Monday, October 20, 2014

Investment, Inequality, and Economies of Scale

Admittedly this is an odd post title, and I'm trying to integrate somewhat layered concepts (or perhaps nested) as well. So hopefully this post will not be too convoluted!

Resource use densities tend to agglomerate, and in the process, generate inequalities in both investment and production structure. Where does that pose problems? For inequality, it mostly depends on whether product formations are important components of basic consumption. Nations remain in a high point of a long scaling up process for resources in general. The result is - however - a bit different from Piketty's wealth conceptualization. Because many investments are internationally held and structured, their benefits accrue to participants in the same international (further scaled) context.

The good news? Some of these investment and production processes can be readily scaled to local levels, with few negative effects on profit formation. However, doing so could meet with some resistance. This is particularly true for knowledge based services, which tend to organize their marketplace from already existing wealth densities. Most of these further concentrate holding positions for resources, rather than dispersing service production and consumption where it is needed. The fact services are organized in this manner is why I am highly skeptical of many government redistribution patterns. Thus far, government redistribution mostly serves to intensify the process of resource density agglomeration.

It is far better to counter these densities through the creation of decentralized services and production zones at local levels. That would allow smaller economies of scale to prove advantageous for all participants in these local patterns.

Investment options for new systems communities - in spite of their "closed" nature, would make it possible for local economies to move from dependence to interdependence with larger economies. Local investment opportunities (beyond housing in particular) would also allow local participants of all income levels to retire without reliance on government assistance. Only consider that higher income levels need not rely on housing investment to the same degree as lower income levels, because of their access to international wealth flows. In a sense, local residents would become their own government, as co-creators of wealth and community.

How, then, can local economies do a better job of reaching out to international economies than is now the case? First, consider the ways in which local economies need to remain open to the world. Chief among these is accessing the knowledge and skills capacity which can come from anywhere. One reason nations are reluctant to do so now, is that immigrants are more often perceived as a drain on services than an add to services. By integrating services into aggregate time use context through skills arbitrage, each human component "add" becomes a plus, rather than a minus. Also, few in the U.S. are aware of new infrastructure patterns that other nations are generating for different income levels

Through local production diversity, local economies could benefit from production gains wherever those gains from come from, instead of blocking them out. This is particularly true for resources which could augment local production patterns. By maximizing local investment potential and competition in diverse settings, products from without would become inputs that add to production capacity, rather than being perceived as threats. When technology is capable of retooling at basic levels, no one product line needs to be paramount. This in turn makes low cost production possible for local and regional needs.

Local diversity in production makes it easier to envision high skill levels in time arbitrage, as well. Populations would likely concentrate on generating product which is not as easy to acquire from other regions and nations, without paying more than they would expect to pay for local production.

Inequality is best addressed by populations having input into not just consumption, but also production. The twentieth century focus on government as "protecting citizens" in consumption based terms has not always turned out well. Fortunately, technological gains make it easier for citizens to once more become part of production processes.

What would be the "closed" aspect of new systems communities? Production and consumption functions would also be a recognizable whole, in that the monetary flows necessary for this process would be measured at local levels. This is possible in that - through time arbitrage - services formations would become a direct source of wealth in their own right. In some instances, combined knowledge use patterns would also become capable of acting as dynamic community starters. These are methods which could not only address a lack of labor force participation, but some important aspects of inequality, as well.

No comments:

Post a Comment