Whole Lotta (Shape Shifting) Going On

...That's why it's not always easy to discuss the "moving parts" in highly specific terms, which is certainly true for nominal targeting, as Marcus Nunes indicated when he suggested that Scott Sumner's rationale, "Don't reason from a price change" can also be applied to the idea of GDP components.  For this reason, I often encounter a certain amount of cognitive dissonance whenever the discussion becomes "how much?" in terms of a component that someone is politically trying to wrestle to the ground. A good example of that phenomenon can be found today in a post at Marginal Revolution, where Tyler Cowen reluctantly weighed in on an already bogged down discussion as to some of those moving parts!

For what ever reason it was easier for many to think, talk and write about potential upcoming shape shifters, just prior to the new century. Books such as "The Hungry Spirit - Beyond Capitalism: A Quest For Purpose In The Modern World" by Charles Handy (1998) provide a great reminder, just how optimistic dialogue actually was, prior to the events of 9/11 which quickly focused dialogue back into a far more linear and specific path. Sure enough, a considerable amount of dialogue has remained on this trajectory, especially as some pundits continue to ride any number of its not so lovely victim and aggressor aspects. It's not much of a stretch to further extrapolate such linear thinking to a mindset which suggests greater militarization aspects in places I never expected to see them: airports in the United States. According to Lars Christensen, maybe I don't need to be boarding airplanes for a while, if I don't want to get depressed! His concern as to how such militaristic scenarios could harm future growth aspects for the U.S., is one of the primary reasons this United States citizen started blogging in the first place. More discussion about airline security can be found at an Alex Tabarrok post here.

In spite of such efforts to freeze frame life into hardened notions, there's still a "whole lotta shape shifting going on", just under the surface of our perspectives of reality which are not so readily pinned to the wall. Like the young Jerry Lee Lewis in this old video, our world economy is not going to be taking outdated twentieth century ideas of progress, sitting down. In spite of austerity and calls on the right and left to keep things "just the same" (balance sheets and all), developing nations have the chance to move ahead through greater inclusiveness for all citizens, and developed nations would do well to follow the lead of those who find success in that endeavor. Nonlinearity is still alive and well - and is just waiting for its chance to return to the global stage. What's more, the measure of individual participation in the economy through nominal targeting is the first place one can readily observe shape shifting in action.

The biggest shape shifter of all is the act of bringing the marginalized back into the fold - that is - including those who we have tried too long, to exclude. That act of social and economic exclusion has skewed overall economic results in countless ways, and has led to imbalances in the overall economy which no longer lend themselves well to measuring as they currently exist. This is one reason why, for instance, it is so hard to discuss current healthcare on the face of its present merits and circumstances. When we ask the question, how do the poor tend to themselves when there is not really enough space in the system to tend to them? - there is no clear answer.

To say Obamacare can tend to low income just because we "want it to" is not enough, and it misses entire areas of the U.S. which  no longer have the social or economic infrastructure to fulfill such obligations on the desired terms. This travesty is also why we can't even provide something as simple as a clear delineation between luxury care and basic care, because of the way it is lumped together as the ultimate good that outweighs the advantages of all other goods, in its present form.  Because of what has become a default categorization, healthcare has inadvertently reduced the value of all other knowledge simply by the way it is structured. How does one even begin the process of thinking about category size while such displacement is still a part of our ongoing reality? The same displacement factor holds true for all economic activity that faces the increased overhead of low technology building components, which skews the costs of every single economic activity from where their true potential lies: a potential that would otherwise suggest being able to hire more employees.

Shape shifting especially matters in our services, which have become increasingly backed into a corner as we have waited too long to make human skill primary in economic life. The very reason people gravitated to even the most mundane of jobs in recent centuries was the greater flexibility those jobs gave in their circumstances with friends and loved ones. We can't afford to forget that reality now as services start to take center stage in economic activity, or we face the danger of recreating the limited choice options with others, which we struggled so to overcome in the first place.

Like the seeming random nature of flowers on our most traveled trails ("planned" though they may be), we need a random feel in our knowledge choices and designations so that positive incentives can stay alive. As Shane Parrish of Farnam Street explains, "If we're doing something that pays out randomly, our brain releases dopamine when we get something good and our body learns that we need to keep going if we want a reward." This particular rationale (and incentive) is possibly one of the best I've come across so far, for true free markets in services. Not every effort we make to coordinate reciprocity with others is going to knock the results out of the ball park. But the fact that we would give ourselves the chance to try and get it right with others time and again, is what can provide something optimal for all, in the long run. Whereas, if we rationalize one "winning" approach and apply it over and over as the "rule" for all participants, that only demoralizes everyone who tries to make one "garment" fit an entire population.

Suffice to say that this is not the time to get concerned about the shapes of the economic activities of the present, for they will most likely change in significant ways in the years ahead. For instance, who knows what the "natural" rate of unemployment might be, if NGDPLT were running smoothly and the principles of good deflation were actually applied to the non tradable sectors of the present?
Who knows what companies might need to calculate for operating costs, if their environments were actually in tune with technological innovation and people were moving services into local knowledge and skills arbitrage commons? There's still a whole lotta shape shifting going on.