"One change is that cities do not seem to be functioning as ladders of opportunity."
Some principles for teaching one on one.
A working paper from the San Francisco Fed: "Longer-Run Economic Consequences of Pandemics"
An exercise in modeling shock effects.
It turns out that consolidation in the production of ventilators wasn't a good idea.
Solving the great toilet paper mystery!
Cyril Morong offers further rationale.
Let's be careful in any return to "normalcy", not to assume away the importance of subjectivity in human want as a source of wealth.
"Throughout the 2020 crisis there has been a slightly eerie sense of mind-meld between the wonkish/thinktank commentariat and the Fed. The Fed's latest repo initiative raised that sense of mind-meld to a new level."
Scott Sumner explains why money matters. Also, some clarification regarding the money multiplier.
Alas, "senators seem to behave better the further they are away from the voters". But does this mean we would benefit from less democracy?
Industries with low face to face interactions are more likely to resume normal activity in the near future.
Also, "Over 37 million Americans work in industries immediately impacted by COVID-19."
How might the world change after COVID-19?
Social distancing affects industry output.
The current recession will be the fourteenth since the Great Depression.
Edoardo Campanella reviews two recent books about pandemics.
Germany put plenty of efforts into contact tracing.
"The characteristics of the coronavirus itself made an effective response difficult."
How could knowledge and skill be more broadly applied in society as a whole? Too much diversity representation discussion, is really about the limited slots available in the top tiers of knowledge use.
Some good news for the month: A new way to generate electricity.
Democracy was essentially built up on America's factory floors, when manufacturing created a prosperous middle class. Can democracy be preserved in a post manufacturing economy? (Ed Leamer and Russ Roberts)
Dietrich Vollrath and James Pethokoukis on the long term decline in economic growth.
From the IMF: The Great Lockdown, also threats to financial stability.
The Austrian school in particular has been blindsided by a growing public rationale of and support for MMT. Could MMT "prove correct in its macro predictions"? And, what is the real cost?
Alas, another part of the reality: "MMT could be Democrats' way of saying 'We don't want to be suckers anymore.'"
Agriculture is transitioning into more automation due to ongoing labour shortages.
How is COVID-19 affecting the global demand for dollars?
China reopens its wet markets. But wet markets are not all the same.
Why has the labour response in Europe and the U.S. to the pandemic, been so different?
For some, it feels as if time has stopped. Young people in particular, are missing personal interaction which normally leads to milestones in their lives.
"Hospitals are surprisingly fragile as economic entities."
Something positive is taking place with solar cell technology, even if it isn't being noticed right now.
"It's time to build."
Hopefully, short term pain will not become long term scarring. "What do cyclical norms suggest?"
In 1960, healthcare was five percent of the economy. Today, healthcare spending is almost a fifth of all spending in the U.S.
"A supply shock is a situation where RGDP growth will fall if you hold NGDP constant."
Long term there will be more risk aversion, going forward. Overall productivity could be lower as well.
Adam Tooze provides a recent chronology of central bank action.
The international community has built economic integration which does not include solidarity.
Washington has yet to take global logistics for vaccine development, into account. For example, "What if the first, or best, or most effective vaccine is a Swiss vaccine and virtually all of the needles now come from China?" Further, "Are we going to have to watch another series of White House task force briefings early next year where they tell us no one could have possibly seen this coming?"
Nominal wage cuts are taking place across the income spectrum.
Timothy Taylor takes a closer look at pharmaceutical markets.
"The value of our cattle went down over 35% just since the virus hit."
Social Security insolvency is getting too close for comfort.
If inflation isn't the key worry, what is?
Plus, George Selgin notes "the return of the inflation mongers".
Tim Duy stresses how it is still a long road ahead.
What makes this crisis different than the last? Joe Weisenthal and Tracy Alloway interview Adam Tooze (Bloomberg)
The business model for primary care doctors is becoming unexpectedly fragile.
Community colleges also have a long list of pandemic concerns.
Prison testing highlights the true extent of asymptomatic spread.
How might the pandemic ultimately affect crime?
Retail may be radically changed.
"wealthy hospitals...are in a competitive stampede against near-insolvent hospitals for the same limited pots of financial relief."
Globalization continues to provide tremendous benefits for the medical field.
Claudia Sahm stresses the severity of the coronavirus recession.
Kevin Kelly offers "68 bits of unsolicited advice" for his 68th birthday.
"The surprising truth is that people tend to behave decently in a crisis."
While there has been plenty of sad news this month, this last link is encouraging. It may not be as easy for the virus to reactivate as we initially thought.
Thursday, April 30, 2020
Tuesday, April 28, 2020
Notes on Practical and Experiential Wealth
Ultimately, the pandemic may encourage us to think differently, about the activities we associate with either practical or experiential wealth. For instance, it certainly didn't take long to discover - in the initial rush to social distance - that defining "important" versus "unimportant" business activities was no simple task. What further complicates the present crisis, especially in terms of possible wealth loss, is the extent to which the crisis includes both practical and experiential aspects of our economic lives.
For many of us in the past month or so (here in the U.S.), cabin fever set in almost as quickly as the decision to self quarantine. As it turns out, it is the rare person who doesn't crave novel experiences on a routine basis! Many learn - especially in later years - to make up for lack of travel opportunities via the interesting "escapes" of books, movies, music and more. Still, there are moments when nothing really substitutes for getting outside and experiencing the world in the company of friends, extended family and others.
Part of what sets this period apart from earlier pandemics, is how much of our economy has evolved away from practical consumption to many activities that scarcely seem practical at all, whether or not we happen to deem them emotional "necessities". When economic life was largely centered around goods rather than services, that earlier tradable sector dominance must have also made it simpler, to financially manage the economic disturbances brought about by pandemic circumstance.
By way of example, Ian Stewart recently noted how "The impact of this crisis will be as much on intangible capital as physical assets." Alas, it may take a while before we discover whether this crisis impacts how highly invested human capital is monetarily valued. Should considerable wealth be lost, that missing income potential would likely reduce the appetite for risk - especially considering the present requirements of capital risk in our physical environments.
Some wealth losses could be averted, should we elect to structure ownership potential in more incremental and flexible ways. Some of today's regulatory requirements could be amended via settings which allow simpler forms of physical infrastructure, for both living and working needs. Simpler ownership structures would maintain countless delicate webs of valuable human connections, even when those connections can't be as compensated as fully as before. As a society, we could try to ensure that valuable risk taking isn't lost, but instead transformed in easier to manage components than what are often deemed necessary in the present.
Even before the pandemic, we were already questioning the broader societal context of our educational systems. Where are the most meaningful experiences in these learning processes? What is the real difference between practical or experiential education, in an economic sense?
Learning is all the more complex, since it tends to include practical and experiential elements. Already, online learning appears to be more useful in terms of practical settings which can readily be managed by the individual. On the other hand, the most highly motivated learning often occurs when people get the chance to forge strong personal connections with others. If nothing else, temporary mandated closings of schools and colleges alike, might speed up societal incentive to generate more face to face interaction between people, wherever it is possible to do so. After all, the services generation which societies value most, tend to be of this nature.
How might technology lend support to a future capable of preserving experiential wealth? Roger Bootle believes the pandemic will encourage additional automation and use of robots, particularly for tasks which have been interrupted by social distancing. Nevertheless, he continues to hold confidence in new avenues for employment potential:
For many of us in the past month or so (here in the U.S.), cabin fever set in almost as quickly as the decision to self quarantine. As it turns out, it is the rare person who doesn't crave novel experiences on a routine basis! Many learn - especially in later years - to make up for lack of travel opportunities via the interesting "escapes" of books, movies, music and more. Still, there are moments when nothing really substitutes for getting outside and experiencing the world in the company of friends, extended family and others.
Part of what sets this period apart from earlier pandemics, is how much of our economy has evolved away from practical consumption to many activities that scarcely seem practical at all, whether or not we happen to deem them emotional "necessities". When economic life was largely centered around goods rather than services, that earlier tradable sector dominance must have also made it simpler, to financially manage the economic disturbances brought about by pandemic circumstance.
By way of example, Ian Stewart recently noted how "The impact of this crisis will be as much on intangible capital as physical assets." Alas, it may take a while before we discover whether this crisis impacts how highly invested human capital is monetarily valued. Should considerable wealth be lost, that missing income potential would likely reduce the appetite for risk - especially considering the present requirements of capital risk in our physical environments.
Some wealth losses could be averted, should we elect to structure ownership potential in more incremental and flexible ways. Some of today's regulatory requirements could be amended via settings which allow simpler forms of physical infrastructure, for both living and working needs. Simpler ownership structures would maintain countless delicate webs of valuable human connections, even when those connections can't be as compensated as fully as before. As a society, we could try to ensure that valuable risk taking isn't lost, but instead transformed in easier to manage components than what are often deemed necessary in the present.
Even before the pandemic, we were already questioning the broader societal context of our educational systems. Where are the most meaningful experiences in these learning processes? What is the real difference between practical or experiential education, in an economic sense?
Learning is all the more complex, since it tends to include practical and experiential elements. Already, online learning appears to be more useful in terms of practical settings which can readily be managed by the individual. On the other hand, the most highly motivated learning often occurs when people get the chance to forge strong personal connections with others. If nothing else, temporary mandated closings of schools and colleges alike, might speed up societal incentive to generate more face to face interaction between people, wherever it is possible to do so. After all, the services generation which societies value most, tend to be of this nature.
How might technology lend support to a future capable of preserving experiential wealth? Roger Bootle believes the pandemic will encourage additional automation and use of robots, particularly for tasks which have been interrupted by social distancing. Nevertheless, he continues to hold confidence in new avenues for employment potential:
I draw comfort from human beings' need for other human beings. There's one thing that robots and AI will never be able to be better at than other human beings: being human. I think we are going to want to interact with other human beings in our work life and in our leisure life, and that's going to create demand for all sorts of new jobs.When thinking about technological gains at a grassroots level, consider how near future tech could augment not just consumption potential for individuals, but production potential. The difference is crucial, and it matters for anyone who would assist others, yet needs additional tech support to augment their own skill and level of applied knowledge potential. Consider how technology could free individuals, it it assumes the practical tasks, while making room for individuals to exercise their own initiative in the experiential wealth they seek to share with others.
Thursday, April 23, 2020
Knowledge Preservation In a Time of Pandemic
Many are understandably focused on the short term effects of COVID-19, and what needs to be done in the here and now. However, even though it's not easy to pause and reflect on broader concerns, there are possible long term effects of the pandemic which likewise deserve a careful response.
In particular, this pandemic exposes the fragile nature of how societies currently manage and reimburse their most important knowledge providers. History has made evident, how some pandemics culminate in events which undermine such systems. Skills arbitrage as the sole means of knowledge provision and application, is less sustainable over the long run than it may appear. All the more so, since compensation for these skills is compromised through over reliance on debt arrangements. Too many currently provided services, include vague expectations of reimbursement later in time from future generations. But what if something about this arrangement, should radically change? For instance, suppose future generations lack a sufficient level of income to fulfill yesterday's promises?
Whenever substantial levels of societal wealth are lost, pandemics tend to impact how people organize their lives at basic levels of operational capacity. These losses are only exacerbated whenever applied knowledge is too closely held in high density populations, as is currently the case in our productive regions. If the economic patterns of major cities are disrupted, productive capacity becomes all the more important elsewhere, to ensure that vital threads of current information and applied knowledge can continue. We need to ensure that knowledge and skill can be encouraged and maintained via a full range of population densities and intellectual abilities. The more places and settings where skills capacity is fully tapped, the better prepared civilizations could become, to face moments of crisis and uncertainty.
Clearly, we should no longer rationalize that it is somehow reasonable, to limit the use of valued knowledge and skill to areas of high population densities. But how to begin the vital task of reinvigorating small communities? Even though I've long argued for time arbitrage as a way to do so, admittedly a part of me is now overwhelmed by current events. I find myself wishing "if only" such processes had been put into motion earlier, so the preservation of already existing human capital, might also be a simpler matter.
Alas, I did not realize how the need for new knowledge use patterns, would become particularly relevant during my own lifetime. Like many others, I feel as though being swept along in a vast tide of change - one which makes me question my own ability to return safely to shore this time. And like many, I'm not certain whether it is still feasible to craft a fully effective response, or to safely bypass the political battles now occurring. If only new patterns of wealth creation had already been pursued in earnest! Dare we still hope that much of our wealth is not lost in the years to come? Can our most productive areas still reach out to other regions, in hopes of lifting them up?
Meanwhile, society continues moving in the opposite direction, as exemplified by additional closings of rural hospitals. As it turns out, hospitals - despite their institutional importance - are exceedingly fragile in economic terms. If we are to deal successfully with the present crisis, we also need for healthcare to transition from the fragility of skills arbitrage, to the open ended and simpler nature of time arbitrage. Time arbitrage would not attempt to offer "perfect" solutions. Rather, it would seek to remain present for all concerned. In time arbitrage, patients could hopefully express what they need from others, and perhaps gain a real chance of being taken seriously. Sometimes, when illness strikes, it's not so much survival which is at stake, but rather finding the most peaceful way possible to overcome one's fear of the unknown. Each of us as patients deserves in moments of fear, not to have to face those moments completely alone.
Healthcare could be envisioned as a most basic element of organizational potential, for all citizens of community. Healthcare provision in all its countless variations, deserves to be part of the reciprocity of mutual assistance. Such assistance could eventually be paid in the real time of people who are alive today, instead of future generations which deserve better than to be saddled with debt obligations of a past which never really belonged to them. We can build meaningful ways to be with others in their moments of greatest need, and yet do so without bankrupting anyone or anything. It's time to build anew, starting with more flexible versions of rural hospital organizational patterns.
As Marc Andreessen recently noted, "We're all necessary, and we can all contribute to building." Should we embrace the mindset of crafting stronger realities, we also gain the ability to create long term solutions which can benefit governments as well. We might finally be able to offer our governments a viable path to address the debt burdens they have already accumulated. Living with one another on reciprocal terms in the here and now, is no small matter. Let's get started. Again, we are all in this together.
In particular, this pandemic exposes the fragile nature of how societies currently manage and reimburse their most important knowledge providers. History has made evident, how some pandemics culminate in events which undermine such systems. Skills arbitrage as the sole means of knowledge provision and application, is less sustainable over the long run than it may appear. All the more so, since compensation for these skills is compromised through over reliance on debt arrangements. Too many currently provided services, include vague expectations of reimbursement later in time from future generations. But what if something about this arrangement, should radically change? For instance, suppose future generations lack a sufficient level of income to fulfill yesterday's promises?
Whenever substantial levels of societal wealth are lost, pandemics tend to impact how people organize their lives at basic levels of operational capacity. These losses are only exacerbated whenever applied knowledge is too closely held in high density populations, as is currently the case in our productive regions. If the economic patterns of major cities are disrupted, productive capacity becomes all the more important elsewhere, to ensure that vital threads of current information and applied knowledge can continue. We need to ensure that knowledge and skill can be encouraged and maintained via a full range of population densities and intellectual abilities. The more places and settings where skills capacity is fully tapped, the better prepared civilizations could become, to face moments of crisis and uncertainty.
Clearly, we should no longer rationalize that it is somehow reasonable, to limit the use of valued knowledge and skill to areas of high population densities. But how to begin the vital task of reinvigorating small communities? Even though I've long argued for time arbitrage as a way to do so, admittedly a part of me is now overwhelmed by current events. I find myself wishing "if only" such processes had been put into motion earlier, so the preservation of already existing human capital, might also be a simpler matter.
Alas, I did not realize how the need for new knowledge use patterns, would become particularly relevant during my own lifetime. Like many others, I feel as though being swept along in a vast tide of change - one which makes me question my own ability to return safely to shore this time. And like many, I'm not certain whether it is still feasible to craft a fully effective response, or to safely bypass the political battles now occurring. If only new patterns of wealth creation had already been pursued in earnest! Dare we still hope that much of our wealth is not lost in the years to come? Can our most productive areas still reach out to other regions, in hopes of lifting them up?
Meanwhile, society continues moving in the opposite direction, as exemplified by additional closings of rural hospitals. As it turns out, hospitals - despite their institutional importance - are exceedingly fragile in economic terms. If we are to deal successfully with the present crisis, we also need for healthcare to transition from the fragility of skills arbitrage, to the open ended and simpler nature of time arbitrage. Time arbitrage would not attempt to offer "perfect" solutions. Rather, it would seek to remain present for all concerned. In time arbitrage, patients could hopefully express what they need from others, and perhaps gain a real chance of being taken seriously. Sometimes, when illness strikes, it's not so much survival which is at stake, but rather finding the most peaceful way possible to overcome one's fear of the unknown. Each of us as patients deserves in moments of fear, not to have to face those moments completely alone.
Healthcare could be envisioned as a most basic element of organizational potential, for all citizens of community. Healthcare provision in all its countless variations, deserves to be part of the reciprocity of mutual assistance. Such assistance could eventually be paid in the real time of people who are alive today, instead of future generations which deserve better than to be saddled with debt obligations of a past which never really belonged to them. We can build meaningful ways to be with others in their moments of greatest need, and yet do so without bankrupting anyone or anything. It's time to build anew, starting with more flexible versions of rural hospital organizational patterns.
As Marc Andreessen recently noted, "We're all necessary, and we can all contribute to building." Should we embrace the mindset of crafting stronger realities, we also gain the ability to create long term solutions which can benefit governments as well. We might finally be able to offer our governments a viable path to address the debt burdens they have already accumulated. Living with one another on reciprocal terms in the here and now, is no small matter. Let's get started. Again, we are all in this together.
Thursday, April 16, 2020
Flexible Building Components Could Save Lives
Once extensive manufacturing innovation finally kicks in, flexible components might even make home ownership feasible with only an income of $12,000 per year. At least one can hope! Importantly, many different groups are closer to this level of income than it may seem, not to mention the fixed incomes of Social Security checks. Clearly, calls for "living wages" will continue, if our non tradable sectors are not able to build real wage potential via production reform.
Recall also, that $1,000 a month is a frequently cited basic income possibility, in the event of technological employment disruption. But what would basic income accomplish, if non discretionary needs are mostly out of reach? Alas, this level of income, significant though it may be for the provider, still leaves recipients too dependent on the assistance of others. Without a concerted non tradable sector response, millions could remain unable to create useful and productive lives for themselves. Indeed, deaths of despair often stem from such realities.
However, the pandemic provides a more straightforward example, how independent living made possible by flexible components, could save lives. As it turns out, the most dangerous transmission of the virus occurs via households where people regularly congregate under the same roof. According to medrxiv:
Besides addressing these short term realities, flexible building components could also prove well suited for a longer term context. A recent Brookings article notes how the crisis only exacerbates the problems low income groups already faced, in their efforts to secure reliable employment and housing. All too often, when extensive virus transmission occurs under one roof, it is partly the result of individuals having doubled up with other family members, after they experienced difficulties tending to obligations on their own.
Not every community is willing to make room for mobility options in living and working needs, and NIMBY impulses will doubtless remain one of life's constants. Still, some communities may decide to take a new and constructive approach. Clearly, the same market potential which opens ownership capacity for a wider range of income levels, makes room for new definitions of dynamic community in the process. Should flexible building components be adopted in the near future, these ownership options could help create paths which lead away from the uncertainties of the pandemic. With a little luck, flexible housing manufacture might become one of the initial ways that societies overcome the economic uncertainties of pandemic times.
Recall also, that $1,000 a month is a frequently cited basic income possibility, in the event of technological employment disruption. But what would basic income accomplish, if non discretionary needs are mostly out of reach? Alas, this level of income, significant though it may be for the provider, still leaves recipients too dependent on the assistance of others. Without a concerted non tradable sector response, millions could remain unable to create useful and productive lives for themselves. Indeed, deaths of despair often stem from such realities.
However, the pandemic provides a more straightforward example, how independent living made possible by flexible components, could save lives. As it turns out, the most dangerous transmission of the virus occurs via households where people regularly congregate under the same roof. According to medrxiv:
All identified outbreaks of three or more cases occurred in an indoor environment, which confirms that sharing indoor space is a major SARS-CoV-2 infection risk.Even though transmission takes many different forms, repeated social interactions at close range is particularly dangerous due to increased viral loads. Consequently, healthcare practitioners often attempt to isolate themselves from family members, when risk of infection is exceptionally high. Yet being able to do so is not always easy. Indeed, some physicians make temporary living quarters in backyard tents, to mitigate the risks to their own families. At the very least, individuals sometimes loan recreational vehicles and travel trailers to healthcare workers, where zoning permits them to do so. Other communities are stepping in and providing hotel rooms for much needed isolation, as well.
Besides addressing these short term realities, flexible building components could also prove well suited for a longer term context. A recent Brookings article notes how the crisis only exacerbates the problems low income groups already faced, in their efforts to secure reliable employment and housing. All too often, when extensive virus transmission occurs under one roof, it is partly the result of individuals having doubled up with other family members, after they experienced difficulties tending to obligations on their own.
Not every community is willing to make room for mobility options in living and working needs, and NIMBY impulses will doubtless remain one of life's constants. Still, some communities may decide to take a new and constructive approach. Clearly, the same market potential which opens ownership capacity for a wider range of income levels, makes room for new definitions of dynamic community in the process. Should flexible building components be adopted in the near future, these ownership options could help create paths which lead away from the uncertainties of the pandemic. With a little luck, flexible housing manufacture might become one of the initial ways that societies overcome the economic uncertainties of pandemic times.
Saturday, April 11, 2020
Three Basic Ingredients for Economic Stability
While there are many ways to envision what contributes to economic stability, the current pandemic suggests a closer look at basic ingredients. Should it prove difficult to maintain current wealth levels, a focus on the essentials could also lead to sturdier safety net options. I find it useful to think about three elements in particular: First, the importance of stabilizing what is nominal. Then, building a simpler framing for physical and non physical aspects of the real economy which the nominal represents.
As a market monetarist, I also believe it is vital to maintain a level nominal target, so that general equilibrium will (hopefully) remain stabilized. And even though level NGDP targeting is not the stated approach of the Fed, central bankers have more closely adhered to nominal stability since the mistakes of the Great Recession. The greater danger now, however, is that monetary stabilization could be threatened by extensive supply side disruptions. Adjusting for optimal aggregate demand will be quite the challenge, since present supply side uncertainties - unlike many previous shocks to the real economy - are due to factors too numerous to understand.
Consequently, despite what it can accomplish in the near future, monetary policy still needs to adjust to lost general equilibrium capacity, at some point. In other words, accurate nominal representation also depends on what the real economy is able to accomplish. Clearly, there is a great deal of interdependence between the nominal realm, the physical realm, and human oriented aspects of our economic lives.
Again, consider what present uncertainty consists of, insofar as many chains of financial obligation are being disrupted. How will society respond? Understandably, fiscal policy also seeks to stabilize general equilibrium conditions. Nevertheless, doing so is only feasible up to a point. All the more so, when fiscal stabilization attempts to include many activities that are not essential to getting things done.
In all of this, many small businesses won't survive, and some Main Streets could end up even less dynamic than before. For instance, one third of Americans missed their rent payments in April. This means problems for renters and landlords alike. Stephen Cecchetti and Kermit Schoenholtz explain what financial institutions also face:
Likewise, broader options for economic participation and use of human capital, are needed for non physical aspects of our environments. We need locally applied time arbitrage, to rescue what are increasingly endangered knowledge chains. Two recent articles offer unsettling examples. From NPR:
Let's create simpler procedures and settings for ownership and economic participation, so that individuals and businesses aren't jeopardized every time a month's revenues fall short. Ultimately, we could end up struggling to maintain general equilibrium in its present configuration. But even if existing wealth is somehow diminished, imagine what could still be done, to strengthen and preserve its core.
Why not make our physical and non physical environments easier to access for all concerned. If we can shake loose structural rigidities how productive activities are "supposed" to occur, oppressive financial burdens could be lightened as well. A direct structural approach today, would be better than the indirect response of a debt jubilee later on. Perhaps debt jubilees of the past also reflected the unwillingness of societies to relax their own expectations for working and living requirements. Debt jubilees may have been no real panacea, if they left in place the same rigid requirements that negated the economic participation of millions - even in good times. Let's work on reducing unnecessary barriers to ownership and economic participation, so that a better new normal might eventually emerge.
As a market monetarist, I also believe it is vital to maintain a level nominal target, so that general equilibrium will (hopefully) remain stabilized. And even though level NGDP targeting is not the stated approach of the Fed, central bankers have more closely adhered to nominal stability since the mistakes of the Great Recession. The greater danger now, however, is that monetary stabilization could be threatened by extensive supply side disruptions. Adjusting for optimal aggregate demand will be quite the challenge, since present supply side uncertainties - unlike many previous shocks to the real economy - are due to factors too numerous to understand.
Consequently, despite what it can accomplish in the near future, monetary policy still needs to adjust to lost general equilibrium capacity, at some point. In other words, accurate nominal representation also depends on what the real economy is able to accomplish. Clearly, there is a great deal of interdependence between the nominal realm, the physical realm, and human oriented aspects of our economic lives.
Again, consider what present uncertainty consists of, insofar as many chains of financial obligation are being disrupted. How will society respond? Understandably, fiscal policy also seeks to stabilize general equilibrium conditions. Nevertheless, doing so is only feasible up to a point. All the more so, when fiscal stabilization attempts to include many activities that are not essential to getting things done.
In all of this, many small businesses won't survive, and some Main Streets could end up even less dynamic than before. For instance, one third of Americans missed their rent payments in April. This means problems for renters and landlords alike. Stephen Cecchetti and Kermit Schoenholtz explain what financial institutions also face:
Banks will not be able to dodge the financial fallout. Many borrowers are likely to suspend repayment soon, presaging widespread default. We will not know the extent of the damage or who will ultimately bear the costs, for some time.Yet this time really is different, as they further note:
Rather than the financial system undermining the real economy, it is very much the other way around. With few exceptions (like Sweden), advanced economies have entered a form of suspended animation. As a result, households and business are losing income that they can never replace. The hope is that the COVID-19 crisis does not trigger a full-fledged financial crisis, exacerbating what is already destined to be the most severe global downturn since the 1930s.Many households and businesses are going to need financial options in the foreseeable future, which rely on lower monthly expense levels. Hence when considering basic ingredients for economic stability, simplification of everyday living circumstance is key to making this possible. By way of example, in my most recent post , I suggested flexible building and infrastructure options as a way to address structural physical aspects of the real economy.
Likewise, broader options for economic participation and use of human capital, are needed for non physical aspects of our environments. We need locally applied time arbitrage, to rescue what are increasingly endangered knowledge chains. Two recent articles offer unsettling examples. From NPR:
According to a report released this month by the Chartis Center for Rural Health, nearly half of rural hospitals were already operating in the red before the COVID-19 crisis.Further, Dylan Scott writes for Vox that hospitals are cutting staff "just when America needs them most". Even though the initial healthcare losses took place largely outside of hospitals, staff cuts are beginning to spread inside of these institutions. Only recall that much of this problem stems from the fact today's healthcare is heavily dependent on existing wealth - much of which is in jeopardy at least in the short term.
Let's create simpler procedures and settings for ownership and economic participation, so that individuals and businesses aren't jeopardized every time a month's revenues fall short. Ultimately, we could end up struggling to maintain general equilibrium in its present configuration. But even if existing wealth is somehow diminished, imagine what could still be done, to strengthen and preserve its core.
Why not make our physical and non physical environments easier to access for all concerned. If we can shake loose structural rigidities how productive activities are "supposed" to occur, oppressive financial burdens could be lightened as well. A direct structural approach today, would be better than the indirect response of a debt jubilee later on. Perhaps debt jubilees of the past also reflected the unwillingness of societies to relax their own expectations for working and living requirements. Debt jubilees may have been no real panacea, if they left in place the same rigid requirements that negated the economic participation of millions - even in good times. Let's work on reducing unnecessary barriers to ownership and economic participation, so that a better new normal might eventually emerge.
Monday, April 6, 2020
It's Time to Build Strong, Lightweight, Yet Affordable
As the financial repercussions of the pandemic gradually set in, more of us will become focused on "whatever it takes" to keep a roof over our heads. Towards this end, flexible building components of all kinds are needed - especially for anyone already experiencing difficulties with rent and mortgage costs before the pandemic even began. The more mobile options we have for physical infrastructure and buildings in the near future, the greater our chances of continued economic stability.
Where to start? Initially, until 3D printing becomes more widespread for local manufacture, building components and their associated infrastructure, could be designed and implemented in various locations around the country. Once these new markets start to go into effect, they would gradually assume retail connections in communities which can open their doors to the appropriate zoning and regulatory variance. I continue to hope that plastics manufacturers are already experimenting with materials suited for these purposes. Plus, the more plastics in production which can be recycled locally for more building materials and infrastructure, the better.
In contrast with the response of temporary fiscal stimulus for businesses and employment losses, affordable building components would be a gift that keeps on giving, via lower monthly financial obligations. And even though affordable building components can especially help lower income levels, they would also provide means to "start fresh", for many who face temporary setbacks due to the economic circumstance of the pandemic.
Ownership of flexible building components could take place incrementally. The most basic starter units, for instance, would include built in (manufactured) electrical and plumbing. This would be an especially important regulatory variance, since the costs of normally required skilled labour for electrical and plumbing, tend to prevent home ownership for those with limited income. These costs stand in the way of lower income levels being able to purchase traditional homes which are in extensive need of repair and renovation.
Initially, communities could connect building components with already existing infrastructure such as electrical lines and local water systems. However, an eventual community goal in many instances would be to create more flexible infrastructure options for energy, water and sewer needs. Only recall that when land can be used in ways which allow it to revert to simpler, less costly uses afterward (such as agriculture), temporary use zoning could prove simpler than zoning changes which require permanently higher land use costs.
Chances are, in the near future, job losses will make it difficult for millions of individuals to meet what are continuous financial obligations - particularly rent. Even though fiscal stimulus will provide temporary relief, it comes at the cost of additional long term budgetary burdens. What is really needed, is a long term approach for economic stability which does not create additional financial burdens. New patterns for incremental ownership, could create a targeted response to the uncertainties brought about by the current pandemic.
Where to start? Initially, until 3D printing becomes more widespread for local manufacture, building components and their associated infrastructure, could be designed and implemented in various locations around the country. Once these new markets start to go into effect, they would gradually assume retail connections in communities which can open their doors to the appropriate zoning and regulatory variance. I continue to hope that plastics manufacturers are already experimenting with materials suited for these purposes. Plus, the more plastics in production which can be recycled locally for more building materials and infrastructure, the better.
In contrast with the response of temporary fiscal stimulus for businesses and employment losses, affordable building components would be a gift that keeps on giving, via lower monthly financial obligations. And even though affordable building components can especially help lower income levels, they would also provide means to "start fresh", for many who face temporary setbacks due to the economic circumstance of the pandemic.
Ownership of flexible building components could take place incrementally. The most basic starter units, for instance, would include built in (manufactured) electrical and plumbing. This would be an especially important regulatory variance, since the costs of normally required skilled labour for electrical and plumbing, tend to prevent home ownership for those with limited income. These costs stand in the way of lower income levels being able to purchase traditional homes which are in extensive need of repair and renovation.
Initially, communities could connect building components with already existing infrastructure such as electrical lines and local water systems. However, an eventual community goal in many instances would be to create more flexible infrastructure options for energy, water and sewer needs. Only recall that when land can be used in ways which allow it to revert to simpler, less costly uses afterward (such as agriculture), temporary use zoning could prove simpler than zoning changes which require permanently higher land use costs.
Chances are, in the near future, job losses will make it difficult for millions of individuals to meet what are continuous financial obligations - particularly rent. Even though fiscal stimulus will provide temporary relief, it comes at the cost of additional long term budgetary burdens. What is really needed, is a long term approach for economic stability which does not create additional financial burdens. New patterns for incremental ownership, could create a targeted response to the uncertainties brought about by the current pandemic.
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