Notes for today's post kept going into different directions, so I finally erased it all to provide at least a summary of my thoughts. Initially I wanted to tell a story about greater density levels in small town and rural areas that existed prior to the rise of two automobile households. Certainly I'm not the only Baby Boomer with fond memories of neighbors who once lived in closer proximity, before both parents owned cars. Even though some would like to recreate communities which resemble that earlier reality, it may well be a slow process, getting there. Hopefully in the next decade, the Internet will make it possible for like minded people with similar goals for their lives to come together to form more affordable common interest communities...defined once again by people and what they actually want, rather than what is just convenient or profitable for local developers.
However, a major emphasis of those earlier notes was on the redefinition of lifestyle expectations, for populations from the sixties forward. Looking back, I really find myself wishing that nominal targeting had been a part of those years so that economic growth could have happened more incrementally. As it was, those earlier gains of the post war era were quickly captured and consequently expressed in hard and fast rules that everyone was expected to live by, even when personal income didn't match the realities. Over time, the finance capture that resulted from those regulatory definitions, slowly began to exacerbate actual differences in income levels, as well.
Had nominal targeting existed all along, more efficient, affordable and innovative housing options for both lower and upper incomes might have been just one of the positive results. Potential suppliers, knowing full well that income realities needed to be taken into consideration in overall context, might have been more inclined to build for the markets which actually existed, instead of being unrealistic by competing, building and zoning for the subsets they preferred. All too often, the kind of low tech construction which should have served primarily as "I don't have to be practical" signaling devices for relative wealth, instead came to define even the buildings that lower classes were expected to commit and sacrifice for.
To a considerable degree, inflation prior to the Great Moderation was created and maintained in terms of non tradable product (construction and services) not well matched to consumers at lower income levels. While neither of these product definitions have yet to experience any real reform, inflation has nonetheless been cancelled out by higher unemployment levels now called for to moderate aggregate demand. For instance, people who should have been able to experience ownership in more flexible and innovative terms, instead were expected to either maintain overwhelming definitions of ownership, or suffer the social stigma in the U.S. that was a result of renter status. Hard and fast definitions of economic gains from the mid twentieth century, also translated into high levels of inflation right up until the Great Moderation.
While there's no guarantee things could have been different, I like to think how it all might have played out, had consumers not been held hostage to what local economies ultimately decided to offer. There's simply no getting around the role which low efficiency lifestyle options played for inflation and subsequent limitations to hiring. In those years, municipalities chose to look past variances in income levels, and structure instead according to the market they wanted to cater to. For a long time, they were accommodated. However, a lack of accommodation now still rests on the earlier hard definitions which caused such inflationary problems in the first place.
When some worry about "runaway inflation" in the present, they miss the reality that the conditions which created this particular form of inflation are long past, for the perimeters of wealth capture - as they presented themselves in a time of economic growth - were quickly taken advantage of in non incremental ways (no consideration for nominal targeting), almost as soon as they presented themselves. In other words, real growth of the present not only needs to take place in different terms, but with different perimeters altogether. And, once it does, it will probably not be as amenable to capture by finance as it was in the past. Not only will people have a better idea what is actually possible to achieve with income, they will be more apt to consider income in a total context of economic possibilities as well.
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