What's that, you say? Supposedly it's all about value in exchange, and certainly that's the intention government set forth in the early 20th century, when it encouraged knowledge and skills use to primarily take place in institutions outside one's own personal and private settings. A recent WCI post by Nick Rowe got me to thinking about some of the differences between value in use and exchange, with a post that compared housing to a $20 banknote. In the post he posited the house as representing pure value in exchange (no one lived in it), which of course makes sense when a house is mostly considered as an investment good. Depreciation is generally the same over time for a house, whether the focus is on use or exchange. The difference is that monetary depreciation may be greatly offset in housing markets with good job potential or representative of a desired but limited national market.
Much of the consumption value a house might hold, on the other hand, comes from the value in use. While this utilitarian quality of housing (house as hotel for instance) has been debated in comment threads in a number of posts at The Money Illusion, there were also additional value in use settings that provided further impetus for housing as it became defined in the 20th century, especially as staging areas for "treasures" which the parents of Baby Boomers brought home "from the world", for instance. That aspect of housing was noted as a passing phase which now needs to further evolve, by Patrick Doherty in an essay for Foreign Policy at the end of January. He stressed how the postwar demand for suburban housing and consumer goods doesn't accurately reflect the needs of the present.
A primary purpose of the Fed is of course maintaining value in exchange for monetary stability, and anyone who believes this isn't a valid goal might want to reconsider. However, certain value in use settings that have been taken for granted have indeed run their course to a considerable degree, and the fact they haven't yet been addressed puts unnecessary pressure on the Fed to perform in the absence of any true public vision to maintain wealth creation. Thus, in the coming decades, we need greater reorientation in any number of value in use functions, which give also give greater validity to the value in exchange.
How might that play out? In the abovementioned FP article, Doherty explored some of this rationale, both in terms of needed infrastructure, as well as the actual reorientation for value in use settings. Yet one of the most important value in use settings - for true reorientation - is nonetheless difficult for some to envision: walkable communities. I would have missed that (most useful) FP link, had it not been for the always thoughtful Emily Badger at The Atlantic who said : "Doherty's basic idea is that pent-up demand for such communities could help power a new American economic engine."
The best way to think about this is to consider the shortcomings we are left with, after the atomizing effects of the automobile - effects which now leave us and our institutions in separate siloes. While any Baby Boomer such as myself is grateful for the decades of travel we were able to experience, many of us now find ourselves separated from both extended family and friends in our later years to a greater degree than generations before us (unless they were immigrants). What's more, the communities many of us find ourselves in, often don't exist with many true commonalities in outlook or experiential settings. This is all the more difficult in that consumerism will only take an individual so far in life, and many of us now find ourselves desiring experiential settings which simply aren't there: settings that are the result of value in use societal coordination.
Recent events in Egypt are especially a wake up call for nations and their governments to give more important to value in use settings of all kinds: not just the physical forms of walkable communities that are a perfect starting point, but especially in terms of our economic and social lives. The fact that governments focused primarily on value in exchange settings, thus shortchanging their own citizens in the process, has left the religious institutions of too many nations scrambling to provide the relatively few existing value in use options that many citizens now have. What's more, religious groups have not abandoned rural areas to the degree that many nations and their citizens have. When a nation's rural areas are not a vital part of economic life, economic imbalances are the result.
While religious groups have helped society in many ways, these are not the groups which should have to bear responsibility for any nation's important economic infrastructural concerns. Some nations which do not address the need to structure all product creation more efficiently for their citizens, with the skills sets of all citizens, will find that their religious institutions end up taking care of a considerable portion of a nations affairs by default. This is just as true of my own country, as any country...something I can't stress enough. Let the domestic summits begin.
No comments:
Post a Comment