Saturday, December 28, 2013

Overcoming Land Use and Knowledge Use Scarcities

There has been interesting discussion about two subjects of late: "inequality" and "optimal" land taxation (yep, scare quotes). Since my notes for both were a bit jumbled, it seemed appropriate to consider them together in this post. Certainly, optimal land use is a random (i.e. not fixed) scarcity. That's a reality which can eventually dash dreams and tax schemes alike. It's too easy to forget that when economic participation becomes limited, land use and land valuations can also suffer. What's more, some of the most problematic aspects of apparent inequality, primarily stem from limits in knowledge use.

Often, what appears to be insurmountable inequality and scarcity, are little more than the restrictions we collectively impose upon ourselves - something that rising income does not really address. The more that wages rise, the more tempting it can be to place further restrictions on overall land use and related assets. This makes us co-conspirators with the governments that restrict our options, and it also contributes to the land use scarcity which now makes homelessness a more difficult default position than ever, to maneuver.

This same lockout effect contributes to knowledge use scarcities, in that there is less overall economic participation to fund needed services on the part of everyone. One of the problems in using land taxation to generate services, is the fact that no one can predict whether many locations can generate a continuous wealth equilibrium. Communities often make the same mistakes as individuals when it comes to erroneous calculations. That is, they attempt to maintain certain levels of wealth redistribution through income capacity and exclusivity, rather than by continuous adaptation and multiple choice options for economic progress.

It's easy to lampoon governments for not being willing to start over, when it comes to the fiscal adjustments that are needed in the present. But governments' desires to make choices based on what generally worked before, are echoed by communities which will use the same economic strategies over and over - as long as possible. When we look around us now and say, "Egad...inequality!", what we're really seeing is a long term result of society's natural instinct to put up walls against economic inclusion, as wealth creation strategies.

Many varying paths have resulted - and converged - from that basic instinct. The fact that people have used exclusion tactics for far too long, has also led financial adjustments which distort monetary policies, savings and investments in general. This happens in numerous ways, especially at local levels where other options for economic activity and wealth creation have been closed off. Just the same, the time has arrived that these arbitrary walls need to be torn down. And it is best to do so with creativity and imagination, instead of war and pointing fingers at the supposed enemies.

Fortunately, land use aspects of scarcity is not as difficult to visualize as knowledge use scarcity, thus they are receiving a fair amount of consideration in the present. Still: forced, ad-hoc and otherwise reactionary land use "solutions" are no way to approach the matter. How to think about the kinds of options people need? First, all possibilities need to be presented in simple and recognizable forms. Otherwise, people would invest time, energy and effort in them, only to be disappointed that there was not enough common vision to sustain the process. What's more, this is not just a matter of walling off higher income communities from lower income communities as people are politically tempted to do in the present. Not only would complete separation of income levels create economic instability, but those static formations would not be sustainable.

So in a nutshell: how to approach what the title of this post suggests? Equality of opportunity means equality in time use, alongside accessibility in resource use. Services access has mostly become a problem for those who do not have middle upper to upper level incomes. What this also means is that anyone who has adequate income to pay for needed services, does not need to utilize systems that generate equality in time use. Just the same, these systems could coexist in the same places and environments, if it is widely recognized what the differences between them actually consist of. What's more, secondary systems of lateral knowledge use are capable of providing vital back up systems for knowledge use preservation. This issue becomes especially important, whenever knowledge use systems that rely on upper income levels become threatened by negative supply shocks or other problems.

Plus, accessibility in resource use does not mean the same kind of endogenous coordination structure, that lateral time use depends upon. Local resources would rely on the same pricing mechanisms as they would anywhere in the world. Any difference in wealth creation for product, lies in the degree to which local community can add value to those local resources before they ever leave the area. However this is an opportunity which far too many local economies have not been able to capitalize on: the combination of (price exogenous) commodity use alongside local endogenous coordination and relevant education. In other words, local pricing (through voting) optimizes services, while global pricing optimizes product and resources separate from our time.

With this understandable separation, many local economies would no longer be forced to maximize wealth creation through asset formations or bare bones commodity prices, just to pay for needed services formations. Problems of apparent inequality would fall away, as people start to produce and consume services that were once associated primarily with either formative years or upper level incomes. What's more, varied combinations of production and consumption formations in multiple use spaces can serve to break down land use scarcities. This can happen in part by loosely formed associations which coalesce for specific and variable needs.

3D printing technology will make it easier to encourage, what previously took place mostly through creative destruction in city locations. How so? There will not be such significant cost for capital, at risk for specific product formulations. That also allows individuals to claim small projects as their own. Because of this, economic activity would also shift back towards knowledge use, in that more knowledge will be required for short runs of product. This in turn makes it easier for those involved in services formations to maintain direct links to production cycles as well. Consider Lee Billings, in an article about architecture:
Architecture will eventually enter a more biomimetic phase as the need grows for more energy-efficient building. Agent-based optimizations could become commonplace, along with new construction technologies such as 3D printing, which would allow unprecedented architectural experimentation and innovation. A revolution may occur in how humans construct and live within their homes. Boxy, self-similar houses and office buildings could give way to a wild profusion of easily produced and altered organic forms.

Snap together and pull apart building components could also allow greater flexibility in working relationships, as well as living arrangements. None of this is to suggest these are "preferable" to solid construction, long term commitments or fixed property purchases for that matter. Rather, land use flexibility provides choices that allow real respect for anyone with "handicaps" of any nature. By creating multiple definitions for economic access, individuals have the chance to survive occasional "steps back" (instead of forward) when necessary, and yet still be able to strive for their life's goals. Indeed, legal rules in the U.S. once gave individuals the ability to either start over or start out incrementally, when they were unable to do so in the Old World.

Flexible land use and building components also make one's personal income less important for economic mobility. Think of the race between the tortoise and the hare. When property and knowledge use take the tortoise into account, far more wealth is ultimately created in the process. That means less financial risk as well, when the world quits struggling to fit everyone into the same mold.  Our ongoing efforts to survive and thrive deserve to be a greater determinant of our life options than they presently are. Consider for example, this advice about our future from the above link at HBR,
What will drive a more "optimal" decision framework? It will require emancipation from fundamental assumptions such as employment and organization.
What's more, ongoing local skills and services proposals could also receive "keep trying" votes of confidence, whenever communities do not have room for them in the present. This is an important indicator, because it's one that many businesses which failed, never really had. Often businesses are missed when they close their doors, and former customers wish there were ways to somehow bring them back.  A "keep trying" vote of confidence, not only indicates what people still want to be able to experience,  it also allows them to get used to new concepts and thought processes that might otherwise act as unsettling disruptors, if introduced too quickly. Ongoing variations on proposals (in local activity calendars) allow people to get familiar with service offerings and how they can work.

Knowledge use and land use scarcities can be overcome. How so? By creating economic time and space for multiple participants over the long run, rather than expecting individuals or institutions to be the sole provider every day of the week or not at all. Monopolies in scarce resources are one thing, but monopolies in services only make people forget how to negotiate with one another for their most basic life needs. Worse, knowledge monopolies make people forget the immense value of knowledge itself. When the differences between real scarcities and false scarcities are not well understood, the idea of "affordable" or "not affordable" is meaningless. By using environment integration and getting to the root of unnecessary time scarcities, it becomes easier to determine optimal choices for our finite time.

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