The "Burdens" of Asset Formation

As some readers are probably aware, I don't believe that asset structures (or services for that matter) have to represent societal burdens. Even though housing definition often appears as such - for instance - in many respects that reflects artificial, not real scarcity. (What's more, building components can be adapted as needed to better deal with real water scarcity*.) Housing also exists within environments of artificial knowledge use scarcity which further distort marketplace conditions. Few realize just how thoroughly their time value has been captured, by special interests which can't bother to innovate or improve the producer/consumer landscape as needed - inside and out.

Asset formation appears as though a burden which not only distorts economic access, but also (completely unnecessarily) builds up financial risks over time. As special interests attempt to keep the old definitions of consumption and "yesterday's" innovation in place, the costs of primary consumption gradually block the monies which contribute to new services and knowledge use formations.

Worse, product definition gridlock means underlying problems - which contributed to the "Lesser Depression" - have still not been addressed. Governments "need not" address them, because they benefit from the special interests which lack incentive to innovate. Not only do populations need to take greater roles in supply side infrastructure and design, they need to be able to understand the underlying monetary mechanisms which would also provide economic stability for their efforts.

This is particularly important in terms of decentralization, which can only help economic circumstance when done right. Presently in the U.S., states represent a conglomeration of overlapping regional markets in commodities, asset holdings and services, which would effectively prevent them from operating by more autonomous means. Indeed, I had been under the impression that Switzerland knew how to work quite effectively with decentralized power structures. But the recent proposal to return to gold for monetary "stability", forces me to reconsider Switzerland's advantage in regard to decentralization.

Since 2008, considerable monetary flow has been needed to maintain the valuation of existing asset formation. Unfortunately this has been used as rationale to diminish flows at the level of everyday monetary activity, as reflected in Divisia monetary aggregates. The recent Fed tool of IOR contributes to confusion regarding the MV= PY formula, as well as other aspects of monetary theory which once seemed as though well grounded. If this were not enough, uncertainty about the feasibility of redistribution, tempts policy makers to turn their backs to human potential in favor of metallic coin and the hard assets already on the books.

The preferred asset formations on the part of many special interests, are the same that contribute to societal polarization. What's more, they are more problematic in terms of inequality and economic access, than income. The limited ability to innovate for primary consumption needs, only generates further burdens in both asset and community formation. Instead of much needed new cities, economic activity often attempts to cluster around the edges of already existing infrastructure.

Only consider the infrastructure component of this reality. As Ricardo Hausmann stresses in a recent post,

It is the fixed costs that limit the diffusion of the networks. So a strategy for inclusive growth has to focus on ways of either lowering or paying for the fixed costs that connect people to networks.

Even though his thoughts particularly apply to developing nations, they hold meaning for developed nations as well. Instead of new cities, the U.S. mostly saw new subdivisions in the 20th century. And yet unbeknownst to many, the vital supply side issue of lowering fixed costs had already been considered in the U.S. - decades earlier - by Buckminster Fuller.

Innovative infrastructure was all too easily shot down in the twentieth century, by everyone from real estate interests to plumbers and electrical unions. Even so, Buckminster Fuller's efforts to make infrastructure more productive continue today, by people around the world who have been inspired by his vision. To that end, domestic summits could also include recent suggestions for innovation which have the potential to be applied at local levels in new communities.

Freedom of choice in infrastructure and asset formation, would relieve considerable burden and responsibility on the part of those who desire more time use freedom. For instance, burdens associated with becoming a landlord (been there, done that), make it evident that building components need to be subjected to the same stringent overhaul as the vast improvements of the digital transformation. Don't like "slumlords"? Make building components that anyone can snap to existing grids, and also buy or sell if they so desire. True, there are some who enjoy home repairs, renovations and constant maintenance. But that does not mean everyone should have to be subjected to this route, as the primary available low liquidity ownership option.

During his lifetime, Buckminster Fuller attempted some of the same structural transformation which is needed - yet opposed by special interests - today. Only when asset formations become more liquid - hence less associated with the burdens of non innovative "success" - will it be possible to break the stranglehold of crony capitalism which insists future generations must bear the burdens of the past. Only when asset formation comes within closer reach of aggregate time use potential and wider swathes of the population, will nations be convinced that real growth remains possible.

What private interests too often forget, is that they also bear responsibility to make the marketplace easier to access and navigate. Many who complain of government regulation in this regard, forget that it is many among their own who continue to ask for further regulations and restraints, in order to limit competition. If private interests don't take the initiative for reform and change when it is needed most, the marketplace gradually starts to break down. By this time, private interests have often waited too long to take real action, and government steps in to "save the day" (not).

Circumstance such as this likely have bearing, why Keynes as representative of government was remembered after the Great Depression, instead of individuals such as Gustav Cassel. And yet it was the latter, who was able to explain why depressions occurred in the first place. When central bankers and private interests lose faith in the ability to maintain prosperity, it has been too easy to place the blame elsewhere. But further confusion as to actual causes, serves no productive purpose.


*Desert or semi desert climates especially need infrastructural options that allow water use choice "built in", from grid formations to building components.