Wrap Up for December 2019

Even though there was much to disagree with in David Graeber's essay, David Glasner engages with some of his more meaningful arguments.

Where is low wage work more prevalent? Brookings illustrates how it is found to some extent in all regions. It also helps to be realistic about reskilling.

Banks are subjected to stress tests. Why not the government?

David Beckworth and Claudia discuss her new Sahm rule.

Even though low inflation is important for the credibility of central bankers, it makes them quite unpopular, as if by design.

Sarah Skwire notes how the gender bias of unions has often been missed.

Diane Coyle highlights some of her favourite economics books of the year.

The potato was an important lesson re monoculture.

Tyler Cowen interviews Daron Acemoglu.

"...a new General Purpose Technology might be required to kickstart economic growth once again."
Tyler Cowen posts from some of the above linked paper with Ben Southwood, here and here.

Why would state law be behind a pay wall?

"...fiscal resources are not infinite, and public leaders can't assume every older asset is worth maintaining." I would add, don't just convene the experts to work on this issue, because they may end up with mostly suggestions to build infrastructure that many citizens can't afford.

Tim Harford suggests ways to survive elections with your sanity intact.

Peter Boettke highlights some forgotten and neglected classics.
He also notes important political economy books from the last decade.

Is there a middle ground for "gentle" densities?
"...most single-family lots could accommodate more housing without purchasing adjacent parcels and combining them." Light touch density is a similarly used term, which could affect zoning laws in the near future. And while progressives are often blamed for NIMBYism in exclusive areas, Miles Kimball recently highlighted a conservative response to potential zoning changes.

Government debt carries hidden risks.

There's not many specifics in the 40 AI startups surveyed as of yet which point to greater productivity. 

Many communities will maintain the infrastructure status quo as long as they possibly can.

Greg Mankiw notes a review from Jason Furman, of the recent book from Banerjee and Duflo, Good Economics for Hard Times.

As monetary policy continues to improve, real shocks have become more likely to trigger RGDP slowdowns than recessions. Can the Fed finally engineer a soft landing?

Carnegie Mellon University remembers Marvin Goodfriend. Also Miles Kimball.

Rural flight in Texas started back in the fifties.

Lars Christensen is blogging again. Also, "Revisiting the P-star model"

When it comes to tradeoffs, time is the ultimate scarcity.

Let's be careful not to take the advantages and benefits of the modern world, for granted.
"We certainly don't seem to have as much of a commitment as we did to leaving people to their own devices." We can't arbitrarily stop progress now, we have to keep innovating just to maintain what we already have.

When everything is said and done, might we end up with some version of Medicare for all?

The transition to modernity may have been messier than it seemed.

Frances Coppola questions the role of the repo market, which functions quite differently from the previous interbank market.

How much Chinese tech will have to be replaced?

From David Wessel at Brookings: This study found that minimum wage hikes are causing problems for new small business formation particularly in rural areas.

"Beyond developing conversational skills, the family phone asked its users to be patient and participate in one another's lives."

How accurate is that drug price index?

Gregory Mankiw explains his skepticism regarding modern monetary theory.

"Deafness freed Beethoven as a composer because he no longer had society's soundtrack in his ear."

Some digital stories of shame this year were particularly good!

Do cities suffer from energy imbalances?

Cyril Morong highlights a Minneapolis Fed paper re how changing technology affects inequality.

Gratitude is a complex thing.

Inside Cato's annual monetary conference.

Some historical aspects of migraine. Mine are in that (somewhat) tolerable average range.

Tyler Cowen presents a wish list of worthy projects.

Some of the big economic stories of the decade.

A recent Minneapolis Fed conference discussed potential housing options.
They are certainly needed. For instance, Just having a peaceful night of sleep can make a real difference.

Scott Sumner notes that the new spending bill is a disaster. Someone must be celebrating however, because it's a four hundred billion dollar win for special interests in a repeal of three healthcare taxes alone: the Cadillac tax, a health insurance tax and the medical device tax. Hence Bob Laszewski jokes, "Who says Washington can't get along!" The surprisingly mutual desire to do something about surprise medical bills, went nowhere as well.

Coffee had plenty of detractors when it was the newly introduced product.

For now the economy is strong.

It's not easy to think clearly about the eventual ramifications of excessive debt loads.

"While much of the rest of Mercy Hospital Fort Scott had been underused and patient rooms sat empty, the ER handled nearly 9000 people the year before it closed."

It cost about 9 million for the community to set up their own internet infrastructure.

"If Sapiens were a blog post"

Some personal reminisces from Arnold Kling re Robert Solow.

Post Highlights from 2019

Here are highlights from some of this year's popular posts.

Where is the Educational Upside?  One major issue regarding formal education in general - whether public or private - is a tendency to treat "desirable learning and competence" as "scarce goods for which men and women must compete". Consequently, formal education contributes to artificial skills scarcities and imbalances in time based services markets. While knowledge and skills capture have become deeply embedded in ways which aren't readily remedied at state or national levels, communities could nevertheless start taking local action. Local education has the potential to not only become broader in scope, but more closely connected to the evolving wants and needs of all citizens.

Money Price is Most Relevant for Traditional Scale  An incredible amount of economic time use potential remains untapped. Yet more of our accomplishments could provide value for others, if we were to capture mutual wants and needs in a marketplace for time value. We need to derive value from our scarce time more effectively, especially since time based product does not scale via traditional means.

Monetary pricing is most relevant for output which scales on traditional terms, and it can't always offer similar benefits for human capital's natural scarcity in the form of time based product. Earlier forms of tradable sector dominance, meant societies could mostly rely on monetary compensation patterns which captured additional monetary gains from scale. In this context, a wide array of time based product was readily derived from revenue surplus, taxation, and multiple forms of financial debt. However, as we continue to adjust to a services dominant economy, there may gradually be fewer options for gains in scale to accrue to aggregate income in general. Fortunately, these losses might be amended by seeking aggregate output gains that include knowledge, skill and time value as wealth components alongside monetary compensation.

Has GDP Measure Lost Its Practicality?  Even though monetary representation is but a partial approximation of progress, there is no consensus how intangible resource factors could contribute to a better framework. Yet it would be counterproductive to discard elements of GDP measure which clearly serve valid purpose. In all of this, practicality and utility are as relevant as ever. Economic time value is an intangible component which needs more clarification, especially given our high levels of time scarcity and already existing financial responsibilities. There's a good chance that economic time value would be the most logical addition to current GDP measure.

What Really Preserves the Labour Theory of Value?  In some respects the labour theory of value has been disproved, especially when labour is applied to product which exists separately from time value. However, the labour theory of value likely has some adherents in unexpected places, particularly among providers of high skill time based product. Social position for example allows professional associations to reward personal labour via a rationale that one's time represents quality product deserving of monetary reward. Here one can also find much of today's intangible resource capacity, which causes much confusion as to actual productivity gains. More markets are needed for forms of quality time based product that don't negatively impact total factor productivity.

Inclusive Economies Can't Be Built on Exclusive Pricing  Interestingly enough when this post was written, Wikipedia provided more information on inclusive growth, than on inclusive economies in particular. Yet that was a reasonable search result, since growth is always necessary, before more individuals can participate and gain economic access. Consider why the correlation of inclusiveness with economic growth, matters. Should people become convinced that economic growth is no longer necessary, markets would become more exclusive by design. Such a result would only close the door further on those who still seek access.

One way to counter this impulse, is to create additional economic value for time based product. Doing so would also mean less pressure on earth's physical resources for the monetary support of time value. Direct reciprocity for time based services is an inclusive approach, which could result in more supply and demand for applied knowledge, hence additional growth in the use of knowledge for all citizens.

Time and Fiscal Revenue as Scarce Commons  One way to decipher whether additional budgetary debt burdens can be safely imposed, is to stop and ask: Do we really understand the full extent of aggregate time obligations we have already imposed? What if we discovered how many economic time hours would be necessary to meet those already existing obligations, only to realize current or near future generations don't actually have that many economic time hours to spend? Given the possibility of such a scenario, time value may need to evolve beyond a purely monetary focus, so that societies aren't jeopardized once budgetary burdens in general become more difficult to repay.

Some Broader Considerations re MMT Logic  There are too many competing demands on present day fiscal policy, for it to provide a strong framework for the underpinnings of a 21st century economy. National income taxes were established during historical periods when (now mature) economies could still rely on expanding tradable sector growth. Much of these revenue sources consequently benefited from traditional scale, which allowed millions to contribute to the government's wealth redistribution patterns of the present. Alas, since gains in traditional scale are no longer widely distributed in aggregate income, more than monetary representation may be needed, to preserve the knowledge dispersal and skill sets so important to modern society.

Time as Economic Unit: Intervals of Certainty  Time arbitrage could bring greater stability and precision to how individuals plan and manage the use of their time. Indeed, such an economic option might even prove more useful than the proposed Facebook currency (Libra) which inspired this post. While workplace skills arbitrage is partly useful for personal time management, it is mostly feasible when personal income is sufficient for individuals to delegate to others, the responsibilities they lack the time to accomplish on their own.

Markets Could "Find a Way" For Services  Sometimes, supply side conservation of unique skills capacity may come at the expense of supply side potential for markets as a whole. Just as aquaculture provided a market solution for overfished oceans, time arbitrage might ultimately create solutions for overfished governmental revenue.

When is Hierarchical Structure a Good Approach?  Normally, time arbitrage would utilize relatively flat organizational capacity, in order to get things done. However there will always be occasions when hierarchical organization is more efficient and appropriate. Examples include complex procedures which are not often needed locally, and also workplace outcomes which clearly go beyond the contributions of single individuals.

Full Employment, or Future Productivity Gains?

Indeed, why should it have to be one or the other? And why isn't automation more often acknowledged, for the long term employment problems it might ultimately pose? Basically the issue is this: Would it be necessary to give up full employment for society to realize continued progress?

Perhaps the fact many earlier Luddite arguments didn't pose long term problems, explains an inclination to disregard where automation is a factor in regional employment losses. Nevertheless, as Scott Sumner noted in a recent post, protectionist and Mercantilist trade spats between nations aren't a reasonable approach, either. Alas, more logical responses aren't as obvious as one might expect, and there are plenty of moving parts in this scenario. Even though nationalist responses for instance are inappropriate and counterproductive, there's little consensus regarding a constructive framework for long term employment potential.

Any progress in this regard would focus on domestic economic realignment, and continued productivity gains are key to this discussion. Importantly, there are no linear solution sets which include full employment and continued productivity gains in a general equilibrium scenario. That said, the good news is that tradable sector organizational capacity is as appropriate as ever, at all levels of equilibrium dynamics. It's the organizational capacity of non tradable sectors which pose such problems for long term productivity, and employment as well.

If there is a tradable sector problem in all this, it's that we can no longer expect full employment in these areas. What we also can't accomplish is full employment from non tradable sector time based services as they are currently constructed. Without a more dynamic approach to services generation, these dependent (secondary) markets would ultimately create extensive societal burdens. Hence non tradable sector activity could benefit from a non linear approach. These new institutions (new communities) would build defined equilibrium settings which create additional employment and supply side potential, via mutual time reciprocity.

Once new non tradable sector institutions address full employment, how would they contribute to future productivity gains? First, a time arbitrage defined equilibrium does not detract from total factor productivity, since it would function as a primary or direct wealth creation market, instead of as a secondary market which depends on general equilibrium wealth.

Possibly the best news, is that internal sustainability is only part of what time arbitrage could contribute to long term productivity gains. When participating groups align skills and applied knowledge internally, they create new wealth in the process. Even though each individual's economic time options are necessarily rival due to time scarcity, the applied knowledge in each setting is non rival. Consequently, knowledge and skill gradually accumulate in ways which move forward services production benefits to future generations. This, instead of mostly expecting future generations to pay for today's skilled services! Even though these particular aspects of productivity might not manifest as monetary gains, they would nevertheless accumulate as long term output gains for knowledge, skills and services markets access.

Again, tradable sector productivity is still optimal in the sense that in many respects, we mostly need to keep doing what already works. One could say that tradable sector activity as a linear reality, is relevant as ever - not just for general equilibrium dynamics but as potential for every defined equilibrium setting. Yet we need to organize differently for non tradable sector output capacity, by thinking in non linear patterns which simultaneously encourage full employment and long term productivity gains.

Does Cooperation Lead to Greater Inequality?

In a recent Marginal Revolution post, Tyler Cowen appreciates "the virtues of greater cooperation" but adds, "Be careful what you wish for!" In some respects, it appears that more cooperation among participating groups could actually lead to greater levels of inequality. For instance, Cowen noted how high skilled individuals gain more benefits from mutual cooperation, than those who utilize lower skill levels in the workplace. Another oft cited example of late, are growing levels of inequality between different firms. How might one think about this conundrum? Could cooperation turn out to be just another expression for the wealth capture of collusion, or the exclusive nature of tribalism?

Fortunately, mutual coordination is too basic a human survival instinct, to be associated solely with either positive or negative outcomes. Plus, the references in Tyer Cowen's post were somewhat broad, in that his examples were more indicative of correlation than causation.

Nevertheless, when it comes to apparent inequalities, much depends on the extent to which specific resource coordination can disperse beyond directly participating groups. And since our time is naturally scarce, so too is time based product. Indeed, the only way to multiply high skill markets for time based services generation, is to invite more participants to the process. Otherwise, mutual cooperation in supply side chains which are limited by design, will only continue to exacerbate existing inequalities.

Until now, tradable sector dominance has proven far more capable of spreading wealth in societies, than has been the case for non tradable sector time based services. However, with time as a component of economic value alongside money, this problematic sectoral imbalance could ultimately be addressed. Time arbitrage would also be able to address the human capital investment problem by greatly lowering its costs. Presently, high human capital investment costs have become difficult for society to carry, since many time based services are reimbursed via debt and tax based redistribution.

Granted, the coordination potential of time arbitrage can't change the underlying problems of limited non tradable sector revenue. After all, the scarcity of time based product translates into aggregate output limits for these activities as well. What time arbitrage could create, however, is greater accessibility to services marketplaces in terms of production and consumption. One reason this ultimately matters so much for existing inequalities, is that millions now need a high income level just to access basic - yet vital - skilled services. In short, there are organizational means whereby mutual cooperation could create greater equality for all skill levels, once time value gains validity alongside monetary value.

Personal Production as a Human Right

Markets can't really be considered free, if too many of us aren't being recognized as active contributors to supply side processes. How so? Where once our economic efforts were largely connected with physical production, our economic priorities now are more likely to be associated with time based product. In this context, our time is more important at an experiential level for all concerned, than was the case when most product assumed forms separate from ourselves. Clearly, we face a quickly evolving set of economic circumstance which needs a careful response. Today's services dominance suggests we reexamine whether we are actively contributing to positive personal outcomes - not to mention outcomes which are as voluntary as possible.

Nevertheless, there is considerable confusion about the shift to services production. Presently, many assume only certain forms of human capital need apply for participation on economic terms. Some organizations arbitrage skill so as to manage time based services in ways that are poorly aligned with what providers and recipients prefer. Further, many aspects of personal skill which are important for the applied knowledge of modern economies, are off limits to those who don't complete formal educational processes that involve extensive monetary investment.

As tradable sectors continue to reduce their employment needs, time based services will be a logical transition for many in the coming decades. However, important time based services are presently arbitraged between individuals and the impersonal interface of public or private enterprise, rather than voluntary personal negotiation. Alas, this approach has unfortunately contributed to losses of personal autonomy. When people lose the ability to play active roles in production and consumption which involves extensive personal interaction, they may be forfeiting certain aspects of human dignity and respect in the process. Even though such losses may be more subtle than many of the human rights highlighted in recent centuries, they are still quite important in terms of well being and happiness.

Why haven't more individuals taken a stand in terms of personal production rights? For some, the trade offs can be reasoned away, due to a dynamic consumer economy of material abundance. Among the many benefits of a fortuitous tradable sector history, a wide array of luxuries have essentially been transformed into "necessities".

However, look more closely, and one realizes that skilled time based services have not followed a similar path, nor are they are likely to do so in their present organizational form. Yet non tradable sector requirements have conditioned citizens - especially in recent decades - to accept a wide array of time based services as absolute societal necessities. Otherwise, governments may not have been as willing to bear the burdens of redistribution now required to reimburse skilled services. Nor do the burdens fall solely on governments. Services costs are built into business obligations, just as the costs of applied knowledge compel citizens to seek higher paying employment, than the economy is able to create for all concerned.

If we can reclaim our own capacity to produce as a human right, eventually we would be able to bring down some of these costs and burdens. Clearly, the ways in which we all need to be able to produce for ourselves and others, are important not only for well being, but also human survival. Given the relatively recent historical emphasis on human rights in general, especially those of a political nature, perhaps it isn't surprising that societies have yet to deeply consider economic rights. For that matter, production reform potential for applied knowledge, is just part of the production reform societies need, to bring costs of living back in line with future income - hence revenue - realities. In particular, production rights would also extend to our contributions to the physical environments we live in, as well. Fortunately, we can start anew with organizational patterns for production reform which - instead of adding societal burdens - might ultimately relieve them.

Defined Equilibrium and the Generational Debt Burden

Given all the discussion regarding a more sustainable use of earth's resources, one might expect more concern about sustainable long term budgetary strategies as well. Why, then, hasn't this been the case? Part of the problem, is that governments and populations are overly reliant on long term debt for the funding of high skill services generation.

However, this approach leaves too much applied knowledge vulnerable to the limits of asymmetric reciprocity. Too many debt instruments now discourage symmetric resource use for services generation. Alas, debt as services "solution" encourages a societal perception that carefully managed national budgets aren't as important as other aspects of sustainable resource use. Even though monetary representation (in its most immediate and usable form) reflects direct resource reciprocity, a substantial amount of monetary representation supports less direct means of high skill services funding.

And, in part because of the future reciprocity expected of services debt, monetary representation of the latter is less likely to be kept in active circulation in the economy, than the former. When money becomes "sterilized" on such terms, it may actually be designated as a measure of current value, instead of as a current medium of exchange (This process also prevents nominal inflation at a general equilibrium level, but simultaneously deflates investment capacity). Part of the impulse to sterilize money is due to the lack of immediate reciprocity for services generation. Hence some monetary representation (also reflected in divisia) can actually obscure the crucial role of money in wealth creation via immediate resource symmetry. Chances are, it will be a while before differences in monetary divisia roles become more apparent, since monetary representation is still evolving in response to recent services dominance in general equilibrium conditions.

In all of this however, future generations are expected to pay for many high skill knowledge based services being provided in the present. This being the case, is it any wonder that while younger generations are concerned about earth's sustainability, they aren't particularly worried about long term budgetary sustainability? Especially if policy makers aren't attempting to reduce the burdens of future generations in this regard! When every political party starts to run with the money while in power, what would make free college for all any more egregious than other forms of budgetary excess! Since younger generations have been sorely compromised at basic levels of governmental policy, that could explain why they no longer find a middle ground in policy making, all that compelling.

Unfortunately their lack of concern is quite understandable. That said, I still believe in long term approaches for long term debt burdens. Let's face it, Keynes probably didn't emphasize that "In the long run we are all dead" because he didn't care about the long run. Rather, he may have been worried that economists wouldn't continue making strong enough contributions or adjustments as needed, to help ensure economic stability for the long run. Call me old fashioned perhaps, and not sufficiently cynical given present political circumstance, but I still worry that if long term debt burdens are not soon addressed, much of today's economic prosperity will eventually unravel. Regular readers also know I doubt we can still tend to these issues on general equilibrium terms in a complex economy. Which is why I suggest local defined equilibrium settings, to help maintain and preserve long term economic stability.

For the most part, the general equilibrium conditions of many nations have become too complex to respond well to ideas - economic or otherwise - which could readily be applied to a structural whole. Indeed, some even complain that there is a dearth of new ideas! Chances are, what's really lacking are suitable settings where new ideas could readily be tried with minimal repercussions if they don't work out. Governments need to give their citizens permission to conduct local small experiments via new economic platforms, instead of subjecting entire nations to economic experiments which are more likely to end up as social disasters. Plus, governments are increasingly exposed to competing factions which prefer different approaches to economic engagement. Why not try different approaches in small community settings, instead of attempting to impose a one size fits all economic pattern on a diverse citizenry?

While local versions of defined equilibrium would create boundaries for time based services coordination, these new communities would remain open to surrounding economies, especially for tradable sector activity and global ideas re infrastructure potential. Still, these communities would reject forms of non tradable sector rigidity which made debt burdens so intractable in the first place. Hopefully, new economic options for non tradable organizational capacity, might eventually lessen society's dependence on debt formation. Affordable building components and reciprocal symmetry in services generation, could give governments much needed possibilities for the problems of long term budgetary debt.

The "Greener Pastures" of Market Flexibility

With the advent of NIMBYism and protected knowledge sources, we sometimes forget how earlier forms of market flexibility made it easier for individuals to move more freely from place to place. How might we recreate "greener pastures" for new economic opportunities, especially for those with the greatest incentive to put them to good use?

The mid twentieth century U.S. economy was a time of considerable market flexibility, which helps explain some of the nostalgia surrounding this period. Clearly, its tradable sector dominance also contributed to social mobility. What were relatively flexible organizational patterns and divisions of labour in particular, helped local environments adapt to changing economic and social circumstance. Small business production was extensive, and it made feasible a wide range of wealth creation diversity. Even the smallest and most isolated of communities were often able to create their own roles, in what was an open and dynamic domestic economy.

Chances are, today's sticky domestic markets are a bigger problem for social mobility than is generally recognized. While social mobility is more often described as realizing income gains over time, our ability to move about freely as needed without accruing excessive costs or personal risks, is likely just as important. How much social mobility is negatively impacted, by the rigid requirements of non tradable sectors? Especially since these sectors tend to set the rules for economic participation in general. Even though tradable sector factory closings are an obvious hardship, citizens of hard hit regions face additional long term difficulties, when they try to start over in new environs only to find the costs of economic engagement beyond their reach. Unfortunately, non tradable sector rigidity is shutting off too many economic opportunities in domestic markets.

An interesting way to think about these issues, is the nature of risk taking in light of current market barriers. How so? Presently it is not uncommon, to hear that people aren't as willing to invest or take risks as was once the case. Yet this supposed lack of desire to invest further for continued economic progress, links economic stagnation with an assumed unwillingness on everyone's part. But why expect millions who are basically satisfied with their lives, to be the primary risk takers in society?

Plenty of individuals who are willing to assume risks and invest in new possibilities, aren't being noticed. Paradoxically, many who seek greener pastures are derided for doing so. Supposedly they aren't the ones to be pursuing better realities! Perhaps instead of expecting the already successful to do the heavy lifting of innovation and furthering progress, we might ask them instead to have more patience with others who aren't quite as content with present circumstance. We might discover how people who are content with their gains, could become more willing to make room for others who wish to create successes in their lives as well. In many instances, it simply isn't necessary for everyone to struggle with competing platforms and goals in the same physical locations. No one need force extensive market changes on those who understandably resist, when new spaces could be freed instead, for greener pastures of economic opportunity.

Transportation is Both Basic and Discretionary

How do we categorize the importance of transportation in the context of everyday life? More specifically, what do we need to utilize transportation for, in any given moment? By clarifying differences between basic and discretionary transportation options, we could better determine, how the physical layouts and transportation grids of new communities could reflect such roles as well.

As it turns out, commutes for daily routines vary considerably, from the transportation networks we now rely on for longer road trips. Alas, 20th century transportation networks - designed with automobiles in mind - created spatial settings which don't really distinguish between the two! Consequently, the same highway systems that can be so advantageous for discretionary and occasional travel, tend to be commuting headaches wherever people routinely come together to get things done. Some basic rethinking is needed, to retrieve commuting options which take less time than what is now frequently necessary.

What are some differences in transportation needs? One might imagine a spectrum which on one end contains daily non discretionary travel commitments, versus a totally discretionary "vacation of a lifetime" on the other. Points along the middle of our transportation spectrum could be occasional visits to friends and family at a distance, plus similar excursions of limited duration and expense.

Fortunately, the more discretionary aspects of this transportation spectrum are still served reasonably well by state and national highways, here in the U.S. Even so, some disparage today's interstate systems, and reason we would have been better off had they never been built. While I'm convinced many highways are practical and useful, they've still muddled how we once went about getting from point A to point B on a daily basis. Since roads for automobiles went through so many cities and towns instead of around them, the physical proximity people need for many daily interactions has long since been compromised. Yet for now, what's done is done. Many local commutes will remain lengthy in the foreseeable future, and millions will bear responsibility for high transportation costs, since so much private property fronts the thinly spread densities where people expect to get things done.

Ultimately, greater efficiencies in local commutes would involve a rethink for private property coordination, so that closely spaced population densities will once again prove feasible in small towns. What many new communities would want to achieve, is greater accessibility for services workplace densities in particular. It will be interesting, to observe whether some settings might eventually prove similar to walkable communities before the automotive era. How might neighbors shift what were earlier coordination patterns for physical production, towards new combinations for time based services production?

One major challenge is the need for more flexibility in private property ownership, so that optimal densities for current life goals and responsibilities are feasible in a community core.  How so? Consider that in many private property arrangements, getting from point A to point B takes more time due to the need to commute around residents who reside between those points, but aren't part of the coordination factor therein. Indeed, some residents who aren't locally engaged during normal work hours where they live, lose valuable time commuting elsewhere as well! If short commutes to get things done (by all concerned) is understood as an important community goal, flexible ownership patterns toward this end, could prove easier to achieve. Property ownership deserves commute considerations such as these.

Granted, millions of individuals will continue to prefer the spread out densities made possible by automotive transportation, and understandably so. Still, many others could benefit tremendously from walkable communities which don't require automobile ownership. Desirable though it is, automotive transportation should no longer have to be necessary for individuals to maintain their autonomy and personal connections with others. Recall as well, that while public transportation, taxis and new companies such as Uber are viable options to auto ownership in cities, they simply aren't practical in many small places where it can be difficult to make a profit.

Walkable communities would make life more affordable for those with limited sources of income. Plus a simpler infrastructure approach would lessen the burdens of many a municipal budget. Doubtless, plenty of exploration will be needed, before new communities can transition to walkable core settings which restore economic engagement at all levels of society. In time, however, closer densities for living and working could lead to newfound vitality and more sustainable small towns.

Wrap Up for November 2019

Once a minimum wage has been raised, it is no simple feat to bring old jobs back.

Do low interest rates impact productivity growth?

Why do people treat countries as if they were anecdotes?

Perhaps the future of transportation is rethinking the places we wish to connect.

Hardly anyone is willing to seriously address the explosion in federal spending.

A major part of today's inequality is actually due to wide variance between companies, and the extent to whether they rely on intangibles. Plus intangible assets are not well suited for debt finance and traditional investment.

It's very unlikely the entire Internet would just stop. But what if it did?

What is given up when deep organizations become more flexible?

"The Global Equilibrium Real Interest Rate: Concepts, Estimates and Challenges"

"Now that the US is no longer the world's undisputed technology leader, US President Donald Trump and his advisers don't want to compete according to a rules-based system. Their goal is to contain China's technological rise." Even if doing so sets back an early 5G rollout in low income countries.

The biggest problem for rural police departments is a lack of qualified officers, especially considering the pay disparity with larger cities.

Alas, and sadly, this was explained to me by members of extended family nearly forty years earlier.

"Decades before environmental organizations and governments encouraged reuse, recycling, and circular economies, the wiping-rag industry had mastered the art."

Tim Harford notes the importance of the weakest link theory.

Success regarding job retraining for mature adults in the U.S. has been mixed.

Gregory Mankiw explains why he is now voting as an independent.

It seems David Graeber has written the most contentious economics article of the year. Both Noah Smith and Scott Sumner respond.

While substitution has its limits, a wealthy country has more economic options, when a diverse range of commodities and goods means that many of them consequently gain luxury status.

When tax forfeiture goes too far.

Workplace certificates might also position college students to more successfully complete their degrees.

David Beckworth and Binyamin Appelbaum discuss The Economists' Hour: False Profits, Free Markets and the Fractured Society.

Pessimism is more of a problem for capitalism, than for socialism.

Has the world gone mad? Cullen Roche provides some clarification.

"...workers with graduate or professional degrees will be almost four times as exposed to AI as workers with just a high school degree."
Their report also breaks down the exposure of different areas of employment to AI.

In what context is money mostly just a medium of exchange?

The natural rate of employment is not a straightforward concept.

Agnes Callard explains that no one is entitled to gratitude, remembrance or appreciation:

Write something worth reading. Put your ideas out there and hope that someone will make something of them. Give with an open hand and stop thinking about the tokens with which you will be repaid. Be happy to be worth stealing from. The future owes you nothing.

Completed suicides are rare, which helps explain why they are so vividly remembered by those who try to help.

Gregory Mankiw also suggests it's not a good idea to punish the frugal with additional taxation that the spendthrift is able to avoid.

Arnold Kling notes that new methods of classification are needed for an increasingly intangible economy.

Why are mandatory eye exams necessary?

Perhaps decades will pass before AI can really transform the economy.

Might MMT reasoning become an inevitable budgetary result? A CNBC article highlights a recent paper from the Federal Reserve of St. Louis, re national debt.

What's the Point in Work With Limited Pay?

For some - regardless of past earnings - this question may appear to have a simple answer. There isn't! Yet plenty of work we perceive as either enticing or necessary, takes place via no monetary compensation to speak of. How to think about this reality?

What encourages us to choose the work we are willing to do, regardless of compensation? After all, much more is at stake than a "fat" paycheck. By way of example, voluntary work we deem desirable, may either contain the internal reward of intellectual challenge, or represent our sense of duty to others. For that matter, work of a seemingly mundane nature is worthwhile, since daily chores and routines play important roles in maintaining our connections to our environments. Some will likewise sacrifice reliable paychecks to work on autonomous terms, particularly since doing so makes it simpler to juggle competing responsibilities.

Nevertheless, we find most aspects of work more meaningful, if we aren't constantly having to worry about keeping a roof over our heads and food in our pantries. Should low pay work appear insufficient for meeting basic needs, some will refuse to work for others on those terms. And yet there's plenty of work needing to be done, which for the most part can only be paid poorly. Consequently, progressives and conservatives alike are discussing the possibility of creating either "living" wages, or else wage subsidies as government support for employees (via their employers).

Even though I'm pessimistic as to whether either approach is actually feasible, I'm an optimist about the possibility of creating local environments which better reflect low to mid range wage capacity. Supply side innovation for our non tradable sectors, could create greater personal security and stability, for those whose primary work only gains minimal monetary compensation.

So: Consider the range of work possibilities we might consider for ourselves if we don't also have to worry about keeping a roof over our head, and food in our pantry. Would relative financial stability change our mental framework as to what is possible?

Regardless of automation and AI, modern day economies are likely to need a full range of skills complexity in the near future. That said, a lot of employment options may not pay quite so handsomely as before. One problem in this regard is that existing municipal government budgets may become stretched to the breaking point - an event would lead to knock on effects elsewhere in the economy as well. Even though millions continue to seek high compensation for personal levels of high skill, the reality is many budgets will come up short for this human capital approach. Indeed, while lower skill work has been displaced to some degree by automation, AI is a more recent technological development which could impact high skill levels, especially if it becomes utilized in response to budgetary limitations.

Eventually, more cities and communities are going to need to redirect extensive resource capacity to basic elements of infrastructure maintenance. Hopefully, this will encourage the creation of infrastructure and services which don't cost so much to operate and maintain in the first place! Once we have more local settings which are easier to maintain, more individuals may ultimately find value in pursuing intellectual endeavour which does not necessarily come with a large paycheck, or a pension for that matter.

Another consideration, is that the twentieth century redefined how we perceive many non pecuniary obligations to others. These cultural shifts are quite substantial and are still having ramifications. One reason a marketplace for time value is needed, is to restore important forms of mutual assistance which have essentially fallen by the wayside. Also, the use of skills arbitrage for widespread employment, has contributed to increasing physical distance from friends and families as we age. Time arbitrage - given its encouragement of physical proximity for economic activity - could help restore mutual assistance in ways which allow us to rebuild trust locally.

Should people refuse to work for "peanuts", often there are good reasons why. Fortunately, we can create new forms of institutional means which make it more worthwhile to do so. One important aspect of these processes is greater economic security, via innovation for more affordable local environments. Plus, we commit to a restoration of personal workplace autonomy, for participating individuals. Why so? Only recall that one's ability to personally manage workplace circumstance, is a major reason why people are often willing to work for less money. And even though making room for the personal autonomy of others would include occasional inconveniences on our part, only recall how much we appreciate it, when others extend to us, the same privilege of personal autonomy.

Frontiers For Basic Gains Are Also Progress

What makes the possibilities of frontier so important for the progress of nations? Much more is at stake, than frontier progress which expands opportunities for human wants along the margins of a given equilibrium. While this high income approach to economic progress has been dominant for some time, something is missing. Our non tradable sectors have paid scant attention to millions who would more fully participate in the economy, were they able to do so. What about the wealth potential of newly generated local settings which could encourage low income groups to fulfill basic life goals? After all, this approach would ultimately create more consumers able to encourage the growth frontier of "cutting edge" at the margin, once millions of individuals gain sufficient footing in more basic endeavour.

Chances are, the frontiers which matter most, are those which include starting points for the innovation of need based circumstance. Part of what makes these kinds of frontiers so important, is their potential to allow people of all income levels to more directly manage and create their own life circumstance, thereby contributing to economic growth in the process. Too many such opportunities for self control of local environment, have instead been given over to special interests, redistribution and subsidies, in the belief that experts "should" instead be managing the circumstance which low income groups face.

Indeed, innovative gains which contribute to basic life conditions, are also those which add to economic growth in ways that can actually surpass what occurs along the"cutting edge" of a given equilibrium margin. Alas, the latter more often involves shifts in wealth and resource capacity from one form of consumption to another. Only consider how the relatively recent frontiers of the New World also created new opportunities for citizens to start over in need based terms. Ordinary citizens of those frontier days, often had the good fortune to play starring roles in these earlier stories of new wealth creation. One of the primary challenges of our time is to create new forms of economic frontier, where gains in the innovation of basic needs on the part of everyday citizens, continue to define how we experience our world.

All too often, experts assume that basic economic settings where ordinary people might gain a new lease on life, are a thing of the past in modern day economies. However: Even though immigration is a good solution where possible, it should not be relied on as a sole means of economic escape from conditions that aren't conducive to survival and human thriving. Especially since immigration has only become increasingly difficult for many would be emigrants. Perhaps we could set ourselves an easier task, by creating new forms of economic frontier for beginning anew. In these local settings, many aspects of regulation would be greatly simplified so as to encourage basic innovation on the part of those directly involved.

Let's not assume that need based economic gains are a part of the past, especially in advanced nations where this approach to progress has mostly been abandoned. There are simply too many citizens and communities left behind, to focus all efforts for wealth frontier on further gains for higher income levels. Chances are, need based frontier for wealth creation could be just as useful and practical as ever. Basic human needs in general, could greatly benefit from occasional examination and social adaptation. Modern day economies should not remain limited to a focus on expanding the wants of higher income levels. The economic needs of lower income levels and the potential for supply side innovation in this regard, will always hold relevance in the continued pursuit of progress.

Why Do Services Need Monetary Equivalence?

Much of today's political chaos, can ultimately be traced to struggles over who retains access to high skill knowledge. Consequently, it helps to consider: How much of this skills capacity might be artificially scarce?

Still, artificial scarcity was built into quality services product for understandable reasons. Originally, professional services were largely intended for citizens with relatively high income levels in prosperous areas. Over time, however, professional services provision gradually became the norm, replacing the mutual assistance which citizens with limited incomes had long provided for one another. Even though the move from mutual assistance to professional activity has been a centuries long transition, the real turning point towards complete professionalization began about fifty years ago.

By the late seventies, professional healthcare had mostly replaced the last vestiges of local and less formal services options. Nevertheless, the details as to how skilled forms of mutual assistance were legislated away, aren't really well known. Even the latter stages of these transitions were scarcely noticed, since the professionalization of services in general, benefited from widespread media support.

What is belatedly apparent, however, is that when production rights are withdrawn from groups lacking the money for extensive human capital investment, markets for useful services are going to suffer. Fortunately, what has become a woefully insufficient services marketplace, can be addressed. But doing so means not being afraid to explain to citizens what actually happened. The less blame in this regard, the better. Forgiving what happened, means we get the chance to create a more productive and hopeful future. We now have the opportunity to create greater economic meaning for time value, and doing so would extend the skills capacity needed for today's knowledge based economy. Much of this skills capacity will also need to take place on non pecuniary terms capable of creating monetary equivalence.

Why so? Healthcare is mostly a dependent secondary market. Since much of it relies on government support, periods of slow economic growth impact the revenues actually available. Consequently, even though demand continues to grow - especially due to aging populations - healthcare providers have limited ability to expand supply side capacity via the same pricing terms. Yet how could healthcare providers be paid substantially less, if their human capital investment costs remain relatively fixed?

For the U.S. in particular, present day organizational capacity was created during relatively long periods of increasing tradable sector growth. This organizational capacity was also accomplished via strong price making mechanisms, especially in the latter decades of the 20th century. Now, in certain respects the price making approach has reached its natural limits, given other near future budgetary obligations. In other words, even though more capacity is needed, revenue can't realistically grow to meet that demand. Consequently, services demand now needs to be met by different means than what have occurred in the U.S. thus far.  This is the dilemma many high skill providers currently face. What can be done?

The moment is right, to create human capital organizational patterns which include reliable and easily defined non pecuniary rewards. This approach would help compensate the fact that healthcare as a secondary market position, cannot respond to further demand with full monetary compensation for an expanded supply side. Non pecuniary rewards would create greater monetary equivalence for those willing to participate in healthcare, through new forms of organizational capacity.

Services such as healthcare could gain greater monetary equivalence by increasing time value as part of an applied knowledge continuum. This process could be undertaken with relatively minimal costs for human capital investment. Education for services skills would be integrated into local communities and their workplaces. The symmetry of time arbitrage would allow education and other services capacity to function as components of wealth creation, instead of simply more demands on other existing wealth.

Such an approach could be a tremendous boost for communities which presently lack the resources necessary to compensate today's high skill knowledge providers. Plus, monetary equivalence for human capital investment via non pecuniary means, could help stabilize skilled services markets in general. And in modern economies, services stabilization is certainly important for wealth stabilization as a whole.

Decentralization For The Greatest Good

When many rules have centralized origins - especially in large populous nations such as the U.S. - governments struggle to achieve the greatest good for the greatest number of citizens via taxation. The fact that utilitarian outcomes aren't easy to come by for diverse populations, helps explain why policy makers of opposing parties have become less willing to compromise. So why do we insist on imposing the same sets of requisite rules and standards on everyone? Why can't our economic freedoms be more closely associated with the possibilities of economic diversity, so that all citizens might live in settings where they can create good lives for themselves and others around them?

Nevertheless, one may take comfort, in the fact rigid expectations are nothing new. People have attempted to impose one size fits all regulations and social requirements on one another for a long time. For instance, even though Walden was published in 1854, Henry David Thoreau details how the social expectations around housing, contributed to the impoverishment of many in his time:

Most men appear never to have considered what a house is, and are actually though needlessly poor all their lives because they think that they must have such a one as their neighbors have. As if one were to wear any sort of coat which the tailor might cut out for him, or, gradually leaving off palmleaf hat or cap of woodchuck skin, complain of hard times because he could not afford to buy him a crown! It is possible to invent a house still more convenient and luxurious than we have, which yet all would admit that man could not afford to pay for. Shall we always study to obtain more of these things, and not sometimes to be content with less? Shall the respectable citizen thus gravely teach, by precept and example, the necessity of the young man's providing a certain number of superfluous glowshoes, and umbrellas, and empty guest chambers for empty guests, before he dies? 

Sometimes, societies impose such standards as a way to exclude others who they believe cannot adequately contribute to the needs of given communities. The problem however, is that more communities aren't created with infrastructure which accurately reflects what many individuals could contribute to the well being of all concerned, given the chance. Where, exactly, are excluded individuals and groups expected to go, especially when there are few domestic markets competing via product innovation, to enrich the production potential of lower income levels? And why haven't such individuals already gained the economic freedom to create anew for themselves, what many institutions have proven reluctant to provide?

Social expectations around housing requirements in particular, have proven especially harmful for the bottom 50% of working adults in the U.S. without sufficient income to live where reliable work can readily be found Even though lower income levels have been losing real wage capacity for decades, we have scarcely begun to discuss supply side approaches which could lead to more positive outcomes.

Alas, no one can realistically pretend that trends for low pay work will be reversed soon. We need economic options which allow us to bypass the sticky markets of today's extensive non tradable sector requirements, so that low wages will go much further than is presently feasible. Decentralized local settings which more accurately reflect what small incomes are capable of, could give millions new hope. Such settings would have far more ability than any centralized government, to create the greatest good for the greatest number of citizens. Defined equilibrium for housing, infrastructure and services would also make use of limited regulatory patterns, for groups which find mutual assistance a way to improve the well being of all concerned.

Consider as well that when it comes to housing, one need not classify Thoreau's housing sentiments as anti-materialistic. It's one thing to disavow material possessions in order to seek other time use options, yet altogether another to disavow certain forms of consumption which many individuals can't realistically afford in the first place. Life is much easier when we can accept such realities and move on, instead of having to constantly struggle with income differences in the face of one size fits all regulatory absurdities. People should be able to make low cost choices where desired, yet still have plenty of local economic options to lead meaningful and respectable lives.

A supply side approach would allow us to take the focus off struggles concerning aggregate demand and government "solutions". Doing so is all the more important, since governments hold considerable responsibility for the centralized consumption regulatory barriers which impact the lives of low income groups. Let's build decentralized settings where non discretionary costs might finally come within reach, of millions who seek to make the most of the resources they actually have available.

Some Productivity "Mysteries" Are Solvable

One often hears, "To what extent does technology contribute to productivity?" But an equally important question is, "What else may be closely involved?" For instance, when do societal expectations of what comprises quality product, get in the way? Are those expectations creating additional burdens for our already scarce time use options?

If quality product expectations (such as housing and services) keep requiring ever more of our scarce economic time, more citizens will end up excluded from basic market processes in the years ahead. Essentially, this means aggregate productivity is also being lost, despite productivity gains which may still accrue at upper income levels. Markets aren't as beneficial as they seem, if the costs of basic life necessities leave little room for discretionary spending options for millions of people. On the other hand, free markets are a major boon for all concerned, if they offer accessible basic products and services for all income levels - thereby creating a base of sustainability. Should this in fact take place in the near future, some of our production mysteries will also have been solved.

Certain features of our non tradable sector activity have been reducing aggregate productivity gains for quite a while. Nevertheless, there's good news, for we have the ability to simplify some of the current confusion as to potential productivity gains. How so? One of the most basic elements of productivity gains which still holds, is how such gains accrue to our advantage when they give us additional time options, monetary options, or both. Importantly, even though we now inhabit a services dominant economy, this is as true as it ever was.

Productivity gains, when they do occur, tend to take place in more than just a single dimension. An apt 20th century example for productivity benefits at multiple levels, were washing machines which entered our homes around mid century. Not only did we realize wealth gains from increased aggregate output (and output scale created a positive wage benefit), washing machines freed up lots of time for other activities as well.

Only imagine how easily we could realize similar production gains today, by adopting lightweight yet strong materials for a broad range of building functions. Indeed, many building components could combine to create relatively small structures (compared to today's square footage requirements), simple enough in form to require a mere fraction of the maintenance and renovation which is now necessary. These new living/working options would restore millions to a sustenance level of activity at the very least. In other words, far more individuals would remain closely attached to wealth creation processes, than if they were dependent on others for shelter. Any society that forces undue dependence through excessive living costs, will also tend to create less overall output or wealth. Whereas greater independence in living and working arrangements, leads to more personal choice for countless other market options, hence greater output and productivity gains.

Let's reduce the production mysteries in our dialogue, by addressing how arbitrary product definitions and social expectations impact our time commitments and ability to freely choose. We could reasonably ask of products or services: Can they free up our time for activities we might prefer over present activities? If not, then why not? When we don't take this kind of approach, we inadvertently allow "quality" product requirements to reduce the larger possibilities of our lives. Even worse, we allow those arbitrary product definitions to reverse a centuries long process, of the productivity gains which added so much to real wealth and societal progress.

As Diane Coyle notes in a recent Project Syndicate post, we could all benefit from a more nuanced understanding, as to what makes productivity relevant for our lives. She stresses how already in OECD countries, four out of every five dollars "purchases services or intangible goods". Coyle is spot on, in suggesting we need to think in broader terms about productivity measures and how they may affect overall well being. Otherwise, without a better approach to measured services output (and I suggest time arbitrage), it will only become more difficult, to determine whether societies can keep moving forward as before. Let's stop our struggles over how government demand among citizens is apportioned, and pay more attention to the supply side circumstance which matter most for everyone. Many of us have a good chance of thriving, if we can regain our former rights to select for size. Being able to do so, is what economic freedom is really about.

Wrap Up for October 2019

Politicians place too much emphasis on foreigners re international trade issues, instead of focusing on domestic issues which are vital for a nation's economic health. 

Scott Sumner provides highlights from a new paper on NGDPLT, by David Beckworth.

Tight labour markets have helped low end wages.
Just the same,
"Falling labor demand for non-college-educated workers has weakened the returns to work and lowered labor force participation for many workers."

Waste in healthcare isn't a new problem.
Perhaps waste reduction isn't interesting enough to be a priority. (A JAMA network perspective)

Three forces shaping the world (Morgan Housel)
"It's almost certain that the educational system will be upended. The current arrangement of needing a college degree in order to have a good chance at becoming and staying middle class, but taking on life-changing amounts of debt to do so if you don't have family assistance, can't last."

A baby boomer contemplates the fact millennials aren't particularly concerned by the national debt.

The return of regional divergence (Krugman) He stresses how strong this divergence actually is, and the fact that policy can't reverse it.

Martin Weitzman changed Tim Harford's thinking on climate change.

"A calendar is more than the organization of days and months. It's the blueprint for a shared life."

Andrew McAfee found, to his surprise, that the U.S. is now taking a less materialistic path in the use of many resources. While this is certainly good news, I still have to wonder, how much this circumstance might be arbitrarily imposed, since many people forego a lot of material consumption when they don't also own traditional housing and transportation means. Plus, some individuals understandably voice anti-materialist sentiments as personal choice (rather than financial necessity), for this ownership anomaly now goes well beyond lower income levels.

Bloomberg debates the possibility of world recession.

What happens to national debt over time, if the rate of interest is less than the GDP growth rate?

"Democracy on a Knife-Edge"

The next recession is likely to be met with a fiscal approach which includes more debt. How much of this might morph into MMT rationale?

Alex Tabarrok provides numerous links for this year's Nobel winners (Banerjee, Duflo and Kremer)
Two more from Tyler Cowen, here and here.
Also a contribution from the blog "A Fine Theorem".
This paper from Michael Kremer is "a hit among students".

Olivier Blanchard suggests a nominal wage target.

David Beckworth recently edited a book on Allan Meltzer's life work.

Corruption can be difficult to uproot, when the process becomes a top down witch hunt against a government's political opponents.

George Selgin responds to a revised criticism of NGDP targeting from Lars Svensson.

Non profit hospitals are also driving up the cost of healthcare.

Final thoughts from Alice Rivlin, on healing divisions in America.

Diane Coyle reviews Productivity Machines

Democratic presidential candidates have not given enough consideration to changing workplace realities. Specifically, what's lacking in "talent development ecosystems". And, "Many of the candidates' proposals merely extend the status quo."

Miles Kimball highlights this LSE blogpost:
Perhaps economists are simply more inclined to use Twitter to communicate with one another, rather than the public. Sometimes economists seem to have given up on the latter, especially since political dialogue has grown more strident. Yet one can't help but wonder: Which is cause, and which is effect?

1550 to 1650 could have been the crucial century.

Despite the understandable angst, we will struggle to get past our current disillusionment with "lousy jobs" until we make our time more valuable for one another on economic terms.

The best defense against Trump is to refuse to be tribal.

Even though average U.S. rent was "too damn high" in 2017, it went even higher in 2018.

"Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis"

"The top 50% pays almost all the federal income tax."

"Srinivas Thiruvadanthai on the Sectoral Financial Balance Approach to Macroeconomics"

"...startup community building is a lot of guesswork and trial-and-error. It requires curiosity, humility, an informed intuition, and a general comfort with not having all of the answers."

Cardiff Garcia takes the interviewer role on this Macro Musings podcast, to talk with David Beckworth about NGDP targeting.

Sarah Skwire provides a list of what essentially boils down to "you may be a crackpot economist if..." Oddly, a certain amount of pride (what, no shame?) goes with these descriptions! Hence her post reminded me of a classic song lyric from "You're So Vain", "I bet you think this song is about you."

How susceptible are we to "neuromyths"?

The Week staff provides historical perspective for the impeachment of Andrew Johnson

How will increasing services dominance play out in international trade?

Update on a synchronized stagnation.

J.W. Mason looks at the implications of downward revisions in interest rates.

NPR interviews surgeon Marty Makary

The Fed is gradually moving towards a market based approach - one which may help the U.S. avoid recession in the near future.

"Automation and New Tasks: How Technology Displaces and Reinstates Labor"

A season of discontent is underway.

Diane Coyle reviews Human Compatible: AI and the Problem of Control

Morris Kleiner and Evan Soltas argue that the welfare costs of occupational licensing are higher than the actual benefits.

Airbnb is changing Himalayan villages.

A consideration of real wage factors for inequality over time.

Is there an optimal response to the California power company blackouts? Plus scroll past the trolls for useful comments which reveal the complexity of this issue.

Childcare has become one of the main time/resource coordination dilemmas of our era.
Even though 63 percent of full time workers find childcare costs prohibitive, one daycare manager explains that she actually loses money "on every infant and 2-year-old in her care".

The first Five Books interview ten years earlier with Robert Barro, on the lessons of the Great Depression.

Tyler Cowen recommends a job market paper which highlights downward rigidity in wages for new hires.

The trend rate of growth is (surprisingly) strong. But can it last?

When is Hierarchical Structure a Good Approach?

When do hierarchies contribute to getting tasks accomplished more effectively? This is an important consideration for time arbitrage, which would mostly function via horizontal divisions of labour in relatively flat organizational patterns. Many participants in these processes - regardless of age - would assume active responsibility for the services they seek to create and provide. Often, one's limits in this regard would stem from what other individuals are willing to accept, rather than what institutions refuse to allow in terms of skills provisions and access.

Some aspects of our working lives don't particularly benefit from hierarchical patterns of organization. All the more so, when vertically aligned decision making imposes unnecessary costs and makes it needlessly complicated to get anything done. Fortunately, a wide array of time based services could adapt to a simpler framing which encourages internally managed decision making. Our present day services institutions use hierarchical approaches in part since vertical structure makes it easier to price make for additional income. However, the price making which often comes with hierarchies, discourages the price taking that is full societal time based coordination and participation. Yet it's the latter which encourages people to reach out to others for the full course of their lives. Without such encouragement, the constant permissions process of meritocracy can lead many to believe they are "unworthy" to take part in even basic forms of mutual assistance!

Meritocracy also gets in the way of natural expression. Ideally, an important takeaway for many forms of time based product, would be how participants perceive the experience. Nevertheless, when these activities are institutionally (externally) defined, there's little consideration for the actual circumstance which individuals may face. This inability to take unique factors into account, can detract from the shared experiences of providers and recipients. How much freedom do they have to manage and create a services experience, in the interactions of institutionally defined time based product? If these services could be offered on simpler terms, free markets would more closely represent what individuals actually want to create and provide for one another, as freely participating agents.

On the other hand, there's an entirely different set of organizational considerations, if divisions of labour contribute to final product which is clearly delineated from human input. By way of example, we find strong rationale for externally defined divisions of labour in tradable sector activity, since its final product is the sum of many different - yet specific - actions. Without divisions of labour standardization in such instances, final product could not serve its functional purpose. Hence tradable sector final product is likely to be composed of many different divisions of labour which benefit from external and possibly hierarchical coordination.

Even though time arbitrage could provide many opportunities for non hierarchical patterns of organization, there are still occasions when hierarchical organization could be efficient and even desirable in these settings. For instance, externally defined divisions of labour can be useful to define skills expectations in local projects which are seldom needed. Some skills sets may not be needed locally, to an extent they can be readily included in the local educational patterns of time arbitrage.

Another rationale for hierarchical organization is when multiple participants may be new to local coordination processes. In these instances, communities may not have had time to contribute to local learning opportunities which would simplify egalitarian approaches to mutual assistance. Nevertheless, many hierarchical requirements for services generation need not be ongoing. After all, most individuals hope to assume more autonomous roles in their working relationships, once they become familiar with the needs, expectations and aspirations of their own participating groups.

There are also hierarchical considerations for workplace teams, since team members frequently contribute specific skill sets to the outcomes of group endeavour. Healthcare in particular developed a team approach in the 20th century. However, while healthcare team based price making has functioned reasonably well for higher income levels, it hardly suffices for lower income levels. By way of example, if Medicare in the U.S. were extended to all citizens, the present healthcare system would be quickly bankrupted! A better approach would be to allow lower income levels to adopt knowledge use systems which allow them to internalize educational alignments for mutual assistance. Time arbitrage could ultimately create means for participating low income groups to meet a wide array of healthcare activities.

A certain amount of hierarchical structure would also come into play, for the start up community design of knowledge use systems. Importantly, organizers would want to ensure that community designs aren't needlessly divided between opposing visions of the good life. Everyone's time is scarce, and time arbitrage would include time commitments as a component of local community taxation. Hence opposing visions could quickly get in the way of local aggregate time use possibilities. System co-founders would not be doing their job, if they don't work to ensure that diverse community designs are feasible which reflect the full range of what individual groups hope to create.

Once a given community design is determined, local grid and infrastructure patterns would reflect the main services lifestyle preferences, via a walkable core. From here, more flexible lifestyle and transportation options would begin to define community peripheries. Once these physical aspects of community design are in place, walkable town centers would become a welcoming place for people of all ages, in free markets which represent true services freedom of expression.

Long Term Commitments Need Non Pecuniary Stability

Some non pecuniary settings are more beneficial than others. Regular readers know the ones I believe could prove most helpful: Simpler building and infrastructure choice sets, plus a wide array of services made possible via time value as an economic unit. Often, non pecuniary advantages tend to be random and otherwise ill defined. However, by clearly spelling out such options, defined equilibrium designations would highlight the advantages of real wage stability over elusive nominal wage gains.

During long economic periods when nominal wage growth is lacking for any reason, non pecuniary economic options could prove more valuable than they might first appear. Once costs of living are dramatically reduced, lower income levels can more readily achieve regularity in their daily routines and work patterns. Reliable economic patterns could certainly give these individuals greater courage to assume the risks of long term commitments, so they might lead normal and productive lives.

Only recall that all income levels need reliable economic patterns, before it is realistic to make emotional commitments with others in good faith. Investment potential for lower income levels, can be quite different from what higher income levels expect to assume. Further, even the best of relationships can become derailed, when life/business partners can't find suitable locations where the resources at their disposal are sufficient for building a good life. Why not create more locations which could thrive with minimal revenue requirements, to address the inequalities of our times?

In a dialogue for Project Syndicate "Say More", Harold James touches on educational aspects of cultural fallout due to inequality:

A very important series of books and studies...have shown that in advanced societies, inequality is driven partly by marriage preferences and social bonding among the "elites" who pass on non-pecuniary advantages in education. The logical conclusion is that functioning families should not be a privilege reserved for an educated upper class. That is the path to social collapse.

Let's be careful, before drawing conclusions these problems somehow need to be resolved on pecuniary terms. Once substantial amounts of wealth accrue to the time value of human capital (relative to tradable sector output), it is no longer a simple matter of utilizing money for existing inequalities, or even getting things done communally in general equilibrium settings. Hence the better solution is to increase the value of all human capital, so that more of society's most important work can be done without the monetary expectations which now accrue to upper income levels.

Fortunately, we don't have to access the education, or even the wealth of the elite, in order to live good lives. We can approach learning and human capital investment differently, so that resource capacity is better aligned for all concerned. We can approach physical environment design differently also. These forms of production reform would do much to address the organizational deficiencies of our non tradable sector institutions. There's still time to avoid social collapse. Why not get started while it is still feasible to do so.