Walkable Community Can't Happen Soon Enough

If only we already had more walkable communities! While they are occasionally found in high income locations, lower income groups could especially benefit from them. After all, local walkability reduces transportation costs, which in turn makes it easier to budget for local housing options. 

One wonders whether this logic is included in billionaire Marc Lore's plans which could eventually produce a walkable city. Alas, his vision is only on the drawing board at the moment. Indeed, for anyone whose life could be enhanced by walkable community in the here and now, Lore's initial starting point of 2030 must seem a long way off. According to CNN:

The former Walmart executive last week unveiled plans for Telosa, a sustainable metropolis that he hopes to create, from scratch, in the American desert. The ambitious 150,000-acre proposal promises eco-friendly architecture, sustainable energy production and a purportedly drought-resistant water system. A so-called "15 minute city design" will allow residents to access their workplaces, schools and amenities within a quarter-hour commute of their homes.

For one thing, it's not helpful to frame these efforts as cultural battles, as Tucker Carlson recently did.  In particular, petroleum production will continue to be an important part of near future market patterns for all populations. There's no need to imagine petroleum production as mostly advantageous for rural dwellers and others who embrace the low population densities associated with automotive ownership. Hopefully, petroleum production will continue to enhance a wide range of global markets, even as other energy sources gradually come to the fore. In all of this, we can encourage free markets which represent a diverse range of population densities. If national governments are willing to remain open minded re diverse market preservation, we stand a better chance of preserving market freedoms at local and state levels as well. 

Nevertheless there's some wishful thinking in this latest city building attempt, which needs to be addressed. While "human centered" communities are a reasonable desire, who really knows what that means? Fortunately, a better understanding could be gleaned via the active discovery of individual and group time preferences, through markets for time value. Time based service markets would make it easier to discern preferences that could translate into local time and space design. A free market orientation for time value, is vitally important for any "15 minute city design" to function as intended. Otherwise, participating groups would struggle to effectively coordinate times and places for getting things done.

Mutually determined individual/group needs are key for services based markets in the 21st century. In all of this, intentional markets should not mean imposing specific group preferences on other groups with different outlooks and lifestyles. Rather, intentional markets could create better defined environments that respect personal choice, so as to broaden market possibilities for everyone.

Flexible Ownership Frees Us. But Have Markets Responded?

To a certain extent, markets have responded - at least when it comes to building construction options. But apparently, at least for the duration of this pandemic era, there will be few zoned land patterns to provide the vital support so necessary for incremental ownership to flower. Without such patterns, a dearth of community options means additional burdens for lower income levels - especially given the uncertainties these workers often face. If more accessible forms of ownership were available, the clamor for a $15 dollar minimum wage would likely be muted. What can be done, to create more flexible ownership options in the years to come? 

New land use options would also be helpful for recent retirees such as myself. Once senior citizens try to downsize from traditional single family housing, they quickly discover other single family homes to be the main consumer choice available in the U.S. For example: Thus far I've only located three areas in the country where communities create ample space for flexible housing in a full income range for people over 55. Since many seniors are solely dependent on Social Security income, that leaves a tremendous amount of untapped market opportunity!

Granted, many baby boomers such as myself never thought to seek out manufactured housing when we were young. Doing so wasn't generally perceived as a necessity, for even blue collar incomes could still purchase traditional housing well into the nineties. Likewise: even though Buckminster Fuller advocated for (and designed) flexible housing, he continued to live in a traditional home during the course of his lifetime. Plus, many people never considered non traditional housing until they were of an age they no longer required extra square footage. Part of what's important in this regard, is that homes inevitably age alongside their occupants. Consequently, at the same time in life one anticipates rising healthcare costs, the costs of older home maintenance also rise dramatically. In fact, home renovations can turn out to be more expensive than the cost of new manufactured units.

Nevertheless, if only downsizing were as simple as a non traditional housing purchase! If more land were available for flexible ownership options, lifestyle simplification wouldn't be such a daunting challenge. After all, markets for RVs, manufactured homes and tiny homes have proliferated in recent years. Just the same, older citizens quickly discover that many communities - if and when they'll accept any form of non traditional housing - mostly zone for expensive versions of modular homes on permanent foundations. In other words, these costs can be comparable to what one expects for new traditional housing. 

Since many communities could remain reluctant to add a complete range of income levels to their tax base, the best way forward may be a creation of special zones which encourage flexible ownership for all income levels. Fortunately, there are also ways such communities could help establish trust among the groups which take part. Chief among such methods is making certain local citizens can readily create and maintain economic/social ties with one another. Ultimately, simpler ownership options make it easier for individuals to adapt to evolving economic realities. Plus, once communities become zoned for income diversity, more manufacturers would gain incentive to innovate, thereby further reducing costs for flexible building components on offer. 

One advantage to incremental forms of ownership, are the possibilities of extensive reduction in privately held debt. Less debt - especially for anyone who is burdened by debt - means greater community stability in the event of economic downturn. Once owners can buy, sell, and reconfigure building components as needed, they can better rely on their own resourcefulness, hence become less dependent on others. Reduced dependence in turn, encourages more societal interdependence. Consider how interdependence is valued in the mutual coordination achieved by higher income levels. Why - as a society - shouldn't we be able to extend new potential for interdependence to lower income groups as well? Clearly, in the foreseeable future, market options for flexible land and property ownership will only become more important, not less.

Musings on Food Deserts, Company Stores, and More

Where retail is concerned, often cities and communities may appear to have either too many or too few local options. What makes it so difficult to coordinate supply and demand that everyone can be happy with? In particular, the U.S. supposedly has too much retail, hence the ongoing death of numerous apparently unneeded malls. But what if the real problem isn't actually too much retail?  Chances are, much comes down to how proprietors are expected to offer their goods. Perhaps the bigger issue is retail offerings in communities lacking sufficient density (during working hours especially) for extensive infrastructure investment. Why do cities and towns make such investments necessary anyway? Especially since we're only human, and consumer tastes can change before brick and mortar stores outlive their intrinsic usefulness.

Many a community has questionable "build it and they will come" examples. Some of these enterprises even manage to remain open despite mostly empty parking lots, as potential customers continue to drive where more shopping amenities can be readily found in one place. Some of the biggest business risks in fixed locations with traditional overhead costs, are for perishable commodities. Often, the only way to stay profitable is to eliminate perishable inventory altogether.

Of course, following this limited waste rule to maintain profits and stay in business, has plenty of detractors in the media. By way of example, one hears complaints about "food deserts", especially when the "wrong stores" come to town, such as Dollar Generals which are reputed to prevent regular grocery stores from opening in the same vicinity.

There's a Dollar General in close walking distance from where I live, yet the fact it sits adjacent to the local grocery isn't unusual. I made my peace with the fact Dollar General couldn't make special orders, several years ago. The fact they don't, probably helps to explain how they can stay open in towns with a limited customer base. I'm just glad for the merchandise they do carry, which saves so many trips out of my small hometown. Meanwhile, the local grocery does its level best to stock as much fresh produce as possible, in spite of the fact many potential customers make the drive elsewhere to larger towns. It's discouraging to think how much fresh produce must go to waste! As a former business owner, I remember all too well, wanting to carry more perishables than could realistically be sold locally. If only the individuals who complain about Dollar Generals and food deserts could know what is actually at stake.

What about produce markets and flea markets for fresh products? For a long time this was a viable option for self employment. Decades earlier, one could find flea markets wherever they happened to travel. Indeed I would have gone back to flea market selling were it possible, once rising rents got to a point brick and mortar locations were finally out of reach. Some of what is involved for the future financial security of millions, is simply overcoming the lifestyle illusion which tries to mandate everyone living as though they can afford a standard middle class lifestyle.

One historical consumer complaint could hardly seem more different than food deserts: Mandated local shopping! Many of us of a certain age recall Tennessee Ford singing "Saint Peter don't you call me cause I can't go. I owe my soul to the company store." The company towns of a century or so earlier, often ruled over their citizens like small authoritarian governments. At the very least, these were small decentralized versions of authoritarianism not overly difficult to exit. Many a restless or otherwise "fed up" local could vote with their feet to leave, and frequently did. The ones who willingly stayed, were often happy with the local abundance of the company store.

Nameless Towns is a historical sketch of Texas sawmill communities as company towns, from 1880 to 1942. I really enjoyed this book, in part because it took me back in time to places my family came from. Two grandparents lived and worked in Nacogdoches, near the edge of what was once a vast and ancient longleaf pine forest. Company towns finally cut down the last of these majestic trees in the early forties and then disbanded. Another of my grandparents worked as a sharecropper in these thinly settled regions, and I have little doubt he would have been too independent minded for the hierarchical demands of company towns! Although that likely didn't stop him from selling a little moonshine (along with fresh garden produce) to their inhabitants from time to time, even during Prohibition.

What determined the extent of company operations in these deep woods? Thad Sitton and James Conrad explain:

The number and importance of private businesses in company sawmill towns seem quite variable, and this matter probably relates to critical decisions companies made at the origins of their towns. Very occasionally, companies like Lufkin-Land (later Long-Bell), Angelina County Lumber, and Thompson-Tucker chose to set up operations immediately adjacent to major market towns, such as Lufkin and Trinity. In these cases, private businesses lay just beyond the sawmill-town perimeters from the beginning, and there was nothing the companies could do about them except offer full-service towns, including commissaries, drugstores, schools, and boardinghouses, and pay only in merchandise checks. However, the merchandise check and company social pressure to trade at the commissary often did a remarkable job of keeping employees on the reservation, especially in the early days. Around 1910, for example, a Lufkin resident recalled that downtown merchants in the county-seat town catered mainly to the cotton-farming trade despite the presence of two 100,000-board-feet-a-day mill operations immediately adjacent to the municipality. Company economic policies effectively insulated workers from the nearby "cotton town". 

Much more commonly, however, companies bought land and set up new towns in the remote countryside close to their timber holdings, and in this case they had the option of keeping all land in company ownership and leasing it out to private businesses on a case-by-case basis, or of selling off big blocks of property in their towns to whomever paid the price. 

By the time the petroleum company town of my youth set up camp for its resident workers, the work of logging company towns was almost done. Newer versions of company towns, once many families purchased automobiles and traveled more widely, were certainly far less hierarchical. For instance my mother recalled that while engineers did live in a separate row of houses, they were built the same as any other camp houses. There was one commonality with the earlier company towns, however. These neighbors still spent their days socializing with one another, and like the children of the sawmill towns, children in the latter version had the same freedom as well, to roam about the entire neighborhood as they desired.

Once most families gained access to reliable transportation, company towns and their associated stores became a thing of the past. Initially in the fifties and sixties, local Main Street retail was prosperous in towns of all sizes. But by the time families were able to purchase two vehicles, consequently working too far from home to shop locally during the day, these Main Streets began to decline. In a sense, Main Street became the first retail deserts of our time. What might we expect in the near future, as the process reverses and families own fewer vehicles, in particular outside today's prosperous regions? How far in a different direction, might small communities go from the well to do cities of the present? Right now it is anyone's guess.

The Cost of the Conduits is Too High!

One might easily imagine the dispersal of knowledge through society as freely flowing through conduits - much as pipes for electrical wiring or channels for water. But how effective are flows of knowledge today, since knowledge protection via rival use means diverting channels to pay the bills? What happens, if conduits for knowledge dispersal in society become so limited, that citizen participation essentially dries up like a river which no longer meets the ocean? Already, we observe where limits to productive agglomeration in prosperous regions are cutting off other avenues for getting things done - not just in the U.S. but across the globe.

That said, by no means are today's knowledge conduits the only ones faced with excessively high costs. Main Streets in general have similar requirements for getting things done. Unfortunately, when the sought after "show horse" versions of retail landscapes don't function as planned, full scale working horse versions aren't often permitted in their stead. Johnny of the blog Granola Shotgun, describes the "working horse" model and how simple it could be to implement, if only it were feasible to do so. He recently visited a flea market which was

composed of an old asphalt parking lot, tents, and portable shipping containers. There isn't anything about the place that costs much to build or maintain yet it functions like a traditional human scaled Main Street with mom and pop shops. 

This was no "fashionable" flea market, either. Rather, it contained essentials and much more:

Quite a few vendors were selling tools suitable for small scale businesses. Landscaping equipment, carpentry implements, compressors, and restaurant supplies could be purchased by people looking to start their own micro enterprise on a tight budget - possibly right there at the same flea market. The whole place was one giant interactive incubator. 

There were plenty of tasty meals to choose from and even inflatable slides for the children. He continues:

This place is a work horse. It grows small businesses from scratch without recourse to bank loans or government subsidies. It provides products and experiences that are genuinely needed in the community. And it costs almost nothing to create compared to the usual economic development model meant to induce artificial prosperity through tax holidays and subsidies for mega projects. Notice how any parking lot is instantly ADA compliant for people in wheelchairs who require a barrier free environment. This is amazingly good urbanism built in the absence of complex bureaucratic proceedings. 

So why don't local governments embrace more of this sort of pop up grass roots mom and pop enterprise? Officials are in a trap that requires them to boost the tax revenue to pay for all the attenuated infrastructure and municipal overhead that's accumulated for decades.  

Alas, municipalities are caught in the same show horse mindset for time based high skill services. Granted, there are vast troves of information and retail possibilities in the digital realm for individuals to access, especially when Main Streets are missing in action. But these economic options don't even come close to replacing the economic dynamism and person to person interaction that were once taken for granted at local levels. Apparently these timeless versions of free market activity could only be recreated by citizens who inexplicably now need exclusive permission, not only to take part in simple physical retail, but also today's knowledge centered economy.

To be sure, some overhead costs have evolved as ways to minimize "riff raff" and security risks. But the perceived need to keep up appearances has completely backfired for countless communities and millions of individuals who wish to take part in local business and service opportunities. More flexible building and infrastructure components, and permissions for knowledge use are needed. Chances are the new landscapes for retail and services wouldn't often resemble the flea markets of yesterday, but they still need to be equally simple to assemble.

Affordable components and permissions for living and working, would mean millions more can get back up and start over, even after they've assumed risks which proved too extensive. Who doesn't want to appear successful, especially since appearances have been legally required in most environs? Hence it's somewhat understandable that business people take excessive risks for the success signal, up to a point. Yet just the same, many individuals with successful flea market operations ended up making the leap to brick and mortar locations, then had no thriving flea market to return to, afterward.

What is not understandable, is the lack of economic options with safety valves that cushion the hard landing of individuals who unsuccessfully assume risk. Without those safety valves, individuals exit only reluctantly after many attempts to stay connected, and their lives can be irretrievably lost to solitude in the process. We need a new version of opportunity zone, one which makes far fewer exits necessary. Opportunity zones could create flexible permissions and incremental ownership options for those who are directly invested, not just outside investors who are expected to maintain the high cost status quo. It should not always have to cost so much to participate in economic life. People should not have to give up on vital connections years or decades ahead of schedule. All the more so, since demographics have shifted in ways which include needing to remain employed as long as possible.

The Visceral Nature of Economic Freedom

What is economic freedom? How is it different, from the political freedoms which have long been more widely discussed? For one, economic freedom is closely linked with psychological health and well being. Yet this connection has often been misunderstood, despite the millions who risk everything to build a meaningful life through self employment and entrepreneurship. Are the potential economic patterns which might help preserve freedom at its most basic level, simply too boring to discuss? Or are they actually misconstrued as a form of undesirable economic planning?

Unlike the intellectual arenas of political freedom, much about economic freedom is instinctive and personal in nature, hence not always as easy to put into words. Yet much that comprises the foundations of economic dynamism, results from countless individual struggles to preserve one's dignity and self respect in society.

Economic freedoms are also about the circumstance and resources which people have to work with in the here and now. Since freedom is generally discussed at an abstract level, more mundane aspects of economic freedom can easily get lost in translation. Consequently we are more often reminded what freedom is not, than given clear scenarios what personal freedoms might actually consist of. I recall a similar lack of understanding nearly a decade earlier, after reading Hayek's The Road to Serfdom. As it turns out I wasn't the only one. In their recent conversation for Medium, Tyler Cowen asks Russ Roberts which Hayek book influenced him the most:

That would be Fatal Conceit. It's certainly not The Road to Serfdom, which is the book everyone tells me they've read or that they plan to read. I say, "Don't read it. It's really slow going...The style is even more turgid than some of Hayek's other work."

For those who are fortunate, economic freedom helps to preserve social connections later in life when it otherwise might not be possible  to do so. Paul Samuelson detailed some of the incentives and difficulties of the self employed in the 11th edition of Economics, noting how many small scale efforts are doomed from the start, "When the owners' initial capital is used up, they are finished":

Who, on a Sunday jaunt to the shore or mountains, has not pitied some self-employed drudge, whose own efforts and those of the entire family hardly suffice to let them break even? 

Still, people will always want to start out on their own. Theirs may be the successful venture. Even if they never do succeed in earning more than $15,000 a year, there is something attractive about being able to make your own plans and do the variety of tasks that a small enterprise or franchise operation calls for. 

In the almost four decades which have passed since those words were written, how many still recall, just how basic is our desire for social inclusion in a viable economic context. Especially those of us who strongly relied on such framing, to help make up for our own social inadequacies! Recently I came across a study suggesting small business ownership could contribute to happiness and well being, and found myself wondering, isn't that already obvious?

Perhaps these differences between the mundane reality of personal freedoms, versus society's more lofty versions, is part of what stands in the way of a small government approach on the part of today's political parties. If so, it might help explain why those who have been left behind, remain neglected. It's easy to assume the poor consist of people who either haven't tried, or aren't willing to. But among these, are also plenty who have tried, and also started anew, many times. Millions of us embraced and thrilled to those fleeting moments of business success for all they were worth. There's many a fading photograph and local news story of once dynamic Main Streets to tell those stories, and some of them are our own. Have the earlier personal benefits of economic freedom simply become too mundane for a 21st century economy? Once again, Russ Roberts:

But most people who are poor are poor because they do not have the tools, the skills to contribute to the modern economy. They have circumstances that keep them from rising. I've been deeply saddened by the failure of people on so-called our side - the people who believe in smaller government - to think at all about that, to think at all about human flourishing by the people who are struggling. I think that has been a terrible mistake.

At the same time, we've failed to make the case for freedom, and to the extent that even saying that seems foolish...It's not literally true, but the last prominent politician, I think, who made the case for liberty and freedom in and of itself was Maggie Thatcher. Reagan, to some extent, also, but Maggie Thatcher did it relentlessly. That's so out of fashion in our times. We've become so consequentialist. The idea that liberty is a principle worth defending in and of itself is really, really difficult. 

I find it strange that people tie small government to the Republican party. The Republican party doesn't make the case for liberty...We don't have a political home for our ideas and I think the intellectual home has failed badly for our inability to make the case, either for liberty in and of itself, and to understand how and why people who are being left behind by our economy, and what policies might help them. I think that's an utter failure of our side, and it's a tragedy. 

Nostalgia for the Past? It's Not the First Round.

Have people the world over been "seized" with irrational nostalgia? In "The Global Nostalgia Epidemic", Edoardo Campanella writes:

Surveying today's world, one might well conclude that it is increasingly trapped in the past. Many people across Europe and North America believe that life was better 50 years ago...Whether the problem is rising inequality, economic stagnation, or technological disruption, nostalgia offers relief from socioeconomic angst. But far from being innocuous, infatuation with a mythicized past is shaping our politics in dangerous ways, not least by creating fertile ground for jingoistic leaders who are happy to exploit nostalgia for their own ends.

I'd like to suggest that this is only the latest round of sentimentalism, for a time when one's personal efforts in the economic domain were generally more likely to generate rewards. Hence for baby boomers such as myself who ended up leaving the workplace too soon, cultural battles can seem as though a belated national reaction, to the hollowing out of economic dynamism in far too many local communities.

However I disagree with much of the polarized political response which has emerged. Thus far, political posturing offers no real solutions for the fact the center can't hold, given its excessive reliance on the institutions which no longer have room for all comers. Nevertheless, that doesn't mean that capitalism or governments have "failed", only that their present organizational capacity is insufficient to move forward into a more dynamic future.

My own nostalgic attempts for retail based self employment began in the early nineties. That's when baby boomers such as myself, discovered that office work with benefits was a declining option, for many without college degrees. In retrospect, those baby boomer hopes for Main Street retail locations, were ill fated from the start. So what, them, prompted too many of us to make losing bets with our capital investments, knowing full well the extent of mom and pop businesses already facing displacement by chain stores?

Put simply, there were too few other economic options, for individuals who wished to continue engaging with others locally. Imagine for a moment, former office workers abandoning "ships", but the most obvious local option (without a college degree, for work that wouldn't be too physically demanding as one aged) was one's own Main Street business. In other words, with a little luck on one's side, retail opportunities appeared as though nearby "ships" which could still be boarded successfully.

That initial round of nostalgia, was also part of what capitalism had provided for so long, via the earlier dynamism of tradable sector activity. Barring other business opportunities, one might instead recapture the sentimental Main Street memories of a baby boomer childhood. Despite the extensive investment losses many of us ultimately endured, this seemingly "dumb" response to unemployment, was a lot more benign than what is playing out in the present.

For anyone who was "shipwrecked" after the loss of once reliable office work, the hope of course was that other nearby ships weren't "taking on too much water" to stay afloat. Even though many local Main Streets were under threat, where were the other additional ships (local institutions) designed so as to lend certainty to local commitment and investment? Indeed, some structural problems which contributed to the Great Recession were probably temporarily delayed, as many baby boomers continued as long as possible - often a decade or more - investing in small business capital, which could hopefully allow one to coast to retirement.

One reason this societal struggle has finally moved to a cultural level (where little good can be expected to occur) is that no new institutional frameworks were explored at local levels - decades earlier - when it mattered most. Indeed, nostalgia for the past is rational, when societies don't create new organizational patterns that provide possibilities for a better way forward. What's not rational, is the impulse to destroy previous still functioning institutions just because they can't be all things to all people. Hopefully we can bring down the cultural battles a few notches, so as to explore the possibility of new institutions that prove worthy of the risk and commitment of those with the courage to believe in them.

Localism Needs a Strong Economic Base

Is it possible to localize cultural preferences? While I've hoped for similar outcomes from knowledge use systems, there are important economic considerations as well. For instance, groups of individuals in new communities would have difficulty organizing purely on shared values, without an economic framework that could make functional decentralization a real possibility.

Just the same, it's time to explore new means for moving forward, as Washington's gridlock is unlikely to be resolved any time soon. In a recent Brookings article, "Is constitutional localism the answer to what ails American democracy?", the authors write:

Our urgent call for a new civic ethos reflects our belief that the old New Deal structure that relies on centralized standardized solutions does not align with the variety of life in America today.

Even though a rethinking of non tradable sector activity would be key for such efforts, today's non tradable sector activity is caught in a tangled web of interdependence at local, state and national levels. True decentralization would require reassessing these complicated connections, so as to move past the problems they still pose for independent action.

What's more: As "Johnny" of Granola Shotgun recently noted, retail designations are no longer the panacea for many communities they once were, in terms of providing local taxation revenue. How might new communities meet mutual obligations on different sets of terms?

Plenty of discussion needs to take place, before groups can envision settings that are conducive for working with others on mutually agreeable terms. There's three central economic aspects to this process, in particular: Local infrastructure commitments, incremental ownership options (for all residents), and circumstance in which taxation will still apply. Time arbitrage as a component of wealth creation, also creates internal revenue and time coordination flows - flows which otherwise would have been dependent on other sources for ongoing maintenance and upkeep of shared spaces.

Individuals would naturally gravitate towards groups which share similar resource capacity for infrastructure commitments and ownership responsibilities, hence infrastructure outcomes would reflect this reality. The good news for groups with limited resource capacity? As a society, we're getting close to the technological momentum that makes possible a much wider range of affordable infrastructure - some of which would require far less maintenance, than infrastructure requirements which evolved in the 20th century.

When would taxation still be necessary within the equilibrium corporate structure that provides an economic base for new communities? One example occurs when local citizens take part in ownership options which provide dividends within the equilibrium corporation's tradable sector role, for production of building and infrastructure components. What makes this particular income taxable at county, state and national levels, is that it represents product separate from time capacity. Most important for the equilibrium corporate structure, however, is to ensure that compensation for time based product is not subject to any taxation, since time is scarce and not capable of output multiplication.

The digital era makes it possible to form new communities in which participants have shared interests and values. Just the same, similar identities are but a starting point, as these new groups would also need to agree on similar means of resource accommodation and commitment levels. Everyone would need to be in agreement re the purpose of basic infrastructure settings, and how those settings could assist them in their own personal goals and aspirations.

Tradable Sector Strength Was the Real "Trickle Down"

In economics, there's the policy "trickle down effects" that were largely discounted by economists (and in some instances ridiculed), versus the real economy trickle down effect. It's the latter, which some of us of a certain age particularly miss: those days of plentiful second hand markets that contributed to decades of weekend entertainment, and more. Supply side trickle down meant increased access to products which still had plenty of value, once the original buyers decided to part with them.

Often, resold goods had scarcely even been used. In the eighties, many second hand stores further specialized in new areas such as music and sporting goods. Quality product such as high end clothing could found with be price reductions which meant inexpensive signaling, for that matter. From the seventies (at least here in the South) to the early part of the new century: Mass production made it possible for most anyone with limited incomes - wherever they happened to live - to enjoy many benefits of a modern economy.

What happened to second hand market abundance? While resale stores can still be found in some areas, their prominence reached a turning point about a decade ago. This unexpected death knell became obvious with the onset of the Great Recession, when second hand stores of all varieties began to close their doors. While some would fortunately remain in business in larger cities and towns, it ultimately became difficult for small towns to maintain even a single store. Yet only a decade earlier, in small towns, it was common to find at least three operating in close proximity to one another, putting those old downtown buildings to good use.

Retail in general has also faced its own setbacks, since the Great Recession. While some discretionary income loss is inevitable in times of recession, Liberty Street Economics recently highlighted the fact that this time, it took a full decade for discretionary income to return to trend. And by the time it finally returned to its earlier level, much in the marketplace was irrevocably changed.

Today, discretionary spending follows new patterns, much of which bypass many local communities. Two sets of circumstance about discretionary income losses, particularly stand out: First, the fact that Fed policy makers did not maintain aggregate spending capacity at the onset of the Great Recession, also accounts for Main Street losses too numerous to fathom. Second, non tradable sector demands continue to crowd out tradable sector activity, even now. Much of this crowding out has diminished the marketplaces which were fun, only to replace them with economic activity which is necessary, but not necessarily fun.

If we could somehow wave a wand to bring back economic dynamism, what would we want? Some would doubtless argue that in earlier decades, Baby Boomers such as myself had a lot more stuff than we "needed", so who misses the loss? Nevertheless: Given the crowding out that has occurred, no one knows the real extent, of what has been lost that people might still enjoy if they had the chance to do so.

Tradable sector activity was dynamic, in part because so much of it took place in ways that made resource coordination and reciprocation, far more obvious than what occurs in the present. And when too much economy activity becomes generated through debt, it becomes increasingly difficult for lower income levels to know the extent, to which discretionary spending is even a rational choice.

When resources are coordinated and matched without debt at the outset, societies have more room for flexibility and further options. Perhaps one of the best things about real economy trickle down, was the fact it encouraged societies to share the fruits of knowledge, as well. Alas, in times of economic stagnation, knowledge seems to be held more closely, as if the product of knowledge were the only remaining way to generate wealth. There are far better ways of building wealth, than hoarding the use of knowledge. Fortunately, we can do better.

When Coordination Becomes "Too" Efficient

Two posts from earlier today were otherwise different in nature, but I noticed an interesting connection between them in regard to this post title. One could say today's institutions are doing such a good job sorting for preferred characteristics, they pose further externalities which are gradually becoming more difficult for societies to manage, over time. Specifically, when those externalities are people.

First, Timothy Taylor in "How Between-Firm Inequality Drives Economic and Social Inequality", highlights quotes from an essay by Nicholas Bloom:

The real engine fueling rising income inequality is 'firm inequality'...the best educated and most skilled employees cluster inside the most successful companies, their incomes rising dramatically compared with those of outsiders. This corporate segregation is accelerated by the relentless outsourcing and automation of noncore activities and by growing investment in technology.

However, firms aren't alone, in their contributions to inequality through closer coordination for similarly aligned resource use. As it turns out, municipalities sometimes benefit from similar strategies. In "Restrict Supply, Subsidize Demand", Arnold Kling quotes the Los Angeles Times:

Home builders are not keeping up with demand for homes in California. 

Hence the proposed supply side "solution": subsidized demand. Again, from the Los Angeles Times:

a lot of local municipalities have first-time home buyer-assistance programs and people should look at those programs in their area. You also may be able to qualify for additional assistance as a first-time home buyer based on your occupation, for folks like teachers, firefighters and law enforcement. 

What's interesting is that the listed occupations are necessary components of any thriving community. Yet while private firms increasingly sort for high or low income levels, public sector incomes tend to be a moderate income range - one which ends up competing with lower income levels for an already limited market in "affordable" housing. So if local home prices are mostly well above a given national average, municipalities need to find ways to "make room" for important service functions. The subsidy mostly works as a sorting mechanism. Hence locals "solve" for the services coordination problem, but the result doesn't look like a free market solution.

Yet consider what local public and private interests are attempting to accomplish. Much local real estate becomes closely associated with the core elements (or "core" employee ownership) of today's prosperous firms. Nevertheless, many firms now outsource for non core employees. And the lower levels of compensation these employees receive, mean they'll be searching for affordable housing as well.

While between-firm inequality may not be "fair", or public employee housing preferences on the part of municipalities "free market", these dynamics are different from earlier forms of rent control. Public and private institutions likely resort to these methods because they find them necessary to fulfill their own societal obligations. If public and private interests find it simpler to maintain coordination structures within a similar income range of income, why not strive to broaden this approach so as to make more such clusters possible along a wide range of income potential. Without such efforts, too much knowledge would instead end up clustering along a higher income range, where it becomes increasingly difficult to reach a wide range of markets.

In many respects, a services based economy is different from the spontaneous mobility of an earlier period when it was simpler for a wide range of income groups to live and work in close proximity to one another. Much of this was due to the greater flexibility of tradable sector activity, in which both output and marketplace definition was often subject to continual change in definition. The earlier prominence of tradable sector activity was not only more conducive for physical mobility across regions, but also the mobility of differing income levels among local groups.

That mobility is particularly missed now, as society slowly adjusts to different patterns of wealth creation. It is no longer a simple matter of redistributing wealth or knowledge based skill, from tradable sector output. However, with a little luck, redistribution can take place via time value, and its associated potential for knowledge dispersal. Greater mobility might once again become a possibility. Even better, coordination would no longer be "too efficient". After all, time value could once again pick up the thread that was dropped, when employment in relation to an ever expanding output, finally completed its logical course.

Speed Traps, NIMBYs and other Community "Coping" Mechanisms

Often, when we think of economic imbalance, low income individuals and families come to mind. In the 21st century, many lack economic access in part because knowledge use has become such an important component of economic activity. Without the ability to tap into knowledge use for widespread employment, low income groups suffer, and communities suffer as well. How do communities "cope", when a general lack of economic access also means insufficient resource capacity or economic complexity?

Consider the coping mechanism of "speed traps", as an apt example. If the economic rationale isn't taken into account (lack of local resources for municipal needs), speed traps can seem almost ludicrous. Why would local police park in a not so obvious spot by the side of the road, and wait for unsuspecting motorists to speed by?

Sometime ago I wrote about police departments as a "last line of defense", when societies ignore structural economic issues for too long. This last line of defense shows up in multiple ways. At root, there has been a gradual loss of monetary time value (in aggregate), for too many individuals. When people lack sufficient means to make their time count on economic terms, others gradually lose their trust in these folk, and social unrest is just one result. Communities of all sizes respond to this reality, by zoning out the individuals most likely to experience social unrest and related problems. And for communities which are not well positioned to keep the "unwanted" out, sending them to prison often becomes the next option.

Nor does anyone have to be sitting behind bars, to feel imprisoned. Even though we no longer have (literally at least) debtor's prisons, a general lack of local resource capacity in many instances, is nonetheless leading to the same legal traps which poor people experienced centuries earlier, of legal fees for which one had few resources to address. Even though excessive court fees for these folk can appear even more irrational than the aforementioned speed traps, these kinds of problems will only grow until local communities once again have broader means to harness the skills capacity of their own citizens.

However, these issues of economic loss are not easy to discuss at a political level, for their problems are mostly observed among the margins which have little means to resist them. This is Main Street protectionism. One can of course note the winners and the losers, but it has proven more difficult to decipher how - or why - some communities and cities continue to unravel.

In the meantime, there are calls to bring those who have lost out to the places now experiencing success, without adequate understanding as to what communities were trying to protect themselves from in the first place. When David Henderson wrote "The Case For Low-Income Housing" in response to a Strong Towns post,  "Handle" responded (in part) in the comments:

...in an average month, the vast majority of cases of violent crimes involved residents of these complexes...It is a very dramatic and obvious manifestation of the Pareto Principle - "10% of the people cause 90% of the problem," and concomitantly they produce a wildly disproportionate per capita drain on local resources.

"Handle" further explains that there is a race to the bottom competition among localities to avoid these individuals as a result. Again, rural areas which find themselves on the losing end of the race to the bottom, are more likely to resort to longer prison sentences for local safety concerns. Likewise, the War on Drugs continues to serve as a source of local resource capture, for too many communities which have insufficient means to tap knowledge use for local productive wealth formation.

Only recall the earlier debtor's prisons and what finally made it possible for populations to escape them: new horizons in the New World. Today, there is also the possibility of creating new horizons for knowledge use, so that individuals, families and communities alike can escape the coping mechanisms which make so little sense to others. Unfortunately, there were sometimes understandable reasons for communities to put up walls against the individuals who lacked the ability to reciprocate as responsible citizens. The challenge is to make it possible for all people to assist one another with knowledge use, so that coping via exclusion is no longer as necessary, as has proven to be the case in the present.

A Plea For Economic Vitality

No economy or general equilibrium state can be considered vital or truly dynamic, if it is faltering at the margins. Why do policy makers and others turn a blind eye to local examples of economic abandonment, particularly in places which had extensive investment - in some instances - only decades earlier? Has everyone given up on long term growth?

It's one thing if existing structures clearly need to be torn down, for some reason. Is this what we are to expect when so much expense is poured into buildings and locations that are mostly intended to be usable for fifteen years, as has occurred in recent decades? Why not either build with the hope of greater permanence, or else design for greater flexibility at the outset via yearly spatial adjustments? In some instances, "permanent" new buildings are constructed with the promise of new business tenants, only to end up underutilized as extra storage space and the like, such as occurred recently on a nearby Main Street. What a waste!

The fact that neither public or private interests have addressed what can only be considered a wide array of economic abandonment, contributes to the kinds of social unrest which many of us who are older, never expected to see again in the course of our lifetimes. Faltering Main Streets were the first indication of trouble. Presently, abandoned businesses and homes in suburban areas are continuing the cycle.

Is it possible that shifts in middle class income patterns (less "middle", more "high" and "low") affect the dearth of local investment? After all, those with lower income levels have long taken advantage of existing real estate opportunities, when higher income levels shifted to new options elsewhere. A lack of investment along a full (diverse) income spectrum, contributes to an economic "deepening" of investment (instead of widening), as David Glasner noted in a recent post. His example highlighted capital deepening in relation to hiring decisions and efficiency in scale on the part of major companies, but these processes doubtless affect small business formation as well.

What is at stake in all this, is whether today's economic constructs remain vital to a point of being able to replicate themselves. Thus far it's been too easy to be fooled, when replication does takes place in developing nations (or more recent arrivals), but not in developed nations. What's the difference? A cellular organism has to divide (i.e. new wealth source) to generate new life. Not just stretch! In other words, economic vitality is not just a matter of expanding or bringing more entrants into already prosperous areas, but starting anew.

Meanwhile, cities and nations tell potential newcomers in no uncertain terms that they are basically full. Only so much augmentation is possible in the reigning circumstance of the present. And no one wants to hear it, because it is still too difficult to contemplate starting over. If today's economic conditions are to remain amenable to long term growth, this is no time to give up on places which have experienced less prosperity. Yet one reason it has been difficult to start the process - at least in the U.S. - is the lack of a national dialogue as to how citizens would like to live, work, and economically engage with one another in the 21st century. Instead, legislators and special interests are busily enacting laws to make many options in this regard off limits, across an entire realm of possibility.

Perhaps my outlook is even more "Malthusian" than usual (about economic vitality), due to a telling set of pictures and story line which provided a much needed warning. While prosperous regions and their residents mostly remain convinced all is well, economic stagnation continues apace at the periphery. From Johnny Sanphilippo at Market Urbanism, in "Your Town is a Financial Timebomb":

I keep up with the reports and journalists proclaiming that America's suburbs are thriving and will continue to do so forever. Yet I keep scratching my head since these depictions are  in conflict with what I keep seeing on the ground as I travel around the country.   

Many citizens don't have the current option of living where service formation and tradable sector production both exist in abundance. The above linked article also alludes to the fact that extensive government infrastructure is questionable, when much of it appears to encourage abandonment sooner, rather then later. Are we using the wrong kinds of infrastructure, if these forms of government investment end up being treated disrespectfully? How can governments contemplate further investment spending along the same lines, if too much ends up being squandered? It's time to recreate not just the environments that some of us live in, but also the ways in which we wish to interact with, and assist one another.

New Communities: Some Spatial Considerations

More people will want to move to thriving economic regions in the near future, but not everyone will be able to enter the places where prosperity is already a given. This also holds true to some degree, for those who live in the under served areas of developed nations. As a result, individuals and groups alike need to actively reconsider, what economic access and participation actually mean. How might new communities start from scratch, in an era when knowledge use has become an important time based service product? How can new community starts contribute to aggregate supply and output, instead of having to knock at the closed door that is economic stagnation?

Communities have had little opportunity to evolve in meaningful ways, and recent additions to existing infrastructure appear as though extensions of the old. Or occasionally, someone constructs a sentimental throwback to the Main Streets that baby boomers such as myself remember from childhood days. But how useful are these design elements in the present, especially given the forms of service product which remain in short supply in the marketplace? Especially since the environments which do exist for important time based services, are primarily structured for higher income levels.

One thing to consider is the fact that in general equilibrium conditions, those with higher income levels have been willing to pay more for both housing and related amenities - both for the additional security they provide and the greater ease of getting things done. Lower income levels will want varying degrees of (lifestyle) self selection, but they will need to utilize infrastructure and related resources quite differently. For decades, however, security has been a problem at low income levels. Hence some families and individuals will understandably prefer to maintain their living quarters along the outer edges of newly generated communities, so as to have a buffer from the mixed use neighborhoods which lie closer to the center, where living space would often be adjacent to retail and service formation.

A different approach for security would be tapped for those who live near the community center, in that these groups would benefit from a constant variety of ongoing activity in the public and private areas of downtown. These are the most logical places for many among the young, old, and the disabled to work and congregate, particularly to break the cycles of isolation such groups have too often experienced in schools, assisted living facilities and rural areas.

Central locations for these individuals would also ease the commuting burdens that can be especially stressful for low income families. Families with young children or aging parents would gain access to living quarters near downtown, alongside older individuals who face the additional stresses of living alone with few family or friends nearby. These flexible ownership patterns would alleviate what can be considerable institutional costs, in general equilibrium conditions. A services oriented Main Street might resemble campus settings. These flexible "campus" arrangements could be interspersed with public spaces, alongside the privately owned enclosures that would serve as space for time arbitrage settings.

Walkable communities are a high priority, since they represent a logical starting point on an income continuum which has yet to be taken into account in general equilibrium conditions. For those with small wages and income, walkable communities would present a full range of opportunities that make it easier for everyone to generate ongoing employment - even those who face health and age related issues which occasionally limit participation.

The hub and spoke option is advantageous for walkable communities, where the center or downtown exists as a hub. From this center, a series of transportation pathways and roads (spokes) would radiate out to more traditional forms of transportation (i.e. highways, railroads, rivers and the like) along the town boundaries. Each spoke could specialize in a different form of transportation, and individuals could seek out living options along the spokes which are their personal preference at any given point in time.

These communities would in many instances not be designed for substantial expansion. Rather, they would provide a full range of living and working options, which would in turn could begin a replication process in other locations, once a certain population density is reached.

Design particularly matters for anyone with a limited amount of mobility for whatever reason, and the heart of these communities would provide ample room for these groups at its center. Ultimately, the result would be fewer individuals who remain dependent on government assistance as in the present. Areas closer to the hub or downtown, could provide living arrangements for families currently providing for either young children or elderly parents. Also, older citizens who live alone with no family nearby, would gain living quarters near the community center.

Fortunately, design for low income community structure is one of the more obvious economic patterns that would provide immediate benefit for those who are presently impacted by the spatial requirements of automobile defined towns and cities across the country. New community formation needs to address the most pressing aspects of this reality first, before moving up the spectrum to provide broader options for the middle classes which are also experiencing their own pressures in general equilibrium conditions. Indeed, much of their "beef" with higher income levels, revolves around the framework for lifestyle patterns which appear as though necessary in every instance. It always helps to ask: is this really true?

Freedom to Choose, Means More Freedom to Trust

Betsey Stevenson recently challenged her readers in this Bloomberg article, "Want to Help The Economy? Learn to Trust". Yes, more trust would certainly help. But just the same, the article reminded me of a "feel good" Sunday morning sermon, in which the pastor exhorts everyone to be "better" people. Who remembers that impulse by Monday morning?

Unfortunately, there are good reasons for a growing lack of trust in the present. Stevenson is right that people are losing faith in one another, and she noted that when we find it difficult to trust others, others find it difficult to trust us as well. Economically speaking of course, less trust equates to less economic output in aggregate. However, something was missing from her reasoning: the same economic forces which leave us more vulnerable or less able to choose for ourselves and others, make us less trustworthy, by default. As someone who remained (formally) unemployed for too long, I get that such a perception on the part of others is understandable.

It's not enough to persuade, cajole or reason one's way to a stronger economy, especially in a time frame when representatives of more prosperous regions are becoming more intent on closing the door to new entrants. In particular, people need new means for discovering economic interaction with one another, which are also capable of contributing to long term growth. More reliable economic patterns would make mutual trust a rational choice - one less likely to end up as excessive risk taking in terms of either one's health or personal belongings.

Just the same, whatever the label that society places on the marginalized, and there are plenty of relatively arbitrary labels: those who try to assist the ones who have fallen, have too few economic means at their disposal to help them in the ways that count most. Sometimes, when social workers are new to their work, and the light of day dawns on them as to what is really going on, it can be a cruel dawning. I remember a few years earlier, a young woman who was working with the homeless ended up screaming at a crowd: Jobs! They need jobs!

Freedom to choose on economic terms, also includes the freedom to construct one's own unique business environment, by which to interact with others. I cannot stress enough, how important this function can sometimes be, for those who may otherwise lack the social graces to thrive in the large corporate environments of the present - whether they be public or private.

Consider what freedom to choose could potentially mean, given a meritocracy which rewards people so as to encourage excessive repetition in terms of chosen skill sets. Those who are deemed less skillful, are too often expected to perform repetitious patterns continuously which others have already opted out of. Yet time value - in terms of workplace options - should also exist as a form of marketplace choice. Physiologically, our bodies constantly ask us for variety in both movement and thought processes. Our bodies naturally use the "down time" of low skill processes to prepare for the next step we want to utilize in high skill processes. When work is performed according to externally determined time frames, it is not always possible to optimize this natural process.

Also, work environments can be thought of as a form of experiential product which is paid for through time investment. While the reality of job as desirable product is now recognized in terms of happiness and self esteem, the reverse effect has not been adequately considered for remaining low skill positions. When individuals have sufficient options to coordinate high and low skill work patterns among one another, self respect - hence mutual trust - can be much easier to come by.

A marketplace for time value, would provide more freedom to choose, which in turn could lead to more respect for a wider array of work functions than presently exists. Even though broader sharing of repetitious low skill work may seem as though a small matter, it's not for the ones who are expected to fulfill these societal roles to a degree they have little remaining time for more challenging work. Trust is not a matter of wishful thinking. But I would also suggest for Betsey Stevenson that trust issues are not something that governments can work out for their citizens. These are the kinds of issues which need to be faced openly and honestly, on the Main Streets which have increasingly been left behind.

Wrap Up for June 2016

In the most recent recovery, "just 20 counties have generated half the growth". By way of comparison, 125 counties generated half of new business establishment growth in the early 1990s recovery. Rural areas have of course been hardest hit. From the WP article, "A very bad sign for all but America's biggest cities."

"It's going to get much worse," said John Lettieri, a former Republican congressional aide who is a co-founder of the Economic Innovation Group. "As bleak as these numbers are now, these may be the good years."

This growing divergence of fortune between prosperous cities and other areas, has received too little attention. While there are class and cultural considerations, they are not necessarily fundamental to the underlying economic dynamics which continue to play out. Politicians need to become more cognizant of this fact, instead of exacerbating social differences as an "easy way out" (see Brexit...).

Logistically as well, it is somewhat difficult to reach out to smaller communities. There are so many, yet each must deal with the economic realities of Main Street on their own terms. How might prosperous cities help smaller communities in the near future, given the fact their circumstance are so different from the areas that are suffering? Yet this is the challenge. Highly educated urbanites may ultimately need to share - at least to some extent - their knowledge sets with small communities, to help them take part in the knowledge based economies of the 21st century.

Eduardo Porter knows that "A Universal Basic Income is a Poor Tool to Fight Poverty"

Alas, I can only contribute to macroeconomic discussions as a layperson. But that makes it no less important for me to try, given the present uncertain nature of macroeconomic dialogue. In particular, Olivier Blanchard wants greater emphasis on what is precisely non monetary. However, this emphasis tends to take populations out of the economic equation, at the very moment when governments most need the contributions of their citizens for 21st century challenges. To ignore the vital role of supply and demand in economic structure, would be to discount the real economy solutions that are possible. Nick Rowe was concerned about Blanchard's article, and so too, Scott Sumner.

Charles Murray created a stir recently, with this article:
http://www.wsj.com/articles/a-guaranteed-income-for-every-american-1464969586

National socialism is a confusing mix of policy recommendations and thought processes.
Alberto Mingardi responds to Anne Applebaum's article with a thoughtful post.

Have yet to get over the fact that Edmund Phelps wrote this Project Syndicate article in 2006 in support of low wage subsidies, yet apparently, no response from Washington. Had this approach been enacted, one has to wonder whether some rural area business losses might have been prevented, particularly since the Great Recession. Given the "one size fits all" regulatory patterns for business formation, it is not as easy for small town businesses to automate, to respond to higher minimum wage requirements as the sole responsibility of business owners.

Ambrose Evans-Pritchard writes an incisive article on Brexit and Dani Rodrik responds.

The Economist takes a look at teachers:
http://www.economist.com/news/briefing/21700385-great-teaching-has-long-been-seen-innate-skill-reformers-are-showing-best?curator=MediaREDEF

I'd like to have one of those t-shirts! from Narayana Kockerlakota http://www.bloomberg.com/view/articles/2016-06-15/the-fed-needs-more-than-one-direction

Shane Greenstein on Robert Gordon's book:

By the final chapter the ebullient economic historian disappears, replaced by a downbeat macroeconomic forecaster.

Scott Sumner takes a close look at NeoFisherism: http://www.themoneyillusion.com/?p=31807

Ryan Avent notes that James Bullard's conclusions are a little off: http://www.economist.com/blogs/freeexchange/2016/06/expect-worst?fsrc=rss

Regional patterns matter for employment: http://www.brookings.edu/blogs/the-avenue/posts/2016/06/21-nonworking-prime-age-men-berube

And the remainder for June goes to Brexit...

WSJ on Brexit http://www.wsj.com/articles/brexit-a-very-british-revolution-1466800383

Josh Hendrickson: Just because the public may think differently about negative externalities than economists do, does not necessarily mean they are "stupid" https://everydayecon.wordpress.com/2016/06/26/on-a-pascalian-theory-of-political-economy/

Economic policy uncertainty is higher this time...http://econbrowser.com/archives/2016/06/policy-uncertainty-in-america-in-the-wake-of-brexit

The role of immigrants, from Slate: http://www.slate.com/articles/news_and_politics/politics/2016/06/immigration_and_brexit_how_a_rising_tide_of_european_immigrants_fueled_the.html

Ouch! Everyone lost with this vote.

Public or Private: Who Can Make the First Step?

How to respond, to recent assertions that monetarism is dead? Granted, monetarism as a discipline is changing. Where it was once approached from a somewhat quantitative stance, this viewpoint has shifted towards a supply and demand approach in terms of aggregate spending capacity. Both economic time and resource capacity are represented by money, and their relation to one another is constantly changing. Indeed, market monetarism opens up additional ways of conceptualizing money in terms of economic freedom, which have yet to be explored.

For purposes of this post, imagine the output of aggregate supply as a "race for growth potential" between public and private interests. How to think about these efforts, in real economy terms? Many assume that government is now capable of growth capacity to a greater extent than private interests. While this is viewpoint is understandable, given government involvement across the economy - alongside a growing private sector reticence - few realize what's at stake for growth and economic stability. This issue is all the more confusing for the public, when discussions between opposing economists mostly involve technical complexities or political oversimplification.

Much of it really boils down to this. In a temporarily stalled economic environment, which "side" is best equipped to address a lack of economic dynamism: fiscal policy or monetary policy, and why? That is, who is prepared to make the first meaningful step forward? After the Great Depression in the twentieth century, some government "first steps" for renewed growth had measurable impact, even though monetary assistance was quite uneven. What had become new infrastructure patterns in those decades, also meant a broader economic framework in several respects. Even the expansion of square footage for housing played a role, in that it provided "storage" for the additional supply side capacity of mass manufacture.

However in the present, it is no longer possible for government funded infrastructure - or related strategies - to have the same dramatic effect. Neither Washington - or Main Street for that matter - had sufficient response to the fact the 21st century would not/could not be a redo of the 20th. Today, the digital realm means far less physical space is needed for living and working, even though non tradable sectors have yet to adjust. And while millions of individuals desire to produce and partake of experiential product, again, organizational patterns still need to take this important shift into account.

Today, fiscal revenue for physical infrastructure - while it is needed for maintenance - is a vastly different component, than the multiplier effect of infrastructure which previously contributed to supply side dynamics across the spectrum. And while new forms of infrastructure are needed to generate more closely spaced living/working patterns, national infrastructure dialogue is mostly that of increased competition with already existing infrastructure patterns of general equilibrium - many of which are far from being fully utilized to begin with.

So called government multipliers lose their effectiveness, as government debt comes to include more economic roles that include high levels of ongoing obligation. Today, government debt includes continuous budget responsibilities which make it all but impossible, for policy makers to respond to changing economic circumstance. Again, think about the "race for growth" in which governments have to take two half steps (debt funded activity) to account for each single monetary step on the part of private industry. Until the Great Recession, government was able to access sufficient revenue that it could take enough half steps to stay ahead in the race, if need be.

Private industry has long since lost confidence in government, as capable of providing meaningful assistance for economic prosperity. But by the same token, private interests are also not inclined to make the first move, or - if they are - remain blocked by other players. Just the same, it's Main Street's turn to make the first step in a race towards stronger growth. Even though some will insist they can't, or possibly even insist it's not their responsibility to do so.

In an important sense, the Great Recession was a "contained" depression - a fact which underlies the paradox of those "return to normal" scenarios the Fed continues to speak of, only years later. Perhaps "normalization" reflected the fact that government was no longer well positioned to contribute to a broader growth pattern. There was just one problem. Too many private interests had become content with a protected and limited marketplace which left too little room for economic access.

Fortunately, there are still ways to move forward which do not require the "half step" matched revenue of fiscal policy. Matched time value can renew non tradable sector activity, through coordinated settings which combine public/private efforts into a single monetary framework. Matched time value would represent wealth which requires no debt, public or private. With enough "whole" steps, output would finally return to a level capable of accommodating all who wish to take part.

Right to Work, to Make One's Job, or to Have a Job?

While working on this longish post, I realized the title would scarcely do justice to the scope of what needed inclusion, and some elements were tied together a bit loosely. How to think about rights in terms of working for others, versus making our own forms of work? What has been problematic in this regard? Let's delve into some particulars. First: In a recent Moneywatch article, Mark Thoma asks, "Will election 2016 soothe Americans' job fears?" From the article:

We would all be better off if the large number of people who left the labor force during the recession return to productive employment rather than relying on social services, family, crime or other means to survive. We will be healthier as a nation if the gains from international trade are broadly shared rather than concentrated at the top of the income redistribution.

He continues:

Our future growth will be higher, and the opportunity to find decent jobs will be enhanced, if the U.S. has the infrastructure, educational resources, healthcare and social protections it needs to ensure Americans are as productive and innovative as we can be...Policy makers at the Fed and in Congress must do all they can to create jobs and opportunity for those who feel overlooked and forgotten.

Some might construe part of Mark Thoma's argument, as a right to a job. However, there is no right to a job in the sense of provision from others. Nor would a right to a job be possible for all concerned. The right to work on economic terms, i.e. make one's own compensated work, is most important for survival - yet seemingly all but forgotten. Likewise, even though both the Fed and Congress are responsible for economic prosperity, they do not have the specific means to make automatic job creation a reality.

For instance: like many individuals in the present I have a clearly designated right to work. However, there are few means (in part due to geographical circumstance and health) to make some work options viable on monetary or economic terms. Still, I've maintained a regular work routine in recent years, due to the good fortune of living with another family member, and my daily routine includes work which is quite important to me. Sometimes we forfeit the work which feels most important to us, when it becomes imperative to seek a paying job in the marketplace.

Rights to work discussions - when they take place - are mostly through an economic or monetary lens. Wikipedia provides us with (at least) two understandings regarding the right to work. From the first definition I found:

Right to work laws do not aim to provide general guarantee of employment to people seeking work, but rather a government regulation of the contractual agreements between employees and labor unions that prevents them from excluding non-union workers, or requiring employees to pay a fee to unions that have negotiated the labor contract all the employees work under.

What I want to note about the above definition, is the fact it provides a specific example of economic freedom by corporate design. Even though these employment opportunities are for marketplace "winners" (in terms of today's efficiency and scale expectations), so too the "winners" in terms of marketplace concentration by knowledge use as fiscally defined, in the other Wikipedia definition:

The right to work is the concept that people have a human right to work or engage in productive employment, and may not be prevented from doing so...The phrase "the right to work" was coined by the French socialist leader Louis Blanc in light of the social turmoil of the early 19th century and rising unemployment in the wake of the 1846 financial crisis which led up to the French Revolution of 1848. The right to property was a crucial demand in early quests for political freedom and equality, and against feudal control of property.

Right to work laws apply for tradable sectors in some states, and a right to work (in terms of the above defined concept) often applies to the fiscally supported non tradable sector activity, of knowledge based services. Asymmetrically, these right to work definitions are two sides of the same coin, in terms of organizational capacity and the scale capture which makes both "exclusive", rather than inclusive. Organizational scale contributes not only to variations in income structure, but also the level of economic access that is possible - albeit more in terms of production (work) potential, than consumption potential.

When does organizational capacity (in tradable sectors) become "too" efficient? Excessive consolidation and monopoly remains problematic for free market potential, as has been pointed out by Barry C. Lynn. Regular readers may remember my referencing his book "Cornered: The New Monopoly Capitalism and the Economics of Destruction" several times. From a recent ProMarket article, in a phone interview with Barry Lynn:

The goals of the old antitrust regime were to preserve competition in all parts of the political economy in order to protect the liberties of the individual, our democratic institutions, the stability of our economy, and also local communities. These were all thrown out, and replaced by the idea that we should just have efficient structures that serve the interest of the consumer. 

Another problem in terms of efficiency - is that supposed "efficiency" in terms of less (produced) time based product, only leads to less (consumed) time based product, output and marketplace formation. Whereas efficiency in tradable sectors is still able to maintain a broad marketplace, by comparison. Even so, today's non tradable sectors have doubtless been influenced by the increasingly centralized nature of non tradable sector activity, and have taken advantage of the legal constructs involved. One unfortunate result is a smaller Main Street presence, which is one of the thornier issues for lack of work availability in many counties.

As Barry Lynn noted, Washington was not always so complacent. Indeed, some of America's founders were greatly concerned, about what at the time was little more than a future potential for economic monopoly to occur, due to constant legislative activity. James Madison wrote in this pre-Convention memorandum ("Original Meanings: Politics and Ideas in the Making of the Constitution", page 314) :

II. If the multiplicity and mutability of laws prove a want of wisdom, their injustice betrays a defect still more alarming: more alarming not merely because it is a greater evil in itself, but because it brings more into question the fundamental principle of republicanism Government, that the majority who rule in such Governments are the safest Guardians both of public good and of public rights.

Madison was also concerned that economic legislation would jeopardize "fundamental rights of property". Why has Washington lost its appetite for antitrust legislation in recent decades? I can only surmise a possibility, here. Given the ongoing consolidation in non tradable sector activity, in part spurred by budget restraints, why should policy makers think differently of consolidation in tradable sectors? Possibly, they found themselves in a position where it was no longer possible to have a strong reaction.

The net result - however - is a lack of vital economic activity at local levels, and intervention on the part of state and large interests to diminish the market impact of the small player. Hence even though we can't expect a right to a job from someone else, it has still become more difficult to generate jobs on our own terms. Bonnie Carr inspired me to follow up a recent post with this one, and here' I'll include a portion of a post she wrote several years earlier:

I recall a story about an independent motor carrier being shut down by the Department of Transportation after having an accident a few years back. I was interested in this story because I had watched public testimony at a House Transportation Committee meeting regarding regulatory matters just after the Republicans had retaken the House. I was shocked to see that there was virtually no change in behavior as representatives for large, affiliated carriers were able to secure even more regulatory barriers over the pleas of independents. And regarding this story, I was horrified that the DOT moved in a state licensed, insured and inspected carrier, padlocking the gates and confiscating the busses without a warrant, a hearing or due process while the same thing never occurs when large carriers are involved in similar accidents.

What some among our country's founders had feared, has indeed come to pass - in terms of economic legislation which harms citizens. Today, some Republicans are willing to demean rural residents who were economically left behind, and Democrats may believe that Republicans have no interest in making the winners share. But neither party really has interest in leaving room on Main Street, for the work patterns of normal income gains from small scale employment capacity.

No one - at this juncture - can force either national or state governments, to allow citizens to make their own jobs and economic connections. Plus too many battles would be involved, all around. However, local corporations could be legally constructed so as to provide safe havens, for individuals who wish to create work for themselves in relation to other individuals.

In local corporate structure, competition would of course exist. But not in the sense of people and businesses constantly being knocked out of the workplace, in a race for "perfect" skills or business competition. Much of competition would exist in the shared choices that people routinely make, in a marketplace for time value. Neither would it be necessary for tradable sector activity to constantly scale up, in order to remain viable. Importantly, a right to work in the present also depends on a right to use knowledge properties - much as physical properties were the vital component, for centuries.

Knowledge Use and Alternative Equilibrium

Everywhere one looks, knowledge appears as though in abundance. Yet somehow, not much of it is actually being measured or applied in concrete ways. Even the digital realm suggests better means for economic infrastructure which have yet to materialize. How might these circumstance be changed? For one, both practical and experiential forms of knowledge need to be expressed through more personal means. Over time, pathways for voluntary forms of association, could prove amenable to services growth for the long term.

In primary equilibrium, personal time value is not well represented in any segment of the economy. However the need to explore skills development through individual relationships - and not just existing institutions - is a recent development. For centuries, primary equilibrium evolved through individual relations with specific resource sets. Resources were often personally shaped into product, then presented to others. Gradually, these personal production roles were supplanted by institutions which became intermediary production points. While this process still works to some degree, it is now insufficient for labor force participation as a whole.

Primary equilibrium particularly became dependent on expanding production cycles, in order to fund the knowledge use of high skill services. However, both traditional forms of production and services centralized to a degree it was often not possible to sustain them at local levels. Better targeted forms of wealth creation are now needed, in part because the roles of both Wall Street and governments alike are both increasingly questioned. Main Street has stumbled through its own uncertainties for decades, and many places need to become more directly involved in the wealth creation capacity that is now needed. Fortunately there are possibilities for doing so, through the alternative equilibrium option of knowledge use systems.

Alternative equilibrium would allow groups to individually match time based compensation. This process begins with the degree of local environment that a given group is capable of committing to at the outset. Instead of differences in local hourly pay, income variations would (gradually) arise through local investment options which all participants would commit to at some level. While time based services coordination provides an alternative to income taxation, shared local investment provides a viable alternative for other forms of local taxation. These investments would include everything from production and maintenance of building components, to local municipal grids.

While time coordination is inclusive, focused and ongoing efforts would be required, for local participants to gain the time availability of other locals whose time capacity they value most. Given the fact that all desired skills sets can only go so far, this is taken into account for local educational efforts - an important factor if time arbitrage is to be successful.

The finite nature of time means that competition arises at a personal level, to prove "worthy" of what one desires to match in services and other ongoing activities from others. Given these circumstance, "fairness" becomes less of an economic issue. Why? Constraints are more clearly that of personal and group time use options, as opposed to the institutional and educational barriers that one finds in primary equilibrium. Likewise, constraints for monetary compensation overall are more obvious when local participants are invested in the system itself.

How to think about variation in equilibrium? Many knowledge use systems would seek infrastructure which is capable of generating good deflation through ongoing innovation across a wide spectrum. What's more, these systems would seek to make the most of tradable goods, international trade, and innovation possibilities from international sources.  This combination of methods would also provide room - i.e. a form of group support - for the life of the mind, which often lacks settings to manifest in ordinary circumstance.

Most important is the fact that knowledge use systems cannot be built upon either external definitions or controls, because this would take away both freedom and incentive to pursue personal challenges. In other words, any attempts to dictate how individuals divide divisions of labor would only defeat the purpose, because divisions of labor for services need to be arrived at through spontaneous means. Otherwise, it would be difficult to determine the reasons why individuals seek one another for assistance, encouragement and social activity in the first place. This - after all - has been the primary problem with the top down structures of services formations of the 20th century.

Charter City vs Charter Community: Some Comparisons

After listening to Paul Romer's latest interview with Russ Roberts at Econtalk, I wanted to sketch out a few differences between charter city or community approaches in this post. Econtalk also includes a link for a brief Romer interview from 2010, ("Give poor people a chance") which provides additional perspective.

Of course the primary difference would be in terms of scale. Whereas a charter city needs to commit to a well understood approach at the outset, charter communities could be more flexible and experimental in nature. And while charter city infrastructures may need to accommodate millions of citizens, charter communities would often be laid out for walkable and other non motorized options. This would allow the inhabitants to coordinate ongoing schedules and activities in ways that are also capable of overlapping, where needed.

Charter communities would rely on direct democracy for service formations, in part due to ongoing time use choices which involve long term educational planning and local resource use. Whereas services formations in charter cities would probably utilize traditional division of labor structures and representative democracy. The difference is also one of density optimization: divisions of labor in knowledge use communities would reflect the varied needs of a much smaller population at any given moment in time.

In the 2010 article, Romer spoke of increases in land value which would stem from the authorities providing public goods. For a charter community, land value would likely increase slowly, due to gains from increased ability to coordinate services and production more effectively over time. Local investments could be apportioned so that gains can provide fallback options for citizens as they age, as well.

Participants are more likely to be involved in initial planning processes, than would be possible in charter cities. Especially as the concept starts to take shape, more individuals would be able to play "founding" roles in domestic summits which seek to create new chartered communities. Domestic summits would also focus on the formation and definition of public spaces. These would vary widely, according to common interests and the kinds of infrastructure formation which best match investment options for potential citizen groups. As Romer noted, public spaces facilitate the interactions which make cities valuable. Certainly the same would hold true for charter communities.

A common characteristic of both city and community would be the fact that multiple interests would be brought together and harmonized. While broader sets of income levels would be able to live in charter cities, to some extent chartered communities would be able to make provisions in this regard as well. As Romer noted in the Econtalk interview, "An attractive climate is a luxury good." To a degree this is also true for other attractive geographic features. However, the U.S. still has vast stretches of property which could be made attractive in multiple capacities. What's more, some communities would include time commitments which lend to unique land use characteristics.

Only consider how long it's been since many cities were formed in the U.S., for the twentieth century mostly saw suburbs added to already existing cities. Not all big city infrastructure is going to hold up well in the decades to come. There are a couple of things to consider in this regard. Not only do future infrastructure patterns need to be more versatile, they will not always require require the same spatial dimensions of the present.

City formation slowed in part, because of origination patterns which were reliant on manufacture and traditional production. The fact that chartered communities could use knowledge based services as a point of origination, suggests new models for town centers and conceptual ideas for Main Street. Would a single primary street remain vital to communities of the future? In part, it depends on the designs that individuals find appealing, once domestic summits become a reality.

Last but certainly not least, chartered communities represent self supporting internal economies, which would be approved within given nations as the special exploratory zones they represent. In the U.S., states would agree to honor the same exemptions for these communities that would be honored by nations. Likewise, long term economic efforts on the part of these citizens would be recognized and compensated, as the new wealth they would bring for all concerned.