Sunday, September 29, 2019

Wrap Up for September 2019

"Shifting visions of the good job"

We want to remain close to family, friends, workplaces and cultural amenities. Even technology doesn't change this, and broad transportation options have become increasingly limited.

For India, the war on informality has become a war on the economy.

"A UBI in its most basic form would be massively expensive yet do little to reduce inequality or advance opportunity."

Which politicians are still willing to defend free trade?

Regarding the Phillips Curve:
"When you estimate a demand curve without being able to identity shifts in demand, you are not estimating a demand curve, you are estimating a reduced form that combines - and fails to identify or distinguish between - both demand and supply."

"The True Toll of the Trade War"

Mapping out racial diversity

China sales to the rest of the world have more than offset losses in exports to the U.S.
Both China and India have been building internal supply chains.

How might the Fed respond to dollar dominance?

"Most of these malls shut down because of the roof."

Telemedicine has come a long way.

David Beckworth and Alex Tabarrok discuss long term growth prospects and economic dynamism.

What other policy framework would exist around universal basic income? It can't be realistically discussed in isolation.

"We are part of the equilibrium."

Ben Ramanauskas reviews The Technology Trap.

"Is the US Economy having an Engels' Pause?"

Tim Harford explains the logic of holiday timing.

Taxing robots would be a quick route to quashed innovation and progress.

"The term 'sterilization' refers to policies that cause newly injected money to be set aside as a store of value, rather than circulate as a medium of exchange. One can think of IOR as a policy where the Fed pays banks to hold the new money being injected into the economy, rather than have it move out into circulation."

In spite of our efforts to "stay young",
"Repeated periods of poverty can accelerate the ageing process."

Trump has caused problems for the U.S. when it comes to trade.

The Book of Why is also an argument for philosophical persuasion.
"Modern machines...are nothing like our minds."

Bruce Bartlett explains how Keynes was a conservative.

What is happening to wages? Much depends on methodological choice.

Brookings: " increase in interest rates is not necessary to generate the decline in future national income."

"Who are the biggest exporters?"

Binyamin Applebaum talks about his new book with James Pethokoukis.

The successful continuation of tacit knowledge is another good argument against centralization.
Yet the ability to transmit visually apparent tacit knowledge at scale is quite recent.

Recent decades have seen considerable economic divergence between Democrats and Republicans.

"...productivity growth tends to be lower when interest rates fall."

For now the dollar remains dominant.

Diane Coyle highlights a great quote from Elinor Ostrom.

"...the days of entering a hospital without security clearance will soon seem as quaint as walking a family member to an airport terminal."

"In nominal terms (measured at current exchange rates), the Chinese economy is only about two-thirds the size of the US economy. In purchasing power parity terms (adjusting for differences in prices), the Chinese economy is actually larger than the US economy. That's because China has much lower prices."

"Stake out the street grid; separate public from private space; and leave room for what's to come. Then let the free market take over."

Documenting national industry concentration in services.

Allison Schrager defends economics.

In this short clip, Paul Romer explains how the importance of economic growth, is really about growth in value. Some thoughts: Quality product has yet to be distinguished from growth in terms of output versus nominal gains. Might some aspects of quality product negatively impact long term growth and productivity? How to know whether GDP gains from quality product contribute to economic dynamism? To what extent might aggregate output be the most important form of long term growth, for market representation?

When it comes to monetary policy, the size of a country matters.

The old conservatism versus the new conservatism.

"Ironically, despite the expense of owning a car, going carless in America often requires having money".

"It is the scarcity of physical objects and the potential for conflict that such scarcity creates that is at the heart of why we have private property at all." Granted, there's strong rationale to make knowledge non rival. However, imposed artificial scarcity is still an institutional response to real scarcities of place and time, for high skill time based product. Perhaps a better way to build continuum for knowledge in non rival context, is seeking out settings which greatly reduce the costs of space and time constraints.

Philadelphia as a microcosm of income variance.
"When an additional 1% of income goes to the top 20% of income earners, GDP falls. But when the same gains are made by the bottom 20%, GDP rises."

"Moving the needle" on progress.

The Constitution can't save democracy, but citizens can.

Wednesday, September 25, 2019

Potential Monetary Characteristics For Time Value

Is time value capable of assuming economic functions similar in nature to what money provides? More specifically, how could local defined equilibrium make it feasible for time value to serve as a medium of exchange, a unit of account, and also as a store of value?

Granted, time value has long been considered too variable to serve as a standard unit, especially given the extremes of individual abilities in open economies. However, in the last century there have been extensive price making claims on time value, in relation to the revenue sources it depends upon. When prior monetary claims include production rights for knowledge use, the process exacerbates already existing differences in personal aptitude. This arbitrary skills polarization only makes it more difficult for different groups to effectively coordinate time based services with one another. We need economic options which broaden services markets by restoring skills capacities in a closer range, so that modern day economies can benefit citizens regardless of income level.

Unlike tradable sector markets where the wealth representation of resource capacity is obvious, market capacity in non tradable sector activity relies on wealth claims which lack immediate reciprocity. Consequently, many present day services sector costs are actually being shifted towards future generations. Time as an economic unit of value, via symmetric alignment and coordination, could eventually resolve more services provision costs in the present. Hopefully, once time value gains monetary characteristics, it will generate non tradable sector market capacity which goes well beyond the present price making demands on general equilibrium revenue.

First, time arbitrage would play an active role. Voluntarily matched time preferences would create new supply and demand in services markets, on price taking terms. Matched time is the initial activity which allows time arbitrage to function as a local medium of exchange. Eventually, once a given group becomes established, the debt cancelling function (time purchasing time), allows time arbitrage to become monetarily and institutionally backed. Since this mutual employment process functions as a source of wealth origination, it not only creates additional resource capacity, but greater economic inclusion as well.

Time arbitrage as a unit of account, would also serve as a record keeping device with a long term storytelling component. As a unit of account, time arbitrage would not only generate a history (or continuum) for group activity, these records include pricing signals which allow mutually held priorities to function more effectively. Unit of account storytelling suggests learning opportunities which occasionally extend beyond local participants, to others who might become part of the process as well.

For time arbitrage, the store of value function may prove most useful for the benefits of recorded time insurance which accrues in one's own lifetime, rather than what goes into a recorded group continuum. A store of value option could help individuals reserve future commitments in simple skills from the group by initially providing their own. In particular, the more time one gives to those in need of assistance who presently can't reciprocate, the more one might gain assurance of the same, at a later point in life.

This is a more direct approach to coordination potential, than what is presently available in markets for time based services. All too often, insurance offerings or perhaps informal commitments from others for life needs, leave us hoping for more personal attention than what is realistically feasible. Further, many who wish to better their lives in the present, understandably set their sights higher than simple services provision for others. This reality occasionally creates trust issues for those who are mostly left with simple services options, instead of choosing them willingly. Time insurance for simple service offerings would make it easier for all concerned, to continue pursuing meaningful challenges in other aspects of life and mutual employment opportunities.

Monetary characteristics for time value, could help restore growth on terms which few can really argue against. After all, time use potential is one of the few natural resources which is clearly underutilized in modern day economies! Even if monetary framing for time value seems as though a technical approach, it still provides a key which could open an entirely new realm of possibilities, for inclusive and accessible services generation.

Friday, September 20, 2019

Markets Could "Find a Way" for Services

In a post for Econlib, "The Market Finds a Way", Scott Sumner states:
Experts often warn that we are soon going to run out of a natural resource. If so, then we might expect an increase in price which encourages conservation.
What if the impulse to conserve comes well before the price rises? Consider how markets for time value in high skill services, essentially took this approach in the 20th century. Still, even though augmented time value (which includes extensive human capital investment) can be priced at a premium, many forms of time value haven't been factored into the same general equilibrium equation. Consequently, supply side conservation of special skills capacity, may come at the expense of supply side potential for markets as a whole. Clearly, some disequilibrium circumstance is due to artificial scarcity, which may ultimately result in an incomplete market equilibrium for time value.

Presently, the resource potential of aggregate time value appears less promising than should be the case. For many individuals, the total value of their employment potential (working time hours) is insufficient to compensate the service product they may need from existing service markets. These limits in coordination capacity have meant unnecessary production losses and arbitrary supply side limits for markets as a whole. Given the growing demand for high skill services, immigration controls are now the latest prominent "conservation" efforts. As fully compensated time value becomes hoarded by the relative few, more nations are convinced that the time value of millions is insufficient to make their potential contributions worthwhile.

On the other hand, natural resource capacity other than time value is more likely to experience conservation efforts after periods of marketplace abundance and accessible pricing. Time as resource has suffered from imposed artificial scarcities to such a degree, it's difficult to contemplate the fact of its real scarcity for all concerned. Hence the confusing framing of actual resource potential for time value, makes it difficult to build dialogue for a more realistic approach to human capital and applied knowledge conservation.

Sometimes the best way to overcome the problems of market limitations - whatever their cause - is to simply create a new approach for production, altogether. In the above linked post, Scott Sumner goes on to note how aquaculture proved to be much more than a response to high prices, since it also created market solutions for the seemingly intractable problem of overfished oceans:
In many cases, however, that price increase unleashes a new and unforeseen alternative supply. Consider the fishing industry which used to rely on fish caught in the ocean.
He then highlights a graph showing that while capture production peaked in the mid-1990's, there was a considerable rise which was completely attributable to aquaculture. The difference? Capture production was slightly less than 100 m tonnes in 2015, while aquaculture increased total production for that year to approximately 175 m tonnes.

One can also imagine "fish caught in the ocean" as comparable to current service provision expectations in general equilibrium budgets. Many of these "overfished" expectations for applied knowledge are in need of a more concise, locally organized approach. Since aquaculture exemplifies a locally managed setting, it can be likened to a defined equilibrium, much the same as human capital with a potential for local development.

Like aquaculture, time arbitrage could build new resource capacity which exists independently of what the "ocean" (general equilibrium) continues to supply. And like aquaculture, time arbitrage might ensure that more human capital resources become part of the harvest. After all, when time resources are already scarce to begin with, why should aggregate time value become even more scarce due to human capital potential which is still being thrown overboard? With a little luck, markets could still find a better way for the future of services generation.

Saturday, September 14, 2019

Can Democracy be Preserved?

Are our brains not as well suited for democratic participation, as one would expect? Rick Shenkman, author of Political Animals: How Our Stone-Age Brain Gets in the Way of Smart Politics, highlights some arguments from Shawn Rosenberg, who is decidedly pessimistic about democracy's future prospects. In a speech to the International Society of Political Psychologists in Lisbon, Rosenberg insisted to the group that despite what autocratic leaders might do to undermine democracy, citizens hold the real blame. Shenkman notes Rosenberg's reasoning:
Democracy is hard work. And as society's "elites" - experts and public figures who help those around them navigate the heavy responsibilities that come with self-rule - have increasingly been sidelined, citizens have proved ill equipped cognitively and emotionally to run a well-functioning democracy. As a consequence, the center has collapsed and millions of frustrated and angst-filled voters have turned in desperation to right wing populists. 
His prediction? "In well-established democracies like the United States, democratic governance will continue its inexorable decline and will finally fail."
Presently, excessive centralization as to how knowledge gets utilized (in the U.S.), only makes it more difficult to bring the opinions of rational citizens to the table. Democracy is not so much problematic as a societal concept; but rather, because of the unevenness in its application, as special interests continue to capture means of knowledge based production. Since the reality of lost production rights has not been addressed, citizens vote instead for access to service production outcomes. Indeed, many understandably believe this to be their only option, even if it often does not make sense. Worse, the ongoing struggle for quality services access is based on supply side means which were structured as secondary markets for wealth creation.

In all of this, education has mostly been intended as a sorting mechanism for a meritocratic elite. If democracy is to be preserved, education needs to become actual engagement in the workplaces and consumption choices of a modern economy, especially in left behind communities. Yet the danger now, is that formal education is questioned regarding its true applicability for citizen majorities. These are the wrong arguments, for education needs to be transformed into economic integration at all levels of society. Losses in knowledge based production rights have proven particularly difficult for countless smaller cities and communities, since it leaves them ill positioned to take part in a 21st century economy.

We have to be careful going forward, once people in positions of power start to reason that most citizens aren't "smart" enough for democratic engagement. That's not so much a natural fact of life, as something that special interests have made more prevalent over time, in their attempts to limit the settings by which meaningful discourse and economic action take place. Such limits create perceptions of genius scarcity, not to mention an imagined scarcity of citizens deemed capable of contributing to societal well being. One's ability to take part in knowledge based work has gradually become more dependent on merit and social position. Only consider how this plays into progressive attitudes as well, as elites denigrate rural citizens who instinctively rebel at being left in powerless positions. Ultimately, preserving democracy means creating new and productive means of economic engagement, for the regions and individuals now stranded along society's periphery.

Fortunately there are still ways that authoritarian impulses might be overcome. However, the most promising approach would be for prosperous regions to actively reach out and become more supportive of regions and communities along society's periphery. New organizational patterns for applied knowledge would allow millions more to take part, in work which also happens to be conducive to the creation of responsible and thoughtful citizens. By taking a decentralized approach to new services generation, small communities would also contribute to a larger whole, by creating new wealth and economic vitality.

Democracies could be preserved, via local forms of direct democracy which align time value for the generation of new service markets. Democracies could still prove sustainable long term, should policy makers gain the courage to restore knowledge production means to the many, not just the few. Future prosperity may well depend on it. There is plenty of logic in augmenting knowledge production means, instead of constantly struggling over knowledge production outcomes.

Sunday, September 8, 2019

Many Services Need Better Market Coordination

In spite of regular reminders to improve our skill sets as we go through life; the fact remains, as Karen Weese notes in "America's Fastest Growing Jobs Don't Pay a Living Wage", that some jobs don't translate into fully compensated human capital. How to think about this paradox?

For example, a community worker discovered in one locale that women were mostly working full time with wages at approximately $24,000 a year. Alas, even though this sounds like reasonable wages to old folk like me, it's not sufficient to cover much more than basic bills in many instances. How on earth do these individuals successfully coordinate their services with those of others? And since many of these women worked as home health aides and personal care aides, they were actually seeking assistance in the form of uniforms or scrubs. Ouch, these don't cost much. I priced them at $10 at the local Dollar General after reading the above linked article, and that's when they're not on sale. Weese continues:
Over the next 10 years the occupations with the most job growth in America will not be the techy jobs that most of us think of as the jobs of the future, like, say, solar-panel technicians or software engineers. Instead, they'll be the jobs held by the women in Hyde-Miller's community center neighborhood: home health aide and personal care aide. More than one million new aides will be needed over the next decade, in addition to the 3.2 millions already in the field, the Bureau of Labor Statistics reported Wednesday. What's more, six of the 10 occupations providing the most new jobs over the next decade will pay less than $27,000 a year. That's more than 15 million people, working hard at jobs that simply don't pay the bills.
There's another problem regarding this reality which is not always taken into account. She asks: What about those who do gain the needed education to exit this kind of work, for better wages? More to the point: what if everybody did so? Who would be left to tend to those who are in need of additional assistance from others?

Like many, Karen Weese argues for higher wages for low skill work, which is understandable. Nevertheless, even when workers benefit from nominal gains, those gains are temporary. Only the real economy can create the supply side conditions which make multiple wage levels relevant. As a quick aside: Without production reforms, UBI could become a particularly thorny taxpayer burden, as its recipients find themselves in similar circumstance to today's low skill wage levels. All the more so, if UBI or perhaps government guaranteed work is implemented as means for policy makers to relieve themselves of time based service responsibilities. One can only hope, they might see to it that new service market options are in place first.

More progress can be made, by creating better services coordination and innovating our way out of the present hurdles of today's building and infrastructure requirements. A more pragmatic approach is needed - one capable of creating good deflation for a wide array of non tradable sector product and services. Only after new equilibrium is explored, would societies find it realistic to build knowledge use systems which don't fully compensate at the expected monetary levels of the present.

Fortunately, there are ways that basic skills sets can be shared with more challenging skills sets, for all concerned. Besides the normal voluntary matching of time arbitrage, time based service product could also be coordinated via local community "service taxes". Another useful approach would be time value insurance, which creates market space for individuals to "pay it forward" for those who can't reciprocate. For instance, should someone stop and do yard work for an elderly person on a hot summer day (does he really need to be out there pushing that mower?), their activity would also become part of a local public record, ensuring someone remembers to do the same for them, later on.

When we purchase insurance essentially of a social nature via money, the results are not always efficient, particularly when what we really seek is the time and attention of others. By way of example, in the U.S. we are encouraged to wait as long as possible, to tap into the insurance of Social Security. And while Social Security is primarily a matter of monetary security, the Medicare aspect of this form of social insurance, is mostly about access to the time of others when we need it most.

Here's the problem. Even though Social Security can no longer be taken at 65 without penalties, we still need to start monthly payments for Medicare at age 65, regardless. And if we don't, there's a ten percent penalty for monthly Medicare payments which grows an additional ten percent each year. How is one supposed to come out ahead by delaying their Social Security as long as possible (when they don't have other sources of income), if the previously required Medicare time frame still applies? The head scratching discrepancy between Social Security and Medicare requirements, makes all too evident the fact that money does not represent our aggregate time value as well as one might imagine.

Time arbitrage could help create markets for time value, which are more direct, representative and efficient, than what money is currently able to provide. There are ways to create better coordination, for vital and useful services of all kinds. We just need to begin the process of exploration, to discover what is possible.

Friday, September 6, 2019

Have Monetary Foundations Lost Their Relevance?

Since the Great Recession, perceptions as to the importance of monetary policy, have changed considerably. But how stable is this new reality? Indeed, what happens not if, but when a new consensus is pushed too far? Harold James gives voice to some of these concerns in the concluding paragraphs of a recent Project Syndicate article:
The new narrative that has emerged is ideal for populists. It holds that the financial crisis discredited traditional economics, and that "neoliberialism" was a dangerous illusion. The neoliberal insight that came in for the greatest criticism after the crisis was that fiscal restraint is a virtue and rewards adherents with lower interest rates, cheaper credit, and enhanced consumer spending. According to the critics, government spending is not only free, but also an unalloyed good.
In this brave new economy, no one seems to be able to say authoritatively how much debt is dangerous. But that doesn't mean there isn't some level of debt that could trigger a dramatic reversal. If depositors and investors become nervous, debt could become expensive again, making the existing debt stock unsustainable. Only then will the populist magic stop working.
Those who want to restore conventional politics and the old rules find themselves in an unenviable position. Although they do not wish for an end to prosperity, they sound like they do when standing next to populists. Nobody wants to vote for Cassandra when Pollyanna is on the ballot. By the time Cassandra's warnings are borne out, it is always already too late.
His article was also an apt reminder, how important are some elements of what has come to be called neoliberalism, for continued prosperity and economic stability. I've long hoped that new forms of wealth might be built alongside existing wealth without excess disruption of earlier patterns. Now, however, I occasionally find myself wondering whether extensive wealth might instead be lost, before societies learn to create wealth via new and sustainable means.

Instead of disregarding the vital connections of monetary representation with prosperity, a broader understanding is needed for how monetary processes correlate with aggregate output and real economy conditions. Without sufficient focus on these quantitative aspects, central bankers sometimes protest that monetary policy can't be expected to accomplish everything. Which only leads to a further disregard of the quantitative nature of money, and what monetary policy can accomplish. Nevertheless, fiscal policy simply can't do the heavy lifting. Only real economy adjustments and accurate nominal representation will suffice for long term growth prospects and continued prosperity. It is becoming more important by the day, to explore how monetary connections relate to ongoing changes in aggregate output and real economy circumstance.

In all likelihood, I probably come across as one the Cassandras referenced in the above article. Alas, why continually remind people about accumulating debt burdens? Or the fact future wages can't rise to the extent enjoyed in an era of tradable sector dominance, with its ever expanding output? Or that traditional housing and infrastructure is beyond reach of many near future incomes?  Who wants to be told that important and useful services could be in jeopardy for millions, once governmental budgetary burdens get out of control?

Nevertheless, I emphasize these things because I believe they can be productively addressed in the long run - even if the short run mostly holds out hope of decentralized experimentation in new community. A few years earlier, I realized it felt important to stress some of what could be done, before going more fully into the whys of what happened in the first place. Hence the real "Cassandra" portion of my story, otherwise known as book two, became sandwiched between segments of potential responses. Once I complete the first portion of the book project (for the blog sidebar), which - not surprisingly - is a little behind schedule, I anticipate a return to concentrating on the whys of this economic dilemma. With a little luck I can get there before the end of this year.