Monday, April 21, 2014

Domestic Summits and the Tiebout Example

Why put these concepts into the same post title? Basically, because of what they both suggest as to living options, in terms of services and lifestyle in general. When Charles Tiebout introduced his model in the fifties, his theorizing of population sorting as naturally occurring, made a lot of sense - for U.S. populations in particular. Hence, no political solution was needed for free rider problems and local governance. In that spirit, I suggest that no political "solutions" are needed, in order for domestic summits and their follow up workshops to occur.

What's more, Tiebout's portrayal of limited moving costs was fairly accurate for those times. However, service definitions were quite different in the mid twentieth century U.S., which somewhat limits the effectiveness of his example today. Moving from one place to another has become quite risky, as well. This is why some individuals need to look deeply into living options before making the leap, as one was once able to do. How could all of this be considered, in a context of domestic summit discussions?

I like that Tiebout presented population sorting as a naturally occurring phenomenon. For some income levels, this example works as well as before. Still - as my readers already know...yep, it doesn't work quite as well for the lower to middle classes, as it does for everyone else. In my last post I spoke of the need for infrastructure planning, but I didn't designate services separately into public or private context. There's a reason for that, because the lines would be blurred in any economy which utilizes knowledge use more inclusively and effectively than the present. In order to thrive, services need to move well beyond their late twentieth century definition, into a more coordinated and inclusive context.

One of the positive aspects of domestic summits, is that they have the capacity to be non political ways in which society might move forward. After all, they would not be imposing blanket solutions on the country as a whole. Indeed, what they would be capable of, is exploratory economic scenarios. What's more, they could provide momentum at local levels which can be measured and gauged. When something does not work, not only would it be replaced with other options, but the fact that it did not work well for local citizens could be openly discussed in non political terms. What's more "discarded" options could still be utilized at later points in time, or tried elsewhere. The point is not to rule things out, arbitrarily or unnecessarily, with needless legislation which is often just a hidden way to protect special interests.

How would free rider problems be avoided? One reason they can be such a problem in the first place, is that many local citizens have few means to translate their skills sets into viable monetary options. A sufficient marketplace for those choice sets does not yet exist. People need services and assistance. Yet they have not been able to offer their own skills capacities in return, unless they are actually needed by the public or private employee options currently in place. By translating skills sets into a more direct marketplace between individuals, new forms of economic - hence monetary activity - become possible.

One of the most important aspects of domestic summits, is that they would not be asking either for fiscal solutions or ongoing subsidies. Instead, what has previously been designated as public or private activities, would be taken on at individual levels. Individual time management would be utilized in the same capacity (equal use of time) to tend to activities which governments have struggled to provide for their lesser endowed citizens. Two matched hours "collapse" into a single hour of newly measured wealth. This can put our time use back into the heart of economic activity, where it belongs. In effect, by creating services product at the matched hour, these coordinated, matched and measured activities would be monetized in a direct sense.

Still, that raises another important issue. This represents directly created economic time use, which needs to be recognized as such. There is a remaining problem in this regard, in that the Fed has not yet adopted nominal level targeting as a rule. In other words, the Fed has not purposefully acknowledged the value of hourly time and aggregate spending capacity in its own models.

However, the Fed would have much to gain, by recognizing the new marketplace that domestic summits have the capacity to generate. It would become possible to place solutions directly into the hands of the public, where it is simply not possible for political parties to do so. These potential communities could also show the Fed, how central our time is, to economic processes as a whole. The dialogue of domestic summits could also show the importance of expectations, for economic outcomes.

All of this is a somewhat different scenario than total "exit" or splitting off, which I do not feel is helpful or constructive for any nation. At this point, how much difference really exists between our national leaders? What these newly energized communities could do is provide hope for people, if not political parties, which remain hopelessly caught in their own defensive positions. Rather than insisting on solutions at national or state levels, informal solution sets can be tried at local levels on a "game board" where the regulatory clutter has been cleared away, to see what can work in its stead. As Michael Munger aptly stated,
Poverty is what happens when groups of people fail to cooperate, or are prevented from finding ways to cooperate.
Therefore, local explorations and economic examples would provide incentive for our presently sticky marketplace, in terms of how it might rationally proceed. That is, instead of depending on consumer feedback, they would be more reliant on citizen suggestions as to how the marketplace might be redefined. In the aggregate, this would be far more effective for private industry than ties to Washington, because new product formations would come into existence which previously had not been possible.

These exploratory communities could show governments what presently works, yet still keep the capacity for flexibility if it appears some options don't "work". Just because something works right now, does not necessarily mean infrastructure laws or regulations are needed! Resource use changes, and so does life in general. Liberty is not just about freedom, it is about recognizing the fact that we need to be free to adapt to resource availability at all times - in terms of both skills use and commodity options. In the same way that a nominal target makes time use a central economic component, the energized  community would also make time use the focal point from which other resource options can be more readily understood.

The fact that these undertakings could be carried out with flexible and lightweight building components, would allow material risks to be held by the entire groups which undertake these economic projects. Rather than the risky component of exit alone, these summits and their follow up workshops, would provide far better options of exit and voice.

Why do we need these kinds of choice sets in the first place? We are moving into economic environments which increasingly feel wishful, yet passive aggressive at the same time. Some want to move money around more, so as to "increase" equality. And some imagine that technology will sort it all out with little help from the public, while others just throw up their hands and become resigned to bad endings. It does not have to be any of this. Economies can still be purposeful and innovative, especially given that the underlying resource base still exists to make it so. Let's make the best of the options we have.

P.S. Follow up workshops (for domestic summits) would allow like minded individuals with similar consumption patterns to organize and look into coordinated services creation, before making relocation decisions.

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