabolisms will understandably crave the chance to do something completely different. Being able to do so - in turn - further energizes us for the paid work we undertake.
What's more, our skills sets beyond the identity of paid work are not just about hobbies or extra interests, which once were a part of resumes. Skills sets are everything about the ways in we actually approach our lives. Not only do we change skills sets over the years which we routinely tap into, the ones we are the most adept at are not necessarily those which provide the greatest challenges for us in the present. Some of those more substantial "natural talents" may not even be among the ones we are conscious of, such as the individual who normally manages household finances, for instance. Plus, we do not have to be particularly good at a given skill in order to enjoy it and even to spend time with others engaged in that skill, in some way. We forget sometimes that learning processes don't necessarily "happen" amongst two individuals of noticeably different skill levels, but just as often between people who are approaching similar experiential or validation processes through other aspects of commonalities. Equal time arbitrage matching allows this to happen in recognizable, thus measurable form.
One of the bigger problems with skills barter in particular (besides government interference which shuts barter down, of course) has been the limited terms in which people tend to approach it - that is - mostly as an attempted replica of what people do in the workplace...only without the money attached. This becomes a problem in that what people are really trying to do is gain the better arbitrage for the value they perceive a "job" set as holding in the workplace, instead of the optimality of their own internal time structure as coordinated with that of another. In other words, the arbitrage value for skills barter is perceived as external to the agreed upon setting, whereas skills arbitrage represents not an external optimization in an immediate sense, but an optimization of one's own time use given the most important challenges of the present, as able to gain match potential to others with similar sets of challenges.
For instance, even though music has been a big part of my life, I finally reached a point (ten years ago) when it became apparent that I would need to set aside the time once given to music, for the new sets of challenges in my life which took me in a very different direction. That doesn't necessarily mean I wouldn't teach piano again, (along with music theory) to someone in the present if circumstances permitted. It only means that teaching piano is no longer a practical primary skill set I would reach for in arbitrage settings, unless it was in fact the main skill request by someone who was high on a list of my own time priorities for other reasons.
The reasoning (behind such a decision on my part) matters for anyone who is seeking the best means by which to apportion their time in overall context, and there are multiple facets to the reasoning process. Part of my personal reasoning, for instance, had to do with the actual importance music once held for me, let alone the separate fact that it was no longer able to remain viable in an economic sense. How so?
The way we approach a discipline is very important, given the degree to which it demands our mental faculties and how others expect us to apportion our time for whatever reasons. In that sense, familial or societal "permission" are quite the same (Or, a partner saying "no" to our going back to college is like the workplace which demands at least 40 hours of our time). A most appropriate example in this regard are doctors. As they find their time choice options further decreasing, some are now simply choosing to opt out of the profession altogether. What's important in this regard is the degree of sacrifice a discipline requires, and why in fact the expected sacrifices and requirements actually exist in the first place. For doctors, the basic problem ultimately became an exterior (societal) imposition of time sacrifice, rather than time choice. However, unfortunately, the societal response was also rational, given the self limiting nature of healthcare skills sets from decades, even centuries earlier.
For myself - as regards to the practice of music - there was also an interior time "imposition" which mattered in a very different form: one that existed because of the additional role music also held for me in a creative sense. When we find ourselves compelled to approach life in creative ways, to a degree that is an innate impulse. In other words, such a faculty exists even if we don't particularly like what results from its use! Consequently, we inadvertently end up challenging status quos which we don't particularly want to upset. For me, an early experience in that regard was with a music theory teacher who became frustrated when I wrote songs with minor fifths, even though there was supposedly "no such thing".
What that also meant in a larger sense (for time priority) was that music mattered to me - a lot. The problem in that regard was that if I gave a little time to music, I would often end up wanting to give more time to it, which represented an imposition on what finally became more important responsibilities, as the opportunity costs of remaining in college in the early seventies were a bit higher than the present in wage based terms (long story short...the "you need to be a secretary" lecture). Only when the choice of office work became unsustainable a couple of decades later, did I finally return to music in a serious manner (along with bookselling) and continued until the changes of the 21st century proved too great for many musicians to commit to staying with a band. And my back "gave out" when I tried to move keyboards and equipment around on my own for too long.
In other words, many different kinds of factors come into our choice sets: some of which are because of our own internal circumstance and valuations, and some because of the external circumstances and valuations of those around us. If it is not always possible to think about the differences, to a large degree that has been because of the fact that valuation of our skills sets have been societally externalized for so long. That's the part which will need to change. In the next post I'll explore some more skills options choices also from an educational perspective.
Friday, June 28, 2013
We Will Not Go Quietly
What ever happens in the near future, one thing for certain: it will not be quiet. So perhaps we still have a chance for good (as in stubborn good) outcomes, instead of everything economic (hence political, etc.) turning out really lousy as it threatens to, now. When people come around the neighborhood with signs that say Impeach Obama and someone has put a Hitler mustache on the president's image, and no one sees a problem with that but puts it on the front page of a local paper? Yes Obama is quite clueless but he certainly wasn't the main source of many problems we are dealing with now. So, if any president is ever going to listen to the public, people need to present some unified objectives to him or her that actually relate positively to one another, instead of conflicting with one another. That's usually what people in power hear, the conflicting versions of what everyone wants.
There is a Don Henley song from 1989 which slips into my mind, still. That song seems all the more significant, when it appears people are ready to give in to a supposedly "inevitable" decline. In the past, certainly there were economic declines which were not preventable. However, I would like to think that today, the long term stagnation "knocking on our door" is imminently preventable. In times past, people tended to think of solidarity in terms of highly specific groups and values. But today, the need for solidarity is different, because the individual solidarities of the past finally worked against the common interests of our humanity. There is tremendous need for people to pull together in a societal sense.
Turn this thing around.
I will not go quietly.
I will not lie down.
No I will not lie down.
If only I could talk about all this without my emotions getting caught up in the process. But I continue to be afraid that people are giving up. So, this post will also pick up from the last one, where I spoke of possibilities for coordination in terms of environmental reform, in which we also allow trees to turn into old growth forests we can walk under, instead of cutting them down to bring indoors and finally subjecting to termites. No, I didn't quite say that in the plastics post, but it certainly was part of the implied reasoning.
How to coordinate possibilities that actually relate to each other? Domestic summits are one approach, even it they might have to be planned to take place in another year or two from now. Just the same, here are some ideas: Strategies for communities which would be starting from scratch could look at everything from walkable solutions for living and working, to how local building and construction options could be carried out by participants in the community.
For those communities which would be interested in skills arbitrage, a summit which explores the variety of skills people want to utilize amongst one another would be quite useful. For any who are interested in follow up potential, further classes as to group arbitrage settings could also be provided. Both of these summits could also look at the kinds of public environments that participants might want to create for work and retail space, to see how many similarities participants actually share.
Also, a summit which explores building component potential would be especially important, for those who wish to get into more technical and infrastructural aspects of the environments which participants actually want. Some would want to see how these environments could be put together in flexible and changing patterns depending on season, or exploration as to work adaptations.
Of course the most important aspect regarding these ideas are the legal requirements to make lifestyle and environment reforms possible in the first place. This is true not just for new forms of zoning and regulations (in adopting areas), but also in terms of knowledge use among all the participants themselves, who would have extensive preparation ahead of such a move, were such a community to take place. Perhaps the biggest difference between these possibilities and the kind of cities Paul Romer envisions are that the participants create the desired environment through sets of agreed upon options, and the efforts to do so would generally be in a nation of which a group already belongs. So the legal activities required to make it all happen, would be in nation processes.
If any of my readers are interested in such processes please let me know. Or, if any of you have heard about things such as this already being tried, that info would be most useful! Ultimately I want to explore these options in some form, and eventually I want to be able to travel, in order to do so.
There is a Don Henley song from 1989 which slips into my mind, still. That song seems all the more significant, when it appears people are ready to give in to a supposedly "inevitable" decline. In the past, certainly there were economic declines which were not preventable. However, I would like to think that today, the long term stagnation "knocking on our door" is imminently preventable. In times past, people tended to think of solidarity in terms of highly specific groups and values. But today, the need for solidarity is different, because the individual solidarities of the past finally worked against the common interests of our humanity. There is tremendous need for people to pull together in a societal sense.
Turn this thing around.
I will not go quietly.
I will not lie down.
No I will not lie down.
If only I could talk about all this without my emotions getting caught up in the process. But I continue to be afraid that people are giving up. So, this post will also pick up from the last one, where I spoke of possibilities for coordination in terms of environmental reform, in which we also allow trees to turn into old growth forests we can walk under, instead of cutting them down to bring indoors and finally subjecting to termites. No, I didn't quite say that in the plastics post, but it certainly was part of the implied reasoning.
How to coordinate possibilities that actually relate to each other? Domestic summits are one approach, even it they might have to be planned to take place in another year or two from now. Just the same, here are some ideas: Strategies for communities which would be starting from scratch could look at everything from walkable solutions for living and working, to how local building and construction options could be carried out by participants in the community.
For those communities which would be interested in skills arbitrage, a summit which explores the variety of skills people want to utilize amongst one another would be quite useful. For any who are interested in follow up potential, further classes as to group arbitrage settings could also be provided. Both of these summits could also look at the kinds of public environments that participants might want to create for work and retail space, to see how many similarities participants actually share.
Also, a summit which explores building component potential would be especially important, for those who wish to get into more technical and infrastructural aspects of the environments which participants actually want. Some would want to see how these environments could be put together in flexible and changing patterns depending on season, or exploration as to work adaptations.
Of course the most important aspect regarding these ideas are the legal requirements to make lifestyle and environment reforms possible in the first place. This is true not just for new forms of zoning and regulations (in adopting areas), but also in terms of knowledge use among all the participants themselves, who would have extensive preparation ahead of such a move, were such a community to take place. Perhaps the biggest difference between these possibilities and the kind of cities Paul Romer envisions are that the participants create the desired environment through sets of agreed upon options, and the efforts to do so would generally be in a nation of which a group already belongs. So the legal activities required to make it all happen, would be in nation processes.
If any of my readers are interested in such processes please let me know. Or, if any of you have heard about things such as this already being tried, that info would be most useful! Ultimately I want to explore these options in some form, and eventually I want to be able to travel, in order to do so.
Could Plastics Provide Liftoff From The Zero Bound?
We know where a lot of the "slow motion" money has gone...it's "parked" at the point of interest on reserves so as to provide support for already existing housing. Certainly, that policy of monetary support was needed to stabilize the economy overall, even though too much emphasis was placed on housing and not enough on unemployment. But now, it is time to start moving money back into broader markets overall and begin the focus on generating real economic momentum. The Fed told us many times it could not do the job alone, and as citizens we need to start helping ourselves. The best means to do so? Provide more incremental ways for everyone to move ahead into the future. In order for that to happen, the versatility and potential of plastics is the best place to start.
To be sure, some will be able to resume ownership in the homes which are coming back onto the market. Just the same, this particular method of local wealth creation is already being acknowledged for the extremely slow growth it actually represents in the present. Only a limited number today can reasonably expect to own property in a "traditional sense", as legally defined in the U.S. But that is no longer true just for consumers. Business possibilities of all kinds are limited, in large part because of today's outdated zoning and codes. Many businesses could make the decision to retain people instead of building robots, if their own building codes were freed by the potential of lightweight and strong building materials that plastics could become.
Our landfills are already full of the very material that could be adapted to the printing capacity of 3D technology, which also means local manufacture of snap together components for construction possibilities would be doable anywhere. Each piece could be amenable to technological innovation as well, making many of the extra functions, expenses and other extreme aggravations that go into homebuilding completely unnecessary. There are few better examples of the possibilities of good deflation, than allowing technology through plastics use to greatly simplify our environments, just as technology has expanded and deepened our communications.
However the best part of all: the incremental ownership that such processes would make possible, even for those with the smallest of incomes. Because of its mobility and flexibility, plastic could give us environments that we can shift about, repurpose, and put together again as needed. That would allow us to find out what actually works in the present, for living and working amongst one another in new ways. For any community that wishes to start anew, working with plastics to make a more survivable world for all participants is the best place to start.
Use of plastics would also make it possible for people to experience ownership without being overwhelmed by the process. Not all people, as they age, have the ability to provide the maintenance for traditional structures which often need extensive remodeling with each passing decade. Even brick homes with only limited wood framing and walls eventually succumb to problems with water, plumbing issues and insect infestations. Pull apart components, on the other hand, could simply snap into place (even as primary support), making expensive remodels of bathrooms and kitchens completely unnecessary for those who cannot afford to take them on. DIY could become something that no longer need destroy relationships, finances and one's health in the process.
The very idea of sticky contracts and wages in the marketplace can slowly be busted apart, as local economies adapt to more flexible and incremental means for economic growth. Any community that takes on the challenge of environmental renewal can provide inspirational examples for others, not to mention the potential of doing so with materials already readily available at home to a large degree. Also, land use can become more oriented around the actual, always movable location a citizen chooses to utilize at any given moment. That would also allow a more coordinated public orientation, which citizens can readily combine for one another as needed and desired.
What of the larger coordination that would be required to make any of this possible? To be explored in the next post...
P.S. This note is to "park" a link, "Brain Sets Prices With Emotional Value". It's a good fit, regarding what people may need in terms of living options and what actually gets offered to them, i.e. the "emotional" response to buy. From Eureka Alert, HT Mark Thoma.
To be sure, some will be able to resume ownership in the homes which are coming back onto the market. Just the same, this particular method of local wealth creation is already being acknowledged for the extremely slow growth it actually represents in the present. Only a limited number today can reasonably expect to own property in a "traditional sense", as legally defined in the U.S. But that is no longer true just for consumers. Business possibilities of all kinds are limited, in large part because of today's outdated zoning and codes. Many businesses could make the decision to retain people instead of building robots, if their own building codes were freed by the potential of lightweight and strong building materials that plastics could become.
Our landfills are already full of the very material that could be adapted to the printing capacity of 3D technology, which also means local manufacture of snap together components for construction possibilities would be doable anywhere. Each piece could be amenable to technological innovation as well, making many of the extra functions, expenses and other extreme aggravations that go into homebuilding completely unnecessary. There are few better examples of the possibilities of good deflation, than allowing technology through plastics use to greatly simplify our environments, just as technology has expanded and deepened our communications.
However the best part of all: the incremental ownership that such processes would make possible, even for those with the smallest of incomes. Because of its mobility and flexibility, plastic could give us environments that we can shift about, repurpose, and put together again as needed. That would allow us to find out what actually works in the present, for living and working amongst one another in new ways. For any community that wishes to start anew, working with plastics to make a more survivable world for all participants is the best place to start.
Use of plastics would also make it possible for people to experience ownership without being overwhelmed by the process. Not all people, as they age, have the ability to provide the maintenance for traditional structures which often need extensive remodeling with each passing decade. Even brick homes with only limited wood framing and walls eventually succumb to problems with water, plumbing issues and insect infestations. Pull apart components, on the other hand, could simply snap into place (even as primary support), making expensive remodels of bathrooms and kitchens completely unnecessary for those who cannot afford to take them on. DIY could become something that no longer need destroy relationships, finances and one's health in the process.
The very idea of sticky contracts and wages in the marketplace can slowly be busted apart, as local economies adapt to more flexible and incremental means for economic growth. Any community that takes on the challenge of environmental renewal can provide inspirational examples for others, not to mention the potential of doing so with materials already readily available at home to a large degree. Also, land use can become more oriented around the actual, always movable location a citizen chooses to utilize at any given moment. That would also allow a more coordinated public orientation, which citizens can readily combine for one another as needed and desired.
What of the larger coordination that would be required to make any of this possible? To be explored in the next post...
P.S. This note is to "park" a link, "Brain Sets Prices With Emotional Value". It's a good fit, regarding what people may need in terms of living options and what actually gets offered to them, i.e. the "emotional" response to buy. From Eureka Alert, HT Mark Thoma.
Wednesday, June 26, 2013
Statistically, I Belong To A Group That Can't Be Trusted
There are, of course, many of us in this significant group. But perhaps it is in the developed nations of the world - where we are supposed to be the most responsible for our economic livelihoods - that we may in fact be held in the most suspicion. For the developed world is mostly made up of environments which don't leave a lot of room for hardscrabble adaptation or random settings. Therefore, as long term unemployed, we are generally hidden in surroundings where others still have well understood and specific ways to interact with one another. Whereas, without a job to go to, we have choices along a certain limited spectrum, but those options don't readily intersect with the choices of people around us. Therefore, we may find our own routines and stoically maintain them, but when we are around those who don't know us, the unknowing itself may still create uncertainty in some settings, regardless of our actual reactions to the settings themselves.
And - as a group - our reactions to this odd set of affairs run the gamut from acceptance to despair, each duly noted by society in its turn and mostly from a safe emotional distance. In particular, anger is the potential element which people are the most compelled to respond to and guard against. There are - fortunately - the peaceful moments when we can accept our fate with equanimity. Yet, the fact that we sometimes win our personal battles doesn't readily translate beyond ourselves. Whereas when an employed individual wins such battles, there are positive effects that can go well beyond one's own personal sphere, into one's community.
What's more, there is presently no cohesive roadmap or playbook for any of our actions or responses; no broader context for our focused efforts and oft remembered previous commitments. The playbooks that exist for others, work mostly for the emotional shadows of yesterday that we continue to wrestle with in our dreams. If we are older, others probably do not question that we hold back from obligations we can't actually make. But if we are young, the holding back can be readily misunderstood as to the logic it may actually hold, regarding our own recognition of our additional limits and boundaries. Others may persevere just the same for our commitment in the spirit of a conquering force, or they might observe our sanity, try to capture it and transmit it into some form of subservience. Yet the very acquiescence to such intentions can change our own equanimity and autonomy into something else entirely different.
We are fragile, and yet in certain ways we are not fragile at all. For in long term unemployment, we are exposed to the ragged edge of life's greatest challenge to find the intention in our destiny. What might have been an ordinary "garden variety" denial, is brought into sharp relief, by the mirror of ones own rejection. Whatever we ignored before only comes to visit again in the too open morning, if in fact we did not relive it in the night.
Why can't we can't be trusted? Because we undermine your feeling of personal stability, of certainty. You may feel confident enough to trust me directly, but to do so means you take a chance on giving in to other confusions. By allowing me into your world, the lack of an economic anchor in my own can make you question some of the aspects of your life which you would otherwise, unthinkingly and comfortably take for granted. By turns you might feel pity or even a mild form of resistance to the nature of my own response to circumstance. I am a part of that thing which is not supposed to happen on any number of levels, and the fact that it happened anyway has no ready answers or solutions. By being unemployed, that makes all of us in this group the biggest question mark society has: did we bring such circumstances about purposely, or is this something that can even be helped?
And - as a group - our reactions to this odd set of affairs run the gamut from acceptance to despair, each duly noted by society in its turn and mostly from a safe emotional distance. In particular, anger is the potential element which people are the most compelled to respond to and guard against. There are - fortunately - the peaceful moments when we can accept our fate with equanimity. Yet, the fact that we sometimes win our personal battles doesn't readily translate beyond ourselves. Whereas when an employed individual wins such battles, there are positive effects that can go well beyond one's own personal sphere, into one's community.
What's more, there is presently no cohesive roadmap or playbook for any of our actions or responses; no broader context for our focused efforts and oft remembered previous commitments. The playbooks that exist for others, work mostly for the emotional shadows of yesterday that we continue to wrestle with in our dreams. If we are older, others probably do not question that we hold back from obligations we can't actually make. But if we are young, the holding back can be readily misunderstood as to the logic it may actually hold, regarding our own recognition of our additional limits and boundaries. Others may persevere just the same for our commitment in the spirit of a conquering force, or they might observe our sanity, try to capture it and transmit it into some form of subservience. Yet the very acquiescence to such intentions can change our own equanimity and autonomy into something else entirely different.
We are fragile, and yet in certain ways we are not fragile at all. For in long term unemployment, we are exposed to the ragged edge of life's greatest challenge to find the intention in our destiny. What might have been an ordinary "garden variety" denial, is brought into sharp relief, by the mirror of ones own rejection. Whatever we ignored before only comes to visit again in the too open morning, if in fact we did not relive it in the night.
Why can't we can't be trusted? Because we undermine your feeling of personal stability, of certainty. You may feel confident enough to trust me directly, but to do so means you take a chance on giving in to other confusions. By allowing me into your world, the lack of an economic anchor in my own can make you question some of the aspects of your life which you would otherwise, unthinkingly and comfortably take for granted. By turns you might feel pity or even a mild form of resistance to the nature of my own response to circumstance. I am a part of that thing which is not supposed to happen on any number of levels, and the fact that it happened anyway has no ready answers or solutions. By being unemployed, that makes all of us in this group the biggest question mark society has: did we bring such circumstances about purposely, or is this something that can even be helped?
Shake It Up! (Turn Over Pyramids, Zero Bounds and Various Bloated Bottoms)
Who remembers The Cars song by that name, from 1981?
Not long ago I wrote a post which referenced Maslow's pyramid structure (should have included "Maslow" in labeling system...can't find the link!), and afterwards thought about the fact that he exaggerated the bottom of the pyramid, thus implying a limited importance of the upper portions. Of course, that might have been his impression because of a research focus on successful individuals. Still, those designations of aspiration (which also matter for happiness in general) didn't necessarily appear to extend to the overall population in any aggregate sense. Ouch!
However, through both formal education gains and the digital realm, a greater appreciation of the upper portions of the spectrum is now commonly acknowledged, which probably accounted for multiple takes of Maslow's hierarchy of needs pyramid in these images. I especially liked the one where someone scrawled Internet on the bottom portion! Some pyramids in those images had been reconfigured in such a way (a less bloated "bottom"), that various attributes were spread much more evenly throughout the entire form. Not only does debate continue as to what is particularly relevant in the Maslow pyramid - but in a related note, U.S. food pyramid issues never really got "resolved", either. For instance - until 2005 - one version had a bloated bottom which my metabolism considered to be way too much bread. Finally, USDA replaced its 19 years of pyramid with suggested portion sizes (now called My Plate).
Of course, one problem for us is that we don't have much room for the upper portions of a Maslow hierarchy of needs in a monetary sense, which represents human skill potential. At the very least, this neglect of happiness factors might not be an especially new problem, as civilizations have often taken advantage of especially stable periods of prosperity to "build out" as much as humanly possible. There are a fair number of ancient pyramids around the world which attest to such prosperous periods in time. For all we know, people are happier in time frames when such obvious prosperity doesn't exist, but for now that's just one of life's mysteries...
Now there's a paradox...why would people crowd out "upper quadrants" of happiness potential with overwork (and under technology) for the more basic components of life such as housing? This paradox of "more than necessary" housing also accounts for one Keynesian mystery of the present: why didn't the need for work disappear, as society prospered?? (hint, giant mortgages to pay) And, of course, for those on the other end of the spectrum, why haven't we benefited more from good deflation by now? Hint, the "inflation" that dared not speak its name, in the form of lifestyle grandeur for paupers and all...
How, then, does all this tie in with the zero bound? Perhaps one might think of the one percent as the top of a "pyramid scheme", but it's really about the fact that today's interest on reserves took up more "parking spaces" than ever should have been necessary on the first floor. Where once adequate flow existed throughout the entire monetary system, the zero bound was also able to capture a tremendous amount of basic life needs, all wrapped up with a bow as though they were societal upper aspirations. Healthcare - as it is presently defined - certainly counts for this summation, in that it presently "eats" money in ways not unlike housing itself. Nominal targeting is one way to think of making the bottom less bloated, so that money becomes freed up for all the activities that make up our lives.
In a way, the last food pyramid, with its vertical wedges, made me think of the greater balance which NGDPLT implies. However, the same confusion which existed as regards to that previous food pyramid, seems to exist now whenever the fluidity of actual components are taken into account for nominal targeting. To shift the pyramid to a smaller base, we can focus more on the entire structure, and less on the moving parts near the ground floor. Let's "shake it up" and get money back into motion.
Not long ago I wrote a post which referenced Maslow's pyramid structure (should have included "Maslow" in labeling system...can't find the link!), and afterwards thought about the fact that he exaggerated the bottom of the pyramid, thus implying a limited importance of the upper portions. Of course, that might have been his impression because of a research focus on successful individuals. Still, those designations of aspiration (which also matter for happiness in general) didn't necessarily appear to extend to the overall population in any aggregate sense. Ouch!
However, through both formal education gains and the digital realm, a greater appreciation of the upper portions of the spectrum is now commonly acknowledged, which probably accounted for multiple takes of Maslow's hierarchy of needs pyramid in these images. I especially liked the one where someone scrawled Internet on the bottom portion! Some pyramids in those images had been reconfigured in such a way (a less bloated "bottom"), that various attributes were spread much more evenly throughout the entire form. Not only does debate continue as to what is particularly relevant in the Maslow pyramid - but in a related note, U.S. food pyramid issues never really got "resolved", either. For instance - until 2005 - one version had a bloated bottom which my metabolism considered to be way too much bread. Finally, USDA replaced its 19 years of pyramid with suggested portion sizes (now called My Plate).
Of course, one problem for us is that we don't have much room for the upper portions of a Maslow hierarchy of needs in a monetary sense, which represents human skill potential. At the very least, this neglect of happiness factors might not be an especially new problem, as civilizations have often taken advantage of especially stable periods of prosperity to "build out" as much as humanly possible. There are a fair number of ancient pyramids around the world which attest to such prosperous periods in time. For all we know, people are happier in time frames when such obvious prosperity doesn't exist, but for now that's just one of life's mysteries...
Now there's a paradox...why would people crowd out "upper quadrants" of happiness potential with overwork (and under technology) for the more basic components of life such as housing? This paradox of "more than necessary" housing also accounts for one Keynesian mystery of the present: why didn't the need for work disappear, as society prospered?? (hint, giant mortgages to pay) And, of course, for those on the other end of the spectrum, why haven't we benefited more from good deflation by now? Hint, the "inflation" that dared not speak its name, in the form of lifestyle grandeur for paupers and all...
How, then, does all this tie in with the zero bound? Perhaps one might think of the one percent as the top of a "pyramid scheme", but it's really about the fact that today's interest on reserves took up more "parking spaces" than ever should have been necessary on the first floor. Where once adequate flow existed throughout the entire monetary system, the zero bound was also able to capture a tremendous amount of basic life needs, all wrapped up with a bow as though they were societal upper aspirations. Healthcare - as it is presently defined - certainly counts for this summation, in that it presently "eats" money in ways not unlike housing itself. Nominal targeting is one way to think of making the bottom less bloated, so that money becomes freed up for all the activities that make up our lives.
In a way, the last food pyramid, with its vertical wedges, made me think of the greater balance which NGDPLT implies. However, the same confusion which existed as regards to that previous food pyramid, seems to exist now whenever the fluidity of actual components are taken into account for nominal targeting. To shift the pyramid to a smaller base, we can focus more on the entire structure, and less on the moving parts near the ground floor. Let's "shake it up" and get money back into motion.
Monday, June 24, 2013
Bad Deflation is Not Creative Destruction
Whodathunkit? Or...the other title I wanted for this post was Creative Destruction For You, But Not For Me (so many good post titles, so little time). If the blogosphere seemed a bit sleepy or disoriented recently, nothing like an outrageous BIS report to wake it up again! (Boo Hiss it's BIS - okay I promise I'll stop, I'm killing myself here) It's probably a good thing that there's too many links for me to realistically list, but I have to mention Simon Wren-Lewis. Lest anyone think that the economy can "dog paddle" into the indefinite future with a teensy cap on "everything as usual", good luck with that (WSJ are you listening?). Eventually, refusal to budge off of a status quo that now means significant unemployment, likely means that resistance to change turns into bad deflation, somewhere down the line. This is no time for all the economic players to sit at the table and simply pray that theirs is not the bad hand.
Without a doubt some of my readers must be confused by now, because on regular occasion I sing the praises of authors who have been most happily adapted (adopted?) into Austrian thought processes. Therefore, the word austerian is most helpful, because it gives me a chance to readily distinguish certain areas of discourse from Austrian writers who inspire me and who I believe to be imminently respectable. Austerian is also a great word because it's not so much meant for Internet Austrians (again, not quite the same as Austrian) who are but a small subset of this group, but actually indicative of people from many walks of life, moneyed and not-so-much so, who have inadvertently painted themselves into a corner by their own expectations of themselves and others around them.
The primary difference between this far flung group and others who wish to limit money printing is that austerians tend to see money primarily as representative of hard assets and assorted real estate rather than services, even though these areas of life generally play out in local economies as two sides of the same coin. Unfortunately, if services disappear in significant ways, the very ones who dissed said services tend to follow, in spite of what they felt or thought about them.
What about the normal and upbeat rationale one normally hears as to wealth creation: where does it go in times like this? Why the sudden slamming on the brakes - that is, dropping NGDP off a cliff in such a way that made the Great Recession inevitable? Indeed it doesn't make sense how central bankers could have convinced themselves that letting this happen was the right thing to do, and the fact that they did means the public is no longer so quick to trust them as before. If central bankers had believed in their previous methodology, why would negative expectations cause them to back off so quickly? How did they think that wouldn't send the wrong message to the world?
And - as for those who got "cold feet" about their own course of action - think how that runs counter to what so much free trade literature actually extolls. When we read about the progress of production efficiencies and technology in the twentieth century, there's not so many praises sung about the primary forms of wealth (building construction) we actually came to rely on in the present. And even though some really serious people decided to pull the "emergency brake", no one ever bothered to explain why, even though there were plenty of discussions as to who was really to blame. So when we hear how we need to "sit back" (a couple of decades, maybe) and wait for creative destruction to do its magic, what exactly are people referring to, and why isn't anyone actually starting the process now? For something that sounds so active and positive, there's a lot of passive resistance and defensiveness going on...and I for one will not be happy if "creative destruction" is just a copout phrase or excuse for war.
And even now, we know that many forms of new innovation, production efficiencies and free markets (in some respects anyway) finally helped to pull us out of the Great Depression. BUT...not before a lot of people were killed, and a tremendous amount of wealth was destroyed first, in far too many nations. No one was particularly interested in innovation for a couple of decades, it seemed, until a lot of potential economic players were knocked off the field, both literally and figuratively.
In other words, creative destruction seems to be great so long as the ones in power are not the ones having to deal with it. How would governments large and small pay for services, if it weren't for their citizens running like hamsters on the mortgage treadmills? Oh, it's easy to praise creative destruction from afar, especially when it involves wealth creation which doesn't threaten one's own particular piece of pie in the first place. In a sense, the present day output gap in NGDP represents a vivid crisis of imagination. Which perhaps would not be so bad, were it not for the fact that the output gap also represents a massive loss on the part of those who would have gained work and a decent life, from those forbidden wealth generation processes. The scary part is that a government which refuses to lift regulations against innovative construction, is a government that ultimately courts bad deflation destruction.
What's more, the central bankers knew all along that the crisis of imagination on the part of proud austerians was behind the problem, which is probably why the Economist had this oddball article heading the other day: "I'm a Central Banker, Get Me Out Of Here". The worst part? The central bankers finally - when it was too late - knew they were going to get the blame for bankrolling whatever the austerians wanted in the first place (mindless growth with practically zero innovation and technological gain), until everyone actually lost their nerve. A nominal targeting rule would have at least stopped the process before it went too far along and sucked up too much future income, but who wants a reasonable rule when it's not necessary?!
Fortunately, there is actually a simple way to express the lack of coordination which has led to the stalemate between central bankers, governments and citizens. While central bankers and citizens would happily blame one another till doomsday, the regulations of local economies are in fact the real culprit. The only reason it is not readily apparent that the outdated laws, regulations and zoning are the actual source of the problem is that no one in power has a single thing to gain by speaking out against a broken status quo. No wonder Buckminster Fuller must have seemed like a bit of a dingbat, to some.
A big part of what appears as business cycles is just the effort to put too many citizens into outdated forms of construction which are not well suited to their income, and thus, financial needs. Yet municipalities have been reluctant to update construction methodology for fear of losing construction jobs and the outsized tax base that became available for services. But the need for everyone to have income for that outdated housing only made the problem worse over time. Bad deflation can be overcome by giving construction over to innovation, and by creating more sustainable forms of services which do not need to rely on yesterday's representations of building and construction in order to happen. When that happens, a lot of finger pointing and wealth destruction will no longer be necessary.
Without a doubt some of my readers must be confused by now, because on regular occasion I sing the praises of authors who have been most happily adapted (adopted?) into Austrian thought processes. Therefore, the word austerian is most helpful, because it gives me a chance to readily distinguish certain areas of discourse from Austrian writers who inspire me and who I believe to be imminently respectable. Austerian is also a great word because it's not so much meant for Internet Austrians (again, not quite the same as Austrian) who are but a small subset of this group, but actually indicative of people from many walks of life, moneyed and not-so-much so, who have inadvertently painted themselves into a corner by their own expectations of themselves and others around them.
The primary difference between this far flung group and others who wish to limit money printing is that austerians tend to see money primarily as representative of hard assets and assorted real estate rather than services, even though these areas of life generally play out in local economies as two sides of the same coin. Unfortunately, if services disappear in significant ways, the very ones who dissed said services tend to follow, in spite of what they felt or thought about them.
What about the normal and upbeat rationale one normally hears as to wealth creation: where does it go in times like this? Why the sudden slamming on the brakes - that is, dropping NGDP off a cliff in such a way that made the Great Recession inevitable? Indeed it doesn't make sense how central bankers could have convinced themselves that letting this happen was the right thing to do, and the fact that they did means the public is no longer so quick to trust them as before. If central bankers had believed in their previous methodology, why would negative expectations cause them to back off so quickly? How did they think that wouldn't send the wrong message to the world?
And - as for those who got "cold feet" about their own course of action - think how that runs counter to what so much free trade literature actually extolls. When we read about the progress of production efficiencies and technology in the twentieth century, there's not so many praises sung about the primary forms of wealth (building construction) we actually came to rely on in the present. And even though some really serious people decided to pull the "emergency brake", no one ever bothered to explain why, even though there were plenty of discussions as to who was really to blame. So when we hear how we need to "sit back" (a couple of decades, maybe) and wait for creative destruction to do its magic, what exactly are people referring to, and why isn't anyone actually starting the process now? For something that sounds so active and positive, there's a lot of passive resistance and defensiveness going on...and I for one will not be happy if "creative destruction" is just a copout phrase or excuse for war.
And even now, we know that many forms of new innovation, production efficiencies and free markets (in some respects anyway) finally helped to pull us out of the Great Depression. BUT...not before a lot of people were killed, and a tremendous amount of wealth was destroyed first, in far too many nations. No one was particularly interested in innovation for a couple of decades, it seemed, until a lot of potential economic players were knocked off the field, both literally and figuratively.
In other words, creative destruction seems to be great so long as the ones in power are not the ones having to deal with it. How would governments large and small pay for services, if it weren't for their citizens running like hamsters on the mortgage treadmills? Oh, it's easy to praise creative destruction from afar, especially when it involves wealth creation which doesn't threaten one's own particular piece of pie in the first place. In a sense, the present day output gap in NGDP represents a vivid crisis of imagination. Which perhaps would not be so bad, were it not for the fact that the output gap also represents a massive loss on the part of those who would have gained work and a decent life, from those forbidden wealth generation processes. The scary part is that a government which refuses to lift regulations against innovative construction, is a government that ultimately courts bad deflation destruction.
What's more, the central bankers knew all along that the crisis of imagination on the part of proud austerians was behind the problem, which is probably why the Economist had this oddball article heading the other day: "I'm a Central Banker, Get Me Out Of Here". The worst part? The central bankers finally - when it was too late - knew they were going to get the blame for bankrolling whatever the austerians wanted in the first place (mindless growth with practically zero innovation and technological gain), until everyone actually lost their nerve. A nominal targeting rule would have at least stopped the process before it went too far along and sucked up too much future income, but who wants a reasonable rule when it's not necessary?!
Fortunately, there is actually a simple way to express the lack of coordination which has led to the stalemate between central bankers, governments and citizens. While central bankers and citizens would happily blame one another till doomsday, the regulations of local economies are in fact the real culprit. The only reason it is not readily apparent that the outdated laws, regulations and zoning are the actual source of the problem is that no one in power has a single thing to gain by speaking out against a broken status quo. No wonder Buckminster Fuller must have seemed like a bit of a dingbat, to some.
A big part of what appears as business cycles is just the effort to put too many citizens into outdated forms of construction which are not well suited to their income, and thus, financial needs. Yet municipalities have been reluctant to update construction methodology for fear of losing construction jobs and the outsized tax base that became available for services. But the need for everyone to have income for that outdated housing only made the problem worse over time. Bad deflation can be overcome by giving construction over to innovation, and by creating more sustainable forms of services which do not need to rely on yesterday's representations of building and construction in order to happen. When that happens, a lot of finger pointing and wealth destruction will no longer be necessary.
Saturday, June 22, 2013
The Last Macro Show?
...And at this point it's not easy to know the story line in the "picture show"! Like Marcus Nunes, I was struck by Paul Krugman's assertion that Market Monetarists are "homeless", in that they don't even have a political party to call their own. Oftentimes I've seen the lack of specific political identification as a plus, but as Krugman inferred, there has been little political response to Market Monetarists that would contribute to positive action at the Fed in the present, especially given the fact that Ben Bernanke is now slated to leave. However, it was Scott Sumner's remarks in a post today that I'm still trying to make some sense of - and it's not the first time he's made suggestions that macro as a field could "lose its rationale":
Before any readers think I'm overly concerned as to Sumner's musings, believe me - I'm not going to let other Market Monetarists off the hook that easily! Perhaps it's just hard sometimes to think about what actually needs to happen for monetary policy beyond the near term, especially when the primary goal of a nominal targeting rule has yet to be established for a central bank. Some who are not strictly Market Monetarists are also grappling with monetary concerns of the present, such as Miles Kimball who has tried to envision how central banks might normalize central bank operations in a negative interest scenario. Even George Selgin had this to say in a recent post:
Those in government positions, the Fed, and economists most connected to the status quo have the most to lose, if they in fact are not willing to consider real alternatives. Which is especially true, in that the problems of the zero bound threaten to remain with us for some time. While "homelessness" may be a convenient talking point for Paul Krugman, the fact that Market Monetarists are not politically connected should give him pause, as to the deeper implications of that fact. Something tells me there will be plenty more action on the stage, before the "last" macro act takes place.
If NGDP growth is stable then macro as we conceive it today (which is mostly a demand-side field) will disappear, and that means market monetarism will disappear. Even worse, the residual problems (and there will be supply-side problems) will appear to be failures of market monetarism. And we won't have any useful advice to offer, other than "Money won't solve that problem, nor will demand-side fiscal stimulus".How to respond? I'm not even sure where to begin. Except to say, Market Monetarists in general are quite concerned about supply side issues, even if the primary impetus for central banks and macroeconomics until now has been demand driven. So - if not Market Monetarists for the coordination which needs to happen in the future for both supply and demand related growth...who? Keynesians are primarily concerned about the interactions between government and the economy, and other areas of economics tend to be more concerned with supply side issues. In fact, some Austrians don't even see macroeconomics as a truly legitimate area of the discipline. In other words, I don't know who else is prepared to consider supply and demand side problems in the same context - let alone see them as worth taking on together, as the most important economic issues facing us today.
Before any readers think I'm overly concerned as to Sumner's musings, believe me - I'm not going to let other Market Monetarists off the hook that easily! Perhaps it's just hard sometimes to think about what actually needs to happen for monetary policy beyond the near term, especially when the primary goal of a nominal targeting rule has yet to be established for a central bank. Some who are not strictly Market Monetarists are also grappling with monetary concerns of the present, such as Miles Kimball who has tried to envision how central banks might normalize central bank operations in a negative interest scenario. Even George Selgin had this to say in a recent post:
...free banking alone will no longer suffice to make our (or any) monetary system sound.
Something else is needed. And that something must of course consist of the base regime itself. Broadly two alternatives exist for such reform. These are: (1) the restoration of a base medium consisting of some form of specie, or perhaps of some other commodity; and (2) reform of the existing fiat regime. Both options have advantages and disadvantages. A major advantage of the second is that it is likely to be less disruptive. This advantage isn't itself decisive. But it does supply one important reason for not simply dismissing out of hand proposals for imposing strict rules upon fiat-money issuing authorities - including rules that call for targeting NGDP.Clearly there are economists as well as "concerned citizens" such as myself who are willing to put in whatever effort it takes to find solutions. Just the same, it is a bit discouraging that few in positions of political power are ready to come to the table with others outside positions of power, because that really is what it is going to take to move forward. What's more, because of those not willing to budge from previously held positions, much political goodwill and economic stability continues to be jeopardized.
Those in government positions, the Fed, and economists most connected to the status quo have the most to lose, if they in fact are not willing to consider real alternatives. Which is especially true, in that the problems of the zero bound threaten to remain with us for some time. While "homelessness" may be a convenient talking point for Paul Krugman, the fact that Market Monetarists are not politically connected should give him pause, as to the deeper implications of that fact. Something tells me there will be plenty more action on the stage, before the "last" macro act takes place.
Knowledge Use as Direct Democracy
While many notions of direct democracy nowadays seem far fetched indeed, it helps to put such thoughts in context, and I need to start doing that, as this blog is now "two months in" and so this is an important post. My thoughts as to direct democracy are somewhat utilitarian. However, not in terms of forced redistribution of which I mostly disagree with (for services) on grounds of what have become totally skewed incentives. That is why - in terms of coordinated skills arbitrage - I insist on level starting points in time use as a free market tool for all economic actors, and this post will attempt to provided more explanations as to "why", in that regard. I promise, an equal starting point is not the "evil" you may think it is! Perhaps some of the rationale here will indicate why a libertarian such as myself still believes that democracy has potential to work effectively.
First, the point in such a possibility as equal time use is not that we are "equal" to others in all respects (which we most certainly are not), but that we deserve equal opportunity to seek out what we deem useful arbitrage in community, from all who wish to utilize time in ways that are capable of somehow corresponding with our own needs and desires. Through ongoing and systematic voting for (desired) basic service sets as a "price" mechanism (to indicate possible time use and time investment potential), young people also gain an idea how to structure learning options which correspond with a community's changing needs. Such an educational base also serves as a jumping off point from which individuals can engage in special skill set preferences, which they then "market" as additional and more spontaneous community offerings. That same basic educational set can be augmented by "just in time" additional knowledge use in when it becomes important in larger group settings, as well. When we gain the opportunity to directly compete with one another in service offerings limited only by our own imaginations, nothing about life ever need be boring or mundane, again.
Why is this not possible with today's services offerings, where some are automatically gauged as "more valuable than others" based on one's "time sacrifices" or innate abilities? Unequal knowledge use rents ultimately change the playing field for every other economic player in irrevocable ways. People therefore try to revert to representative democracy to "force" policymakers to make up the differences, but there is simply no way to do so in spite of appearances to the contrary (Obamacare). Once skills sets are subjected to scarcity controls even to a small degree, there is no more turning back, thus the holders of said skills have to also limit the degree to which they can freely engage in the use of those skills. What's more, their life becomes mostly a sacrifice for the special privilege they were given, and so knowledge use in its present form is not unlike slavery in this respect - high paid though it may be. They become bound by the institution that sets the rules for the limitations, and have no free market by which to negotiate with the rest of us.
Whereas our institutions once provided strength for knowledge holders and governments as well by this process, the strength of these rent capture measures has begun to wane. This inconvenient truth is especially significant, in that it now lead to distortions of financial markets which in some ways serve as a last resort for societal attempts to find rebalance. Only by negotiation from equal vantage points can we regain strength in our economic dealings with one another. Unfortunately, much valuable knowledge use definition (in monetary terms) has finally become what accrues mostly to the one percent. In such a reality, arguments for less reimbursement "somehow" to knowledge holders in a system which also demands total sacrifice on their part, is mostly semantics. What's more, the efforts to do so only make the representative democracy that used to work in this regard, appear as a travesty in the present, because of its increasingly inability to remedy the problems caused by special privilege.
In a sense the Great Depression "forced the hand" of greater wealth creation that ultimately led to a resurgence in services on a greater scale than had previously been possible. However - in the present - wealth is not held in the same ways that made that earlier form of adaptation possible. To be sure, people remain aware that resources do not just "spring into use" by the fact of their existence, and the value of human ability is frequently extolled in this regard. For instance, Matt Ridley's book "The Rational Optimist: How Prosperity Evolves" was - for me - an inspiring read a couple of years ago. I read echoes of those same thought process this morning, as Mark Perry of AEI highlighted a number of points Don Boudreaux of Café Hayek recently made about human ability.
However, such arguments can often quickly devolve into ill disguised attempts at continued institutional control of human ability. In spite of limitations on progress which consequently is not quite "real" in a societal framework, certain important capacities of knowledge use are mostly reserved for the one percent because of the incentive structure itself. Such limitations are also why earlier civilizations have often advanced in important technological areas, only to fall back again. Interestingly, some of the common beneficial knowledge which survived and spread, has also been purposely devalued (old wives tales?) by institutions in the present (herbal knowledge for instance) only to resurface as derivatives and patents once again limiting benefits to a public that pays for something supposedly "completely new".
When people realize the degree to which so much vital knowledge has been removed from the public domain, they will finally become anxious to retrieve it and put it to use once again in the knowledge commons from whence it came, in spite of an ongoing backlash against specialized knowledge in the present. There are, for instance - healthcare options that institutions have little space for, which can be utilized at local levels by people freely participating with such knowledge as it encourages personal education and skills negotiations as a direct result of one's efforts. Again, equal time as true arbitrage potential is what makes the direct democracy aspect possible.
This is all the more important in that even representative democracy is somewhat endangered in the present, to a large degree because of growing knowledge use limitations. The same problems with (actual) scarce resources which make direct voting referendums difficult, make realistic voting options extremely difficult for what are now artificially bound institutional services. The same knowledge use limitations that made services growth possible in earlier economic times, only point to a decreasing aggregate utilization as economies mature, thus knowledge use limitations become a true hindrance to any nation's strength, in the long run. However, a government's willingness to trust its own citizens to provide services for one another, can make all the difference. In order to gain true free markets in services, we have to be free to both choose and participate, in order to make that happen.
First, the point in such a possibility as equal time use is not that we are "equal" to others in all respects (which we most certainly are not), but that we deserve equal opportunity to seek out what we deem useful arbitrage in community, from all who wish to utilize time in ways that are capable of somehow corresponding with our own needs and desires. Through ongoing and systematic voting for (desired) basic service sets as a "price" mechanism (to indicate possible time use and time investment potential), young people also gain an idea how to structure learning options which correspond with a community's changing needs. Such an educational base also serves as a jumping off point from which individuals can engage in special skill set preferences, which they then "market" as additional and more spontaneous community offerings. That same basic educational set can be augmented by "just in time" additional knowledge use in when it becomes important in larger group settings, as well. When we gain the opportunity to directly compete with one another in service offerings limited only by our own imaginations, nothing about life ever need be boring or mundane, again.
Why is this not possible with today's services offerings, where some are automatically gauged as "more valuable than others" based on one's "time sacrifices" or innate abilities? Unequal knowledge use rents ultimately change the playing field for every other economic player in irrevocable ways. People therefore try to revert to representative democracy to "force" policymakers to make up the differences, but there is simply no way to do so in spite of appearances to the contrary (Obamacare). Once skills sets are subjected to scarcity controls even to a small degree, there is no more turning back, thus the holders of said skills have to also limit the degree to which they can freely engage in the use of those skills. What's more, their life becomes mostly a sacrifice for the special privilege they were given, and so knowledge use in its present form is not unlike slavery in this respect - high paid though it may be. They become bound by the institution that sets the rules for the limitations, and have no free market by which to negotiate with the rest of us.
Whereas our institutions once provided strength for knowledge holders and governments as well by this process, the strength of these rent capture measures has begun to wane. This inconvenient truth is especially significant, in that it now lead to distortions of financial markets which in some ways serve as a last resort for societal attempts to find rebalance. Only by negotiation from equal vantage points can we regain strength in our economic dealings with one another. Unfortunately, much valuable knowledge use definition (in monetary terms) has finally become what accrues mostly to the one percent. In such a reality, arguments for less reimbursement "somehow" to knowledge holders in a system which also demands total sacrifice on their part, is mostly semantics. What's more, the efforts to do so only make the representative democracy that used to work in this regard, appear as a travesty in the present, because of its increasingly inability to remedy the problems caused by special privilege.
In a sense the Great Depression "forced the hand" of greater wealth creation that ultimately led to a resurgence in services on a greater scale than had previously been possible. However - in the present - wealth is not held in the same ways that made that earlier form of adaptation possible. To be sure, people remain aware that resources do not just "spring into use" by the fact of their existence, and the value of human ability is frequently extolled in this regard. For instance, Matt Ridley's book "The Rational Optimist: How Prosperity Evolves" was - for me - an inspiring read a couple of years ago. I read echoes of those same thought process this morning, as Mark Perry of AEI highlighted a number of points Don Boudreaux of Café Hayek recently made about human ability.
However, such arguments can often quickly devolve into ill disguised attempts at continued institutional control of human ability. In spite of limitations on progress which consequently is not quite "real" in a societal framework, certain important capacities of knowledge use are mostly reserved for the one percent because of the incentive structure itself. Such limitations are also why earlier civilizations have often advanced in important technological areas, only to fall back again. Interestingly, some of the common beneficial knowledge which survived and spread, has also been purposely devalued (old wives tales?) by institutions in the present (herbal knowledge for instance) only to resurface as derivatives and patents once again limiting benefits to a public that pays for something supposedly "completely new".
When people realize the degree to which so much vital knowledge has been removed from the public domain, they will finally become anxious to retrieve it and put it to use once again in the knowledge commons from whence it came, in spite of an ongoing backlash against specialized knowledge in the present. There are, for instance - healthcare options that institutions have little space for, which can be utilized at local levels by people freely participating with such knowledge as it encourages personal education and skills negotiations as a direct result of one's efforts. Again, equal time as true arbitrage potential is what makes the direct democracy aspect possible.
This is all the more important in that even representative democracy is somewhat endangered in the present, to a large degree because of growing knowledge use limitations. The same problems with (actual) scarce resources which make direct voting referendums difficult, make realistic voting options extremely difficult for what are now artificially bound institutional services. The same knowledge use limitations that made services growth possible in earlier economic times, only point to a decreasing aggregate utilization as economies mature, thus knowledge use limitations become a true hindrance to any nation's strength, in the long run. However, a government's willingness to trust its own citizens to provide services for one another, can make all the difference. In order to gain true free markets in services, we have to be free to both choose and participate, in order to make that happen.
Friday, June 21, 2013
Cities, and other Nominal Targeting Possibilities
To a degree this post follows from my previous post: however this one will hopefully make sense on its own, if readers don't have time for the above link. In the midst of a summer lull, some Market Monetarists such as myself feel a bit wistful for "what could be" (i.e. how different Fed activity would be right now if only NGDPLT were the rule) and of course I'm stubborn enough to keep thinking about it, even in the middle of some folk's vacations. As to the recent actions of the Fed and subsequent reactions to now inevitable tapering: it's not hard to tell that markets want more growth than Main Street is prepared to "serve up", so another goofy analogy is that I'm not afraid to remain in a hot kitchen in spite of it all, with more thoughts of future growth...
This morning's links provided some fun in the form of good news and bad news stories. First the "bad" news (hehe), HT to The Browser and a recent quote for the day:
Now, for the (actual) good news, and this time the HT goes to Ryan Avent for the link. In "Trans-Atlantic Trade and Its Discontents", the authors indicate that in spite of the problems which finance, housing and mortgages created, "...the euro crisis never became a trade crisis, in stark contrast to the 1930s trade wars (italics mine). In fact, one of the key conclusions to be drawn from the balkanization of the European finances and divergent euro growth over the last three years is that the European Union's single market needs to be deeper." Now there's a perspective one doesn't hear a lot of, lately.
Of course, the authors of this article also point out that political factions make the possibility of further trade improvements less realistic, than they should be. But what remains encouraging - even now - is that setbacks for trade in both the developing and the developed world are not so great, where production efficiencies do in fact continue to exist. What's more, we can hope that people are careful not to lose too many of the gains from trade this time, so that no one has to repeat the losses of multiple markets at the same time: just one of the unfortunate results of the Great Depression. Not to say that some trade won't fall prey to protectionism - but with a little luck, globalization won't break down the way it did in the thirties. Because of the vast differences in how tradable and non tradable goods production are conducted in the present, local economies in any number of nations definitely have a role, in how this situation ultimately plays out. Often it will mean starting over with a fresh template that challenges plenty of old assumptions all around.
In developed nations; even though the main problems still appear as primarily finance related, they nonetheless stemmed from a similar series of events at local levels, where real estate as wealth became a prime impetus for additional services provisions in many locations: a process which finally became like a dog chasing its own tail. In order for any city to move away from this self-defeating cycle, there are two primary structural components to be considered.
First, local economies need to envision greater mobility and flexibility in both living and working circumstances. In part, that means establishing new varieties of zoning options, where individuals also have the ability to manufacture lightweight building components and supporting infrastructures. Another important aspect of such zoning is the inclusion of those who wish to live and work in closer proximity to one another, than automobile use allows. How might citizens envision such environments with flexible building components, which can be pulled apart and reconfigured for different economic settings as the need arises?
Cities also need to create more inclusive social structures for knowledge based skills and services, which are slowly being scaled back over time in traditional terms. One way to think about the process itself: allowing skills sets which are often non tradable between institutions, to become tradable goods through diverse arbitrage settings . How so? This goes back to the above refutation of the John Gray quote: by coordinating knowledge use across multiple disciplines and forms of economic activity, cities and indeed towns as well, can create greater competition amongst ideas, by allowing their imprints in multiple places, whatever the "truth" is. The more we are able to bring knowledge use processes into our economic lives, the less we have to fight over what the truth is, in the first place.
One reason nominal targeting is questioned as optimal in the present is the fact that some assets and resources presently appear to be of relatively greater important than the actual use of our time. By learning how to match time to economic life in more optimal ways, it also becomes easier to convince others that time measurement of nominal targeting is in fact the best anchor for monetary stability. While there is a learning curve involved in making knowledge use a more central aspect of wealth creation, once it is coordinated into recognizable and practical forms, many aspects of services will become far simpler in organization as a result. Such simplification would also go a long way to reduce the need for taxation - except for the taxation of tradable goods which, as the above article indicates, still do not suffer from the problems of finance in general, and services in particular in parts of the Eurozone.
Part of this process also involves citizens refusing "business as usual" to the financial entities which often "dictate" austerity now. It is simply wrong that any nation's citizens' receive all the blame for profligacy - that of which was the very terms the bankers and construction interests brought to citizens, to begin with. People can create their own incremental approaches to ownership and business formation, if and when their financial institutions refuse to help them. There are only so many people who can go back to the earlier sets of expectations, and local economies need to be creative in finding new ways for their citizens to thrive, instead of hoping they will locate elsewhere. For that is indeed the problem: no other "elsewhere" presently exists, as too many cities and towns have became bogged down with the old formulations of wealth creation and services provisions which no longer work as before. Greater inclusivity is not just a "feel good" measure for cities in the present, it is really the main option cities now have, to regain economic stability.
This morning's links provided some fun in the form of good news and bad news stories. First the "bad" news (hehe), HT to The Browser and a recent quote for the day:
Only someone miraculously innocent of history could believe that competition among ideas could result in the triumph of truth - John GrayTell me when it's over! Seriously, perhaps it's a good thing I've not had time to read enough history, because I'm just enough of a dolt at age fifty eight to have a bit more optimism that that. Now I'm not completely sure which John Gray was despondent enough to give up on humanity, but looking through various John Gray quotes online, this was far from the only one that sounded fatalistic. To put it simply, I believe that with a bit of organization, cities still have the capacity to utilize and capitalize on good ideas, even if their institutions are not in a position to be able to do so.
Now, for the (actual) good news, and this time the HT goes to Ryan Avent for the link. In "Trans-Atlantic Trade and Its Discontents", the authors indicate that in spite of the problems which finance, housing and mortgages created, "...the euro crisis never became a trade crisis, in stark contrast to the 1930s trade wars (italics mine). In fact, one of the key conclusions to be drawn from the balkanization of the European finances and divergent euro growth over the last three years is that the European Union's single market needs to be deeper." Now there's a perspective one doesn't hear a lot of, lately.
Of course, the authors of this article also point out that political factions make the possibility of further trade improvements less realistic, than they should be. But what remains encouraging - even now - is that setbacks for trade in both the developing and the developed world are not so great, where production efficiencies do in fact continue to exist. What's more, we can hope that people are careful not to lose too many of the gains from trade this time, so that no one has to repeat the losses of multiple markets at the same time: just one of the unfortunate results of the Great Depression. Not to say that some trade won't fall prey to protectionism - but with a little luck, globalization won't break down the way it did in the thirties. Because of the vast differences in how tradable and non tradable goods production are conducted in the present, local economies in any number of nations definitely have a role, in how this situation ultimately plays out. Often it will mean starting over with a fresh template that challenges plenty of old assumptions all around.
In developed nations; even though the main problems still appear as primarily finance related, they nonetheless stemmed from a similar series of events at local levels, where real estate as wealth became a prime impetus for additional services provisions in many locations: a process which finally became like a dog chasing its own tail. In order for any city to move away from this self-defeating cycle, there are two primary structural components to be considered.
First, local economies need to envision greater mobility and flexibility in both living and working circumstances. In part, that means establishing new varieties of zoning options, where individuals also have the ability to manufacture lightweight building components and supporting infrastructures. Another important aspect of such zoning is the inclusion of those who wish to live and work in closer proximity to one another, than automobile use allows. How might citizens envision such environments with flexible building components, which can be pulled apart and reconfigured for different economic settings as the need arises?
Cities also need to create more inclusive social structures for knowledge based skills and services, which are slowly being scaled back over time in traditional terms. One way to think about the process itself: allowing skills sets which are often non tradable between institutions, to become tradable goods through diverse arbitrage settings . How so? This goes back to the above refutation of the John Gray quote: by coordinating knowledge use across multiple disciplines and forms of economic activity, cities and indeed towns as well, can create greater competition amongst ideas, by allowing their imprints in multiple places, whatever the "truth" is. The more we are able to bring knowledge use processes into our economic lives, the less we have to fight over what the truth is, in the first place.
One reason nominal targeting is questioned as optimal in the present is the fact that some assets and resources presently appear to be of relatively greater important than the actual use of our time. By learning how to match time to economic life in more optimal ways, it also becomes easier to convince others that time measurement of nominal targeting is in fact the best anchor for monetary stability. While there is a learning curve involved in making knowledge use a more central aspect of wealth creation, once it is coordinated into recognizable and practical forms, many aspects of services will become far simpler in organization as a result. Such simplification would also go a long way to reduce the need for taxation - except for the taxation of tradable goods which, as the above article indicates, still do not suffer from the problems of finance in general, and services in particular in parts of the Eurozone.
Part of this process also involves citizens refusing "business as usual" to the financial entities which often "dictate" austerity now. It is simply wrong that any nation's citizens' receive all the blame for profligacy - that of which was the very terms the bankers and construction interests brought to citizens, to begin with. People can create their own incremental approaches to ownership and business formation, if and when their financial institutions refuse to help them. There are only so many people who can go back to the earlier sets of expectations, and local economies need to be creative in finding new ways for their citizens to thrive, instead of hoping they will locate elsewhere. For that is indeed the problem: no other "elsewhere" presently exists, as too many cities and towns have became bogged down with the old formulations of wealth creation and services provisions which no longer work as before. Greater inclusivity is not just a "feel good" measure for cities in the present, it is really the main option cities now have, to regain economic stability.
Nominal Targeting Measuring Potentials, and the Local Factor
In a Measure of America Report, it was determined that well being rose in every state (of the U.S.) except Michigan between 2000 to 2010, based on life expectancy, education and earnings. However, would such measures have held true for the states from 2010 to the present? To be sure, this is the right kind of report to bring out when people want assurances that the economy is returning to normal, especially when it "appears" recovery is just around the corner. Just the same, this is no time to say, job done! Just look at this great report! As James Pethokoukis of AEI titled a recent post, the Fed has essentially washed its hands of the new normal U.S. economy. Ryan Avent at The Economist is not any happier, in that it has become clear that the Fed is reluctant to engineer the escape velocity which would allow the economy to escape the zero bound: a circumstance which now also leaves the U.S. closer to a "Japanese equilibrium."
While the states report wanted to look at factors besides GDP to gauge economic well being, the three it used were misleading in a number of respects. To date, educational gain has continued apace whether or not compensation (let alone integration) for said education happens. Plus, both life expectancies and earnings in this time frame are a carryover from decades that were part of a positive equilibrium overall. To get a true feel for recent changes in the economy in an immediate sense, it helps to look at the patterns between our nominal income and aggregate consumption. NGDP measures are also the closest proximate we have to daily and ongoing realities: here, graphs especially tell the visual stories. Even though NGDP may not (presently, at least, for it could) register well being in a collective gain sense, it does tell us now whether we are actually doing our best to maintain it.
While GDP may not seem especially important in certain respects (not all money making is of a positive nature, duh), it really depends on what we are trying to determine through the use of the indicators themselves. There's a tremendous difference between, say, here's the money a nation (or city as it could well be) registers, and the way the money components actually interact with one another. In GDP, a nominal focus also allows us to zoom in on some of the important particulars. Nominal targeting readily shows changes re inclusion and exclusion of economic actors involved, and also shows how people go about meeting their present and ongoing obligations to one another: which after all is what printing money is really about. Much about our economic lives can come into sharper focus through the level targeting of NGDP. What's more, consideration of local conditions through the process can bring the economic picture into an even clearer view.
Why do local concerns even matter for NGDP? After all, nominal level targeting is supposed to be about aggregates and national levels. Part of the beauty of nominal targeting is that it is capable of scaling up or down - in other words - local to national in terms of income to consumption obligations and expectations. That's just a simple model aspect of the measurement itself. Just as important are the patterns that local economies tend to generate - and repeat - in an aggregate sense. What happens in local economies doesn't just stay in local economies. They imprint further examples in other regions which utilize resources in similar ways and tend to create similar employment patterns as well. Effects depend in part on whether the resources reflect long term economic flows (educational investment) or are more contractual and fixed in nature (housing ownership).
When we "come in closer" to look at the particulars, we also get a feel as to some of the larger concerns people have, why NGDPLT - for all the promise it holds as a central bank rule, nonetheless has some remaining obstacles in its path. For one thing, there are structural concerns that get far more wordplay in excuses instead of solutions: which is why Paul Krugman had this retort: "I get annoyed at the phrase structural reform, especially in Europe by very serious people". Structural issues aren't the only ones that seem to mean a million and one different things to different individuals. So, too, does the unfortunate designation: inflation. However the news isn't all bad, and I want to argue in this post that local economies have the capacity to tease out some of the pertinent issues in both structural and "inflation" designations, through specially targeted measurements that indicate how overall flows might be effected.
Inflation - by any other name please - especially lurks in the places that we have every capacity to observe more closely. Countless costs get attached at every step of economic processes, without anyone really stopping to calculate the effects (While such a process would be daunting at national levels, local measures could provide examples for larger patterns). These completely counterproductive processes occur because various elements react to one another instead of coordinating with one another in the same economic environment that they share. Indeed, some of these hidden costs (rent for someone), still exist outside any actual measurement of income to consumption capacity, which is what makes it difficult to determine whether any inflation at all can actually be attributed to central bank activity in recent decades.
Where tax monies or subsidies are a significant factor, the idea of maker versus taker in any redistributive sense becomes even more skewed. These are the sorts of black holes where good deflation born of productivity gains are swallowed, by taking of said gains through every means imaginable, before they are realized by the consumer at any level. But unlike some, I have a fascination as to how one figures out what lies in those black holes! (Aahh, now you know why this blogger wishes she had kept up with math when she was young) I remain convinced that local economies are the primary source of a significant amount of their own unemployment. Anyone want to convince me otherwise? Go ahead, make my day!
It is - in part - these aspects of complexity that also make some wonder whether the gains of nominal targeting might not get buried in the details, but a closer look at the nominal workings of local economies could give us a chance to break through a considerable amount of that complexity. There are so many ways to determine what actually affects prices that have nothing to do with inflation as we once knew it. There are also many different kinds of structural roadmaps that could be contrast with each another. Both of these processes need to happen in specific ways, so that people know what is actually at stake. This is no time to simply stop the process of economic rediscovery, just because some of the national numbers look "prettier on paper". Out here in the real world - for instance - the hard reality remains that the better unemployment number for the Fed is mostly more people dropping out of the workplace. In fact that is likely what the Fed is counting on, by tapering QE before it gets too close to the unemployment deadline.
Admittedly my perspective of the measurement capacity of nominal targeting is somewhat different, for I really came to the idea itself with a Main Street viewpoint of the potential it held. While this makes my perspective somewhat unlike the language of those who approach nominal targeting with a financial or macroeconomic background, it was that implied potential for the transformation of local economies that made me so excited about NGDPLT in the first place. Ultimately, internal resets and coordination could take the place of a long series of reactions that only hurt everyone in the long run. Better knowledge use coordination and dispersal could also make many communities more competitive with one another than they are now. Nominal targeting could keep local economies better grounded in their expectations overall, as they gradually gain a better feel of the perimeters they actually have to work within: a perspective that also makes the "pie" larger over time. While some of this might appear as structural reform, what it is really about is simply people learning how to live with one another again, and each successful example is potential for others in a nation, as well.
While the states report wanted to look at factors besides GDP to gauge economic well being, the three it used were misleading in a number of respects. To date, educational gain has continued apace whether or not compensation (let alone integration) for said education happens. Plus, both life expectancies and earnings in this time frame are a carryover from decades that were part of a positive equilibrium overall. To get a true feel for recent changes in the economy in an immediate sense, it helps to look at the patterns between our nominal income and aggregate consumption. NGDP measures are also the closest proximate we have to daily and ongoing realities: here, graphs especially tell the visual stories. Even though NGDP may not (presently, at least, for it could) register well being in a collective gain sense, it does tell us now whether we are actually doing our best to maintain it.
While GDP may not seem especially important in certain respects (not all money making is of a positive nature, duh), it really depends on what we are trying to determine through the use of the indicators themselves. There's a tremendous difference between, say, here's the money a nation (or city as it could well be) registers, and the way the money components actually interact with one another. In GDP, a nominal focus also allows us to zoom in on some of the important particulars. Nominal targeting readily shows changes re inclusion and exclusion of economic actors involved, and also shows how people go about meeting their present and ongoing obligations to one another: which after all is what printing money is really about. Much about our economic lives can come into sharper focus through the level targeting of NGDP. What's more, consideration of local conditions through the process can bring the economic picture into an even clearer view.
Why do local concerns even matter for NGDP? After all, nominal level targeting is supposed to be about aggregates and national levels. Part of the beauty of nominal targeting is that it is capable of scaling up or down - in other words - local to national in terms of income to consumption obligations and expectations. That's just a simple model aspect of the measurement itself. Just as important are the patterns that local economies tend to generate - and repeat - in an aggregate sense. What happens in local economies doesn't just stay in local economies. They imprint further examples in other regions which utilize resources in similar ways and tend to create similar employment patterns as well. Effects depend in part on whether the resources reflect long term economic flows (educational investment) or are more contractual and fixed in nature (housing ownership).
When we "come in closer" to look at the particulars, we also get a feel as to some of the larger concerns people have, why NGDPLT - for all the promise it holds as a central bank rule, nonetheless has some remaining obstacles in its path. For one thing, there are structural concerns that get far more wordplay in excuses instead of solutions: which is why Paul Krugman had this retort: "I get annoyed at the phrase structural reform, especially in Europe by very serious people". Structural issues aren't the only ones that seem to mean a million and one different things to different individuals. So, too, does the unfortunate designation: inflation. However the news isn't all bad, and I want to argue in this post that local economies have the capacity to tease out some of the pertinent issues in both structural and "inflation" designations, through specially targeted measurements that indicate how overall flows might be effected.
Inflation - by any other name please - especially lurks in the places that we have every capacity to observe more closely. Countless costs get attached at every step of economic processes, without anyone really stopping to calculate the effects (While such a process would be daunting at national levels, local measures could provide examples for larger patterns). These completely counterproductive processes occur because various elements react to one another instead of coordinating with one another in the same economic environment that they share. Indeed, some of these hidden costs (rent for someone), still exist outside any actual measurement of income to consumption capacity, which is what makes it difficult to determine whether any inflation at all can actually be attributed to central bank activity in recent decades.
Where tax monies or subsidies are a significant factor, the idea of maker versus taker in any redistributive sense becomes even more skewed. These are the sorts of black holes where good deflation born of productivity gains are swallowed, by taking of said gains through every means imaginable, before they are realized by the consumer at any level. But unlike some, I have a fascination as to how one figures out what lies in those black holes! (Aahh, now you know why this blogger wishes she had kept up with math when she was young) I remain convinced that local economies are the primary source of a significant amount of their own unemployment. Anyone want to convince me otherwise? Go ahead, make my day!
It is - in part - these aspects of complexity that also make some wonder whether the gains of nominal targeting might not get buried in the details, but a closer look at the nominal workings of local economies could give us a chance to break through a considerable amount of that complexity. There are so many ways to determine what actually affects prices that have nothing to do with inflation as we once knew it. There are also many different kinds of structural roadmaps that could be contrast with each another. Both of these processes need to happen in specific ways, so that people know what is actually at stake. This is no time to simply stop the process of economic rediscovery, just because some of the national numbers look "prettier on paper". Out here in the real world - for instance - the hard reality remains that the better unemployment number for the Fed is mostly more people dropping out of the workplace. In fact that is likely what the Fed is counting on, by tapering QE before it gets too close to the unemployment deadline.
Admittedly my perspective of the measurement capacity of nominal targeting is somewhat different, for I really came to the idea itself with a Main Street viewpoint of the potential it held. While this makes my perspective somewhat unlike the language of those who approach nominal targeting with a financial or macroeconomic background, it was that implied potential for the transformation of local economies that made me so excited about NGDPLT in the first place. Ultimately, internal resets and coordination could take the place of a long series of reactions that only hurt everyone in the long run. Better knowledge use coordination and dispersal could also make many communities more competitive with one another than they are now. Nominal targeting could keep local economies better grounded in their expectations overall, as they gradually gain a better feel of the perimeters they actually have to work within: a perspective that also makes the "pie" larger over time. While some of this might appear as structural reform, what it is really about is simply people learning how to live with one another again, and each successful example is potential for others in a nation, as well.
Monday, June 17, 2013
Competition Depends On How We Hold Wealth
As someone who will always have a soft spot for retail, I remember with fondness when shopping trips as a young girl meant dresses of every variety imaginable - not only all in my size, but in the same section of a single department store! One local department store, for instance, had built a circular room in which a girl could walk around the racks which held junior sizes. But at some point shortly thereafter, the racks which held places for many clothing designers suddenly changed, and one would find endless repetition of the same theme, perhaps with a few variations in color or lines (yep, I wanted to be a fashion designer once) and at that point I started sewing clothes to have a bit more fun with the process. When do the limitations brought on by "efficiencies" start to feel...um, totalitarian?
But something eventually made me put the sewing machine away. Even though too many racks of clothes looked the same in a single store, somewhere (other stores and places) they would in fact be different, and there were so many more of these mass manufactured clothes that the multiple differences I remembered - as a young teenager - finally came together again, on the clothes racks of nice thrift stores. For decades, the "pickings" only got better and better. Oftentimes, second hand clothing for women meant more fun to be had, than browsing among the limitations of style in full price environments. But with the Great Recession and its ensuing protectionism, that multitude of choice started to slip and hasn't been the same sense. What's more, the mass production once taken for granted had somewhere in those years been handed over to the "winners" of the process, which then set about presenting themselves as different choices and options, when oftentimes they really were not.
In some sense, perhaps, how important is that really? Do we even need more "stuff", and why not just make do with the winning "efficiencies" of the present? Yet at the very least it matters for the bargain hunting consumer: certainly it matters for the person without adequate income. After all, there was a time when - because of gains in mass production - clothes prices really came down and stayed that way for a long time. But now, with the winners holding sway, it's not uncommon to find clothes put together in that same "discount" mass market fashion, but at what feels more like top notch prices which once represented a higher quality. In other words, what happened to the compromise we made with "cheaper" made and somewhat bland clothes in exchange for lower prices? Sometimes it seems as though some of the "winners" took that away.
When we think about how this process actually came about, sometimes the evolution of the one percent makes more sense, in that we made that form of wealth holding almost inevitable by the limitations we created in our own environments for retail in the first place, in terms of overhead and expense. We simply miss the point, when we think that taxing the one percent will somehow make everything "right". Let's bring back the environments that make the one percent unnecessary in the first place. If they had stayed with the less expensive product by which they lured us in, that would have been one thing. But every time the competition gets knocked out, the prices get knocked back up and the earlier good deflation flies away with the breeze.
The fact that lots of suppliers lost out is of course chalked up to competition, and for the most part people don't think about it that much. Plus, antitrust laws have become quite confusing, depending on circumstance and who tries to make those laws work for their own. But one wonders why the process of constantly losing out needs to be considered inevitable. Isn't there something we can do about the retail environments we created that our potential suppliers need to deal with, which made it difficult for many of them to stay in the game in the resulting breakneck competition with one another? I found myself wondering about that again, when a 60 Minutes segment spoke of how the Italian eyewear manufacturer Luxottica has affected the pricing of most every eyewear retailer in the U.S. - also just one of the stories detailed in Barry C. Lynn's book "Cornered".
For the most part, I think of holding wealth differently in terms related to knowledge use and services potential, for that aspect of wealth creation represents quite a struggle on its own. But in order for services product to find greater balance in the economy, we still need to evolve our environments for physical product, as well. While putting together yesterdays post, I continued to wonder afterward how monetary values for some product might shift, were local economies actually able to innovate and create for their own in ways not tied to the rents expected of those within special institutional arrangements. So much rent is wrapped up in institutional gridlock that it's impossible to really know what good deflation might result, if that stranglehold were broken. Even if local economies were only able to use some of those innovations locally (monetarily, at least), in some cases there may be times when "reinventing the wheel" is not such a bad thing.
However, the gridlock exists in other ways besides knowledge use, it also matters how tightly we define the environments by which product can be displayed, which is one reason why so much of retail "escaped" to the Internet in the first place. The very act of doing so made retail more utilitarian, in that one shops more of necessity than as a social experience.
So, for us, one primary question now is: how do we feel about that? Are we happy with the Internet as the place to go, or do we still wish to recapture some elements of the earlier shopping experience - both social and in terms of wider choice sets by potential providers? Sometimes we forget that economics is also how we feel about our present collective roles as producers and consumers, and so shrug our shoulders at what's offered to us as "a fact of life". But maybe it doesn't really have to be that way. So, instead of railing at the institutions that created those earlier forms and expectations, we are better off recreating more appropriate versions of reality more closely approximate of our own.
Sometimes we try to look to the future from aspects of life that seem "inevitable" which are really not. They are just sets of circumstances which evolved from earlier choice sets we made - choice sets which may not be so relevant as they once were. For instance, the rise of automobile use created certain kinds of environment expectations that continue to work for those in certain income categories and lifestyles, but no longer work the same way for others who find themselves needing to create different kinds of environments which better reflect the kinds of lifestyle choices they are making now. Along similar lines, Nassim Taleb has this to say about complaining (HT Shane Parrish, Farnam Street):
But something eventually made me put the sewing machine away. Even though too many racks of clothes looked the same in a single store, somewhere (other stores and places) they would in fact be different, and there were so many more of these mass manufactured clothes that the multiple differences I remembered - as a young teenager - finally came together again, on the clothes racks of nice thrift stores. For decades, the "pickings" only got better and better. Oftentimes, second hand clothing for women meant more fun to be had, than browsing among the limitations of style in full price environments. But with the Great Recession and its ensuing protectionism, that multitude of choice started to slip and hasn't been the same sense. What's more, the mass production once taken for granted had somewhere in those years been handed over to the "winners" of the process, which then set about presenting themselves as different choices and options, when oftentimes they really were not.
In some sense, perhaps, how important is that really? Do we even need more "stuff", and why not just make do with the winning "efficiencies" of the present? Yet at the very least it matters for the bargain hunting consumer: certainly it matters for the person without adequate income. After all, there was a time when - because of gains in mass production - clothes prices really came down and stayed that way for a long time. But now, with the winners holding sway, it's not uncommon to find clothes put together in that same "discount" mass market fashion, but at what feels more like top notch prices which once represented a higher quality. In other words, what happened to the compromise we made with "cheaper" made and somewhat bland clothes in exchange for lower prices? Sometimes it seems as though some of the "winners" took that away.
When we think about how this process actually came about, sometimes the evolution of the one percent makes more sense, in that we made that form of wealth holding almost inevitable by the limitations we created in our own environments for retail in the first place, in terms of overhead and expense. We simply miss the point, when we think that taxing the one percent will somehow make everything "right". Let's bring back the environments that make the one percent unnecessary in the first place. If they had stayed with the less expensive product by which they lured us in, that would have been one thing. But every time the competition gets knocked out, the prices get knocked back up and the earlier good deflation flies away with the breeze.
The fact that lots of suppliers lost out is of course chalked up to competition, and for the most part people don't think about it that much. Plus, antitrust laws have become quite confusing, depending on circumstance and who tries to make those laws work for their own. But one wonders why the process of constantly losing out needs to be considered inevitable. Isn't there something we can do about the retail environments we created that our potential suppliers need to deal with, which made it difficult for many of them to stay in the game in the resulting breakneck competition with one another? I found myself wondering about that again, when a 60 Minutes segment spoke of how the Italian eyewear manufacturer Luxottica has affected the pricing of most every eyewear retailer in the U.S. - also just one of the stories detailed in Barry C. Lynn's book "Cornered".
For the most part, I think of holding wealth differently in terms related to knowledge use and services potential, for that aspect of wealth creation represents quite a struggle on its own. But in order for services product to find greater balance in the economy, we still need to evolve our environments for physical product, as well. While putting together yesterdays post, I continued to wonder afterward how monetary values for some product might shift, were local economies actually able to innovate and create for their own in ways not tied to the rents expected of those within special institutional arrangements. So much rent is wrapped up in institutional gridlock that it's impossible to really know what good deflation might result, if that stranglehold were broken. Even if local economies were only able to use some of those innovations locally (monetarily, at least), in some cases there may be times when "reinventing the wheel" is not such a bad thing.
However, the gridlock exists in other ways besides knowledge use, it also matters how tightly we define the environments by which product can be displayed, which is one reason why so much of retail "escaped" to the Internet in the first place. The very act of doing so made retail more utilitarian, in that one shops more of necessity than as a social experience.
So, for us, one primary question now is: how do we feel about that? Are we happy with the Internet as the place to go, or do we still wish to recapture some elements of the earlier shopping experience - both social and in terms of wider choice sets by potential providers? Sometimes we forget that economics is also how we feel about our present collective roles as producers and consumers, and so shrug our shoulders at what's offered to us as "a fact of life". But maybe it doesn't really have to be that way. So, instead of railing at the institutions that created those earlier forms and expectations, we are better off recreating more appropriate versions of reality more closely approximate of our own.
Sometimes we try to look to the future from aspects of life that seem "inevitable" which are really not. They are just sets of circumstances which evolved from earlier choice sets we made - choice sets which may not be so relevant as they once were. For instance, the rise of automobile use created certain kinds of environment expectations that continue to work for those in certain income categories and lifestyles, but no longer work the same way for others who find themselves needing to create different kinds of environments which better reflect the kinds of lifestyle choices they are making now. Along similar lines, Nassim Taleb has this to say about complaining (HT Shane Parrish, Farnam Street):
The best way to strengthen something is to complain about it. Complaining about bankers, politicians, Harvard, etc. is signaling their robustness: everyone complains yet they are still there, so there has to be something to their existence.
People need to seek action, not complaint. Instead you need to move, do something, establish competing circuits to harm them directly...then people will join you after they start seeing blood.The point for me is not to "harm them directly" or "start seeing blood"! Just the same, for anyone who wants to be able to start anew when it's impossible to do so under present circumstances, one has to keep trying to find or create something that works better, or else give up. Interestingly enough, people don't get a lot of respect from others for giving up, either, hmm. Arnold Kling just put up a post entitled "We Need 250 States". I need to go read it and some of the links, and see what some of those folk think about redefining wealth creation.
Sunday, June 16, 2013
Direct Skills Arbitrage is Natural Momentum
It's time for me to begin addressing the fiscal versus monetary debate by the terms of which recent suggestions have been put forth, on the part of Market Monetarists and others who believe in the capacity of aggregate demand both as a stabilizing mechanism and a means for growth. While I responded to Cardiff Garcia's recent post along these lines here, my initial response was primarily in terms of backing nominal targeting as the best framework for moving forward, and so I was greatly encouraged to see that Steve Randy Waldman (Interfluidity) also endorses NGDP as a medium term solution. However, his recent post was especially in response to the suggestions which David Beckworth made for helicopter drops in this recent post.
Suffice to say there is a world of material in these links which is but a fraction of the ongoing discussion, in which it appears some progress could eventually be in the offing (also check the links at the bottom of Waldman's post). So, this post is also a beginning point of sorts, in which I will make some preliminary arguments for - rather than helicopter drops - direct skills arbitrage as coordinated, measured and validated at local levels for ultimate inclusion in open market operations, when in fact a community has diversified to a point in which it becomes confident enough to once again include immigrants and individuals from outside their own area for further growth. For those who are new readers to this blog, I have a recent post which is a really good starting point for this line of thought. In that post, I argue why it is desirable to coordinate knowledge and skill arbitrage time sets from the same vantage point, in incremental terms. What I want to further explain here is how that could line up incentives for better economic linkages, then I want to return to some of the arguments in the first paragraph.
What would make infinity sets for arbitraged skills use incline positive? When a community allows every member to participate in skills arbitrage and educational aspiration to their fullest capacity, aggregate economic growth remains positive so long as population rates also do, even if through good deflation. However, there needs to be coordinated aspects of the resources necessary to apply to skills and knowledge use, in order for further monetary gain to be possible for individuals who take special effort to make that happen. (Open market operations for skills would only reimburse one unit per one hour of time, and our time is very limited). For example, there is considerable wealth in the infinite variety of product associated with healthcare, which can be tapped into by every member of a community who desires to invest in this particular associated infrastructure.
Any community that coordinates healthcare through its own educational and organizational capacity has tremendous gain as well by the ability of every citizen to not only invest in needed local equipment and resources, but also the capacity to invent the equipment a community needs. While our present institutions have rules that circumvent the majority of innovative processes from those outside the established framework, the fact that this is community coordinated (i.e. outside institutional frameworks, plus all economic activity under one unbrella) sidesteps the thousand and one actions that prevent both economic access and innovation in this regard.
Let's consider an additional gain on the part of community: with today's institutional separations, a community pays through taxation for l2 years of schooling for all youth, by lifetime taxes on housing, in the U.S. However, the community does not necessarily benefit from all that expense, in that the student often needs to leave to find a place where they can ply this (first) set of skills. If that were not enough, the community still starts over again in what they need to reimburse for healthcare expenses. In this sense, it's as though they get no return on the education tax base. By local coordination of education and knowledge/skills use potential, some of those double costs can be avoided. Not to mention, the time spent in school does not represent the same gamble for the individual, in that there are communities ready for their skills when institutions may have no room, for those skills. But the biggest benefit by far is that for the community, which by tapping into individual skill sets, brings about a far more positive and effective form of local wealth capture, than the self limiting interpretations of construction interests. By tapping directly into needed skills, a community's tax base also changes in dramatic ways.
Before this post gets too long I need to go back to some of the conversations which prompted it in the first place. Particularly my title, in which I posit direct skills arbitrage as a natural growth momentum, which - in a long term or aggregate sense - would certainly limit the possibility of a return to the zero bound through the application of near total economic access to both production and consumption activity, on the part of populations. Even though Scott Sumner proposed a negative 2% IOR as momentum to counter any (potential) return to zero bound, he nonetheless believes that a constant NGDP level would make such a measure unnecessary. However, I remain concerned that present day limitations of knowledge use in our institutions still work to the detriment of productivity factors standing in the way of equilibrium. What's more, limitations on knowledge use continue to cause problems in transmissions between skill sets and assets in general.
Waldman also links to Matt Bruening, who has a good article regarding cash benefit programs (which David Beckworth noted as amenable to helicopter drops). Bruening makes the point that government allows the recipient to decide how to spend the money, and notes that administration costs are minimal, citing the Social Security administration which "only spent 0.8% of its total expenditures on administering the program in 2012". If only all cash benefit programs could be so effective in that regard! While my counter (below) is only anecdotal, it nonetheless influenced my reaction to said administrative costs.
Over a period of time I was included in a household which received benefits from the SNAP program (formerly food stamps). Perhaps because the program was overwhelmed, there were numerous months in which the food benefit was only $10 per month. However, here's what the local office had to do to provide that $10 or whatever small difference thereof: collect copies of billing to chart monthly invoices for charges often in the thousands of dollars, for ongoing medical and related expenses. That meant providing dozens of copies to their office each month, some of which would invariably get delayed by the institutions providing them, i.e. coming in after the needed due date. In other words, all that effort on everyone's part for $10 per month in food assistance was definitely worth no one's time!
Program efficiencies depend on a large extent whether social frictions exists as to the program's existence, and clearly there has been resistance to food assistance in the U.S. for quite a while. I would certainly be concerned about resistance to permanent forms of helicopter money. And, as Waldman adds in Note 1 of his post: "However, permanent heli drops that are broadly distributed but accumulate to a narrow class might lead to expanding inequality, financial instability, and social mayhem." Think about that for a minute. What are the most difficult "wish I hadn't done that" programs to rid ourselves of, once they are actually enacted? The ones that benefit a narrow class! Something as seemingly innocuous as SNAP by which one readily buys from a wide marketplace, also means there must not be enough special interests standing at the ready to protect the SNAP program.
Ultimately, we need to overcome inefficiencies in the system by negotiating for services production and consumption in ways that can be measured and validated both locally and nationally. Local economies can address problems in a nation's transmission mechanism by capturing skills wealth locally, and thus tapping into the greater efficiencies of global goods by making knowledge/skills use a more central point of wealth transmission. Such a method is certainly more sustainable than the unbearable treadmill of inefficient construction for services funding, which continues to limit skills use and employment in the present.
Suffice to say there is a world of material in these links which is but a fraction of the ongoing discussion, in which it appears some progress could eventually be in the offing (also check the links at the bottom of Waldman's post). So, this post is also a beginning point of sorts, in which I will make some preliminary arguments for - rather than helicopter drops - direct skills arbitrage as coordinated, measured and validated at local levels for ultimate inclusion in open market operations, when in fact a community has diversified to a point in which it becomes confident enough to once again include immigrants and individuals from outside their own area for further growth. For those who are new readers to this blog, I have a recent post which is a really good starting point for this line of thought. In that post, I argue why it is desirable to coordinate knowledge and skill arbitrage time sets from the same vantage point, in incremental terms. What I want to further explain here is how that could line up incentives for better economic linkages, then I want to return to some of the arguments in the first paragraph.
What would make infinity sets for arbitraged skills use incline positive? When a community allows every member to participate in skills arbitrage and educational aspiration to their fullest capacity, aggregate economic growth remains positive so long as population rates also do, even if through good deflation. However, there needs to be coordinated aspects of the resources necessary to apply to skills and knowledge use, in order for further monetary gain to be possible for individuals who take special effort to make that happen. (Open market operations for skills would only reimburse one unit per one hour of time, and our time is very limited). For example, there is considerable wealth in the infinite variety of product associated with healthcare, which can be tapped into by every member of a community who desires to invest in this particular associated infrastructure.
Any community that coordinates healthcare through its own educational and organizational capacity has tremendous gain as well by the ability of every citizen to not only invest in needed local equipment and resources, but also the capacity to invent the equipment a community needs. While our present institutions have rules that circumvent the majority of innovative processes from those outside the established framework, the fact that this is community coordinated (i.e. outside institutional frameworks, plus all economic activity under one unbrella) sidesteps the thousand and one actions that prevent both economic access and innovation in this regard.
Let's consider an additional gain on the part of community: with today's institutional separations, a community pays through taxation for l2 years of schooling for all youth, by lifetime taxes on housing, in the U.S. However, the community does not necessarily benefit from all that expense, in that the student often needs to leave to find a place where they can ply this (first) set of skills. If that were not enough, the community still starts over again in what they need to reimburse for healthcare expenses. In this sense, it's as though they get no return on the education tax base. By local coordination of education and knowledge/skills use potential, some of those double costs can be avoided. Not to mention, the time spent in school does not represent the same gamble for the individual, in that there are communities ready for their skills when institutions may have no room, for those skills. But the biggest benefit by far is that for the community, which by tapping into individual skill sets, brings about a far more positive and effective form of local wealth capture, than the self limiting interpretations of construction interests. By tapping directly into needed skills, a community's tax base also changes in dramatic ways.
Before this post gets too long I need to go back to some of the conversations which prompted it in the first place. Particularly my title, in which I posit direct skills arbitrage as a natural growth momentum, which - in a long term or aggregate sense - would certainly limit the possibility of a return to the zero bound through the application of near total economic access to both production and consumption activity, on the part of populations. Even though Scott Sumner proposed a negative 2% IOR as momentum to counter any (potential) return to zero bound, he nonetheless believes that a constant NGDP level would make such a measure unnecessary. However, I remain concerned that present day limitations of knowledge use in our institutions still work to the detriment of productivity factors standing in the way of equilibrium. What's more, limitations on knowledge use continue to cause problems in transmissions between skill sets and assets in general.
Waldman also links to Matt Bruening, who has a good article regarding cash benefit programs (which David Beckworth noted as amenable to helicopter drops). Bruening makes the point that government allows the recipient to decide how to spend the money, and notes that administration costs are minimal, citing the Social Security administration which "only spent 0.8% of its total expenditures on administering the program in 2012". If only all cash benefit programs could be so effective in that regard! While my counter (below) is only anecdotal, it nonetheless influenced my reaction to said administrative costs.
Over a period of time I was included in a household which received benefits from the SNAP program (formerly food stamps). Perhaps because the program was overwhelmed, there were numerous months in which the food benefit was only $10 per month. However, here's what the local office had to do to provide that $10 or whatever small difference thereof: collect copies of billing to chart monthly invoices for charges often in the thousands of dollars, for ongoing medical and related expenses. That meant providing dozens of copies to their office each month, some of which would invariably get delayed by the institutions providing them, i.e. coming in after the needed due date. In other words, all that effort on everyone's part for $10 per month in food assistance was definitely worth no one's time!
Program efficiencies depend on a large extent whether social frictions exists as to the program's existence, and clearly there has been resistance to food assistance in the U.S. for quite a while. I would certainly be concerned about resistance to permanent forms of helicopter money. And, as Waldman adds in Note 1 of his post: "However, permanent heli drops that are broadly distributed but accumulate to a narrow class might lead to expanding inequality, financial instability, and social mayhem." Think about that for a minute. What are the most difficult "wish I hadn't done that" programs to rid ourselves of, once they are actually enacted? The ones that benefit a narrow class! Something as seemingly innocuous as SNAP by which one readily buys from a wide marketplace, also means there must not be enough special interests standing at the ready to protect the SNAP program.
Ultimately, we need to overcome inefficiencies in the system by negotiating for services production and consumption in ways that can be measured and validated both locally and nationally. Local economies can address problems in a nation's transmission mechanism by capturing skills wealth locally, and thus tapping into the greater efficiencies of global goods by making knowledge/skills use a more central point of wealth transmission. Such a method is certainly more sustainable than the unbearable treadmill of inefficient construction for services funding, which continues to limit skills use and employment in the present.
Saturday, June 15, 2013
Dreams and Other Pragmatic Realities - Dynamism and Structural Flows
Now that I've mangled some positive thoughts with my last post, let's see if I can do a bit better this time! That initial take on dynamism yesterday was certainly colored by my own experiences, but just the same, those circumstances were the biggest part of what propelled my efforts in the present, for greater economic access. There are so many aspects to economic dynamism that don't always pull together readily in the same configurations. So on the one hand we think about economic potential in the context of Internet as a new economic gathering point (Ashok Rao), or we may take a look at dynamism of the previous century to see how it is evolving in more of a social timeline perspective.
For instance, some small towns still have readily measurable wealth, even though it is no longer held in spontaneous and dynamic forms. Where I presently live is a good example, in that much local economic activity is related to a nearby refinery and the services made possible in part by those jobs. However, before that refinery became important here, a whole different dynamic existed which also meant far greater mobility in and out of this area than presently exists. Passenger trains still ran back and forth regularly to nearby cities, and people from all walks of life started and ran businesses seemingly on the drop of a hat: there were certainly plenty of examples from my family members in their younger years. Back then, people in Texas also moved frequently between coastal areas and other points in the state, depending on the changing economic circumstances of the moment.
Just the same, it helps to remember that earlier dynamism as a natural outcome of greater transportation availability, and the momentum of this little town in those days was part of an early rise in the trajectory itself, due to greater automobile use. A later movement of multiple resources to major city centers was the unfortunate downside of that same growth trajectory. While a different transportation momentum will of course continue, it is likely of a somewhat more level nature, in that its primary dynamism will rely more upon regular access by upper income and mostly occasional limited access by lower income. That's also a wonkier way of saying I wish the passenger trains would start running here again!
Today, a lot of small town tax coffers must be simpler to tend to, as taxation measures don't need to rely on such random and varied sources of income as they once did. But that lack of randomness and spontaneity also unfortunately pigeonholes people as "not trying hard enough", even though there are many more roadblocks to business formation and economic access...okay, it's time to dream a little.
How can we recreate the spontaneity of earlier times? If I've gotten this far along in life and still believe in economic utopias where pragmatic and wild dreams coexist, surely others do as well. Let's take our Internet and make it work for both our economic and social lives, because the two belong together and cannot realistically be separated. So far, the Internet has served as a public meeting square, especially as other courthouse meeting squares in numerous towns have largely gone silent. But the Internet also needs to be the connecting point for the most important work of our lives, so that minds can meet from city to country, instead of continuing the heartbreaking separation of the present which also flares into political mayhem.
There are several things to consider about the economic flows still in operation. Too much of the actual flows in recent decades have taken place in high population density points, which in turn left low density population points overly dependent on them - even if not so much for jobs, at the very least, for most important consumer functions. Not only is this a growing issue for people who now need to be able to access more of their services and other goods locally as they travel less, but they also need to be able to take on greater roles in their own services provision, which is where the Internet has tremendous untapped potential. However, clearly stated knowledge use rights will need to be in place before the Internet can begin to provide such valuable links between city and country. Fortunately, that process will go a long way to lessen the emotional distance between city and country.
Also, it is not yet clear how retail might be able to restructure at more local levels. Several factors have only recently begun to converge as to our changing relationships with product. As home size becomes less of a priority, shopping will become more about digital and edible product, and less about the product that has been envisioned as a part of home environments in recent decades. By the same token, less emphasis on home environments means that a growing emphasis on public environments will once again become more important. While this factor is already a given in cities, it nonetheless will become more of a factor (again) in rural areas as well, as people seek out lower maintenance and more efficient surroundings and options than have previously been possible. One of the primary problems with home structures of the present: when people utilize DIY methods to save expenses, an all too often unfinished home becomes even more of a high maintenance problem than the completely finished homes which have relied on far too many procedural steps to completion as well. The truly competitive technology for building would be that which makes living quarters as simple and yet reliable as possible.
Prior to the Great Depression and the scattering of people through the countryside that was a result of the automobile, people in rural areas often lived in closer proximity with one another, indeed within walking distance in many cases. Sometime, a walk in the woods in some cases will still uncover some of those earlier locations, where one might find remnants of old stone walls amongst the foundations of single room schoolhouses. How might such closer proximity to one another be envisioned in the future? What forms of decentralized infrastructure can be utilized in these projects, which are not so taxing on municipalities as in the present? For instance, our local municipality had to work on a broken water main all day and well into the night, while everyone waited to take their showers until the morning!
These are just some of the possibilities to be addressed, before greater economic momentum can once again mean growth in measurable terms. People will start spending again and planning time investment options with greater certainty, when they are more certain of the new paths that are emerging. National discussions would do well to lay out the varieties of paths that are possible, especially in that not every income level or municipality would want to take the same kinds of paths. True diversity in choice means not only economic growth but greater economic stability as well.
For instance, some small towns still have readily measurable wealth, even though it is no longer held in spontaneous and dynamic forms. Where I presently live is a good example, in that much local economic activity is related to a nearby refinery and the services made possible in part by those jobs. However, before that refinery became important here, a whole different dynamic existed which also meant far greater mobility in and out of this area than presently exists. Passenger trains still ran back and forth regularly to nearby cities, and people from all walks of life started and ran businesses seemingly on the drop of a hat: there were certainly plenty of examples from my family members in their younger years. Back then, people in Texas also moved frequently between coastal areas and other points in the state, depending on the changing economic circumstances of the moment.
Just the same, it helps to remember that earlier dynamism as a natural outcome of greater transportation availability, and the momentum of this little town in those days was part of an early rise in the trajectory itself, due to greater automobile use. A later movement of multiple resources to major city centers was the unfortunate downside of that same growth trajectory. While a different transportation momentum will of course continue, it is likely of a somewhat more level nature, in that its primary dynamism will rely more upon regular access by upper income and mostly occasional limited access by lower income. That's also a wonkier way of saying I wish the passenger trains would start running here again!
Today, a lot of small town tax coffers must be simpler to tend to, as taxation measures don't need to rely on such random and varied sources of income as they once did. But that lack of randomness and spontaneity also unfortunately pigeonholes people as "not trying hard enough", even though there are many more roadblocks to business formation and economic access...okay, it's time to dream a little.
How can we recreate the spontaneity of earlier times? If I've gotten this far along in life and still believe in economic utopias where pragmatic and wild dreams coexist, surely others do as well. Let's take our Internet and make it work for both our economic and social lives, because the two belong together and cannot realistically be separated. So far, the Internet has served as a public meeting square, especially as other courthouse meeting squares in numerous towns have largely gone silent. But the Internet also needs to be the connecting point for the most important work of our lives, so that minds can meet from city to country, instead of continuing the heartbreaking separation of the present which also flares into political mayhem.
There are several things to consider about the economic flows still in operation. Too much of the actual flows in recent decades have taken place in high population density points, which in turn left low density population points overly dependent on them - even if not so much for jobs, at the very least, for most important consumer functions. Not only is this a growing issue for people who now need to be able to access more of their services and other goods locally as they travel less, but they also need to be able to take on greater roles in their own services provision, which is where the Internet has tremendous untapped potential. However, clearly stated knowledge use rights will need to be in place before the Internet can begin to provide such valuable links between city and country. Fortunately, that process will go a long way to lessen the emotional distance between city and country.
Also, it is not yet clear how retail might be able to restructure at more local levels. Several factors have only recently begun to converge as to our changing relationships with product. As home size becomes less of a priority, shopping will become more about digital and edible product, and less about the product that has been envisioned as a part of home environments in recent decades. By the same token, less emphasis on home environments means that a growing emphasis on public environments will once again become more important. While this factor is already a given in cities, it nonetheless will become more of a factor (again) in rural areas as well, as people seek out lower maintenance and more efficient surroundings and options than have previously been possible. One of the primary problems with home structures of the present: when people utilize DIY methods to save expenses, an all too often unfinished home becomes even more of a high maintenance problem than the completely finished homes which have relied on far too many procedural steps to completion as well. The truly competitive technology for building would be that which makes living quarters as simple and yet reliable as possible.
Prior to the Great Depression and the scattering of people through the countryside that was a result of the automobile, people in rural areas often lived in closer proximity with one another, indeed within walking distance in many cases. Sometime, a walk in the woods in some cases will still uncover some of those earlier locations, where one might find remnants of old stone walls amongst the foundations of single room schoolhouses. How might such closer proximity to one another be envisioned in the future? What forms of decentralized infrastructure can be utilized in these projects, which are not so taxing on municipalities as in the present? For instance, our local municipality had to work on a broken water main all day and well into the night, while everyone waited to take their showers until the morning!
These are just some of the possibilities to be addressed, before greater economic momentum can once again mean growth in measurable terms. People will start spending again and planning time investment options with greater certainty, when they are more certain of the new paths that are emerging. National discussions would do well to lay out the varieties of paths that are possible, especially in that not every income level or municipality would want to take the same kinds of paths. True diversity in choice means not only economic growth but greater economic stability as well.
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