Perhaps there will be a silver lining, for the storm clouds which still threaten Greece. Whatever the eventual outcome, this beautiful country serves as a reminder that solutions don't come easy for any country which delays structural change too long. Their dilemma is the same that many other nations could ultimately face, when supply side constraints and limitations are not promptly dealt with.
Once structural imbalance reaches a certain point, there is no return to the relative simplicity of earlier circumstance. Even so, political factions have too little reason to find compromise while there's time to do so. Perhaps worsening political scenarios partially account for a more civil dialogue between economists in recent years. One senses a shift in focus away from broad interpretations of fiscal and monetary policy, to determine how those differences actually matter.
Some considerations for the organization and (initial) outcomes of domestic summits: What are the possibilities for new communities in given locations, and are local conditions conducive for long term growth? Before setting down roots, who needs to be consulted and why? How valuable might the opinions of experts be, as compared to the crowd? This article also gives an interesting perspective on expert assistance: http://johnkamau.blogspot.com/2015/05/nairobi-was-built-on-wrong-place.html
It will be quite a relief, when education returns to personalized instruction in challenging settings instead of this. Plenty of Democrats and Republicans probably agree with these sentiments. http://www.alternet.org/education/corporations-profit-standardized-tests
I'm surprised that the U.S. has avoided this trend, at least thus far: http://www.bloomberg.com/news/articles/2015-05-28/worldwide-elderly-crime-rates-increase
Taking a long view of structural stagnation - that of the Middle East Timur Kuran (2004 JEP) http://pubs.aeaweb.org/doi/pdfplus/10.1257/0895330042162421
In 22 of 33 cities, wage growth remains below prerecession level. http://blogs.wsj.com/economics/2015/06/03/here-are-the-u-s-cities-where-wage-growth-has-lagged-job-growth/?mod=WSJBlog
How much will the ACA cost large employers over the next decade?http://www.shrm.org/hrdisciplines/benefits/articles/pages/aca-costs-employers.aspx
Healthcare is not just problematic in terms of consumption expectations, but also the ways which healthcare is expected to be produced. Malaise among medics: Doctors desire vocational purpose
A recent lecture from Amartya Sen: http://www.newstatesman.com/politics/2015/06/amartya-sen-economic-consequences-austerity
This short article is simply a young person's lament of not being able to learn practical things in school. Even though I thought her complaint was quite valid, some of the many comments were brutal. The "do it yourself" conditioning of recent decades, runs deep. When people told her to figure out things on her own, she replied that she had. But that's just the thing. Why, in a time of diverse and complex economies, should it be necessary to do everything oneself?
Free marketers speak often, of the spontaneous economic coordination which makes life so much easier in the present. There's just one problem - for the time and knowledge one accesses on a daily basis, this spontaneous coordination has practically become non existent. In some respects, the beneficial impact of today's economy is mostly limited to traditional manufacture and tradable goods.
Is it too much to ask for the spontaneous coordination of time based product, as well? Isn't it odd that even though no one is expected to put together their own toaster, people are expected to figure out anything involving time and information on their own? Unless - of course - said activity involves formal schooling, healthcare or the workplace, which is but a fraction of the constant issues which arise in one's daily life. A marketplace for time would preserve economic diversity, so that we don't have to do everything ourselves if we don't want to. The whole point of a truly productive and beneficial economy is to have that choice.
Planning and financing from the elite is not the way for lower income levels to rebuild their lives, or the neighborhoods they live in. Urban renewal in Philadelphia
Just 19 days to build a 57-storey tower! Chairman Zhang's flatpack skyscrapers
And this robot builds a steel bridge: http://www.iflscience.com/technology/robot-going-3d-print-steel-bridge
"Don't needlessly annoy readers before you get to your point" http://johnhcochrane.blogspot.com/2015/06/noah-smith-writing-lesson.html
One can only hope it's bluster and little else. http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/26/texas-wants-its-gold-back-wait-what/
What makes the U.S. more problematic in terms of labor force participation, than other developed countries? Some aspects of this situation remain a mystery. http://blogs.wsj.com/economics/2015/06/26/the-u-s-stands-out-on-labor-force-participation-rates/?mod=marketbeat
Tuesday, June 30, 2015
Monday, June 29, 2015
Design for Economic Freedom
What does economic design have to do, with the freedom to interact meaningfully with others? Plenty. I have as much appreciation for Adam Smith's "invisible hand" in the economy as anyone. Just the same, spontaneity in the marketplace can be difficult to come by, when governments and special interests hijack the nature of product formation and infrastructure options. Unfortunately, excessive control in this regard has been going on for a long time.
Adam Smith also wrote about the multiple instances when governments and business interests refused to be supportive of free markets for manufactures and exports. Even though governments have made considerable progress in this regard for tradable goods, other design innovations are long overdue - especially for knowledge use and the asset formation of non tradable sectors. What would be required, to generate the economic freedoms which could better preserve political and economic sustainability?
There are several basic principles involved, beyond the need to match and coordinate time arbitrage equally to generate new wealth. Most important is the right to produce, on the part of as many individuals as possible in any participating system. Production of time based service product is completely different from production of product which benefits from scale, because more personal involvement is needed for time and knowledge based product - not less. And more time based product involving skills capacity, means more individuals and human capital involved in economic life, not less. Because matched time becomes new wealth, these forms of knowledge use and skills capacity are beholden to no special interest or benefactor, beyond the local systems which make them possible.
While production reform is important for time based knowledge use, skills sets, and services, production rights are also important for basic structural innovations within any given community. Knowledge use systems would seek to locally define product through as many means as possible, and through the assistance of as many individuals as possible. However, these forms of product diversity are not to be confused with tradable goods, which for the most part would continue to be sought both regionally and internationally on the part of knowledge use systems. Production reform is needed mostly for non tradable sectors.
A second principle for economic freedom, is that of the right to consume what one wants. Importantly, the right to market one's ideas and product comes first, before lifelong consumption of knowledge based services is a realistic possibility for lower income levels. Also, a clarification: the right to consume is not to be confused with claims on what governments have sought to make available in the marketplace, such as "rights" to healthcare which is already in short supply within primary equilibrium. Individuals need alternative equilibrium options, in which they are able to produce the knowledge sets and services they desire.
A third principle would be a broader understanding of wealth which exists beyond monetary terms. Even though one recognizes that money is only a part of wealth, there have been too few means, for anyone to turn this wisdom into something more concrete. Time arbitrage would eventually allow other factors of wealth to come into play beside monetary compensation, and monetary policy would also face less pressure to solve social issues which lie beyond its reach.
Another aspect of economic design, is the need for a structural response to changing trends in consumption. Baby Boomers have understandably become more pragmatic in recent decades, and in any circumstance, one generally decreases spending as they age. But pragmatism on the part of youth is a new development, which speaks volumes as to what production reform needs to take into consideration. Without a doubt, some of the frugal spending habits of today's youth will persist through the course of their lifetimes. A recent Time article listed 10 ways how spending patterns have changed for millennials - three of which I will touch on here.
First, millennials have become somewhat wary of investing, in terms of equities. Even though the Great Recession was (ultimately) contained by the Fed, the fact that monetary policy suffered a severe initial setback, is now reflected in lowered expectations on the part of those who were just getting started in the workplace. Now, some among this group will save for retirement by putting their money into a sock drawer, instead of normal investments.
Granted, some of the younger millennials will have more faith in the economy, as workplace opportunities have improved of late. Even so, those who were getting started during the initial downturn, will likely seek more practical environments than are currently on offer in the marketplace, for the rest of their lives. Because of these circumstance - if for no other reason - there needs to be regions where both housing and knowledge based services innovation are allowed to take place. It is wrong for nations to expect populations to wait for years or even decades for a stronger economy, when better results could be generated much sooner without the needless sacrifice.
Also, the Times article spoke of a lack of spending for both housing and cars among millennials. While some will eventually commit to traditional housing and cars, low cost commuting options are needed for transportation, besides the dedicated roads and highways for automated vehicles. Again, the highly debated transportation of the future will become feasible options in cities, rather than outlying areas. Many who live in rural areas will need substantial changes in density and infrastructure patterns, in order to gain economic diversity where they already live.
In summary, economic design needs to respond to the kinds of choices that people are now able to make, which in many instances won't be similar to upper income spending patterns. Some will still seek higher income options, but others will want choices designed for more practical and flexible ends. As things stand now, primary consumption choices in non tradable sectors do not offer much in the way of economic freedom. There's a reason why Milton Friedman said of freedom, that it is a rare and delicate plant. Indeed...one that too many still take for granted.
Adam Smith also wrote about the multiple instances when governments and business interests refused to be supportive of free markets for manufactures and exports. Even though governments have made considerable progress in this regard for tradable goods, other design innovations are long overdue - especially for knowledge use and the asset formation of non tradable sectors. What would be required, to generate the economic freedoms which could better preserve political and economic sustainability?
There are several basic principles involved, beyond the need to match and coordinate time arbitrage equally to generate new wealth. Most important is the right to produce, on the part of as many individuals as possible in any participating system. Production of time based service product is completely different from production of product which benefits from scale, because more personal involvement is needed for time and knowledge based product - not less. And more time based product involving skills capacity, means more individuals and human capital involved in economic life, not less. Because matched time becomes new wealth, these forms of knowledge use and skills capacity are beholden to no special interest or benefactor, beyond the local systems which make them possible.
While production reform is important for time based knowledge use, skills sets, and services, production rights are also important for basic structural innovations within any given community. Knowledge use systems would seek to locally define product through as many means as possible, and through the assistance of as many individuals as possible. However, these forms of product diversity are not to be confused with tradable goods, which for the most part would continue to be sought both regionally and internationally on the part of knowledge use systems. Production reform is needed mostly for non tradable sectors.
A second principle for economic freedom, is that of the right to consume what one wants. Importantly, the right to market one's ideas and product comes first, before lifelong consumption of knowledge based services is a realistic possibility for lower income levels. Also, a clarification: the right to consume is not to be confused with claims on what governments have sought to make available in the marketplace, such as "rights" to healthcare which is already in short supply within primary equilibrium. Individuals need alternative equilibrium options, in which they are able to produce the knowledge sets and services they desire.
A third principle would be a broader understanding of wealth which exists beyond monetary terms. Even though one recognizes that money is only a part of wealth, there have been too few means, for anyone to turn this wisdom into something more concrete. Time arbitrage would eventually allow other factors of wealth to come into play beside monetary compensation, and monetary policy would also face less pressure to solve social issues which lie beyond its reach.
Another aspect of economic design, is the need for a structural response to changing trends in consumption. Baby Boomers have understandably become more pragmatic in recent decades, and in any circumstance, one generally decreases spending as they age. But pragmatism on the part of youth is a new development, which speaks volumes as to what production reform needs to take into consideration. Without a doubt, some of the frugal spending habits of today's youth will persist through the course of their lifetimes. A recent Time article listed 10 ways how spending patterns have changed for millennials - three of which I will touch on here.
First, millennials have become somewhat wary of investing, in terms of equities. Even though the Great Recession was (ultimately) contained by the Fed, the fact that monetary policy suffered a severe initial setback, is now reflected in lowered expectations on the part of those who were just getting started in the workplace. Now, some among this group will save for retirement by putting their money into a sock drawer, instead of normal investments.
Granted, some of the younger millennials will have more faith in the economy, as workplace opportunities have improved of late. Even so, those who were getting started during the initial downturn, will likely seek more practical environments than are currently on offer in the marketplace, for the rest of their lives. Because of these circumstance - if for no other reason - there needs to be regions where both housing and knowledge based services innovation are allowed to take place. It is wrong for nations to expect populations to wait for years or even decades for a stronger economy, when better results could be generated much sooner without the needless sacrifice.
Also, the Times article spoke of a lack of spending for both housing and cars among millennials. While some will eventually commit to traditional housing and cars, low cost commuting options are needed for transportation, besides the dedicated roads and highways for automated vehicles. Again, the highly debated transportation of the future will become feasible options in cities, rather than outlying areas. Many who live in rural areas will need substantial changes in density and infrastructure patterns, in order to gain economic diversity where they already live.
In summary, economic design needs to respond to the kinds of choices that people are now able to make, which in many instances won't be similar to upper income spending patterns. Some will still seek higher income options, but others will want choices designed for more practical and flexible ends. As things stand now, primary consumption choices in non tradable sectors do not offer much in the way of economic freedom. There's a reason why Milton Friedman said of freedom, that it is a rare and delicate plant. Indeed...one that too many still take for granted.
Saturday, June 27, 2015
Some Thoughts on Government Roles
What are practical debt load structures in the 21st century, for national governments? How have government visions and budgets changed since only a century ago? What kinds of revenue can governments expect to gain in the near future, as traditional labor force participation continues to decline? What do governments now expect to accomplish, long term? Might the intentions of Washington become easier to recognize, in terms of actual obligations and revenue?
Granted, there's some wishful thinking in the first paragraph of this post. Just the same, what governments are expected to provide on behalf of citizens is no longer well understood. It's time to go back to the drawing board and answer some basic questions about government (and citizen) responsibility, before political parties implode any more than they already have. Why not tend to structural concerns before it becomes impossible to do so in any reasonable manner?
Even though the U.S. still has some "breathing room" before serious budgetary problems appear on the horizon, too much of present day fiscal policy is now redistribution and subsidies - all of which prevent a smoothly functioning marketplace. Much of this is also connected to a dysfunctional healthcare system, with imbalances that are spreading through multiple institutions. What role - if any - did these services asymmetries play in Washington's decision to take a more active role in housing wealth?
Without a doubt, more resources are needed for impending services shortages, than further taxation can provide. What - then - of Washington's most recent Fannie Mae and Freddie Mac strategies for housing wealth? Even though government's participation in housing assets could (theoretically) assist in needed services funding, citizens are right to question Washington, regarding their intentions with this additional money.
How much? Contributions in recent years included more than $100 billion to deficit reduction, in 2013 alone. This windfall from Fannie Mae and Freddie Mac, represents considerable change in recent deficit structure. Thus far - however - deficit reduction has not even translated into additional assistance from Congress for the Veteran's Administration. How does anyone know that increased government involvement in wealth creation will translate into more efficient outcomes, if the most deserving individuals of all are still in desperate need of healthcare?
If this were not enough, the economy as a whole is still held back, by tightly defined notions as to what growth is supposed to represent. The housing market is not the growth mechanism it once was, as traditional housing becomes limited in prosperous regions. Washington also took responsibility for housing at a time when the marketplace was in drastic need of supply side reform. Housing in the U.S. has yet to benefit from either mass production or innovation, which means reduced consumption for both lower income and (what would be) first time home buyers.
Washington will continue to have adequate access to monetary flows to provide services for higher income levels. However, polarization in income levels and and reduced participation in the present housing market, will make it more difficult for Washington to provide services for lower income levels in the years ahead. Instead of relying solely on consumption capacity to meet its obligations, Washington needs to make room for the productive capacity of its own citizens, to generate a new services marketplace. Is it possible to move beyond political posturing so this can happen? Let's at least try.
Granted, there's some wishful thinking in the first paragraph of this post. Just the same, what governments are expected to provide on behalf of citizens is no longer well understood. It's time to go back to the drawing board and answer some basic questions about government (and citizen) responsibility, before political parties implode any more than they already have. Why not tend to structural concerns before it becomes impossible to do so in any reasonable manner?
Even though the U.S. still has some "breathing room" before serious budgetary problems appear on the horizon, too much of present day fiscal policy is now redistribution and subsidies - all of which prevent a smoothly functioning marketplace. Much of this is also connected to a dysfunctional healthcare system, with imbalances that are spreading through multiple institutions. What role - if any - did these services asymmetries play in Washington's decision to take a more active role in housing wealth?
Without a doubt, more resources are needed for impending services shortages, than further taxation can provide. What - then - of Washington's most recent Fannie Mae and Freddie Mac strategies for housing wealth? Even though government's participation in housing assets could (theoretically) assist in needed services funding, citizens are right to question Washington, regarding their intentions with this additional money.
How much? Contributions in recent years included more than $100 billion to deficit reduction, in 2013 alone. This windfall from Fannie Mae and Freddie Mac, represents considerable change in recent deficit structure. Thus far - however - deficit reduction has not even translated into additional assistance from Congress for the Veteran's Administration. How does anyone know that increased government involvement in wealth creation will translate into more efficient outcomes, if the most deserving individuals of all are still in desperate need of healthcare?
If this were not enough, the economy as a whole is still held back, by tightly defined notions as to what growth is supposed to represent. The housing market is not the growth mechanism it once was, as traditional housing becomes limited in prosperous regions. Washington also took responsibility for housing at a time when the marketplace was in drastic need of supply side reform. Housing in the U.S. has yet to benefit from either mass production or innovation, which means reduced consumption for both lower income and (what would be) first time home buyers.
Washington will continue to have adequate access to monetary flows to provide services for higher income levels. However, polarization in income levels and and reduced participation in the present housing market, will make it more difficult for Washington to provide services for lower income levels in the years ahead. Instead of relying solely on consumption capacity to meet its obligations, Washington needs to make room for the productive capacity of its own citizens, to generate a new services marketplace. Is it possible to move beyond political posturing so this can happen? Let's at least try.
Thursday, June 25, 2015
Economic Design: Fact or Fiction?
Don Boudreaux posted recently, about economic "myths" which he believes non-economists (such as myself) are prone to. While most elements of his list were reasonable enough, anyone who has regularly kept up with this blog, knows that I take exception to this assertion on his part, regarding design:
Granted, Boudreaux regularly emphasizes the problematic nature of government planning and intervention. But few government interventions occur, which are not agreed to and encouraged by the special interests which seek those designs to begin with. Rather than insisting that structural economic design is either 1) not "helpful" or 2) not happening (!?!?), let's get real about what is actually occurring. If design is fact and not fiction, then why not extend the possibility of conscious design to those who are not quite so strong and powerful? Let's don't pretend it's not possible to do so.
Only consider the degree to which individuals and groups use design (regulation, zoning, law) to exclude those who may not appear strong enough to maintain similar sets of responsibilities. When this process goes too far, too many are left outside the preferences which are built up over time, in primary equilibrium. Those who end up left out of prosperous regions and cities, consequently need better defined means to make a life for themselves. Why not give them the chance to do so? Economic design is a natural part of life. Let's not pretend this is not true.
Little about the marketplace is as spontaneous and naturally provisional of economic freedom as some imply - a fact which has tremendous bearing on economic realities. Where possible, groups can design for greater inclusivity. But when communities understandably put up resistance, those who are excluded, need a chance to build environments where they can design better means for survival. What's more, they need the right to do so in circumstance where they pose no threat to the structural preferences which others hold.
Even though I am a proponent of intentional design, no one should mistake the sentiments of this blog as attempts to impose structural change where it is not wanted. In the long run, force all too often leads to repercussions which never quite go away. Rather, the goal for any nation which seeks to make room for growth, should be to make room for differences in economic design. Few other goals for decentralized decision making, are more important.
The myth that workable, productive and sustainable complex social orders must be the result of human design (or that human design can improve the workability, productivity, and sustainability of complex social orders).A propensity for design, is an integral part of the human mind. What institutional structure does not benefit from design? Even so, today's marketplace scarcely benefits from the economic freedom which Boudreaux's "leave well enough alone" quote implies. No one can afford to pretend that free markets exist for knowledge based services formation, and new design elements are needed in order for this to happen. There are too few choices as well for building components, in living and working environments of all kinds.
Granted, Boudreaux regularly emphasizes the problematic nature of government planning and intervention. But few government interventions occur, which are not agreed to and encouraged by the special interests which seek those designs to begin with. Rather than insisting that structural economic design is either 1) not "helpful" or 2) not happening (!?!?), let's get real about what is actually occurring. If design is fact and not fiction, then why not extend the possibility of conscious design to those who are not quite so strong and powerful? Let's don't pretend it's not possible to do so.
Only consider the degree to which individuals and groups use design (regulation, zoning, law) to exclude those who may not appear strong enough to maintain similar sets of responsibilities. When this process goes too far, too many are left outside the preferences which are built up over time, in primary equilibrium. Those who end up left out of prosperous regions and cities, consequently need better defined means to make a life for themselves. Why not give them the chance to do so? Economic design is a natural part of life. Let's not pretend this is not true.
Little about the marketplace is as spontaneous and naturally provisional of economic freedom as some imply - a fact which has tremendous bearing on economic realities. Where possible, groups can design for greater inclusivity. But when communities understandably put up resistance, those who are excluded, need a chance to build environments where they can design better means for survival. What's more, they need the right to do so in circumstance where they pose no threat to the structural preferences which others hold.
Even though I am a proponent of intentional design, no one should mistake the sentiments of this blog as attempts to impose structural change where it is not wanted. In the long run, force all too often leads to repercussions which never quite go away. Rather, the goal for any nation which seeks to make room for growth, should be to make room for differences in economic design. Few other goals for decentralized decision making, are more important.
Wednesday, June 24, 2015
Midweek Market Monetarist Links and Summaries - 6/24/15
Congratulations to Mark Sadowski, who recently completed his PhD at the University of Delaware. Scott Sumner also includes a graduation picture of Mark with this post.
"...taking into account the monetary policy offset, the fiscal multiplier still appears to be zero, even at the zero lower bound in interest rates." (Mark Sadowski) https://thefaintofheart.wordpress.com/2015/06/18/failed-fiscalist-forecasts/
David Glasner compares some historical mistakes with more recent mistakes on the part of U.S. government http://uneasymoney.com/2015/06/18/trying-to-make-sense-of-the-insane-policy-of-the-bank-of-france-and-other-catastrophes/
Scott Sumner highlights Mark's new study Mark Sadowski on fiscal austerity, with and without monetary offset Two other studies showed similar results - one from Ben Steil and Dinah Walker, and another from Kevin Erdmann
Too many countries lumped together? Okay, guilty as charged. I'm in Jason Smith's doghouse
Fed intentions are not necessarily future policy response. How much do they want Congress to be responsible for? Monetary offset and the time inconsistency problem
Congress and the Fed need a "meeting of the minds", as Congress doesn't appear to be aware of the hard choices at stake We need a commission on stabilization policy
A closer look at several aspects of fiscal options: Fiscal policy isn't about big government
Scott at Econlog:
And yes, market monetarists do work with econometric studies...Russ Roberts vs Simon Wren-Lewis
Presently, no bipartisan support for tax reform The Democrats move left
Central bankers have been a part of the problem...Could a well designed euro have worked?
Abe and Kuroda are not in agreement Japan's 2014 tax increase worked; they should do it again
"In a sense, this entire debate is an artifact of a flawed stabilization policy regime, with unclear lines of authority." The Other Things
When unemployment becomes an excuse to raise rates (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/17/the-illogical-fed/
One guess is as good as another! https://thefaintofheart.wordpress.com/2015/06/21/john-williams-in-whack-a-mole-mode/
Even though the evidence is there https://thefaintofheart.wordpress.com/2015/06/22/denying-the-monetary-solution/
So close...https://thefaintofheart.wordpress.com/2015/06/23/brad-delong-misses-the-put/
An apt driver's analogy for the macroeconomy: hills, valleys and constraints (David Beckworth) http://macromarketmusings.blogspot.com/2015/06/the-penske-view-of-macroeconomic-policy.html
Speaking of driverless cars, what about "driverless" central banking...(George Selgin) http://www.alt-m.org/2015/06/23/driverless-money/
"The insistence on not making large policy changes creates an environment which is actually very convenient for central bankers who want to hide their mistakes." (Britmouse) https://uneconomical.wordpress.com/2015/06/23/lessons-from-switzerland/
Are ideas "economically special, on the rivalry/non-rivalry dimension"? (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/are-apples-non-rival.html
Some musings on growth theory: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/aksolowsmithschumpeterian-growth.html
If this statement were a school assignment, it would be graded "incomplete" (Bonnie Carr) https://dajeeps.wordpress.com/2015/06/18/ssdd-june-fomc-statement/
Housing supply takes a lot of the blame (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-40.html
How well has monetary offset held up? http://idiosyncraticwhisk.blogspot.com/2015/06/the-2013-austerity-debate.html
This has been a continuing pattern http://idiosyncraticwhisk.blogspot.com/2015/06/the-end-of-qe-and-first-rate-hike.html
Also of interest:
a paper from Brink Lindsey, "Low Hanging Fruit Guarded by Dragons" http://www.cato.org/publications/white-paper/low-hanging-fruit-guarded-dragons-reforming-regressive-regulation-boost-us
Better to create new places of intellectual and economic opportunity for those with limited economic access, than "force" them into places which either don't want or need them: http://www.citylab.com/housing/2015/06/where-should-poor-people-live/394667/
"...taking into account the monetary policy offset, the fiscal multiplier still appears to be zero, even at the zero lower bound in interest rates." (Mark Sadowski) https://thefaintofheart.wordpress.com/2015/06/18/failed-fiscalist-forecasts/
David Glasner compares some historical mistakes with more recent mistakes on the part of U.S. government http://uneasymoney.com/2015/06/18/trying-to-make-sense-of-the-insane-policy-of-the-bank-of-france-and-other-catastrophes/
Scott Sumner highlights Mark's new study Mark Sadowski on fiscal austerity, with and without monetary offset Two other studies showed similar results - one from Ben Steil and Dinah Walker, and another from Kevin Erdmann
Too many countries lumped together? Okay, guilty as charged. I'm in Jason Smith's doghouse
Fed intentions are not necessarily future policy response. How much do they want Congress to be responsible for? Monetary offset and the time inconsistency problem
Congress and the Fed need a "meeting of the minds", as Congress doesn't appear to be aware of the hard choices at stake We need a commission on stabilization policy
A closer look at several aspects of fiscal options: Fiscal policy isn't about big government
Scott at Econlog:
And yes, market monetarists do work with econometric studies...Russ Roberts vs Simon Wren-Lewis
Presently, no bipartisan support for tax reform The Democrats move left
Central bankers have been a part of the problem...Could a well designed euro have worked?
Abe and Kuroda are not in agreement Japan's 2014 tax increase worked; they should do it again
"In a sense, this entire debate is an artifact of a flawed stabilization policy regime, with unclear lines of authority." The Other Things
When unemployment becomes an excuse to raise rates (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/17/the-illogical-fed/
One guess is as good as another! https://thefaintofheart.wordpress.com/2015/06/21/john-williams-in-whack-a-mole-mode/
Even though the evidence is there https://thefaintofheart.wordpress.com/2015/06/22/denying-the-monetary-solution/
So close...https://thefaintofheart.wordpress.com/2015/06/23/brad-delong-misses-the-put/
An apt driver's analogy for the macroeconomy: hills, valleys and constraints (David Beckworth) http://macromarketmusings.blogspot.com/2015/06/the-penske-view-of-macroeconomic-policy.html
Speaking of driverless cars, what about "driverless" central banking...(George Selgin) http://www.alt-m.org/2015/06/23/driverless-money/
"The insistence on not making large policy changes creates an environment which is actually very convenient for central bankers who want to hide their mistakes." (Britmouse) https://uneconomical.wordpress.com/2015/06/23/lessons-from-switzerland/
Are ideas "economically special, on the rivalry/non-rivalry dimension"? (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/are-apples-non-rival.html
Some musings on growth theory: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/aksolowsmithschumpeterian-growth.html
If this statement were a school assignment, it would be graded "incomplete" (Bonnie Carr) https://dajeeps.wordpress.com/2015/06/18/ssdd-june-fomc-statement/
Housing supply takes a lot of the blame (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-40.html
How well has monetary offset held up? http://idiosyncraticwhisk.blogspot.com/2015/06/the-2013-austerity-debate.html
This has been a continuing pattern http://idiosyncraticwhisk.blogspot.com/2015/06/the-end-of-qe-and-first-rate-hike.html
Also of interest:
a paper from Brink Lindsey, "Low Hanging Fruit Guarded by Dragons" http://www.cato.org/publications/white-paper/low-hanging-fruit-guarded-dragons-reforming-regressive-regulation-boost-us
Better to create new places of intellectual and economic opportunity for those with limited economic access, than "force" them into places which either don't want or need them: http://www.citylab.com/housing/2015/06/where-should-poor-people-live/394667/
Tuesday, June 23, 2015
Time Value In Use: A Missing Foundation
Even though value in exchange is the wealth that gets noticed, it's easy to forget how value in exchange overlays a number of value in use foundations, which include time value. Value in use also includes time use which exists in multiple non rival capacities - some of which are cultural in nature. Other value in use components are more clearly defined - particularly asset formation and knowledge use as they exist in relation to economic access and labor force participation.
Asset formation has been measured and emphasized of late, and (value in exchange) knowledge based skills sets are debated on a regular basis. Unfortunately, few have considered the possibility that total economic participation (time use aggregates) could have greater bearing on economic circumstance, than either of these.
Aggregates for economic time value, hold active - as opposed to passive considerations - for value in use. The practicality of time value can contribute to ongoing economic activity, whereas housing assets - while "practical" - mostly contribute to ongoing activity through taxation. Present housing structure also reflects the same rival preferences which now designate "preferred" knowledge use structures. Hence the value in use structure of time can be endangered, when wealth is circumvented by methods which gradually limit overall labor force participation. For instance, housing assets can only "park" nominal income to the degree that income remains engaged in current activity.
Value in use settings for time aggregate capacity, are vital. Compensation for value in use settings, would provide means to ensure continuous story lines for knowledge use, as well as meaning and context for specific place. Labor force participation - whether through self directed or other means - is what embeds the components which give stability to economic structure. The marketplace which needs new definition, is that which holds the time value of interpersonal relationships.
Without a marketplace for time value, the threads which bind knowledge and people together could gradually unravel, from all but a small part of the world's population. Even though corporations and governments provide continuity for valuable thought processes, they only manage insofar as their limited missions and value in exchange time use settings will allow. How might compensated value in use, be capable of strengthening the social "fabric"?
Compensated time on value in use terms, could be thought of as a series of ledges along a steep cliff or mountainside. These ledges can stop or at least slow the "fall", whenever institutions and individuals find themselves in the midst of setbacks. The process would protect knowledge use diversity, skills diversity, investment strategies, and the concept of time value as capable of options for non rival cooperation and coordination.
Understandably, both for-profit and not for profit structures would prefer to maintain control over economic value in exchange structures as they presently exist. Increasingly - however - these already existing structures are proving insufficient for complete labor force participation and economic access. It's time to consider other means of preserving both economic access, and the foundations of knowledge which have existed for so long.
When nations are doing well, it can seem as though possible for a vast wealth of knowledge - from centuries earlier - to remain in the public realm. But when nations stumble, their ability to remain stewards of earlier existing wealth capacity, becomes uncertain. If nations are willing to look to their own citizens and compensate them for time based value in use economies, the chances of maintaining both past and present wealth, will be vastly improved.
Asset formation has been measured and emphasized of late, and (value in exchange) knowledge based skills sets are debated on a regular basis. Unfortunately, few have considered the possibility that total economic participation (time use aggregates) could have greater bearing on economic circumstance, than either of these.
Aggregates for economic time value, hold active - as opposed to passive considerations - for value in use. The practicality of time value can contribute to ongoing economic activity, whereas housing assets - while "practical" - mostly contribute to ongoing activity through taxation. Present housing structure also reflects the same rival preferences which now designate "preferred" knowledge use structures. Hence the value in use structure of time can be endangered, when wealth is circumvented by methods which gradually limit overall labor force participation. For instance, housing assets can only "park" nominal income to the degree that income remains engaged in current activity.
Value in use settings for time aggregate capacity, are vital. Compensation for value in use settings, would provide means to ensure continuous story lines for knowledge use, as well as meaning and context for specific place. Labor force participation - whether through self directed or other means - is what embeds the components which give stability to economic structure. The marketplace which needs new definition, is that which holds the time value of interpersonal relationships.
Without a marketplace for time value, the threads which bind knowledge and people together could gradually unravel, from all but a small part of the world's population. Even though corporations and governments provide continuity for valuable thought processes, they only manage insofar as their limited missions and value in exchange time use settings will allow. How might compensated value in use, be capable of strengthening the social "fabric"?
Compensated time on value in use terms, could be thought of as a series of ledges along a steep cliff or mountainside. These ledges can stop or at least slow the "fall", whenever institutions and individuals find themselves in the midst of setbacks. The process would protect knowledge use diversity, skills diversity, investment strategies, and the concept of time value as capable of options for non rival cooperation and coordination.
Understandably, both for-profit and not for profit structures would prefer to maintain control over economic value in exchange structures as they presently exist. Increasingly - however - these already existing structures are proving insufficient for complete labor force participation and economic access. It's time to consider other means of preserving both economic access, and the foundations of knowledge which have existed for so long.
When nations are doing well, it can seem as though possible for a vast wealth of knowledge - from centuries earlier - to remain in the public realm. But when nations stumble, their ability to remain stewards of earlier existing wealth capacity, becomes uncertain. If nations are willing to look to their own citizens and compensate them for time based value in use economies, the chances of maintaining both past and present wealth, will be vastly improved.
Saturday, June 20, 2015
GDP: Don't Shoot The Messenger
GDP is supposed to be representative of our existing monetary obligations in aggregate...or is it? When monetary authorities become distracted by a host of factors including the complexities of finance, fiscal wish lists, invisible digital "luxuries", and even happiness factors, actual monetary obligations can be forgotten. Even though aggregate spending capacity is key to monetary stability, its importance continues to be downplayed in monetary policy.
If that were not problematic enough, some believe that a digital "revolution" is reason enough to allow deflation to occur. What is forgotten, is that good (or naturally occurring) deflation happens when supply side circumstance give it the chance to do so. In spite of consumer gains in the form of entertainment and communication, the costs of housing and services have yet to benefit from innovation which would improve standards of living on the monetary terms that matter most. Instead of "wishing" away onerous economic obligations through bad (forced) deflation, it makes more sense to face unnecessary supply side burdens head on.
Meanwhile, central bankers - and others - have chosen to obfuscate and misrepresent the monetary means which exist to meet ongoing responsibilities. As a result, populations remain confused as to the actual nature of monetary representation. GDP (and the money it measures) is simply the messenger, which provides the "news" regarding economic conditions which populations create. Don't shoot the messenger!
Scott Sumner recently noted that digital deflation is not a good idea, and Tyler Cowen also responded to Scott's post "...we know what a boom looks like and this ain't it." Cowen adds:
Ultimately, everyone needs to participate in the economy, and recent actions on the part of the Fed make one wonder whether this fact is actually being taken seriously. It would be far better for the Fed to level with the public, regarding its mistakes in the Great Recession. Unfortunately, while the Fed pretends it is innocent of any wrongdoing, some are being convinced to return to a gold standard, and perhaps even bring it closer to home.
There needs to be greater clarity about the nature of fiat money, and the roles which national governments can reasonably expect to fulfill in the future. Until this occurs, many will remain confused as to what fiat money is supposed to accomplish. Supply side intransigence is at the root of too many problems which need to be addressed. If some remain convinced that "too much money" is being printed, the appropriate structural response is to decipher why given levels of monetary printing are needed in the first place, then what to do about needed changes. Important in all of this is to be proactive with these issues as they actually exist, instead of reacting in ways which only make things worse.
If that were not problematic enough, some believe that a digital "revolution" is reason enough to allow deflation to occur. What is forgotten, is that good (or naturally occurring) deflation happens when supply side circumstance give it the chance to do so. In spite of consumer gains in the form of entertainment and communication, the costs of housing and services have yet to benefit from innovation which would improve standards of living on the monetary terms that matter most. Instead of "wishing" away onerous economic obligations through bad (forced) deflation, it makes more sense to face unnecessary supply side burdens head on.
Meanwhile, central bankers - and others - have chosen to obfuscate and misrepresent the monetary means which exist to meet ongoing responsibilities. As a result, populations remain confused as to the actual nature of monetary representation. GDP (and the money it measures) is simply the messenger, which provides the "news" regarding economic conditions which populations create. Don't shoot the messenger!
Scott Sumner recently noted that digital deflation is not a good idea, and Tyler Cowen also responded to Scott's post "...we know what a boom looks like and this ain't it." Cowen adds:
Debts and bills must be paid, and jobs must be created at wages people will take, whether or not you're having fun with Angry Birds or cursing at your (least) favorite bloggers...So don't aggregate consumption gains with productivity gains, proudly parading a single number and claiming that everything is fine. It is better, and more accurate to say, "We've now learned to really love those Brussels sprouts, but we may still be in deep doo doo."Like many other Baby Boomers, I have gradually learned to interact with digital social media. Even so, the digital experience remains a far cry, from how it feels to get out and experience the world firsthand. What's more, experiencing the world firsthand is not always easy, for those who lack economic access. How many individuals would choose the vitality of the marketplace over the internet, if that were truly a viable option?
Ultimately, everyone needs to participate in the economy, and recent actions on the part of the Fed make one wonder whether this fact is actually being taken seriously. It would be far better for the Fed to level with the public, regarding its mistakes in the Great Recession. Unfortunately, while the Fed pretends it is innocent of any wrongdoing, some are being convinced to return to a gold standard, and perhaps even bring it closer to home.
There needs to be greater clarity about the nature of fiat money, and the roles which national governments can reasonably expect to fulfill in the future. Until this occurs, many will remain confused as to what fiat money is supposed to accomplish. Supply side intransigence is at the root of too many problems which need to be addressed. If some remain convinced that "too much money" is being printed, the appropriate structural response is to decipher why given levels of monetary printing are needed in the first place, then what to do about needed changes. Important in all of this is to be proactive with these issues as they actually exist, instead of reacting in ways which only make things worse.
Friday, June 19, 2015
Notes on Time Value as Rival and Non Rival
Rival and non rival time value exists in a number of dimensions, which also depend on the resource and activity flows a given equilibrium can represent. For instance, time aggregates of late have been randomly utilized, as institutions continue to hire individuals in rival capacities. This definition of time value has in fact been logical, in that it evolved from earlier non rival settings. Local group coordination had been spontaneous and mutually time dependent. However, those earlier forms of coordination existed in relation to resource sets of a more physical nature, compared with the present.
In that earlier context, non rival time had not yet been defined - and regimented - by twentieth century institutions. As technology made it easier to define divisions of labor, time aggregates moved from internal valuation towards externally valuations. Of course the paradox in this regard is that increased productivity is gradually whittling away at the need for rival time in multiple economic settings. Even though rival time use still functions reasonably well for prosperous cities and regions, lower density environments never fully adjusted to the externally defined coordination of city environments.
Economic growth in recent centuries has greatly benefited from rival time use, even as this structure also relied on informally organized non rival time use in multiple capacities. While those earlier support systems of informal time coordination have dwindled, they were never monetarily compensated to begin with, and replacements for non rival time coordination will need monetary compensation.
For knowledge use systems, most time value - particularly for ongoing service maintenance functions - would exist in a non rival capacity. Labor force participation could be restored without the need to draw on output from rival production. Because matched time makes it possible to gauge new output which needs no reimbursement or resource smoothing, non rival time also acts as a easy to measure source of new time based wealth.
What exceptions would exist for rival time value in knowledge use systems? One exception is difficult work which would likely require more hourly compensation than a knowledge use services base would offer. Otherwise, there might be few takers for dangerous or monotonous work, in environments which provide stability and context for knowledge based challenges. Do other situations call for asymmetric - or more substantial compensation?
Consider the kinds of activities which would serve as "growth starters" for new knowledge structures. While many of these can emerge internally through matched time arbitrage, there would also be times when new knowledge sets would be sought from elsewhere and need more group support than matched time arbitrage can provide, for local training processes. Because these would contribute to more local economic complexity and diversity, the extra compensation required would be absorbed fairly quickly within local group structures. Extra compensation only becomes problematic when it requires an uncertain degree of separately existing resources for ongoing maintenance functions in knowledge use.
By way of example, consider how rival time value contributes to wealth creation processes in organizational capacity for tradable goods. Many compensated (rival) skills sets exist in association with tradable goods while product continues to emerge in the marketplace. One can compare this process to the foundation that compensated rival time value would provide, for additions to existing knowledge use structures. Even though higher compensation for rival time value is of a temporary nature, it often generates an expanded marketplace for a given product...despite the fact increased market share is anyone's guess.
Only consider what happens to long term compensation for rival time value, when it is not capable of providing increased marketplace share and/or product. For high skill services, time value is often the primary product component. As a result, additional compensation is regularly needed from other resources to reimburse rival skills as time value, even though there are insufficient gains in marketplace formation. Over time, this becomes a growing coordination imbalance, which slowly chips away at other existing forms of wealth and institutional responsibility.
Even though staked claims for rival time value are not always problematic in emerging equilibrium, they can cause major headaches in a mature equilibrium. The resulting imbalance also makes it more difficult to ensure appropriate monetary representation for populations as a whole. The ensuing confusion also means that citizens become less inclined to trust governments at the national levels where services coordination for monetary transmission also takes place.
Asymmetric monetary compensation for rival time value, can eventually create imbalances for nominal income. It matters not whether those imbalances occur through fiscal activity, hidden subsidies or extended patent protection. To summarize, it's not that compensated rival time value isn't desirable. Rather, time management applications which don't generate marketplace gains, can create imbalance when rival time value is asymmetrically compensated over the long term. When too many skills sets for time based product are compensated as rival goods, political strife also results. In these circumstance, representative democracy often gets used to short circuit the rival time value that is desired by opposing factions.
The impulse to maintain time value as rival is understandable. Just the same, this process is beginning to take a toll on many who - as a result - have become convinced that their time has too little value to count in the world for their own needs or aspirations. Monetary representation needs to be better understood by all citizens, and monetary representation also needs to remain firmly attached to the potential value of time use aggregates as a whole. Even though monetary representation for all is such a basic argument, the fact it is scarcely understood, is responsible for much of the societal unrest of the present.
In that earlier context, non rival time had not yet been defined - and regimented - by twentieth century institutions. As technology made it easier to define divisions of labor, time aggregates moved from internal valuation towards externally valuations. Of course the paradox in this regard is that increased productivity is gradually whittling away at the need for rival time in multiple economic settings. Even though rival time use still functions reasonably well for prosperous cities and regions, lower density environments never fully adjusted to the externally defined coordination of city environments.
Economic growth in recent centuries has greatly benefited from rival time use, even as this structure also relied on informally organized non rival time use in multiple capacities. While those earlier support systems of informal time coordination have dwindled, they were never monetarily compensated to begin with, and replacements for non rival time coordination will need monetary compensation.
For knowledge use systems, most time value - particularly for ongoing service maintenance functions - would exist in a non rival capacity. Labor force participation could be restored without the need to draw on output from rival production. Because matched time makes it possible to gauge new output which needs no reimbursement or resource smoothing, non rival time also acts as a easy to measure source of new time based wealth.
What exceptions would exist for rival time value in knowledge use systems? One exception is difficult work which would likely require more hourly compensation than a knowledge use services base would offer. Otherwise, there might be few takers for dangerous or monotonous work, in environments which provide stability and context for knowledge based challenges. Do other situations call for asymmetric - or more substantial compensation?
Consider the kinds of activities which would serve as "growth starters" for new knowledge structures. While many of these can emerge internally through matched time arbitrage, there would also be times when new knowledge sets would be sought from elsewhere and need more group support than matched time arbitrage can provide, for local training processes. Because these would contribute to more local economic complexity and diversity, the extra compensation required would be absorbed fairly quickly within local group structures. Extra compensation only becomes problematic when it requires an uncertain degree of separately existing resources for ongoing maintenance functions in knowledge use.
By way of example, consider how rival time value contributes to wealth creation processes in organizational capacity for tradable goods. Many compensated (rival) skills sets exist in association with tradable goods while product continues to emerge in the marketplace. One can compare this process to the foundation that compensated rival time value would provide, for additions to existing knowledge use structures. Even though higher compensation for rival time value is of a temporary nature, it often generates an expanded marketplace for a given product...despite the fact increased market share is anyone's guess.
Only consider what happens to long term compensation for rival time value, when it is not capable of providing increased marketplace share and/or product. For high skill services, time value is often the primary product component. As a result, additional compensation is regularly needed from other resources to reimburse rival skills as time value, even though there are insufficient gains in marketplace formation. Over time, this becomes a growing coordination imbalance, which slowly chips away at other existing forms of wealth and institutional responsibility.
Even though staked claims for rival time value are not always problematic in emerging equilibrium, they can cause major headaches in a mature equilibrium. The resulting imbalance also makes it more difficult to ensure appropriate monetary representation for populations as a whole. The ensuing confusion also means that citizens become less inclined to trust governments at the national levels where services coordination for monetary transmission also takes place.
Asymmetric monetary compensation for rival time value, can eventually create imbalances for nominal income. It matters not whether those imbalances occur through fiscal activity, hidden subsidies or extended patent protection. To summarize, it's not that compensated rival time value isn't desirable. Rather, time management applications which don't generate marketplace gains, can create imbalance when rival time value is asymmetrically compensated over the long term. When too many skills sets for time based product are compensated as rival goods, political strife also results. In these circumstance, representative democracy often gets used to short circuit the rival time value that is desired by opposing factions.
The impulse to maintain time value as rival is understandable. Just the same, this process is beginning to take a toll on many who - as a result - have become convinced that their time has too little value to count in the world for their own needs or aspirations. Monetary representation needs to be better understood by all citizens, and monetary representation also needs to remain firmly attached to the potential value of time use aggregates as a whole. Even though monetary representation for all is such a basic argument, the fact it is scarcely understood, is responsible for much of the societal unrest of the present.
Wednesday, June 17, 2015
Non Rival Time Value in Growth Context
How to think about rival versus non rival time value, in terms of economic input and growth? Is it possible for non rival time value to further contribute to growth, when time value as rival input becomes limited in the marketplace? Non rival - in this instance - refers to symmetric time use coordination at local levels. Consider the summary below, which Dietz Vollrath provides regarding the recent Paul Romer "mathiness" discussions. Oh - and by the way - "pick two" as applicable...not quite as easy as one might think:
Grey areas as to what actually constitutes rival or non rival input, are also confusing for growth potential. The information or knowledge which gets utilized in the workplace is not always rival for the reasons that one would expect. Market dominance in knowledge use patterns, can sometimes leave populations reliant on inadequate or incomplete methods. What's more, both special interests and governments have been too quick to assign rival definitions for time, skills, and other resources which would gain from non rival knowledge use settings.
Time arbitrage could restore growth capacity for knowledge and skills sets, in services settings devoted to non rival conditions. Not only would human capital take a more active role in the marketplace, but its use would be easier to measure, than the present means of monetary compensation for time value as undefined product.
There is another aspect of time arbitrage as non rival, which would allow it to contribute to output as a freestanding component. In these circumstance, one might not have to pick two from the three possibilities listed above. Matched (or non rival) time would not detract from the product of rival inputs or outputs. Time value becomes its own product, which is "paid" by other new time value and compensated as such.
Whereas group investment structures (for assets, infrastructure, commodities, and product separate from time) would provide settings for product involving rival input and output. Also, knowledge use systems could elect to purchase some time value as a rival good through secondary or traditional monetary compensation, when necessary. This option could assist in generating new growth patterns, whenever outside assistance is needed to contribute to seed formation in knowledge use systems.
1) Output is constant returns to scale in rival output.Vollrath's above linked post provides some needed clarity, for recent discussions regarding growth theory. I'm only beginning the process of sorting through a concept comperable to Euler's theorem, or for those of us who realized the importance of math a bit too late in life, principle of least effort. However, much about the use of capital has been shifting in recent decades, which may be affecting how these principles actually play out. Human capital needs a more active role, than the employment of rival time value can provide. In particular, there are reasons why non rival time value needs a more central role, but is not yet aligned for that purpose.
2) Non-rival inputs receive some portion of output.
3) Rival outputs receive output equal to their marginal product.
Grey areas as to what actually constitutes rival or non rival input, are also confusing for growth potential. The information or knowledge which gets utilized in the workplace is not always rival for the reasons that one would expect. Market dominance in knowledge use patterns, can sometimes leave populations reliant on inadequate or incomplete methods. What's more, both special interests and governments have been too quick to assign rival definitions for time, skills, and other resources which would gain from non rival knowledge use settings.
Time arbitrage could restore growth capacity for knowledge and skills sets, in services settings devoted to non rival conditions. Not only would human capital take a more active role in the marketplace, but its use would be easier to measure, than the present means of monetary compensation for time value as undefined product.
There is another aspect of time arbitrage as non rival, which would allow it to contribute to output as a freestanding component. In these circumstance, one might not have to pick two from the three possibilities listed above. Matched (or non rival) time would not detract from the product of rival inputs or outputs. Time value becomes its own product, which is "paid" by other new time value and compensated as such.
Whereas group investment structures (for assets, infrastructure, commodities, and product separate from time) would provide settings for product involving rival input and output. Also, knowledge use systems could elect to purchase some time value as a rival good through secondary or traditional monetary compensation, when necessary. This option could assist in generating new growth patterns, whenever outside assistance is needed to contribute to seed formation in knowledge use systems.
Midweek Market Monetarist Links and Summaries - 6/17/15
Is a competitive equilibrium possible, with price taking behavior and partially excludable nonrival goods? (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/mathiness-and-growth-theory.html
Ideas have their work cut out for them: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/are-ideas-really-non-rival.html
Oddly enough, plenty of austerity was involved (Mark Sadowski) https://thefaintofheart.wordpress.com/2015/06/12/is-iceland-krugmans-inadvertent-case-for-the-monetary-policy-offset-of-fiscal-policy/
David Glasner considers several aspects of long term unemployment: http://uneasymoney.com/2015/06/10/optimistic-thoughts-about-productivity-growth-and-secular-stagnation/
Retail sales have only followed the lead of aggregate nominal spending (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/11/human-senses-are-wired-for-survival/
Inflation continues to dive, right along with unemployment... https://thefaintofheart.wordpress.com/2015/06/13/preparing-spirits-for-another-postponement/
Even without reference to the previous level, the growth level continues to trend downward: https://thefaintofheart.wordpress.com/2015/06/15/when-will-the-fed-recognize-its-failures/
Any month now...https://thefaintofheart.wordpress.com/2015/06/16/the-fed-and-the-asymptotic-approach-principle/
Whatever hopes for recovery any presidential candidate holds, the Fed likely holds other plans: https://thefaintofheart.wordpress.com/2015/06/16/jb-the-populist/
Stephen Williamson still has a lot of faith in the models (Scott Sumner) AD shocks aren't so mysterious
Dubai has bounced back Please, do buy. You won't regret it
The supply side argument for lower top rates will probably weaken over time What's wrong with Louisiana?
Lower tax rates does not mean supply side miracles Sioux Falls rises, as Sioux City falls
InfoAmerica and CommodityAmerica - Where taxes matter and where they don't
Digital gains are fine, but they have little if anything to do with aggregate spending capacity: Digital deflation? Not an attractive idea
Scott at Econlog:
Iceland's crisis was far more severe...Market Monetarism in Iceland?
They have not been rewarded for incentive: How egalitarianism failed Japan
People notice relative conditions Interpersonal utility comparisons are unavoidable
Switzerland rejects the Piketty agenda Voters in successful neoliberal economies have no interest in Pikettynomics
Sometimes, regulations make life "easier" for NIMBYs...Matt Yglesias on environmental impact regulations
More reasoning from a price change: Kevin Drum's Third Law is wrong
Perhaps Stanley Fischer has declared "victory" a bit prematurely...(George Selgin) http://www.alt-m.org/2015/06/15/doc-selgins-qe-eye-test/
Can companies have macroeconomic effects? (Lars Christensen) http://marketmonetarist.com/2015/06/14/awesome-legonomics-positive-tfp-shocks-and-the-danish-economy/
Benjamin Cole responds to an article from Kevin O'Marah: https://thefaintofheart.wordpress.com/2015/06/11/a-thought-provoking-op-ed-in-forbes/
One could think of supposed overinvestment in housing, as a world record for reasoning from a price change (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-38-world.html
Kevin responds to a recent paper from Vox: http://idiosyncraticwhisk.blogspot.com/2015/06/behavioral-finance-is-wrong-framing-for.html
Ideas have their work cut out for them: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/are-ideas-really-non-rival.html
Oddly enough, plenty of austerity was involved (Mark Sadowski) https://thefaintofheart.wordpress.com/2015/06/12/is-iceland-krugmans-inadvertent-case-for-the-monetary-policy-offset-of-fiscal-policy/
David Glasner considers several aspects of long term unemployment: http://uneasymoney.com/2015/06/10/optimistic-thoughts-about-productivity-growth-and-secular-stagnation/
Retail sales have only followed the lead of aggregate nominal spending (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/11/human-senses-are-wired-for-survival/
Inflation continues to dive, right along with unemployment... https://thefaintofheart.wordpress.com/2015/06/13/preparing-spirits-for-another-postponement/
Even without reference to the previous level, the growth level continues to trend downward: https://thefaintofheart.wordpress.com/2015/06/15/when-will-the-fed-recognize-its-failures/
Any month now...https://thefaintofheart.wordpress.com/2015/06/16/the-fed-and-the-asymptotic-approach-principle/
Whatever hopes for recovery any presidential candidate holds, the Fed likely holds other plans: https://thefaintofheart.wordpress.com/2015/06/16/jb-the-populist/
Stephen Williamson still has a lot of faith in the models (Scott Sumner) AD shocks aren't so mysterious
Dubai has bounced back Please, do buy. You won't regret it
The supply side argument for lower top rates will probably weaken over time What's wrong with Louisiana?
Lower tax rates does not mean supply side miracles Sioux Falls rises, as Sioux City falls
InfoAmerica and CommodityAmerica - Where taxes matter and where they don't
Digital gains are fine, but they have little if anything to do with aggregate spending capacity: Digital deflation? Not an attractive idea
Scott at Econlog:
Iceland's crisis was far more severe...Market Monetarism in Iceland?
They have not been rewarded for incentive: How egalitarianism failed Japan
People notice relative conditions Interpersonal utility comparisons are unavoidable
Switzerland rejects the Piketty agenda Voters in successful neoliberal economies have no interest in Pikettynomics
Sometimes, regulations make life "easier" for NIMBYs...Matt Yglesias on environmental impact regulations
More reasoning from a price change: Kevin Drum's Third Law is wrong
Perhaps Stanley Fischer has declared "victory" a bit prematurely...(George Selgin) http://www.alt-m.org/2015/06/15/doc-selgins-qe-eye-test/
Can companies have macroeconomic effects? (Lars Christensen) http://marketmonetarist.com/2015/06/14/awesome-legonomics-positive-tfp-shocks-and-the-danish-economy/
Benjamin Cole responds to an article from Kevin O'Marah: https://thefaintofheart.wordpress.com/2015/06/11/a-thought-provoking-op-ed-in-forbes/
One could think of supposed overinvestment in housing, as a world record for reasoning from a price change (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-38-world.html
Kevin responds to a recent paper from Vox: http://idiosyncraticwhisk.blogspot.com/2015/06/behavioral-finance-is-wrong-framing-for.html
Monday, June 15, 2015
Time Based Defined Product - Meritocratic or Egalitarian?
Arnold Kling has several recent posts concerning non marketable outputs, undefined product and the importance of these factors for the organization of firms. While Arnold makes some good points, undefined product is not always the best approach for organizational capacity. Fortunately, it is possible to define time based product at the level of individual activity, so that services formation can be better adapted to individual needs.
While horizontal alignment for services structure is also egalitarian, income "equality" is not a sufficient rationale. Rather, equal monetary compensation for time value (as an economic starting point) serves practical purpose in group based investment structures. Equal time compensation allows individuals to discover how they want to create time value, instead of being compelled to do so according to the skills sets which special interests are most inclined to compensate. Plus, the time arbitrage connection - which leaves no residual balance - allows direct wealth creation and knowledge use which can be defined on personal terms.
Time value as undefined product, works best for organizations whose product is not limited to specific populations, time frames or locations. Tradable goods in particular tend to be outward focused, and these organizations are the ones which often benefit from the productive gains of scale. Divisions of labor which exist as undefined product, usually contribute to productivity in these circumstance. Also, meritocratic executive compensation makes sense for most tradable goods in this context, because the "right" sets of skills can mean tremendous gains in marketplace capacity.
Hence meritocratic compensation is the right approach for most tradable goods organizational structure. As Scott Sumner recently noted - incentive and merit can be vitally important for economic outcomes. However a caveat: meritocratic compensation provides the most benefit for the forms of economic dynamism which exist in broad - often international - context. Organizational capacity for tradable goods continues to improve living standards across the world, and it pays to reimburse CEOs in accordance with their ability to make a difference in that regard. When corporate structure is of a size that it possibly affects the economic equilibrium of nations - as Lars Christensen recently noted - this is not a scenario where egalitarian monetary compensation for CEOs makes much sense.
Why, then, is service formation such a different circumstance? Time based product exists in local and specific context. As a result, time dependent product does not conform to the same marketplace dynamic as product which exists separately from time. For one thing, the "need" for a few individuals to organize the activities of others is not automatic, particularly when economic activity is time based and capable of becoming defined product. When time value is integral to product, labor "saving" mechanisms do not always contribute to product quality.
Time based (defined) product is also a quantitative reality. For instance, few question that the skills of surgeons may be preferable to alternatives. Just the same, the time and skills sets which are specific to surgeons, are limited to a specific subset of any given population, at any given point in time. Thus far, meritocracy has provided the monetary reward (compensation) for the surgeon's time and efforts. Through these means - however - it remains difficult to ascertain what the marketplace actually desires or might otherwise create. Even if budgetary caution were "thrown to the wind", merit based time value still can't generate a quantitative change in the marketplace.
It has proven difficult for nations to embrace free trade and encourage domestic economic activity at the same time. Plenty of confusion exists, regarding time based activity in terms of productivity and the economies of scale which sometimes apply. Among other things: in times of uncertainty, this causes governments to question the same beneficial free trade activities which they previously supported.
Governments need a stronger line of demarcation between organizational capacity for time based product, and product which is readily distinguishable from time value. Otherwise, when too many benefits from scale are used to reward time based product, the process can slowly undermine public support for free trade. Meritocratic compensation is worthwhile, when the result is a broader marketplace for the product in question. However, when meritocratic compensation is not capable of contributing to the marketplace in quantitative terms, egalitarian compensation for time based activity can bring much needed balance to the process.
While horizontal alignment for services structure is also egalitarian, income "equality" is not a sufficient rationale. Rather, equal monetary compensation for time value (as an economic starting point) serves practical purpose in group based investment structures. Equal time compensation allows individuals to discover how they want to create time value, instead of being compelled to do so according to the skills sets which special interests are most inclined to compensate. Plus, the time arbitrage connection - which leaves no residual balance - allows direct wealth creation and knowledge use which can be defined on personal terms.
Time value as undefined product, works best for organizations whose product is not limited to specific populations, time frames or locations. Tradable goods in particular tend to be outward focused, and these organizations are the ones which often benefit from the productive gains of scale. Divisions of labor which exist as undefined product, usually contribute to productivity in these circumstance. Also, meritocratic executive compensation makes sense for most tradable goods in this context, because the "right" sets of skills can mean tremendous gains in marketplace capacity.
Hence meritocratic compensation is the right approach for most tradable goods organizational structure. As Scott Sumner recently noted - incentive and merit can be vitally important for economic outcomes. However a caveat: meritocratic compensation provides the most benefit for the forms of economic dynamism which exist in broad - often international - context. Organizational capacity for tradable goods continues to improve living standards across the world, and it pays to reimburse CEOs in accordance with their ability to make a difference in that regard. When corporate structure is of a size that it possibly affects the economic equilibrium of nations - as Lars Christensen recently noted - this is not a scenario where egalitarian monetary compensation for CEOs makes much sense.
Why, then, is service formation such a different circumstance? Time based product exists in local and specific context. As a result, time dependent product does not conform to the same marketplace dynamic as product which exists separately from time. For one thing, the "need" for a few individuals to organize the activities of others is not automatic, particularly when economic activity is time based and capable of becoming defined product. When time value is integral to product, labor "saving" mechanisms do not always contribute to product quality.
Time based (defined) product is also a quantitative reality. For instance, few question that the skills of surgeons may be preferable to alternatives. Just the same, the time and skills sets which are specific to surgeons, are limited to a specific subset of any given population, at any given point in time. Thus far, meritocracy has provided the monetary reward (compensation) for the surgeon's time and efforts. Through these means - however - it remains difficult to ascertain what the marketplace actually desires or might otherwise create. Even if budgetary caution were "thrown to the wind", merit based time value still can't generate a quantitative change in the marketplace.
It has proven difficult for nations to embrace free trade and encourage domestic economic activity at the same time. Plenty of confusion exists, regarding time based activity in terms of productivity and the economies of scale which sometimes apply. Among other things: in times of uncertainty, this causes governments to question the same beneficial free trade activities which they previously supported.
Governments need a stronger line of demarcation between organizational capacity for time based product, and product which is readily distinguishable from time value. Otherwise, when too many benefits from scale are used to reward time based product, the process can slowly undermine public support for free trade. Meritocratic compensation is worthwhile, when the result is a broader marketplace for the product in question. However, when meritocratic compensation is not capable of contributing to the marketplace in quantitative terms, egalitarian compensation for time based activity can bring much needed balance to the process.
Saturday, June 13, 2015
Notes on Freedom, Critical Thresholds and Growth Potential
Knowledge use diversity, and the freedom of choice it implies, have unexpectedly plateaued and begun a slow decline in the marketplace. Neither governments or business interests have acknowledged the fact they need to act quickly, in order to preserve economic complexity. Even though fiscal conservatism may have reached an impasse at state levels, that does not mean governments will be able to continue "business as usual" in terms of fiscal decision making processes.
In the meantime, knowledge use access and time based services will not remain stable in their present marketplace configurations. Fiscal policies will be limited even in the best of circumstance, as entitlement responsibilities continue to override both time based service formation and needed infrastructural adaptation for present income realities. Further, neither of these important issues have been adequately considered within the monetary context where they actually need to occur.
These are just several aspects of a critical threshold for labor force participation and economic access. Knowledge use needs to be approached from a broader perspective, in order to remain fully viable. As government budgets continue to pare back choices re knowledge diversity, individuals experience limits to freedom at a personal level. Professionals have fewer options to pursue intellectual challenges, while non professionals face health concerns from patterns of repetition in the workplace. Likewise, family members have fewer means to maintain personal identity and emotional stability. Less economic freedom means less ability to manage one's life, which only adds further stress at individual and system wide levels.
While central bankers, financiers and politicians receive much of the blame in times of economic uncertainty, rigid supply side circumstance plays a larger role for negative outcomes than is often recognized. Not every call for free markets is actually intended in terms of access and personal choice. Political freedom cannot be reasonably maintained without economic freedom, and it is also the responsibility of supply side interests to make certain economic freedom is not lost. Production reform in particular, needs to restore growth potential to services formation through the use of time arbitrage and knowledge use systems.
There is a counterintuitive aspect to time arbitrage. How so? Time arbitrage has the potential to immediately contribute to the positive side of the ledger for knowledge use, while fiscal policy has had little choice but to subtract from already existing resources in order to support knowledge. Knowledge diversity is vital for prosperity. Just the same, too much knowledge use potential now ends up on the scrap heap of history, in part due to already existing demands on fiscal policy.
What the supply side has missed thus far, are the vast societal positives which could be generated through more extensive knowledge use. Time arbitrage has the capacity to generate new wealth, through better coordination of production and services at local levels. However, even the self start mechanism of knowledge use systems requires plenty of organizational capacity, beforehand.
Coordination for knowledge use systems would need to occur among multiple disciplines, which presently have little incentive to directly interact with one another. One reason is simply the expense involved. Even though interdisciplinary efforts can mean tremendous payoffs, costs are generally too prohibitive, beyond the obvious exceptions of higher income level communities. And yet it is precisely lower income levels which need better access to economic diversity and complexity. Perhaps this explains why many local revitalization projects have proven insufficient, to generate productive activity for those who need it most. What if lower income levels had access to constructive ideas for economically diverse community, without the high costs which are normally required?
Even non rival ideas which are freely available, might not sufficiently contribute to economic complexity without adequate understanding on the part of those who wish to benefit from them. As Nick Rowe indicated in a recent post, non rival ideas are not necessarily easy to spread:
If a limited marketplace in land based services were not problematic enough, the price effect is built into the cost structures of many existing institutions. For today's services providers, it's all about "location, location, location". The real estate valuations of prosperous cities - given their unique positioning for knowledge and services access - often appear as though "outpacing" the ability of local residents to keep up with costs of living. And yet the land which "seems" as though it should be further taxed to "compensate", is already occupied by many of the primary recipients of governmental taxation, i.e. the knowledge use structures which have not been sufficiently duplicated.
Perhaps the oddity of not for profit claims to geographic location was not so obvious, when Henry George became convinced that land prices were the primary cause of inequality and poverty. He wanted to know why poverty seemed to deepen, as society grew wealthier. Granted, it's not difficult to appreciate his logic. Even so, I suspect the lack of a sufficient marketplace for time value and knowledge use, as the real culprit for inequality - in terms of both economic access and land values. A lack of knowledge use in a large percentage of economic environments, raises the costs of knowledge use and services in the places where they do exist.
By restoring balance to knowledge use in economic life, land use valuations would come into better balance over time. Desirable regions which appear completely "out of reach" now, wouldn't quite seem that way, once many more places also become desirable to work, live and raise families.
When people learn to cooperate for diverse economic activity, the land on which they do so also gains in value. One could think of coordinated non random means for economic beginnings, as akin to any aspect of nature which deserves replication for further economic access, growth and wealth potential. Any time that replication has occurred in the past for naturally occurring resources, the result is commodities and products which are more affordable and accessible. The same could also be true, in terms of meaningful replication for services and knowledge use.
In the meantime, knowledge use access and time based services will not remain stable in their present marketplace configurations. Fiscal policies will be limited even in the best of circumstance, as entitlement responsibilities continue to override both time based service formation and needed infrastructural adaptation for present income realities. Further, neither of these important issues have been adequately considered within the monetary context where they actually need to occur.
These are just several aspects of a critical threshold for labor force participation and economic access. Knowledge use needs to be approached from a broader perspective, in order to remain fully viable. As government budgets continue to pare back choices re knowledge diversity, individuals experience limits to freedom at a personal level. Professionals have fewer options to pursue intellectual challenges, while non professionals face health concerns from patterns of repetition in the workplace. Likewise, family members have fewer means to maintain personal identity and emotional stability. Less economic freedom means less ability to manage one's life, which only adds further stress at individual and system wide levels.
While central bankers, financiers and politicians receive much of the blame in times of economic uncertainty, rigid supply side circumstance plays a larger role for negative outcomes than is often recognized. Not every call for free markets is actually intended in terms of access and personal choice. Political freedom cannot be reasonably maintained without economic freedom, and it is also the responsibility of supply side interests to make certain economic freedom is not lost. Production reform in particular, needs to restore growth potential to services formation through the use of time arbitrage and knowledge use systems.
There is a counterintuitive aspect to time arbitrage. How so? Time arbitrage has the potential to immediately contribute to the positive side of the ledger for knowledge use, while fiscal policy has had little choice but to subtract from already existing resources in order to support knowledge. Knowledge diversity is vital for prosperity. Just the same, too much knowledge use potential now ends up on the scrap heap of history, in part due to already existing demands on fiscal policy.
What the supply side has missed thus far, are the vast societal positives which could be generated through more extensive knowledge use. Time arbitrage has the capacity to generate new wealth, through better coordination of production and services at local levels. However, even the self start mechanism of knowledge use systems requires plenty of organizational capacity, beforehand.
Coordination for knowledge use systems would need to occur among multiple disciplines, which presently have little incentive to directly interact with one another. One reason is simply the expense involved. Even though interdisciplinary efforts can mean tremendous payoffs, costs are generally too prohibitive, beyond the obvious exceptions of higher income level communities. And yet it is precisely lower income levels which need better access to economic diversity and complexity. Perhaps this explains why many local revitalization projects have proven insufficient, to generate productive activity for those who need it most. What if lower income levels had access to constructive ideas for economically diverse community, without the high costs which are normally required?
Even non rival ideas which are freely available, might not sufficiently contribute to economic complexity without adequate understanding on the part of those who wish to benefit from them. As Nick Rowe indicated in a recent post, non rival ideas are not necessarily easy to spread:
...the second person can't use that idea unless the first person communicates that idea to the second person. The first has to teach it, and the second has to learn it, and teaching and learning are (sometimes) costly. The cost of communicating the idea to the second person might even be greater than the cost of the first person coming up with the new idea in the first place. Sometimes it might even be cheaper to reinvent the wheel than to walk to the library. And the marginal cost of communicating the idea to the n'th person very probably will be greater than the cost to the first person of figuring out the idea.Learning new means of economic organization is difficult...there's no getting around it. Just the same, productive economic complexity is a gift that keeps on giving - when and where it has occurred. There is a degree of serendipity to prosperous regions which is undeniable, and the social coordination they engender is worthy of replication, if at all possible. Quite understandably, the price of land reflects the random nature of serendipity and local coordination which has long since taken place. Instead of attempting to force greater densities into prosperous regions, it would better to generate economic complexity across a full range of population densities and land values.
If a limited marketplace in land based services were not problematic enough, the price effect is built into the cost structures of many existing institutions. For today's services providers, it's all about "location, location, location". The real estate valuations of prosperous cities - given their unique positioning for knowledge and services access - often appear as though "outpacing" the ability of local residents to keep up with costs of living. And yet the land which "seems" as though it should be further taxed to "compensate", is already occupied by many of the primary recipients of governmental taxation, i.e. the knowledge use structures which have not been sufficiently duplicated.
Perhaps the oddity of not for profit claims to geographic location was not so obvious, when Henry George became convinced that land prices were the primary cause of inequality and poverty. He wanted to know why poverty seemed to deepen, as society grew wealthier. Granted, it's not difficult to appreciate his logic. Even so, I suspect the lack of a sufficient marketplace for time value and knowledge use, as the real culprit for inequality - in terms of both economic access and land values. A lack of knowledge use in a large percentage of economic environments, raises the costs of knowledge use and services in the places where they do exist.
By restoring balance to knowledge use in economic life, land use valuations would come into better balance over time. Desirable regions which appear completely "out of reach" now, wouldn't quite seem that way, once many more places also become desirable to work, live and raise families.
When people learn to cooperate for diverse economic activity, the land on which they do so also gains in value. One could think of coordinated non random means for economic beginnings, as akin to any aspect of nature which deserves replication for further economic access, growth and wealth potential. Any time that replication has occurred in the past for naturally occurring resources, the result is commodities and products which are more affordable and accessible. The same could also be true, in terms of meaningful replication for services and knowledge use.
Thursday, June 11, 2015
Time Value as Defined Product
Even though time value remains a sought after (defined) product in many instances, much of the time value which represents broad income aggregates, is presently undefined. In the twentieth century, time value became somewhat murky in terms of contribution to product definition and compensation patterns. While divisions of labor meant productivity gains for non tradable goods, labor divisions for services formation did not always benefit from the same dynamic.
Services product which relies on time value, is radically different from the product of traditional manufacture. The experiential good of time based product, is easier to capture through horizontal (direct or person to person) alignment. Just the same, the services organizations which represent time based product, have utilized the hierarchical patterns of traditional manufacture - in spite of the productivity and marketplace losses which have resulted. Instead of a thriving knowledge use marketplace for entrepreneurs (particularly healthcare and education), today's services formations are now caught in a painful scaling back process.
As Arnold Kling and others have noted, time value as undefined product also exists in the form of organizational capital. This form of time value particularly reflects organization - or coordination - from a top down perspective. In many firms, one's time value ultimately contributes to product definition which exists well beyond one's input. According to Arnold Kling:
New corporate structures could do so by creating a local marketplace for services entrepreneurs. In hierarchical services structures, compensation for hours worked represents an expense to the firm. Monetary compensation would proceed differently, in the time arbitrage of knowledge use systems. When service product is defined and reciprocated in the same time/group setting, time value becomes a new resource, made available for mutual gain on the part of everyone involved. Coordinated services formation can allow the rediscovery, of time value as defined product.
Services product which relies on time value, is radically different from the product of traditional manufacture. The experiential good of time based product, is easier to capture through horizontal (direct or person to person) alignment. Just the same, the services organizations which represent time based product, have utilized the hierarchical patterns of traditional manufacture - in spite of the productivity and marketplace losses which have resulted. Instead of a thriving knowledge use marketplace for entrepreneurs (particularly healthcare and education), today's services formations are now caught in a painful scaling back process.
As Arnold Kling and others have noted, time value as undefined product also exists in the form of organizational capital. This form of time value particularly reflects organization - or coordination - from a top down perspective. In many firms, one's time value ultimately contributes to product definition which exists well beyond one's input. According to Arnold Kling:
In an Alchian-Demsetz firm, marginal product is not defined. Think of a business that has exactly one full-time tax accountant (TA). In a sense, the marginal product of the TA is zero, since the TA contributes zero output. On the other hand, the tasks performed by the TA have tremendous value...We do not produce output. We produce organizational capital. So most of us have undefined marginal product.How might one's time value consist of defined product, instead? It depends on whether given knowledge or skills sets are capable of meeting the consumer's request, without intermediary assistance. As intermediaries, many firms arbitrage time value on behalf of employees who accept partial compensation. While time value still directly contributes to output in some instances, hierarchical structures can have high transaction costs for both employers and employees, when services are the output. Corporate structures are needed which make it easier for individuals to contribute to output - both as providers and recipients.
New corporate structures could do so by creating a local marketplace for services entrepreneurs. In hierarchical services structures, compensation for hours worked represents an expense to the firm. Monetary compensation would proceed differently, in the time arbitrage of knowledge use systems. When service product is defined and reciprocated in the same time/group setting, time value becomes a new resource, made available for mutual gain on the part of everyone involved. Coordinated services formation can allow the rediscovery, of time value as defined product.
Wednesday, June 10, 2015
Midweek Market Monetarist Links and Summaries - 6/10/15
Even if someone is opposed to NGDP level targeting, these four steps would be quite useful (Scott Sumner) The Second Step
"...sluggish growth, very low inflation, and especially near-zero interest rates." Was it sensible to expect "this" back in 2009?
Where will productivity come from? Yes, the Great Stagnation is here
4.3% could be Australia's new normal: Australia's Great Stagnation
When tight regulations lead to tight monetary policy: Are Aussie housing regulations the dumbest rules on Earth? Also, Lorenzo has a more comprehensive post on this subject: Fancy maths and data series are not reason to ignore supply and demand
Scott at Econlog
A question re inflation with an NGDP target, via Twitter: Reply to Austin Goolsbee
Subtract finance, and the model becomes comprehensible: The world's three smallest macro models
"...impotence is not inherent; it is self imposed" (David Glasner) http://uneasymoney.com/2015/06/04/repeat-after-me-inflations-the-cure-not-the-disease/
In an IT regime, supply shocks of all kinds can unnecessarily put people out of work (Bonnie Carr) https://dajeeps.wordpress.com/2015/06/03/bird-flu-epidemic-in-laying-hens-driving-inflation-in-the-price-of-eggs/
Something about this liquidity isn't quite right...https://dajeeps.wordpress.com/2015/06/09/w-t-h-cnbc-equates-qe-with-lack-of-liquidity/
Inflation targeting does not take a long-run Omega point into consideration (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/back-propagation-induction-does-not-work-under-inflation-targeting.html
A one period, three good model, in response to Krugman: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/i-need-a-3d-symmetric-edgeworth-box.html
Nick continues from the previous post and works with a model from Nick Edmond http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/a-second-tiny-macro-model-for-microeconomists.html
Plenty of useful information in this post from George Selgin: http://www.alt-m.org/2015/06/04/ten-things-every-economist-should-know-about-the-gold-standard-2/
...but does Summers envision a level target? (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/02/a-solution-to-delongs-back-propagation-induction-unraveling-problem/
Recovery? It's all "relative"...https://thefaintofheart.wordpress.com/2015/06/03/krugmans-answer-to-delong-were-in-a-postmodern-economy/
His message: Don't let doubt set in https://thefaintofheart.wordpress.com/2015/06/03/kuroda-nails-it/
Where is the destination? https://thefaintofheart.wordpress.com/2015/06/06/even-a-great-stagnation-requires-planning/
Too much talk of housing "bubbles" https://thefaintofheart.wordpress.com/2015/06/09/revisionist-thoughts-was-australia-just-luckier-than-most/
Who still believes in growth? (Benjamin Cole) https://thefaintofheart.wordpress.com/2015/06/04/the-fed-can-suffocate-the-economy-under-ngdplt-too/
Limits on supply are a fact of life in high rent cities (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-37-our.html
Perhaps a temporary hiring lull: http://idiosyncraticwhisk.blogspot.com/2015/06/may-2014-employment.html
An article from Scott Sumner and Kevin Erdmann at the National Review: http://www.nationalreview.com/article/419442/heres-whats-driving-inequality-scott-sumner-kevin-erdmann
"...the petro-monetary transmission mechanism at work" (Lars Christensen) http://marketmonetarist.com/2015/06/06/kwanza-devaluation-is-the-right-decision-but-fundamental-regime-change-is-needed/
The monetary-real causality is not stable: http://marketmonetarist.com/2015/06/07/does-y-determine-mv-or-is-it-mv-that-determines-p/
U.S. stock prices as a reality check: http://marketmonetarist.com/2015/06/10/the-stock-market-remains-at-a-permanently-high-plateau/
Also of interest:
The rural poor in the Irish potato famine lacked access to capital markets...one cannot help but consider the skills/time based parallels of the present (A guest post from Tyler Beck Goodspeed) http://antonhowes.tumblr.com/post/121035507254/guest-post-how-microfinance-helped-farmers-adjust
"...sluggish growth, very low inflation, and especially near-zero interest rates." Was it sensible to expect "this" back in 2009?
Where will productivity come from? Yes, the Great Stagnation is here
4.3% could be Australia's new normal: Australia's Great Stagnation
When tight regulations lead to tight monetary policy: Are Aussie housing regulations the dumbest rules on Earth? Also, Lorenzo has a more comprehensive post on this subject: Fancy maths and data series are not reason to ignore supply and demand
Scott at Econlog
A question re inflation with an NGDP target, via Twitter: Reply to Austin Goolsbee
Subtract finance, and the model becomes comprehensible: The world's three smallest macro models
"...impotence is not inherent; it is self imposed" (David Glasner) http://uneasymoney.com/2015/06/04/repeat-after-me-inflations-the-cure-not-the-disease/
In an IT regime, supply shocks of all kinds can unnecessarily put people out of work (Bonnie Carr) https://dajeeps.wordpress.com/2015/06/03/bird-flu-epidemic-in-laying-hens-driving-inflation-in-the-price-of-eggs/
Something about this liquidity isn't quite right...https://dajeeps.wordpress.com/2015/06/09/w-t-h-cnbc-equates-qe-with-lack-of-liquidity/
Inflation targeting does not take a long-run Omega point into consideration (Nick Rowe) http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/back-propagation-induction-does-not-work-under-inflation-targeting.html
A one period, three good model, in response to Krugman: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/i-need-a-3d-symmetric-edgeworth-box.html
Nick continues from the previous post and works with a model from Nick Edmond http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/a-second-tiny-macro-model-for-microeconomists.html
Plenty of useful information in this post from George Selgin: http://www.alt-m.org/2015/06/04/ten-things-every-economist-should-know-about-the-gold-standard-2/
...but does Summers envision a level target? (Marcus Nunes) https://thefaintofheart.wordpress.com/2015/06/02/a-solution-to-delongs-back-propagation-induction-unraveling-problem/
Recovery? It's all "relative"...https://thefaintofheart.wordpress.com/2015/06/03/krugmans-answer-to-delong-were-in-a-postmodern-economy/
His message: Don't let doubt set in https://thefaintofheart.wordpress.com/2015/06/03/kuroda-nails-it/
Where is the destination? https://thefaintofheart.wordpress.com/2015/06/06/even-a-great-stagnation-requires-planning/
Too much talk of housing "bubbles" https://thefaintofheart.wordpress.com/2015/06/09/revisionist-thoughts-was-australia-just-luckier-than-most/
Who still believes in growth? (Benjamin Cole) https://thefaintofheart.wordpress.com/2015/06/04/the-fed-can-suffocate-the-economy-under-ngdplt-too/
Limits on supply are a fact of life in high rent cities (Kevin Erdmann) http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-37-our.html
Perhaps a temporary hiring lull: http://idiosyncraticwhisk.blogspot.com/2015/06/may-2014-employment.html
An article from Scott Sumner and Kevin Erdmann at the National Review: http://www.nationalreview.com/article/419442/heres-whats-driving-inequality-scott-sumner-kevin-erdmann
"...the petro-monetary transmission mechanism at work" (Lars Christensen) http://marketmonetarist.com/2015/06/06/kwanza-devaluation-is-the-right-decision-but-fundamental-regime-change-is-needed/
The monetary-real causality is not stable: http://marketmonetarist.com/2015/06/07/does-y-determine-mv-or-is-it-mv-that-determines-p/
U.S. stock prices as a reality check: http://marketmonetarist.com/2015/06/10/the-stock-market-remains-at-a-permanently-high-plateau/
Also of interest:
The rural poor in the Irish potato famine lacked access to capital markets...one cannot help but consider the skills/time based parallels of the present (A guest post from Tyler Beck Goodspeed) http://antonhowes.tumblr.com/post/121035507254/guest-post-how-microfinance-helped-farmers-adjust
Tuesday, June 9, 2015
Some Notes on Time Value
How does time value matter in the marketplace? We rely on what time we actually have, in order to get things done, and to fulfill our responsibilities. Unfortunately, without a marketplace specifically designated for time value, it's not always possible to meet personal challenges and obligations. A smoothly functioning economy depends on full participation. However, time aggregate imbalances have resulted from differences in the monetary values of knowledge and skills sets. Worse, most interpersonal coordination lies in workplace settings, which leaves insufficient time coordination everywhere else. Even those who have sufficient income to compensate others for needed services, still have little time left for meaningful activity.
Much has changed, in terms of both production and resource capacity. But the time that was freed up by the productive capacity of traditional manufacture, remains bound by unrealistic supply side circumstance. What hasn't changed, are the hours in a day that most income levels need, to maintain unwieldy consumption demands. Time - as a basic resource - remains as finite and limited as ever. Is it possible to bring time value back into balance with other forms of resource capacity?
Yes, but in order to do so, time value needs to be recognized as a separately existing marketplace in order to function. More specifically, knowledge and skills sets - while important - cannot be approached in the same context as personal time value. Otherwise, the integrity of time aggregate potential becomes quickly distorted. It isn't possible to smoothly negotiate coordinated work patterns with others, when time values become influenced by external definitions or valuations. In fact, individuals - like firms - stay on the sidelines waiting for the "right" knowledge and skills which may or may not materialize. This is why a time based marketplace needs proactive education which is internally organized and responsive to changing demand.
Whereas time aggregates are finite and non random, knowledge and skill sets have been randomly apportioned, much as other resources and commodities which exist separately from time. And any time a given quantity is recognized as random in nature, it necessarily relies on the same external pricing mechanism as any other goods. Time value could be locally arbitraged through groups, because as a non random element, it is the one resource which provides understandable means for internal management.
Time arbitrage is not possible, where anyone prefers to compensate knowledge and skills based on externally defined value. When time value is compensated according to particular knowledge and skill, this is of course the marketplace which already exists. Unfortunately, it is becoming a limited marketplace, which does not have room for full labor force participation in the foreseeable future.
When time value becomes associated with specific knowledge or skill, time value also aligns with factors which do not have direct relation with one another. If it is necessary to compensate time at different levels of skill, one also has to accept that mutual time coordination no longer provides a new source of wealth, because of the asymmetry. While time value will continue to be compensated asymmetrically, this form of compensation does not lend itself to further economic growth quite so easily as before.
One can think of time value as a (potential) nested non random component, within a given equilibrium of otherwise random components. Knowledge use systems can monetarily compensate time value, and do so while generating new wealth. The difference is that compensation would exist for units of time as they are arbitraged, rather than specific qualities as represented within the time components. "Nested" time value is possible, because it exists in direct relation to other time value. Time arbitrage would not otherwise change the relation of money to goods. It simply provides means of compensation, according to the commonality which individuals actually share.
Much has changed, in terms of both production and resource capacity. But the time that was freed up by the productive capacity of traditional manufacture, remains bound by unrealistic supply side circumstance. What hasn't changed, are the hours in a day that most income levels need, to maintain unwieldy consumption demands. Time - as a basic resource - remains as finite and limited as ever. Is it possible to bring time value back into balance with other forms of resource capacity?
Yes, but in order to do so, time value needs to be recognized as a separately existing marketplace in order to function. More specifically, knowledge and skills sets - while important - cannot be approached in the same context as personal time value. Otherwise, the integrity of time aggregate potential becomes quickly distorted. It isn't possible to smoothly negotiate coordinated work patterns with others, when time values become influenced by external definitions or valuations. In fact, individuals - like firms - stay on the sidelines waiting for the "right" knowledge and skills which may or may not materialize. This is why a time based marketplace needs proactive education which is internally organized and responsive to changing demand.
Whereas time aggregates are finite and non random, knowledge and skill sets have been randomly apportioned, much as other resources and commodities which exist separately from time. And any time a given quantity is recognized as random in nature, it necessarily relies on the same external pricing mechanism as any other goods. Time value could be locally arbitraged through groups, because as a non random element, it is the one resource which provides understandable means for internal management.
Time arbitrage is not possible, where anyone prefers to compensate knowledge and skills based on externally defined value. When time value is compensated according to particular knowledge and skill, this is of course the marketplace which already exists. Unfortunately, it is becoming a limited marketplace, which does not have room for full labor force participation in the foreseeable future.
When time value becomes associated with specific knowledge or skill, time value also aligns with factors which do not have direct relation with one another. If it is necessary to compensate time at different levels of skill, one also has to accept that mutual time coordination no longer provides a new source of wealth, because of the asymmetry. While time value will continue to be compensated asymmetrically, this form of compensation does not lend itself to further economic growth quite so easily as before.
One can think of time value as a (potential) nested non random component, within a given equilibrium of otherwise random components. Knowledge use systems can monetarily compensate time value, and do so while generating new wealth. The difference is that compensation would exist for units of time as they are arbitraged, rather than specific qualities as represented within the time components. "Nested" time value is possible, because it exists in direct relation to other time value. Time arbitrage would not otherwise change the relation of money to goods. It simply provides means of compensation, according to the commonality which individuals actually share.
Monday, June 8, 2015
Equal Time Value is Not "Fair"!
...even so, utilizing time coordination equally could provide a way forward for economic stability. Otherwise, there are not enough clear alternatives for moving ahead, which could maintain the knowledge use and services that populations need. How much weight do arguments against equal compensation for time value actually hold? Equal time compensation is clearly not "fair" to those whose skills are better in some capacity by a wide margin. Why should anyone who is clearly more skilled than others, have to settle for not being (directly) compensated as such?
It depends on the demand for the time based services in question, their centrality to any system, and whether system wide responsibility for those services exists as a result of centrality. Healthcare relies on numerous sources of wealth which are unspecified as to what is demanded from other resource distributions. The problem now lies in the uncertainty of the compensation process, as state level government budgets are beginning to falter. According to the New York Times:
How to respond? When still prosperous governments are no longer in a position to be able to assist populations in their entirely, it is time for those populations to generate further means to assist themselves. Even so, this means addressing the special interests, whose charge was previously to define how economic activity was "supposed" to occur. However, supply side interventions need not take place through shaming perspectives. If at all possible, the task is one of humble requests to move ahead, with the common goal of preserving the best civilization has to offer.
If structural issues can be dealt with at this level, knowledge use still holds a valuable role in the way forward. Granted: not everyone who assumes the mantle of responsibility, will appear as though capable in the same sense as what today's institutions require. Why should someone who is clearly more capable than others in their own midst, have to settle for the same base time compensation as others, in a knowledge use system?
The challenge is to make sure that everyone can strive to fill the potential demand which exists in any given marketplace. It is better to provide group incentives for this objective with clearly designated resources separate from time, through local shared investment settings which are well understood by the participants involved. Without local decentralization options, the stewardship of vast resource pools which nations also attempt to manage for time based compensation (on top of existing obligations), may only decline. If specific resource sets can be locally generated to support group based services coordination, the decision to apportion time use equally, becomes more viable as a "fair" option.
Equal time value is not "fair", but what about life is fair? In life and in economics, there are always tradeoffs. Hence the question becomes, which tradeoffs provide the greatest benefits for the situation at hand? Some skill sets are always going to appear as though vastly "better" than others. Just the same, the current structure for high skill compensation, makes demands on a vast pool of resource capacity which has continuously been tapped in all areas of life. The continued viability of that existing worldwide pool of resources is now so uncertain, that the long term growth trajectories of central banks have been negatively affected.
What's more, today's high skill sets cannot be compensated through direct means, but must be "purchased" through other prior existing wealth. That means human capital is engaged in a constant struggle, to tap into preexisting knowledge use networks. Possibly the best reward of equal time coordination, would be the new wealth which becomes possible - the real, tangible wealth of human capital. In other words, the higher aspirations which individuals hold, could be directly generated through monetary and cooperative means, instead of constantly waiting in hope for support from elsewhere. Perhaps this would be the best reward, of all.
It depends on the demand for the time based services in question, their centrality to any system, and whether system wide responsibility for those services exists as a result of centrality. Healthcare relies on numerous sources of wealth which are unspecified as to what is demanded from other resource distributions. The problem now lies in the uncertainty of the compensation process, as state level government budgets are beginning to falter. According to the New York Times:
In some states, lawmakers have gone into overtime with unresolved special sessions and threats of widespread layoffs...Many of the legislatures that are struggling with budgets can point to external forces, including slow economic recoveries and rising health care costs for their woes.Governments are now making harsh budget choices. Already existing healthcare obligations - which include hard limits on compensated high skill positions - are taking a toll on available monies across general equilibrium. Were it not for the growing budget demands of current healthcare structures even as services continue to be cut back, governments might not have been so blindsided by the slowdown in overall growth. Slow growth which contains hidden services and time aggregate imbalances, can threaten the stability of any low growth trajectory. Already, the effects of these circumstance are spilling over into the political arena.
How to respond? When still prosperous governments are no longer in a position to be able to assist populations in their entirely, it is time for those populations to generate further means to assist themselves. Even so, this means addressing the special interests, whose charge was previously to define how economic activity was "supposed" to occur. However, supply side interventions need not take place through shaming perspectives. If at all possible, the task is one of humble requests to move ahead, with the common goal of preserving the best civilization has to offer.
If structural issues can be dealt with at this level, knowledge use still holds a valuable role in the way forward. Granted: not everyone who assumes the mantle of responsibility, will appear as though capable in the same sense as what today's institutions require. Why should someone who is clearly more capable than others in their own midst, have to settle for the same base time compensation as others, in a knowledge use system?
The challenge is to make sure that everyone can strive to fill the potential demand which exists in any given marketplace. It is better to provide group incentives for this objective with clearly designated resources separate from time, through local shared investment settings which are well understood by the participants involved. Without local decentralization options, the stewardship of vast resource pools which nations also attempt to manage for time based compensation (on top of existing obligations), may only decline. If specific resource sets can be locally generated to support group based services coordination, the decision to apportion time use equally, becomes more viable as a "fair" option.
Equal time value is not "fair", but what about life is fair? In life and in economics, there are always tradeoffs. Hence the question becomes, which tradeoffs provide the greatest benefits for the situation at hand? Some skill sets are always going to appear as though vastly "better" than others. Just the same, the current structure for high skill compensation, makes demands on a vast pool of resource capacity which has continuously been tapped in all areas of life. The continued viability of that existing worldwide pool of resources is now so uncertain, that the long term growth trajectories of central banks have been negatively affected.
What's more, today's high skill sets cannot be compensated through direct means, but must be "purchased" through other prior existing wealth. That means human capital is engaged in a constant struggle, to tap into preexisting knowledge use networks. Possibly the best reward of equal time coordination, would be the new wealth which becomes possible - the real, tangible wealth of human capital. In other words, the higher aspirations which individuals hold, could be directly generated through monetary and cooperative means, instead of constantly waiting in hope for support from elsewhere. Perhaps this would be the best reward, of all.
Saturday, June 6, 2015
Notes on Corporate Structure in Knowledge Use Systems
Knowledge use systems would need to provide further definitions for corporate structure. How so? The institutions of the present were created during historical periods when knowledge access was relatively scarce. Therefore, many institutions were geared towards exclusivity, in terms of both knowledge use and those who have been allowed to participate - at least over the course of a lifetime. Not just anyone had the capacity to organize resources productively, before the digital gains of recent decades. Even though production capacity has changed dramatically, society has yet to organize so these potential gains can be tapped in broader settings.
In order to further evolve, corporate structures need to organize for endogenous and inclusive group formation. For instance, education in these systems wouldn't exist separately. Instead, it would represent means for citizens to contribute to group outcomes in multiple capacities. In knowledge use systems, one overarching corporate structure would take the place of many, which one might otherwise expect to find in towns and small cities. These decentralized groups would combine what is normally thought of as for profit and not for profit activity, within the same setting.
The legal structures involved would need at least three distinct designations. First, time use management would exist as a series of overlapping categories, which builds out from groups of core settings. Second, local asset holdings would not only correspond to core time management structures, but also hold more traditional elements for real estate options as well. Once these are in place, a framework for local production would add to the economic framework. The first two areas provide a cohesive whole for non tradable activity, while the third creates a platform for tradable goods production.
Both information technology and traditional manufacture have evolved to such a degree, that production and consumption choices can be internalized within a multi-purpose corporate group structure. In other words, local citizens would once again have the capacity to be both providers and recipients, for core aspects of what can become a complex economic system. Local decisions for ongoing projects in this regard would be honored, and the process for doing so would be built into voting mechanisms and coordinated educational patterns. In terms of time based services formation, direct democracy is indeed possible.
These linked structures would provide an array of investment categories, so that anyone who participates would be able to gain access to services and resources in later years. Much as "stair step" learning processes between individuals are compensated, stair step financial structures would allow individuals to incrementally buy, sell and also rent existing local real estate and building components - be they of a flexible or more permanent nature. The long lived cycles within these corporate structures would make it possible to generate unique patterns in knowledge use and applications, over time.
Perhaps what would be most unique about these corporate structures, is that the individuals who take part, become the primary wealth which is generated by the system. Even though asset formation is built into the system, it is a secondary gain, compared to the activity which maintains human capital and ongoing endeavor. By fulfilling producer and consumer roles at the same time, individuals become a positive aspect of institutional responsibility, instead of a cost or burden. This is why knowledge use systems can not only preserve valuable services in lieu of government backed fiscal activity, but also provide full employment, as well.
In order to further evolve, corporate structures need to organize for endogenous and inclusive group formation. For instance, education in these systems wouldn't exist separately. Instead, it would represent means for citizens to contribute to group outcomes in multiple capacities. In knowledge use systems, one overarching corporate structure would take the place of many, which one might otherwise expect to find in towns and small cities. These decentralized groups would combine what is normally thought of as for profit and not for profit activity, within the same setting.
The legal structures involved would need at least three distinct designations. First, time use management would exist as a series of overlapping categories, which builds out from groups of core settings. Second, local asset holdings would not only correspond to core time management structures, but also hold more traditional elements for real estate options as well. Once these are in place, a framework for local production would add to the economic framework. The first two areas provide a cohesive whole for non tradable activity, while the third creates a platform for tradable goods production.
Both information technology and traditional manufacture have evolved to such a degree, that production and consumption choices can be internalized within a multi-purpose corporate group structure. In other words, local citizens would once again have the capacity to be both providers and recipients, for core aspects of what can become a complex economic system. Local decisions for ongoing projects in this regard would be honored, and the process for doing so would be built into voting mechanisms and coordinated educational patterns. In terms of time based services formation, direct democracy is indeed possible.
These linked structures would provide an array of investment categories, so that anyone who participates would be able to gain access to services and resources in later years. Much as "stair step" learning processes between individuals are compensated, stair step financial structures would allow individuals to incrementally buy, sell and also rent existing local real estate and building components - be they of a flexible or more permanent nature. The long lived cycles within these corporate structures would make it possible to generate unique patterns in knowledge use and applications, over time.
Perhaps what would be most unique about these corporate structures, is that the individuals who take part, become the primary wealth which is generated by the system. Even though asset formation is built into the system, it is a secondary gain, compared to the activity which maintains human capital and ongoing endeavor. By fulfilling producer and consumer roles at the same time, individuals become a positive aspect of institutional responsibility, instead of a cost or burden. This is why knowledge use systems can not only preserve valuable services in lieu of government backed fiscal activity, but also provide full employment, as well.
Thursday, June 4, 2015
Long Term Growth Needs a Marketplace For Time Value
For as long as anyone can remember, economies have generally performed well without a marketplace specifically designated for time. However, time value sometimes needs its own internal price mechanism - particularly for services formation - when long term growth falters. It is impossible to gauge the full extent, of what is increasingly a missing services marketplace. Individuals continue to commit to time investment in human capital, but with questionable reward. And for the first time since the Great Depression, some policy makers are becoming convinced that the future will not have the same growth momentum as before.
After the onset of the Great Depression, near-zero interest rates lasted from 1932 to 1951, before the economy experienced full recovery in the U.S. Only consider the vast degree of structural shifts which took place during that lengthy period, before populations fully regained confidence in economic stability. Given the fact nations were not always able or willing to meet deep rooted structural challenges, war was also the result. What was different regarding earlier utilization of time aggregates and labor force participation, before the world wars and tumultuous transitions of the Great Depression years?
Before the Great Depression, time value often had a "price", in terms of local and/or familial coordination. Individuals were able to manage time through more direct means for resource use, particularly for agricultural and small business pursuits. As the marketplace gradually transitioned to more centralized forms of business endeavor, populations came to rely on time coordination and resource sets which were externally generated and managed. However, as these forms of (what became) traditional production began to (once again) shift in an eastward trajectory, populations struggled to maintain these now exogenous structures of services and production coordination.
It's not always easy for those who rely on primary equilibrium for multiple time coordination needs, to imagine how some income levels struggle with time management difficulties. Many communities are no longer geared (or sometimes never were) for the complex services coordination which societies have come to expect. This leaves entire regions in positions of supply side dependency - which in the U.S. did not appear so problematic until recently.
Plus, prosperous regions which include a full range of service capacity, are the areas which tend to post "no vacancy" signs for would be producers and consumers. For those who seek access to more prosperous regions of the U.S., price signals and regulations limit both interstate and local mobility, whereas political signals do the same for immigration.
Understandably, high skill service providers prefer to cluster in regions where they have the greatest potential to be rewarded. Even so, this is part of a pattern which continues to broaden the divisions between rich and poor, and knowledge use in general. While some can occasionally travel for needed services, regular access to prosperous regions for ongoing knowledge use needs is another matter. Is it possible for knowledge use to grow in the areas where it is needed most?
Yes, but with a caveat. Knowledge use complexity for services and production in primary equilibrium, relies on a wide diversity of income formation - which isn't always possible to generate in lower population densities. Even though vertical structures for income formation are facts of life in cities, services organization needs horizontal structure as well, in order to spread knowledge use complexity. In other words, time value needs to be coordinated with the option of equal compensation, so that knowledge use diversity can continue to spread through monetary means in multiple areas.
Indeed, if it weren't for density issues which inhibit services formation where it is needed most, the case for time arbitrage might not be so imperative. Just the same, knowledge use systems would provide more personal freedom at the individual level. What's more, the spread of a broader services marketplace would renew hope on the part of many, for full participation in the economy. Personal investment for the enrichment of human capital, would finally serve the purpose which has been promised for so long.
After the onset of the Great Depression, near-zero interest rates lasted from 1932 to 1951, before the economy experienced full recovery in the U.S. Only consider the vast degree of structural shifts which took place during that lengthy period, before populations fully regained confidence in economic stability. Given the fact nations were not always able or willing to meet deep rooted structural challenges, war was also the result. What was different regarding earlier utilization of time aggregates and labor force participation, before the world wars and tumultuous transitions of the Great Depression years?
Before the Great Depression, time value often had a "price", in terms of local and/or familial coordination. Individuals were able to manage time through more direct means for resource use, particularly for agricultural and small business pursuits. As the marketplace gradually transitioned to more centralized forms of business endeavor, populations came to rely on time coordination and resource sets which were externally generated and managed. However, as these forms of (what became) traditional production began to (once again) shift in an eastward trajectory, populations struggled to maintain these now exogenous structures of services and production coordination.
It's not always easy for those who rely on primary equilibrium for multiple time coordination needs, to imagine how some income levels struggle with time management difficulties. Many communities are no longer geared (or sometimes never were) for the complex services coordination which societies have come to expect. This leaves entire regions in positions of supply side dependency - which in the U.S. did not appear so problematic until recently.
Plus, prosperous regions which include a full range of service capacity, are the areas which tend to post "no vacancy" signs for would be producers and consumers. For those who seek access to more prosperous regions of the U.S., price signals and regulations limit both interstate and local mobility, whereas political signals do the same for immigration.
Understandably, high skill service providers prefer to cluster in regions where they have the greatest potential to be rewarded. Even so, this is part of a pattern which continues to broaden the divisions between rich and poor, and knowledge use in general. While some can occasionally travel for needed services, regular access to prosperous regions for ongoing knowledge use needs is another matter. Is it possible for knowledge use to grow in the areas where it is needed most?
Yes, but with a caveat. Knowledge use complexity for services and production in primary equilibrium, relies on a wide diversity of income formation - which isn't always possible to generate in lower population densities. Even though vertical structures for income formation are facts of life in cities, services organization needs horizontal structure as well, in order to spread knowledge use complexity. In other words, time value needs to be coordinated with the option of equal compensation, so that knowledge use diversity can continue to spread through monetary means in multiple areas.
Indeed, if it weren't for density issues which inhibit services formation where it is needed most, the case for time arbitrage might not be so imperative. Just the same, knowledge use systems would provide more personal freedom at the individual level. What's more, the spread of a broader services marketplace would renew hope on the part of many, for full participation in the economy. Personal investment for the enrichment of human capital, would finally serve the purpose which has been promised for so long.
Wednesday, June 3, 2015
Midweek Market Monetarist Links and Summaries - 6/3/15
Positive shocks? Negative shocks? It's all a good excuse to further tighten...(Marcus Nunes) The Fed is a "Tighten-Only Screwdriver"!
With a little luck, James Bullard will be able to stand by the recent paper which he coauthored: Pity the "Magic Acronym was Uttered by Someone as Fickle as Bullard!
...but will the new tools restore the growth of nominal spending: Will New Tools Help to "Save" The Economy?
When the Fed reacts to inflation by contracting nominal spending, output only decreases even further: Much Later the Great Inflation was Pinned on Poor Monetary Policy. How Long Will it Take to Blame Monetary Policy for the Repressed Economy Since 2008?
That "fundamental rethink"? Nevermind...The Lack of Imagination is Pervasive
The fact that people have been worried about the "next recession" speaks volumes: Monetary Policy for the Present Depression, Not the Next Recession
Can't see the forest forthe trees finance..Pearls of Unsound Wisdom
Unfortunately, it didn't have to be: Bernanke's Blogging is Trite
Life is constantly enriched, from both globalist perspectives and goods (Lars Christensen) http://marketmonetarist.com/2015/05/27/a-random-day-in-my-global-life-a-celebration-of-free-trade/
Lars is only disappointed that Bullard's paper did not reference David Eagle, and also provides some links to Eagle's work in this post: http://marketmonetarist.com/2015/05/29/st-louis-feds-bullard-comes-out-in-support-of-ngdp-targeting/
David Glasner remembers one of his favorite early posts, with this response to Paul Krugman: http://uneasymoney.com/2015/05/29/paul-krugman-on-tricky-urban-economics/
There is plenty of mind boggling confusion in the housing market (Britmouse) https://uneconomical.wordpress.com/2015/05/27/uk-households-enjoy-125bn-tax-break/
Scott Sumner is encouraged by James Bullard's recent paper: Bullard, et al on NGDP Targeting
Even though the Taylor Principle has value, it is not a reliable instrument: Marcus Nunes was right
For the most part, in agreement with this analysis: Catching up with Krugman
Scott at Econlog:
What makes their problems different? Greece and Detroit
The markets figured out the deflation problem before the Fed: What went wrong in 2008?
The Fed has spending where it wants it: Looking for AD in all the wrong places
This strong dollar is not an exogenous shock: The Fed is not doing its job
Summers would prefer an NGDP target to a "shift up in inflation targets": Larry Summers on NGDP targeting
Nick Rowe looks for some answers from his commenters for this post: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/05/fiscal-policy-the-eurozone-and-ontario-under-bob-rae.html
Without monetary offset, the fiscal policy multiplier has no impact: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/fiscal-policy-and-econometrics.html
(Kevin Erdmann) "...everyone actively works against their own long term interests...in housing, in education, in healthcare - we keep chasing less and less relative supply with more and more subsidized dollars." And still, the "keepers" of the supply side want to further reduce nominal income: http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-36-we.html
Also of interest:
A working paper from Evan Soltas: http://esoltas.blogspot.com/2015/06/snap-and-food-security.html
And also in the spare time he doesn't have (!) http://esoltas.blogspot.com/2015/06/who-is-on-ruc.html
When statistics meet political interference...(Diane Coyle) http://www.enlightenmenteconomics.com/blog/index.php/2015/05/angry-statisticians-and-fiddled-figures/
With a little luck, James Bullard will be able to stand by the recent paper which he coauthored: Pity the "Magic Acronym was Uttered by Someone as Fickle as Bullard!
...but will the new tools restore the growth of nominal spending: Will New Tools Help to "Save" The Economy?
When the Fed reacts to inflation by contracting nominal spending, output only decreases even further: Much Later the Great Inflation was Pinned on Poor Monetary Policy. How Long Will it Take to Blame Monetary Policy for the Repressed Economy Since 2008?
That "fundamental rethink"? Nevermind...The Lack of Imagination is Pervasive
The fact that people have been worried about the "next recession" speaks volumes: Monetary Policy for the Present Depression, Not the Next Recession
Can't see the forest for
Unfortunately, it didn't have to be: Bernanke's Blogging is Trite
Life is constantly enriched, from both globalist perspectives and goods (Lars Christensen) http://marketmonetarist.com/2015/05/27/a-random-day-in-my-global-life-a-celebration-of-free-trade/
Lars is only disappointed that Bullard's paper did not reference David Eagle, and also provides some links to Eagle's work in this post: http://marketmonetarist.com/2015/05/29/st-louis-feds-bullard-comes-out-in-support-of-ngdp-targeting/
David Glasner remembers one of his favorite early posts, with this response to Paul Krugman: http://uneasymoney.com/2015/05/29/paul-krugman-on-tricky-urban-economics/
There is plenty of mind boggling confusion in the housing market (Britmouse) https://uneconomical.wordpress.com/2015/05/27/uk-households-enjoy-125bn-tax-break/
Scott Sumner is encouraged by James Bullard's recent paper: Bullard, et al on NGDP Targeting
Even though the Taylor Principle has value, it is not a reliable instrument: Marcus Nunes was right
For the most part, in agreement with this analysis: Catching up with Krugman
Scott at Econlog:
What makes their problems different? Greece and Detroit
The markets figured out the deflation problem before the Fed: What went wrong in 2008?
The Fed has spending where it wants it: Looking for AD in all the wrong places
This strong dollar is not an exogenous shock: The Fed is not doing its job
Summers would prefer an NGDP target to a "shift up in inflation targets": Larry Summers on NGDP targeting
Nick Rowe looks for some answers from his commenters for this post: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/05/fiscal-policy-the-eurozone-and-ontario-under-bob-rae.html
Without monetary offset, the fiscal policy multiplier has no impact: http://worthwhile.typepad.com/worthwhile_canadian_initi/2015/06/fiscal-policy-and-econometrics.html
(Kevin Erdmann) "...everyone actively works against their own long term interests...in housing, in education, in healthcare - we keep chasing less and less relative supply with more and more subsidized dollars." And still, the "keepers" of the supply side want to further reduce nominal income: http://idiosyncraticwhisk.blogspot.com/2015/06/housing-tax-policy-series-part-36-we.html
Also of interest:
A working paper from Evan Soltas: http://esoltas.blogspot.com/2015/06/snap-and-food-security.html
And also in the spare time he doesn't have (!) http://esoltas.blogspot.com/2015/06/who-is-on-ruc.html
When statistics meet political interference...(Diane Coyle) http://www.enlightenmenteconomics.com/blog/index.php/2015/05/angry-statisticians-and-fiddled-figures/
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