Wrap Up for August 2018

If information is destroyed in today's economy, value is also destroyed. James Pethokoukis interviews Cesar Hidalgo in a Q & A re Hidalgo's new book:

...the big challenge that societies and firms need to solve is that of learning collectively, learning in the context of a social network.

From the Brookings Institution:
"The Measurement of Output, Prices, and Productivity: What's Changed Since the Boskin Commission?"

Edward Lazear: "Compensation and Incentives in the Workplace"
Incentives especially matter when the targeted output of individuals and groups takes a highly specific form.

And, when might the nature of one's work become integral to incentive structure - whether or not service product is expected to assume a specific form? Greg Kaplan and Sam Schulhofer-Wohl: "The Changing (Dis-)Utility of Work" The authors explore changes in the nonpecuniary costs and benefits of work.

One more on the personal nature of work, alongside related economic considerations. I've been reading "The Reshaping of Everyday Life: 1790-1840" by Jack Larkin. (1989) This early U.S. history is fascinating reading, for everything about our work environments was quickly evolving during these decades.

Mark Lutter for Cato Unbound: "Local Governments are Changing the World"

Will populism disrupt technological gains?

NPR takes note of the housing crisis.

What happens when the retail sales tax becomes a burden?

Sam Bowman makes some valid points about today's centrists.

What accounts for the multifactor productivity slowdown in U.S. manufacture?

Consumer spending has changed considerably from 1901 to 2012. We've been aware of increased housing costs but sometimes forget how much transportation costs have risen. Even though healthcare appears as though somewhat limited at 6.9%, the fact both government and business share this burden as well, helps to explain how today's human capital costs of doing business, is a factor in reduced wages.

Who has time to read economics research articles when they are really long?

How to think about policy questions, if the criterion is to expand individual opportunity?

A wonderful tribute to Nick Rowe from The Economist.

An apt description of a supply chain system that has "grown up to accommodate the variety of goods that we demand, and the speed with which we want them."

When cities lack affordable housing and rural areas appear tempting because of lower housing costs, the relative lack of economic opportunity unfortunately means less incentives to either build new housing, or to restore older housing.

A "grand narrative" draft for Brad Delong's "Slouching Towards Utopia"

"The tragedy of our generation is that our dynamic innovation economy and the most pressing needs of our society are ships passing in the night."

Linda Yueh considers reasons why the Bank of England should target growth.

It could be that Trump's main influence on Fed policy will turn out to be fiscal in nature. Is the Fed already pushing the limits of its floor system?

Will the majority of our efforts in the workplace eventually become "zero-sum"? Better organizational alignment is key for services generation. The purchase of time with time value, could ensure that new wealth would still be generated, and not simply recirculated from other sources.

Even though we know doctors are "too educated", this is not a problem that can be addressed directly, because there are already too many millions of people who need to seek alternatives, both here in the U.S. and in other nations as well.

"Hume modeled a way of life that was gentle, reasonable, amiable: all the things public life now so rarely is."

"Firms create value by managing tensions between competing priorities."

Fungibility as a gradual process.

Of the European contributions to the Great Depression: "The deflation was thus inevitable, but was made much more harmful by its postponement and then abruptness." Scott Sumner and David Glasner also respond.

James Pethokoukis discusses the case for a universal basic income, with Annie Lowrey

How does the loss of the old trend line affect the future?

Sometimes, those who struggle are more motivated by giving advice than by receiving it.

"US exports of goods and services to China in 2016 were $170 billion; but total revenues of US multinationals producing and selling in China that year was twice as high at $345 billion."

Karen Dynan and Louise Sheiner for Brookings: "GDP as a Measure of Economic Well-being"

At the very least, taxing and spending is better than cross-subsidization.

Writing usually involves a lot of work to get the right words on the page!

Ian Hathaway offers a condensed version of "Startup Communities".

The "Malthusian" equilibrium as an "upper limit to returns on labor".

Degree Deflation and General Equilibrium Expectations

Might a recent example of degree "deflation", illustrate good deflation potential for the economy as a whole? In a recent post for AEI, Preston Cooper writes:

Last week, Kentucky's teachers licensing board made a decision all too rare in today's credential-happy labor market: Teachers in the Bluegrass state will no longer need to get an advanced degree in order to keep their jobs.

The board's move is a rare example of "degree deflation". Previously, Kentucky teachers were expected to obtain a master's degree or other advanced credential within ten years of first becoming licensed as an educator. The American economy has experienced degree inflation in recent years, as employers have attached new degree requirements to jobs that did not previously require such advanced education. 

It will be interesting to see if more educators follow their example. And how might other employers respond? All of this matters, insofar as societal expectations are concerned. In his article, Preston Cooper also noted the opposition from both the teacher's union and Democrats in the state legislature.

The initial good that could come from this scenario, of course, is partial relief in the form of reduced human capital investment costs. One might envision education in general, as part of a knowledge production "factory", whereby aggregate inputs (in this instance at general equilibrium level) required in relation to aggregate outputs, are somewhat relaxed.

However, will there be positive societal expectations regarding degree deflation? It remains to be seen, how the education board's action could affect economic circumstance in Kentucky and possibly elsewhere. Might approaches such as this start a trend? If so, how how to discern whether the deflation effect turns out to be positive?

Only recall that good deflation potential, involves more than just lower input costs and/or requirements, which are sometimes a response to economic downturns - even if mostly regional in nature. Ultimately, positive forms of deflation result in higher aggregate output. Real output gains would make it possible for degree deflation to translate into standard of living gains (perhaps discounting certain quality product implications). Nevertheless, if apparent limitations to economic access were partly responsible for the decision making process of the school board, one hopes the decision doesn't prove to be too much of a gamble.

Much also depends on which sectors decide to take advantage of degree deflation. Will various sectors reduce wages accordingly? If so, other costs of living would need to be responsive to such a reality, in order to (at least) maintain total or aggregate output. Even though more tradable sector activity in the region could lead to greater output; non tradable sectors - given their present dependent status (and time/place logistics) - may lack incentive to increase output. Importantly, the ability to reduce wages could encourage non tradable sectors to enhance professional rewards as well.

Hopefully the licensing board has made a decision that turns out well. Even so, I feel the greatest potential for reduced human capital costs, is via defined equilibrium settings - structured so as to generate additional output on primary market terms. Perhaps defined equilibrium settings would prove more reliable for good deflation, than what much of today's non tradable sector activity is structured to provide. The catch in all this, is that it's difficult for non tradable sector providers to raise output, if and when they function in revenue dependent contexts which could dilute professional income levels in the event of additional supply side capacity.

Commonality and Economic Coordination

Are there commonalities which could encourage individuals to coordinate economic activities as a cohesive group, when they might otherwise lack incentive to do so? For instance, how might marginalization affect such incentives? Perhaps it depends on whether marginalization is due to social identity (which may in fact discourage economic solidarity), or commonly held physical and related mobility challenges which inhibit workplace commitments, at least to some degree.

In particular, time arbitrage and the defined environments of this organizational approach, could be a game changer for the latter group, in terms of economic solidarity. Not only would mobility-specific environments lessen transportation woes for the marginalized (many who don't drive), the mutual employment of time arbitrage might also encourage individuals to remain economically and socially connected to others. Only recall how such individuals often have difficulty being hired because they face multiple challenges which can impact their workplace performance.

I found myself reflecting on these issues after a Marginal Revolution discussion a couple of weeks earlier, titled "The Microfoundations of Intersectionality". Tyler Cowen also included the Wikipedia reference for this term. However: After reading some of the responses to his post, I began to wonder whether intersectionality is actually a useful term, since it appears to be highly charged in terms of gender and race - neither of which I find especially useful in promoting a more inclusive economy. How can the sometimes intense focus on specific groups of marginalized, help the aggregate? That said, there are precious few responses to this problem thus far, which aren't essentially zero sum in nature. Plus, if intersectionality discussions are mostly about access to top positions in society, that's not my focus either. To Cowen's credit, he highlighted the fact wheelchair bound individuals also suffer a lack of economic access.

A helpful institutional focus would create settings which address mobility issues for a wide range of marginalized employee potential. As a result, the access problems these various groups face would be minimized by a simple template for thinking about infrastructure and logistics for living and working. Even though it's difficult for firms and other institutions to assist would be employees in more than any single capacity of disability, walkable communities would greatly improve mobility for all concerned. Hence defined equilibrium settings would mean not having to overcome additional costs for the same disability struggles time and again, to bring each marginalized individual to our collective workplaces.

Those with disability commonalities - including everything from getting old to lack of "appropriate" credentials" (two which I face) - have more incentives to respond to well planned logistics for work environments than is normally recognized. One way to think about the framing involved, is via the concept of time as commodity. Time use in these settings becomes a standardized economic unit for mutual time priorities. Like an apple harvest, a primary goal of this approach, would be to make good on as much of the "harvest" of time potential, as is humanly possible. When it comes to time based services, the emphasis on quality product has meant a consequent loss of far more harvest potential than is actually necessary.

There's other logistical advantages to templates that reflect commonality. Recall that the equilibrium corporation non tradable sector activity would not be intended to compensate time or skill as institution specific. Rather, it would support the coordinated settings of similarly minded individuals who are willing to assist one another via multiple levels of skill. It would be a no brainer for the equilibrium corporation to back such settings, given the fact it would also manufacture a full range of modular and flexible infrastructure and building components. Since the compensation and resource utilization processes involved are internally driven, a sustainable continuum for many who were previously marginalized, becomes a distinct possibility.

Essentially, the time as wealth approach makes it possible for individuals to work with others whose combined disabilities become far less of a burden, in a common service generation context. Hence the reasonable chance that commonality in what otherwise often appears as "multiple shortcomings", might actually prove effective, as a strong social security network.

A Meditation on Physical Infrastructure

Among the reasons I've promoted flexible forms of physical infrastructure, is that ownership patterns for more permanent and capital intensive infrastructure, are in a state of flux which may take decades before the dust begins to settle - alas, literally and figuratively. Clearly, the process could profoundly affect societal expectations for overall economic conditions, as well. While some may scoff at the idea of physical infrastructure which local groups could simply pick up and take with them at will to get things done, the adaptability of these movable parts could prove priceless in the short run, for institutions that are able to embrace life on such terms.

Indeed, it can be overwhelming to contemplate, just how many aspects of basic physical infrastructure, now lack fiscal revenue reliability from either governments (or other institutions) which once seemed prepared to "guarantee" long term maintenance and sustainability. The nature of highway networks here in the U.S. is just one example, how our economic expectations became augmented and to some extent taken for granted, since the latter half of the twentieth century.

Let's step back in time for a moment, to consider how the dynamism of tradable sector activity, made so much of these earlier infrastructure upgrades possible. During periods when the general equilibrium circumstance (of today's developed economies) began to take recognizable form, it was difficult to ascertain how capital intensive long term maintenance obligations would eventually prove difficult to uphold - in part due to rising labour costs. Nevertheless: Paradoxically, the rising wages of long term tradable sector dominance, made it feasible for majorities of citizens to take part in the taxpayer obligations which funded so much national infrastructure in the first place.

It's when nations experience periods of rapidly rising wages (especially as tradable sector activity remains dominant), that their ability to define and create capital intensive infrastructure is at its greatest potential. Plus, capital intensive decisions during periods of tradable sector dominance, give additional impetus to general equilibrium possibilities at a national level. On the other hand; for developed nations which have become obliged to subsidize non tradable sectors as dependent organizational capacity, there may be little left over, to offer continued support of permanent physical infrastructure which is already in place.

Once non tradable sector activity (inevitably) begins to dominate any long term economic cycle, it becomes more important for societies to designate ownership patterns for physical infrastructure, which directly include the individuals who are close to the spaces and time frames such patterns represent. Otherwise, too many individuals would lose the forms of economic access which make for a normal life. In the meantime, many citizens in developed nations have become less supportive of infrastructure which they aren't likely to personally utilize, and this societal reluctance could make quite a difference, for the ways our physical and economic landscapes take shape in the foreseeable future.

Now is the time to begin building more flexible forms of physical infrastructure, which are geared towards solution sets and ownership patterns that reflect the resource capacity of local groups who rely on them. Adaptability also means the ability for everyone to experiment, so as to discover how the use of knowledge can reconfigure more effective means of services generation. And just as strong and lightweight building components might physically define such living/working spaces, these components could also transform what are excessive burdens for electrical and plumbing requirements. In particular, future transportation needs to involve a lot less cement, and a lot more alternative means for moving people and things from place to place.

Early stages of defined equilibrium settings would first need to stabilize the steady state nature of knowledge building through time arbitrage, with its somewhat limited wage structure, before branching out into broader ownership patterns which could (once again) provide more diversified infrastructure options. At the very least, in the here and now, the more that nations are willing to give their citizens a chance to create knowledge centered wealth at local levels, the more fiscal revenue may remain available to maintain the transportation networks of the 20th century. It means a lot presently, to be able to keep moving ahead one step at a time.

Does Price Taking "Deserve" Production Rights?

Symmetric matching of mutually held work priorities, is also a price taking process for the economic time which individuals and groups actually have at their disposal. Yet it would be difficult to spontaneously coordinate a wide range of services generation as a measurable production constant, without production rights for the use of knowledge.

The fact many of our institutions hoard knowledge, is a costly process that withholds productive activity and economic vitality from the marketplace. It's not so much that price taking (instead of price making) would mean participating individuals "deserve" production rights, but the fact that a relative production constant for services generation wouldn't be possible, otherwise. If information "wants to be free", there are certainly valid economic reasons. For instance, as Scott Sumner wrote in "Let's Transfer More Technology to China":

The beauty of information is that use by one person does not preclude use by others.

Why, then, do societies too often pretend it's not possible to allow the use of knowledge to take place on such terms? Even though knowledge hoarding seemed to be more a domestic issue in the latter part of the 20th century; increasingly, the protectionist impulse is (yet again) beginning to rear its ugly head at the global level.

In a recent post, I suggested that a new form of institution could potentially adhere to a price taking promise, which might ultimately make time value a more representative component of monetary policy. Fortunately, it's still possible to restore the benefits of price taking as an organizational standard - much as what existed in recent centuries of tradable sector dynamism. When institutions are willing to accept prices which coordinate existing resource capacity among multiple providers, societies remain able to get things done without extensive debt, and the costs of doing business also remains within reach of the average citizen. Whereas price making - when carried too far - is notorious not just for the economic exclusion which can lead to massive societal inequality, but also extensive political risk.

Given present day general equilibrium expectations, it's not always a simple matter to be a price taker, especially when the majority prefer to be price makers. Still, equilibrium corporation settings could make price taking a viable option for those who participate, by coordinating as many non tradable sector factors as possible in locally defined equilibrium settings. It's possible to agree to meaningful work at a standard low wage, when others have done the same in ways which mutually sustain and otherwise reinforce the group for having done so.

At the very least, such a system could provide an apt example, how non tradable sector markets might come within reach of a broader range of income levels. Individuals and nations alike have become burdened by the costs of getting many basic things done - a burden which is entrenched in government budgets as well. Price making, while an understandable reaction to high costs of doing business, is nonetheless a reflexive response which only makes the societal burden more extensive. With a little luck, more production rights and more price taking in general, could eventually create more affordable outcomes for all concerned.

Musings on Strategy, Tactics, and the LFPR

Much of today's economic confusion, concerns individuals who aren't certain how they might expect to be meaningfully employed in the near future. Yet much of this particular discussion has been derailed, given the positive statistics which suggest we're in a good place economically. Many are convinced that societies can ultimately adjust to increasing automation without substantive unemployment issues, just as has occurred in the past. After all, why would discussions about unemployment be relevant, if corporations are having problems finding suitably skilled employees?

Labour force participation "facts" often depend on where one is actually standing, and yet these logistical issues are part of a larger structural story which is not yet well understood. One can almost imagine an economy which "cries out" for more dynamic markets that actually serve as sources for wealth origination. In spite of all the statistical "good news", we could all breathe easier if there were even one plan B waiting in the wings, as protection for unforeseen economic problems.

All too often, societies lack adequate means to respond when substantive economic issues come to the fore, and such moments are often notorious for quickly changed economic circumstance as well. Once real problems do arise and become evident to all, it's difficult at this point to "think straight" in terms of a well considered response. Given the fact we need strategies that are macroeconomic in nature, far more is involved than simply the logistics of time and place. This is a historical moment when we need to take a closer look at what we actually consider to be wealth, which is why monetary policy is also such an important part of the process. Almost the entire twentieth century served as a preparatory phase for the kinds of work many individuals imagined was actually possible to achieve.

A recent post from Farnam Street, "Strategy vs Tactics: What's the Difference and Why Does it Matter?", triggered my own musings. Shane Parrish writes:

In order to do anything meaningful, you have to know where you are going...Strategy is overarching plan or set of goals. Changing strategies is like trying to turn around an aircraft carrier - it can be done but not quickly. Tactics are the specific actions or steps you undertake to accomplish your strategy.

He continues:

Whatever we are trying to do, we would do well to understand how strategy and tactics work, the distinction, and how we can fit the two together. Without a strategy, we run the risk of ambling through life, uncertain and confused about if we are making progress toward what we want. Without tactics, we are destined for a lifetime of wishful thinking or chronic dissatisfaction.

Strategy revisions become necessary, once a given path is no longer straightforward. However, thus far re economic uncertainties, we've mostly discussed a range of policy tactics (such as UBI and public assistance as an option for the already employed) which not only contradict one another politically, but lack any coherent long term strategy. Again, Parrish:

To achieve anything we need a view of the micro and the macro, the forest and the trees - and how both perspectives slot together. Strategy and tactics are complementary. Neither works well without the other. Sun Tzu recognized this two and a half millennia ago when he stated, "Strategy without tactics is the slowest route to victory. Tactics without strategy are the noise before defeat." We need to take a long-term view and think ahead, while choosing short-term steps to take now for the sake of what we want later.

Let's hope that tactics presently being bandied about by governments in general, won't just be the "noise before defeat". Meanwhile, in the U.S. we're mostly left with the usual suspects arguments how government can alleviate low labour force participation via policies discouraging economic dependence, while others continue to hope governments will be able to reimburse those who lack sufficient economic access.

Parrish also mentioned Richard Rumelt ("Good Strategy, Bad Strategy") who wrote, "A good strategy doesn't just draw on existing strength, it creates strength". When thinking about economic uncertainty, Rumelt's insight also helps to explain why new forms of wealth creation are so important - not just to generate a rising labour force participation level, but also to reduce our long run fiscal burdens. The connection between fiscal realities slowly spiraling out of control, and the fact many of us go too long in our lives without meaningful economic connections, has become too important to miss.

Perhaps we're also left without any coherent strategy, since so many of us became worn down from competing theories and mountains of "war chest" statistics after the Great Recession. Like others, I became overwhelmed by statistics in particular - so much so that it finally became difficult to think about employment issues on those terms. Even authors who spoke so eloquently about the need for broad strategies, such as Charles Handy in "The Hungry Spirit" and Ryan Avent in "The Wealth of Humans", weren't able to generate a sustained public dialogue. Not only have many observers long since "moved on" from these discussions, our growing fiscal burdens didn't became a constructive part of the debates. Perhaps it's the fact no coherent long term strategies were created, that we've ended up with political leaders ready to claim victory from tactics which are just protectionist enough to add to the cost burdens of general equilibrium. Let's hope those additional costs for getting things done, aren't mistaken for renewed economic dynamism.

It's perfectly understandable that people grew weary of debating long term economic strategies. At times I've felt just as overwhelmed, as anyone. That said, the political climate is increasingly in tatters, since we gave up on the process in the very years when everyone still had the impetus to take constructive action.

Monetary Policy for a Dynamic Welfare Economy

Recently, Kai Weiss (for CapX) in "Can you really have free markets and a big welfare state?", asserted:

It is time to tackle the idea that only the state can provide welfare.

Weiss highlights a recent CapX post from Samuel Hammond, who suggested free markets and welfare states can coexist, and doesn't see why they can't be made more dynamic. For instance, Hammond suggests that social insurance could help free market processes "remain a positive sum game".

How to think about these arguments? In many respects, welfare economics largely reimburses time elements which are an integral part of final product. Presently, much of this activity takes place in dependent relationships which I've also described as secondary markets. Two examples include the compensation of government employees, and healthcare, which - in the U.S. - government now reimburses at least half the total costs.

While it's possible to create a more dynamic and less dependent welfare state, we would benefit from a new form of organizational capacity which allows time value to directly serve as an economic unit. A formal measure for time (labour or work preferences), would lend much needed validity to our societal participation. A basic time engagement standard that contributes to personal agency is all the more important, since today's digital automation possibilities could lead to more integrated workplace roles for all concerned.

An organizational realignment such as this, would allow our time value to play a more beneficial role as a form of primary market. Commodification of time use at a basic engagement level, would transform our time preferences and labour priorities into a wealth creation position - one similar to tradable sector commodities which have served as broader wealth representation means over the millennia.

When time value is indirectly tapped via asymmetric means, this process can eventually distort societal coordination for time based product. As these asymmetries grow, people come to expect money to do more heavy lifting than it can reasonably accomplish on its own as the sole economic unit. Excessive deficit spending is a prime example, of the fact we rely so much on the liquid and fungible nature of money, that the time value many of us hold, no longer fulfills our ongoing societal obligations. Consequently, excessive hopes pinned on money as the sole arbiter of economic value, now means that  - for instance - bondholders, taxpayers, and retirees who hope for full pensions, are beginning to discover how money can't always be all things to all people, in this representative exchange.

We also need for time value to play a larger role alongside monetary policy, in order for monetary policy to fully maintain stability for aggregate time value in the near future. Consider why this matters in light of arguments re labour representation for a nominal target. In particular, there's uncertainty about labour as means to full employment, when non tradable sector activity, which comprises such a large extent of economic activity in general, has been dominated by price making rather than price taking. When too many economic actors make prices which place excessive demands on general equilibrium, this also reduces the extent to which full employment is possible.

If a product is new, price making allows corporations to cover the costs of bringing product to market. However: When product is no longer new to the market, price making often leads to reduced market capacity and employment potential. Ultimately, monetary policy could be more effective and fully representative, if fewer corporations relied on excessive price making. If more companies were willing to adhere to an internal production norm of lower or at least constant price levels over time, the monetary policy result would be more accurate representation of time aggregates as well.

Hence the most beneficial new institutions for a dynamic welfare economy, could be those which also support the principle of a production norm, so that gains in standards of living remain possible. How might this be achieved? The equilibrium corporation would have a dual (tradable/non tradable sector) nature that makes a unique (or defined) local equilibrium feasible. Not only would it rely on internal price taking mechanisms for services generation, but also locally defined environments which generate relative price constants for a diverse range of physical infrastructure and building component options.

A tradable sector role would allow the equilibrium corporation to manage a full non tradable sector spectrum, via means that leave plenty of room for discretionary income potential which can make amends for time scarcities. What's more, this dual responsibility could present a possibility for managed convertibility of central bank representation of time arbitrage as a wealth origination role. Scott Sumner's recent post which highlighted Josh Hendrickson's Mercatus paper, encouraged me to think through some possibilities. The problem for direct convertibility is that it can't be directly applied to labour or in this instance, time value. But given the dual role of the equilibrium corporation, equity shares of infrastructure and building components - given their basic commodity representation - could provide means for central bankers to purchase shares on behalf of originating time value as a primary market.

In order for this to be a remotely reasonable proposition, the equilibrium corporation would have to make an important promise to central bankers and governments alike. How so? Unlike other forms of non tradable sector activity, these institutions would need to uphold a production norm for both time based activity, and the costs of community organization as a whole, via the tradable sector production of infrastructure and building components. Such a promise would be vitally important, given the disequilibrium and sticky markets which have resulted from extensive price making on the part of existing non tradable sector institutions. If standards of living are to continue rising for the foreseeable future, we need more dynamic versions, for what has been mostly structured as public goods provision.

Human Capital and the Efficiency Paradox

How might the changing roles of human capital in the marketplace, affect societal perspectives regarding efficiency gains? For instance, consider how the approach to 20th century quality service generation, dramatically affected the relationship of required human capital inputs to aggregate output for time based services. Indeed, these organizational patterns continue to negatively impact total factor productivity. While automation isn't always the appropriate response to achieve (further) gains in standards of living; much depends as well, on the human capital roles which are at stake in these processes.

The fact that knowledge production can be a meaningful form of consumption in its own right, helps to explain why knowledge providers are sometimes dubious about organizational patterns which promote efficiency gains. All the more so, since knowledge production for time based product is closely associated with personal identity, autonomy, and agency. Charles Handy in "The Hungry Spirit", observed how efficiency efforts might be ineffective in some instances or possibly even counter productive:

Unless we get efficiency in perspective we may find ourselves so busy being efficient that we forget the original purpose of the enterprise. Efficiency is not always the same as effectiveness.

Often, time based product is based on activities which people actively enjoy engaging in (whether via production, consumption or both), as opposed to activities that are mostly tolerated because they're perceived as necessary. Even so, is an hours long trip to the Department of Motor Vehicles "necessary" in the same sense as a non elective surgery, or does the former feel more like "lost" time? Nevertheless: When service producers are responsible for the preservation of services product (whether surgeons or government employees in this instance), they may naturally be more inclined to determine the present structure of those activities is totally necessary.

In order to discover more specific value sets for automation potential, we can also identify when a given service experience feels as though time lost, or time gained. One apt example: Is a service worker enjoying their time on the job, or are they mostly waiting to "get off the clock"? Yet presently we are are reluctant to lose mind numbing jobs such as this, because of uncertainty how automation will affect future employment patterns. If we are proactive regarding workplace potential, so that we can better preserve positive experiences on formal economic terms, with a little luck our services workplaces won't just devolve into the default circumstance of future budgetary realities.

Producers and consumers alike (in other words all citizens) may occasionally need to participate in decision making processes for time based product, if automation is to continue making a positive difference for standards of living. Unlike the separately existing product of tradable sector activity, the producer consumer relationship of time based product is more often a dual experience. These additional elements of human involvement can make notions of efficiency somewhat more complicated. It's when automation leads to the loss of meaningful or purposeful experience, that technology in this instances either needs to be reconsidered or otherwise approached differently.

Hence a useful societal dialogue could include questions such as "How important is the personal attention (time) element in a given service product? Does the producer version of this description differ substantially from the consumer version? If so, why, and how much should that matter? What distinguishes experiential service product so that it acquires personal meaning? What potential service product diversity has already been suppressed, due to regulatory restrictions? What makes rights to participation in a diverse range of multi skill service product, so important? Many individuals enjoy some aspects of production, more than consumption processes which are associated with these activities. For instance, as a pianist (decades earlier), I preferred playing classical music to listening to it either live or recorded. Might individual preferences such as this, encourage us to think differently about services supply and demand?

To sum up, the efficiencies of automation need not stand in the way of our natural desire to become more fully human. For that matter, automation has played a tremendous role in amplifying our desire to become more fully human, in part due to centuries of earlier automation processes which freed our time. Perhaps the more important perspective is, can we achieve such aspirations, while still encouraging means to increase aggregate output in relation to aggregate input - all without reducing the production experiences which hold meaning? Doing so, would make it simpler to preserve the kinds of human interaction which societies find so important for services generation - especially that which takes place as experiential product.

Economic Inclusion is a Decentralized Option

Florian Ranft in "How can we spread the benefits of the digital economy?", expresses concern about an emerging economic model "where value creation is driven by intangible assets and investments", and notes:

Given these dramatic changes, policy makers need to update their economic thinking of work in society and find policy solutions that better reflect the unfolding changes of big tech and innovation that includes shifting the debate on digital from micro to macro and rethinking how the distribution of the economic benefits of digitalisation can be translated into an inclusive growth model.

However, addressing the economic uncertainties of a digital era is becoming more difficult, for centralized economies in which both time based service product and housing costs representative of time and place, have gained a dominant structural position. These forms of product often don't benefit from additional output in ways that naturally stimulate additional revenue for wages, taxation, or other societal needs. In other words, the response to "Where is the path?" (for greater inclusion) in these circumstance, might be "you can't get there from here"!

Alas, it could occasionally become necessary to "start the trip" from somewhere else. At the very least, decentralized options for new employment and infrastructure potential, could make it possible to create stronger marketplace integration and vitality. Sometimes - just as Diane Coyle seemed to suggest in a recent post re work in digital times - it's not enough to simply hope for more inclusive economic conditions and expect a meaningful response. Just the same, this changed structural circumstance has few obvious fixes that readily translate into policy objectives. Hence policy makers may instead opt to give a green light to a new institutional context, in which decentralized possibilities for economic engagement could be explored.

Only consider how intangible forms of production have created a backlash of relatively tight monetary policy, partly due to the increased difficulty of redistributing either wages or providing support for existing infrastructure via centralized means. By way of example, how to think about this argument from Florian Ranft?

A straightforward solution would be to simply readjust the tax burden between capital and wage income. As machines become better at substituting human labour, sustaining a high level of taxes on worker's income may not be a good idea, potentially driving unemployment and inequality. 

Unfortunately, "one size fits all" taxation models worked better when when more tangible forms of tradable sector production - for instance - could be further sourced for revenue and redistribution. Whereas today's machines and automation frameworks may instead augment professional income hours which bear little connection to output gains. Capital enhancing machinery was certainly easier to tax, when it held direct responsibility for aggregate output gains. And 21st century human capital - in relation to earlier capital frameworks - has essentially become a taxation boondoggle.

Meanwhile, lower income level taxation is also where citizens have few means of access to the legal workarounds that are enjoyed by professionals and corporations alike. What much of this boils down to, is the fact less tax revenue will be available than governments now expect to access in the near future. As more residents become responsible for the infrastructure of their own environments, they will need to be able to assume greater roles in the simplification and design of local infrastructure. It's past time, to explore new avenues for building components and infrastructure which allow communities to better represent a full range of income levels.

In all likelihood, the most effective decentralization models of the near future, will be those which - instead of relying on random taxation measures to tend to ongoing needs - instead find ways to generate more marketplace diversity for local infrastructure, building components and time centered services, on direct terms. This would include integrating available revenue for community obligations into local ownership patterns. By making all local participants owners and co-creators, economic inclusion would indeed become a viable option. Nevertheless, the process will likely become somewhat different from the taxation and redistribution expectations of the present.

Granted, it's easy to think of approaches such as tax simplification as ways for individuals with high income levels to escape "undue" governmental burdens. But the reality is that a more carefully thought through approach, would bring a full range of economic activity within reach of all income levels, many of which experience little gain from the governmental taxation they're presently expected to bear. Done right, the tradable sector activity which scales in tangible ways could serve well into the future as supportive of centralized power. Still: It's the intangibles which can be the undoing of advanced economies over time, if and when citizens lack means to more carefully manage the resources they actually have at their disposal.

Ranft, in the above linked CapX article, also mentioned the possibility of "plural ownership models".  Here, the most important question for such endeavour might be "Does the product in question already have the capacity to scale up?"

If it does, there may be little need for communities to organize cooperative settings around these products and goods. Future governments should maintain some leeway in the redistribution of revenue derived from tradable sector output gains, so long as open global trade remains actively encouraged. It's product which isn't readily amenable to scale, that occasionally benefits from the assistance of local cooperative effort. Ultimately, we would all benefit from a better understanding when local economic coordination can assist both citizens and aggregate output, versus the traditional economic framing in which spontaneous coordination for production, will fortunately suffice.