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.

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