...To a more sensible economic future, that is. I've been fighting a head cold recently, brought on perhaps by a house that got too chilly lately. My ability to concentrate has been somewhat impaired, so hopefully this post will make some sense! At least I've been able to find some interesting links to tie in with today's thoughts: finding our way to a better economic future, is a topic that weighs heavily on many minds.
The other day, Tyler Cowen asked, why is liquidity flowing through economies in such a non neutral fashion? For me, this question can be answered by the fact that special interests force many to accept product formations that are simply not appropriate for their present resource use capacity - thus the monetary disequilibrium that follows. However, the fact that both finance and governments are determined to keep hammering square pegs into round holes, makes it difficult for macroeconomic (monetary) measures to work as effectively as they otherwise could. Let alone the ongoing confusion between statistics and numbers, versus how money needs to be able to flow through economies.
What's more, it's not hard for finance to insist on center stage, when mathematical functions remain front and center in economics departments. For instance, I was of the belief that history of economic thought was poised to become a more important element of higher education requirements. But according to Gavin Kennedy it looks as though some economics departments are instead heading in the opposite direction. Think about this as a striking example, of worthy issues that never even make it to school curriculums for any number of reasons. How many communities and educational entrepreneurs would be able to provide worthy "homes" or destinations for knowledge (homes that can be shared online), whenever educational institutions cannot? That's why I believe in opening up education at all levels to educational entrepreneurs, in local economies willing to start anew.
Because of institutional limitations, many thoughtful and hard working students don't learn about important aspects of life, that could have considerable effect on the way they approach the world. For a student, great teachers mean many things. Does it matter if a teacher says I am not going to teach X (something that may seem central) if the student would do better to learn about X at a different time or even in different context? Institutions of learning haven't adapted to the subjectivity of our fixed time scarcity. Yet each student has a unique time and place for learning, and that matters.
It was an HBR post "Great Entrepreneurs Pick Great Markets" a couple of days back, which nonetheless reminded of the vast marketplace which most still assume to be off limits in the present. Institutional knowledge based wealth capture is so taken for granted that many now think of labor time as non scarce, instead of the finite scarcity it represents both for overall economic stability and the reality of our own lives. That much diminished accounting of human time is a huge mistake. After all, when we don't calculate aggregate economic time participation in direct terms, our economy is forced to make adjustments indirectly: adjustments which cannot maintain equilibrium for the long run.
Rob Go (HBR) speaks of the moats that exist in some marketplaces, acting as effective barriers to entry. For me, the problem is that they interlink with multiple "castles" which in turn rely upon one another for their strength. Those moats cannot be approached head on. Instead, they will need to be actively questioned through limited first mover measures and economic examples over time, which prove capable of removing the negative externalities of undirected personal time.
These moats are precisely why it is hard to find a starting line for economic entry in any normal sense. For instance, Kurt Schuler in this recent post, looks at the fact that nations are used to government being the monetary "go to" for educational purposes in general. He wants to know - is that really necessary? My thoughts: Some start up knowledge use systems, as they are adopted, might want to experiment with monetary printing by more direct means, for educational entrepreneurs at local levels. Such printing could still readily integrate with larger monetary systems.
At the very least, some realize that the desire for a basic income is not as simple as waving a magic wand, as this guest post by Max Sawicky at Next New Deal indicates. For one thing, conservatives are not so anxious to alleviate poverty as they are to keep special interests from benefiting at the expense of lower income levels which do not have their own adequate political representation. Just the same, special interests would not give up their mostly unnoticed gains so easily. Again, first mover problems such as this are why focused economic efforts (and experiments) at local levels could point the way to new integrated economic practices. Not only would these work to benefit lower incomes in the long run; people from all income levels can learn to play more direct roles in the broken down production and consumption functions of the present.
Understanding is key now, to keep urban and rural economies from splitting apart. A complete separation of regional economies into political factions would not help anyone. This is especially evident in ideas of peer to peer economies that revolve around sharing of resources, goods and "slow economy methods" which are intrinsically fine. Just the same, alternative economic measures can be pursued with the understanding that they need to be choices - not life crippling necessities which also translate into low income poverty. That means making the limited capacity of our own time use a central element. To do so, strong links to production efficiency alongside services coordination, need to be maintained locally in monetary terms.
With today's technology, sometimes it seems as though one could put together better functioning knowledge use systems and set them down anywhere, but that isn't really true. How prosperous is the area that is being considered for knowledge use systems? Do they still have good employment prospects and if so, of what nature? Or, has the area declined too far, for anyone to be compelled to initiate complex undertakings? There seem to be "sweet spots", where people would be willing to relocate and start over, yet still have a base to work from in terms of possible growth. What kinds of companies are in the area? Remaining traditional services? How many who live there actually work, and if they do, do they work nearby or commute elsewhere. When domestic summits are taken on, these are important considerations.
Most important here perhaps, is a link Tyler Cowen posted from a Ryan Holiday post that I find myself compelled to respond to. So I'll do a bit of a "take down" re the words that Ryan framed for his wall. Scarcity...hmmm. Now I know exactly why Tyler's latest book bothered me so much.
Yes, of course quality land and related resources are scarce. Oftentimes we can visit special places such as this, yet know that living there isn't really an option. Plus, those that do stay will make more money in relative terms because it costs more to live there - hence local wages can be an entirely different matter from national wages. Still, people have the capacity to increase wage value over time, by making places desirable to live which don't necessarily have geographic advantages. Land can be made quite attractive, when people care about it and for it. One's desire to improve land use should be just as surely a skills attribute for community, as one's pocketbook. After all, that particular initiative is too important to ignore.
Intellectual quality or "good ideas" what to produce, entirely depend on the passageways and destinations that people create, so that knowledge in all its magnificent diversity might have the chance to enjoy the accolades it deserves. What's deemed as "good", also depends on income infrastructure needs. Knowledge only appears scarce when we start to think that human worth in the aggregate is scarce, because primary value is supposedly caught by those castles and moats we'd rather call stagnation, than face up to. Being told that we can't use knowledge to help ourselves or our neighbors, is like being told we can't garden our own little plot (of scarce time), simply because our soil is not as good as the soil in the garden up the road!
In other words, our willingness to support one another in a framework for widespread and diverse knowledge use, creates value for knowledge use and innovation which otherwise would not be possible. I'm sorry but when Tyler says things like intellectual property is scarce, he aggravates me no end. Does he really want the future he portrays?
It would be one thing if institutions had roped off an inhabited area of economic potential that actually held life of its own, but they roped off wealth potential in such a way as to pretend it doesn't even exist. And yet, everyone is sick and tired of the taxation to fight off the endless demons that come out of that forgotten place. Some people now think money is worth little because it has no choice but to also represent that forgotten place! If our institutions refuse to budge now, the rift between productivity and those who can't take part in productive economic endeavor, will only grow.
Institutions of course continue to grab up the "quality" labor we like to call scarce, but that particular definition is one of defeat, in terms of knowledge use potential. Meanwhile the negative externalities of "low quality" labor continue to expand, to such a degree that the random capture of high skills use potential has finally become a false victory. All the while our institutions are forced to somehow support the rest - a responsibility they don't want. I can't say it enough, no one wants to pay for the ones that have been left out...or feels like they should be the ones "stuck" doing so.
When people get left out, there is no direct way to tend to their condition humanely and we end up with private prisons and other horrible conditions. Therefore, the only humane solution is let people help themselves through applied, recorded and measured knowledge use - through their own time use arbitration. If we face up to our "stuck in the mud" institutions on this issue, I think they will eventually get the point. It is better in the long run to let everyone prosper.
And until we do, our financial realm is going to look like one giant monstrous pretzel, trying to figure out how to financially account for the forgotten without anyone noticing, who could have just been allowed to tend to their own affairs. Safe assets are about letting everyone use resources to create wealth. Safe assets are about understanding what the potential of technology actually holds for us personally - not just about devices to hold in one's hand, to communicate with the world. That means allowing technology to create environments that don't constantly overwhelm us with needless complexity.
This is where the starting line is: the scarcity of our time use which is paramount and has to be taken care of before anything else even matters. If money is not allowed to represent the potential of our economic participation in the game of life, the use of money may not have the chance to regain normalcy again in our lifetime or indeed the generations after us. Domestic summits, now. Nominal targeting for our own, very real fixed scarcity, now. Nations can thrive again when nations learn to give their own citizens a real chance to help themselves.