When Wells Run Dry...

Lost in the discussions about future growth trends, is much of the earlier confidence regarding human capital. Indeed, human capital - as a component of wealth - became taken for granted as the twentieth century progressed, only to begin losing its prominence in the 21st. Much as central bankers have become reluctant to provide clarity about monetary policy, policy makers aren't clear about the economic roles that are relevant for citizens. From "Poor Richard's Almanac" (Benjamin Franklin):

When the well is dry, we know the worth of water.

Does anyone really believe technology can - or "should" - replace human capital? Will everyone wait for the well to go dry, before realizing that broad labor force participation was a desirable component of our economic realities? Perhaps we will know the worth of human capital, once it finally becomes evident that strict knowledge use limits will not suffice! Why is it so difficult to envision human capital as vital resource capacity which needs to be extended to everyone - not just for formal workplaces, but for any work that individuals provide for one another through the course of their lives?

Prosperity is not just a matter of capital which is separate from human capabilities and aspirations. Should human capital lose its importance, other forms of wealth creation would not be far behind. Odd indeed, that the earth and its resources get so much attention on a daily basis, when few stop to consider how the wellspring of human capital is threatened to a greater degree, than the earth (from human activity).

When nations reserve the bulk of high value skills capacity for the most talented and accomplished, more is at stake than is realized. Everyone takes the chance that populations will not only lose access to important facets of knowledge use, but also the reasoning capacity which underlies all learning and human interaction. Wealth generation begins with knowledge use, but this process can also be reversed, when asymmetric monetary compensation has no counterbalance from symmetric coordination among groups. When the asymmetric compensation of knowledge based wages makes too many demands on existing resource capacity, the result is political instability.

Like an aquifer that is drawn from without replenishment, human capital in aggregate becomes diminished as governments and special interests divide the spoils of knowledge based wealth among the elite. What few have recognized, is that asset and commodity formation alone aren't enough to sustain wealth for all comers. In the meantime, continued monetary tightening only reduces the wealth of traditional production that has been necessary for asymmetric compensation.

Policy makers have become confused about the forms of knowledge use complexity that are actually important. Consider for instance the rudimentary forms of services which now comprise education and healthcare at local levels. How can these disciplines become transformed, so that they can be integrated with other economic activity in the places where many live out the course of their lives?

As people in developed nations struggle for access to cities, and people in broken nations struggle for access to prosperous nations, not all will be able to gain economic momentum from escape, alone. In a sense, economies are no different from individuals in this regard. When something is broken, there are times when the only solutions to be found, are internal - especially when there are no easy answers. It's time to look inward, for the economic solutions of the future.