Monday, March 7, 2016

Re Local Corporations: A "Naming" Issue

Local corporations. It's a term I've increasingly referred to, in my blog posts. But is there a better name for the concept - a more meaningful one which could be included in this year's glossary "mini" project? Specifically, legal constructs for local corporate activity, already exist. Local incorporation also served as a procedure which made it possible for cities and counties to raise taxes to pay public employees. These forms of local incorporation evolved when individual forms of production (self-employment) were the norm (ranches, farms, etc).

However, the local incorporation of cities and counties, served as means for a minimum degree of coordination among individuals, for small sets of agreed upon public services. This, since individual private production once meant spontaneous coordination in multiple population densities. Where prosperous regions now benefit from international production and national redistribution, spontaneous time coordination still works quite well for these regions - much as it did in a wider variety of economic conditions, centuries earlier. It is the places where economic complexity and coordination are most lacking, which need new forms of institutional effort.

Hence more organizational capacity is needed, as knowledge use acquires greater significance for both work generation and participation. A new corporate structure is needed to coordinate locally desired time based services, in areas which lack economic complexity. All the more so, since many forms of economic participation and production were claimed in ways which now bring (further) time investment value into question.

What would a new corporate structure need to accomplish? First, consider what nations have attempted to provide through redistributive taxation, to limited effect. There are at least two facets of wealth creation, which don't respond well to redistribution: the "special" human capital required for time based product, and the coordination value which accrues to specific locales. New corporate structure would need to generate additional value for both time and social coordination, beyond what is possible now.

For instance: additional monies for "special" time value (such as that of physicians), cannot duplicate time based product, regardless of how much redistribution takes place in an economy. In order to generate a broader marketplace for time based product, more time based product is needed.

Another economic value which doesn't respond to monetary redistribution, is that which arises from the serendipitous (spontaneous) gains in the local coordination of prosperous regions. Think land taxes: redistribution along these lines, seeks to smooth consumption capacity through valuable land. While coordination value can be rearranged from within, it cannot be otherwise increased. One cannot tax the valuable land which benefits from coordination gains, and have those gains somehow "multiply", from without. Instead, new societal coordination creates valuable communities elsewhere, in order to generate further growth. Monetary redistribution cannot substitute, for this additional form of social and economic value.

Perhaps "dual corporation" might be an appropriate name, and I'm encouraged by the fact there is no Wikipedia definition. There is a dual nature to this form of organizational capacity in a number of respects. Dual corporations could increase economic time value (in aggregate), and social coordination value at an aggregate level as well. Ultimately this could mean less need for what are often the zero sum circumstance, of taxing time value. Also, less need to tax valuable land in the attempt to provide "more", for those who happen to reside where land has less monetary value.

Other aspects of duality come to mind: the local to global support mentioned in a recent post, and a bridging role between supply side representatives and monetary policy. In spite of all this, the practical purpose for new corporate structure is simply more employment than has been possible, of late. As James Pethokoukis of AEI noted, "If we want more economic growth, we need more workers." More employment potential. More lifestyle potential. That's really what this is all about. With a little luck it's possible.

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