Experiential Markets Versus Personal Management in Healthcare

Healthcare in the U.S. is a prime example of missing markets for lower income groups. Nevertheless, more than costs are at stake, since other income groups with greater access to healthcare are still dubious about its actual value. Texas ranks highest in limited healthcare access, where in recent years the uninsured are approximately 17 to 18 percent of its population. I am among them since Medicare in the U.S. (which is gradually transitioning to private insurance) is becoming more costly and less predictable for retirees - regardless of income. However, once I retired, I started setting aside money every six months in the event of future healthcare emergencies, rather than paying Medicare premiums.

For many healthcare consumers, careful budgetary responsibility means a high level of frugality regarding any kind of professional assistance. People still believe that healthcare is important, but some of what is missing now, is a matter of regretful consumer choice. How is any of this rational? Two issues in particular stand out: What have people come to expect in terms of healthcare, and how have those expectations fallen so short of the mark? Even though much healthcare dialogue is framed in terms of costs, the very nature of personal interchange in healthcare activity is crucial as well. 

Meanwhile, many individuals increasingly take a personal management approach to healthcare, in hopes of successfully addressing whatever problems might arise. While this approach can be successful, it does has good and bad aspects. The good - of course - is increased personal responsibility for one's own health prospects. The bad? Alas, there are moments in life when it's not feasible to arrive at a clear diagnosis. Worse, there are emergency situations when we are in no position to tend to ourselves without assistance from others. Yet not all nations are fully committed to this elusive ideal of mutual assistance, or even the importance of community in general. Unfortunately, both happen to be the case in the U.S. Hence we are approaching the point where there is insufficient monetary support for healthcare's existing institutions. As the reality of this starts to sink in for healthcare professionals, perhaps they will eventually try new approaches for the preservation and use of vital knowledge - at least one can hope. 

Personal healthcare management is an unalloyed plus. For one thing, consumers and patients have far more time to dedicate to preventative maintenance than do physicians. Also, there's no "one size fits all" for decision making in applied knowledge. Each individual is unique in their personal makeup and approach. Likewise, consumers can maintain personal healthcare histories, and at the very least, AI might be able to do so in the near future. After all, AI is not subject to the same time scarcity constraints as are healthcare professionals. Also, as patients age, they tend to devote much more time to healthcare self management than is generally necessary in one's younger years. In all of this however, traditional media can feel insulting when reporters and journalists stress the dangers of self diagnosis and personal care outside the attention of professional physicians.

If only personal management were enough to take care of healthcare issues. Instead, sometimes our survival depends on the help of others, even if we cannot afford it or worse, end up belittled by the processes involved. For instance, several years ago, an ambulance crew convinced my father to ride to the hospital after a bleeding episode to make sure everything was okay, only for my father to be berated by the physician who complained his time had been wasted. Instances such as this are why people think twice about help in dangerous situations, since one seldom knows whether mutual respect is feasible. People would likely feel better about mutual assistance as taxpayer obligation, had societal skill levels not become so extremely unbalanced. There will be no institutional reform, if possibilities for mutual respect aren't somehow restored. 

Finding better balance in skills levels between individuals, means finding ways to make our time value economic in markets for time based services. How do we create mutual interdependence which is also economic in nature? I get that physicians and other healthcare providers no longer have sufficient time for their patients. In all fairness to healthcare providers, healthcare today shares similar time product scarcities with other secondary markets for applied knowledge. The biggest problem in this regard, are situations which call for mutual time based interaction, yet too few groups in society are able to effectively coordinate the skills involved. Further, additional layers of management in too many instances, cannot make up for time scarcities in crucial skills. Instead, excess management often adds needless complexities and costs, not to mention lowered ability for providers and recipients to find reciprocity in their interactions.

Without direct relationships in time based assistance, societies are losing their ability to effectively manage the demand and supply of time based product in the marketplace. These losses could explain much of society's current dissatisfaction with its existing institutions. Despite this disillusionment, getting down to specifics regarding how to move forward in common purpose, is proving to be the hardest part. Neither experts or laypeople are in a suitable position to implement institutional evolution in the 21st century. 

Though this is one time when solutions are not about "appropriate" credentials, even professionals tend to be criticized when they step out of their immediate domain of expertise. In this environment, how is it even possible for outsiders to be taken seriously? As it turns out, social media gives plenty of permissions for wide ranging complaints regarding why things go wrong, whatever that may be. What social media hasn't been willing to do, and what particularly disappoints me, is its lack of online promotion for suggestions as to how problems can be addressed. We simply can't can't afford to hide anymore from the specific hows of institutional change, despite the fact they are unbelievably difficult and frustrating to confront. For a while, I'd also become reluctant to write about how. But I can't hide my head in the sand any longer.

Upstream Nominal Claims Matter for Equilibrium Balance

Will the Fed successfully curtail inflation in the near future? Fortunately there have been encouraging signs of disinflation, even if the causes aren't obvious yet. However, while the Fed uses monetary policy to tame inflation, in certain respects this is a technical result. In other words, "pulling back" won't address supply side shortcomings such as the perennial inflation contributors in our secondary markets. Unfortunately, these local markets are woefully incomplete in basic respects, with housing and skilled services as the most egregious examples. Consequently, were the Fed were to pursue nominal stability and a stable growth level (as a market monetarist "best case" scenario), this would only be a partial answer - albeit the monetary one - for optimal equilibrium balance. 

Indeed, the Fed has often emphasized how its hands are tied in terms of supply side reform possibilities. Despite the recent pullback on traditional housing loan activity, Fed members must be wondering now, who in a decision making capacity is really paying attention and ready to take action? After all, we need incremental ownership options for flexible housing and land use, before many citizens can lead more productive lives. Without such options, millions still function in their own "recessionary" economy, even as others move on. For that matter, tiny homes, manufactured homes, and modular homes are already available, but few communities remain willing to make room for lower income options. Alas, there's a relative few sad exceptions for flood prone areas which are often long distances from employment opportunities. 

While there's a growing understanding of supply side issues, supply side reform means different things to different people. Consequently we aren't ready to address how local secondary market deficiencies contribute to equilibrium imbalance. In all this, upstream nominal claims tend to define production and consumption landscapes, plus such claims are more locally supported than it appears at first glance. Upstream nominal claims come not only from profit and non profit decision makers, for the Nimby impulses of local citizens lead to surging property taxes as well - taxes for rising asset values rather than local service gains! How can the Fed keep a decent reputation indefinitely, if the constraints of artificial housing scarcity remain enforced? Yet since these claims matter for skilled services, communities often refuse newcomers who lack discretionary income for additional service costs.

In a recent post I noted the structural shift of additional nominal claims from originating wealth sources. Fortunately, some of these pressures are starting to let up, which should make the Fed's job a little easier. That said, problems of excessive expectations will remain with us. Only consider how some of those expectations might have come about in the first place. Part of the high inflation of the sixties and seventies was due to the introduction of higher costs for healthcare in general across the board - costs which could have been rationalized by increased fossil fuel wealth in the U.S. during that period. Now, imagine what might happen to those expectations should that fossil fuel wealth shift into reverse! For that matter, once the Fed finally reduced those earlier high inflation levels, recall how our healthcare institutions enforced hard limits on physician supply. Chances are this nominal structural shift was more than a coincidence. 

It's hard to imagine secondary markets giving up much ground to primary markets in terms of monetary representation, or for that matter acknowledging their dependence on originating wealth sources. But that doesn't mean new market institutions aren't possible - markets that are more free yet don't present direct challenges to the old. New sets of expectations would not include the same excessive nominal demands as the old. Instead, new institutions would make room for flexible ownership and time value as wealth. Good deflation and skilled knowledge use in local markets, could be our best chance for greater market freedom and equilibrium balance in the near future.

Time Based Product and the Profit/Productivity Conundrum

When it comes to service organizations, an investment approach such as private equity can sometimes lead to problems, if personal time is an important component of final product. All the more so in healthcare, should patients need individualized attention for successful outcomes. How might we respond, if and when profit gains result in less personal time with patients in particular? 

For example, a recent NBER working paper, "Does private equity investment in healthcare benefit patients?" highlights the issue of patient neglect. In the abstract, the researchers note how

Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period. This is accompanied by declines in other areas of patient well-being, such as lower mobility, while taxpayer spending per patient episode increases by 11%. 

An article from Vox further elaborates:

The researchers studied patients who stayed at a skilled nursing facility after an acute episode at a hospital, looking at deaths that fell within the 90-day period after they left the nursing home. They found that going to a private equity-owned nursing home increased mortality for patients by 10 percent against the overall average.

As it turns out, the result was more pronounced for patients who were relatively healthier, since sicker patients benefited from time based regiments deemed too necessary for targeted reductions. Whereas other services appeared more amenable to time adjustments. So private equity changes

include a reduction in staffing, which prior research has found is the most important factor in quality of care. Overall staffing shrinks by 1.4 percent, the study found, but more directly, private equity acquisitions lead to cuts in the number of hours that front-line nurses spend per day providing basic services to patients. Those services, such as bed turning or infection prevention aren't medically intrusive, but they can be critical to health outcomes.

The researchers noted an increase in the use of psychotics which could have substituted for personalized care as well. This study is certainly getting attention, for instance Matthew Yglesias referenced it as an example of meritocracy issues in a recent post. He stresses how smart people may be inclined to do "bad things":

Why do private equity takeovers kill so many people? It's not because the Wall Street boys are dimwitted. Their job is to look for companies that, for whatever reason, are not managed in a way that maximizes shareholder value...There's a lot more you could say about this story looking specifically at the lens of nursing home operations. But I'm interested in meritocracy. And the point here is that things can go awry not despite, but because smart people are in charge.

Indeed, it is easy to frame the unfortunate circumstance of nursing homes as a morality play, and there are countless other time relevant service examples which can be told in similar fashion. However, getting caught in these stories, instead of finding positive ways to respond, ultimately depresses us all. 

Why not try a more dispassionate view in the form of a total equilibrium perspective? Money cannot be expected to accomplish all things equally well, for everyone involved. More specifically, unsettling things will occur when money occasionally fails in its coordination tasks for time based services generation. Again, I can't stress enough that money is problematic when it is expected to remain the sole representation of economic value. For that matter, should we elect to create valid service markets for a full range of personal time potential, people would gain more opportunities to meet the needs of their loved ones, when existing organizational capacity does prove inadequate. And family members would not have to shoulder the entire load of caring for loved ones (outside the time limits of today's services institutions), once community members can freely participate in local platforms for services generation.

By no means would time arbitrage supplant existing meritocracies and their associative hierarchies. Rather, horizontally aligned communities would work alongside meritocratic organizations, meanwhile reinforcing the positives which merit based hierarchies do hold.

Various Musings on (Hopes of) Vaccine Access

Due to the recent dustup over the Johnson and Johnson vaccine, when I began this post, the main thing on my mind was the extent to which healthcare access can be undermined by status games. Plus, for obvious reasons we're also being told the best strategy is simply accepting whatever vaccine comes our way. But is this really good advice? After all, many healthcare products and methods are subjectively experienced. In this instance, COVID-19 vaccines are also associated with knowledge and information which continues to evolve. Consequently, some "expert" pronouncements are based on professional opinions rather than obvious facts. Hence some advice I've taken with a grain of salt in my own decision making processes.

When it comes to subjective experiences, not only are our metabolisms unique, but out personal circumstance are quite different as well. For example, I don't recall having issues with vaccines or booster shots when I was young. But the last time I received a vaccine prior to some community college courses, I was already in my fifties. By then, I'd been managing fairly frequent migraines for some time. Perhaps not surprisingly, that last booster shot came with three or four days of strong migraine, afterward. 

Also important, is that strong migraines occasionally include side effects reminiscent of the chills, fever and body aches associated with COVID-19. For these reasons - now to mention the fact I've never liked shots - I suspected my body would better tolerate the once and done dose of Johnson and Johnson.

Alas, policy makers and also healthcare providers have their own preferences what "should" be available for local populations - indeed, if at all in certain rural areas. Compounding the issue: J & J vaccine has been unfairly contrast with both the Pfizer and Moderna vaccines. As a recent NPR article noted:

Public health messaging around the J & J is especially tricky because the efficacy numbers can obscure nuances about how it was studied. The trials were conducted in different countries during different times of the pandemic than the other two vaccines. And, of increasing importance, the J & J vaccine was tested in places where new, more dangerous variants of the virus were already circulated.

Until now, I'd not been overly upset with the particulars of the vaccine rollout - that is, until I became unexpectedly angry about the waiting list problem. After several attempts and frustrating phone calls, once I finally located the waiting list requirements online, I discovered the only people who could sign up locally were healthcare providers or people 65 years of age with at least one chronic condition. Even if - at 66 - I considered my twenty plus years of migraines as chronic, there's a good chance that since I've not relied on physicians for management, that could disqualify me from vaccine access.

However, a news report from a few days earlier had given me hope that local pharmacies might be among the groups administering J & J vaccines in southeast Texas. Unfortunately that turned out not to be the case in my area. Instead, only the local hospital is tending to vaccines for Pfizer and Moderna vaccines. Yet I only realized local doses were available, because a family member (from out of town) had received a Facebook notification from the hospital. Facebook! My age is showing because I really wish I didn't need to join social media to keep up with what is happening where I live. 

So I don't like how online waiting list processes feel. And when people explained to me that phone call appointments weren't allowed, something in their demeanor made me feel foolish for even asking. In fact, the common refrain from a couple of nearby pharmacists and a local doctor, was basically "why are you contacting me"? It comes across loud and clear from these individuals and their affiliated organizations, how they don't want to personally deal with people such as myself. With a little luck, I suppose, online registration prevents them from having to do so. At any rate, I was caught off guard in my poor reaction to this new reality of crossed finger waiting games and online registrations. It's nothing like the world of person to person interactions I once took for granted - a world of once gentler and kinder humanity which I still dream about. We've seemingly lost that world, at least for now.

Extensive Price Making is an Equilibrium Outlier

Even though many of us take extensive price making for granted in time based services, this set of circumstance is actually an equilibrium outlier among many nations. For instance, history provides ample evidence that systems of knowledge centered agglomeration which depend on other sources of wealth, can be quite fragile in the long run. All too often, when citizens can't utilize knowledge via non hierarchical means, they end up missing basic or critical steps which could help them achieve daily goals. Worse, they lack any viable patterns of participation in the institutions which bear responsibility for continued knowledge preservation. 

Since direct reciprocity has only become more difficult for services generation - especially during the 20th century - societies increasingly rely on asymmetric participation, production and consumption for a wide array of knowledge based activity. Alas, this approach has led to sectoral imbalances and accumulating debt loads. Much in the way of applied knowledge is publicly supported. However, this means that much of today's day high skill activities are financial obligations for future citizens, rather than market based production and consumption options for people who need them now. Despite the fact this set of affairs can't continue indefinitely, we still lack any Plan B which could stabilize and lessen budgetary burdens many nations face for knowledge based needs. Perhaps it's the fact no Plan B is being actively discussed, which encourages major political parties to completely ignore the possibility of imposed austerity and hardship in the near future.

A major challenge in all this, is to once again relearn how to use knowledge and skill through more directly reciprocated patterns. Not only would symmetric time use mean greater market participation for all citizens, reciprocal time matching can create more immediate wealth, thereby lessening the perceived need for governmental redistribution of all kinds. Time arbitrage is a viable Plan B which would build a more complete framework for time use potential in local community groupings. The local adaptation of production and consumption settings for knowledge, could ultimately transform communities which otherwise find themselves left out of knowledge production and consumption in urban markets.

The group time of local mutual assistance would function as a form of internalized market pricing. Since the majority of time use potential becomes accounted for in a market context, time begins to function as a valid price taking mechanism for participating groups. Likewise, being able to price take makes good deflation possible for services generation, such as extensive price taking in tradable sector activity has led to good deflation in countless forms of resource capacity.  

Consider how defined equilibrium settings can gradually restore sectoral balance by allowing participants to coordinate time more fully. Importantly, this market option makes time based services more sustainable over the long run. Meanwhile, however, the U.S. may be experiencing even more political polarization than other nations, since healthcare price making is more extensive than what generally occurs in most nations. Indeed, our healthcare organizational capacity actually makes U.S. healthcare more of an outlier, in relation to other mature economies. This extreme dependence on national support also helps to explain why it is often so difficult for both the production and consumption of healthcare in the U.S. to remain in a sustainable position, possibly even for the medium term. While price making is always an understandable urge, fortunately we can recreate market options which make room for the more sustainable practice of price taking, in the use of highly valued skill and knowledge.

Could Healthcare Providers Reduce Our Political Turmoil?

Perhaps there is a role for healthcare providers, in addressing our ever worsening political circumstance. For one thing, much of our political polarization is due to struggles between different groups for access to high skill services. Healthcare tops this list, and its present variance in job specification, is a prime example of the widening asymmetries between skills use potential for all concerned. The millions with limited skills on offer in our workplaces are finding it more difficult as time goes on, to contribute the taxes that - regardless of party - governments find necessary in a knowledge based economy. Yet the fiscal and monetary contributions of these millions are nonetheless sought, to compensate the skills of present day knowledge providers. All citizens need a chance to participate more fully, so as to maintain the viability and sustainability of coordination systems for knowledge based economies.

As societies become ever more dependent on applied knowledge for either employment potential or simply getting things done, too many find themselves limited in their ability to help themselves or assist others. How might we bring back greater employment symmetry for the skills capacity and employment potential of all citizens? Healthcare providers could be part of the answer, especially since when it comes to sought after time based services, one person's supply is another's demand. And markets for skilled time product are more scarce than they may appear, especially in communities and regions which have been left behind. 

Nevertheless, during election cycles, politicians often make promises about services generation for their constituents that they are in no position to fulfill. In the U.S. we face a constant bombardment of television ads where political candidates insist they are the ones who can best manage healthcare access. Supposedly it's all about preserving consumer demand for appropriate "in" groups, whereas if the "wrong" candidate happens to be elected, healthcare services will be reduced or even lost for one's constituents. For instance, one recently aired commercial sought to convince viewers that should the "wrong" candidate win, more rural hospitals would shut down! Seriously, could the politically "unfortunate" outcome prove responsible for that? For anyone who has closely observed healthcare realities for decades, this sort of nonsense can make one reluctant to even show up at the polls. Yet ads such as these tend to be only mildly divisive and hurtful, in contrast with other attacks.

Sometimes I wonder, what must healthcare providers think when exposed to such ridiculous goings on every two years at election time? Clearly, in many instances it is the healthcare profession which has the ability to change our supply side dilemma for services generation and the use of helpful knowledge, not pundits and politicians. This vital supply side matter should no longer be used as political fodder for division and societal turmoil. 

I continue to hope that healthcare providers will have the courage to step forward and create effective change in the years ahead. We can all do better than this as a society. It is still possible to restore hope for the future, by reaching out to one another for integrative solutions in workplace employment and collaboration with knowledge. Let's get started, and also hope there will not be further disruption and turmoil in our nation once the elections finally come to pass. For that matter, why not place the entire concept of healing into the broader societal arena where it is so desperately needed.

Education: Let's Restore Local Community Threads

Much of today's formal K-12 education, takes place quite separately from the lives of local citizens. Alas, this reality adds to the financial burdens of many small communities, where local citizens support public schools through lifelong property taxes. Even though local taxation sometimes leads to impressive school buildings and well prepared students, local circles of sustainability can still be broken, when students need to go elsewhere to put their skills to good use. What of the locals who may never gain the chance to meet these young people? What does society lose, when neither local citizens or students can benefit from what either group learns in life? How can a society sustain itself for the long run, when its knowledge based institutions seek monetary support to survive, but neglect to tap a vast abundance of human capital potential, so that all might thrive?

Clearly, our time value needs to be a greater part of the wealth equation for human capital. We could work to restore valuable community connections, especially those which promote the use of knowledge and skill for markets which otherwise tend to be in short supply. Enhancing the services productivity of all citizens is important, and all communities deserve active roles in today's knowledge based economy. Fortunately, it is within our power to realign local education, so that everyone might benefit from learning processes. Already we are seeing in a time of pandemic, how many knowledge centered institutions will struggle if they depend solely on taxation and redistribution, in the foreseeable future. Why not tap into the vast pools of human capital potential which are waiting to be unleashed?

Time arbitrage, with its reciprocal patterns of wealth generation, could provide opportunities for young learners to engage with many local citizens, particularly during their high school years. With a little luck, this approach might help heal some of today's political divisions. Plus, on a practical note, time arbitrage could lead to meaningful economic interchange, in years when students especially need resources that prepare them for adult responsibilities.

The recent COVID-19 pandemic also illustrates how students might assist others in the here and now. In particular, better communication systems are needed in small communities, so that all citizens can stay informed and up to date. One would think not much time would be necessary, before students could get digital versions of (yesterday's) local newspapers up and running. Such efforts could be readily coordinated without need for advertising revenue to keep the processes going. One immediate gain from such a project, is that small communities would be able to compile statistics about the effects of COVID-19 locally. In the meantime, they often have to rely on guesstimates according to big city statistics, for their own public health management options.

Ultimately, learning processes could be coordinated with larger cities, so that small communities become able to create a broad array of healthcare provisions. One possible pandemic response, might be for healthcare providers whose work is on temporary pause, to work with local citizens and students for the creation of local testing options and other vital assistance for those affected by COVID-19. Even though this would be a short term response, it nonetheless suggests future frameworks, by which prosperous areas might reach out to areas that were already left behind, prior to the pandemic. Given the chance, smaller communities might finally be able to realign local education, toward more productive and beneficial ends.

Knowledge Preservation In a Time of Pandemic

Many are understandably focused on the short term effects of COVID-19, and what needs to be done in the here and now. However, even though it's not easy to pause and reflect on broader concerns, there are possible long term effects of the pandemic which likewise deserve a careful response.

In particular, this pandemic exposes the fragile nature of how societies currently manage and reimburse their most important knowledge providers. History has made evident, how some pandemics culminate in events which undermine such systems. Skills arbitrage as the sole means of knowledge provision and application, is less sustainable over the long run than it may appear. All the more so, since compensation for these skills is compromised through over reliance on debt arrangements. Too many currently provided services, include vague expectations of reimbursement later in time from future generations. But what if something about this arrangement, should radically change? For instance, suppose future generations lack a sufficient level of income to fulfill yesterday's promises?

Whenever substantial levels of societal wealth are lost, pandemics tend to impact how people organize their lives at basic levels of operational capacity. These losses are only exacerbated whenever applied knowledge is too closely held in high density populations, as is currently the case in our productive regions. If the economic patterns of major cities are disrupted, productive capacity becomes all the more important elsewhere, to ensure that vital threads of current information and applied knowledge can continue. We need to ensure that knowledge and skill can be encouraged and maintained via a full range of population densities and intellectual abilities. The more places and settings where skills capacity is fully tapped, the better prepared civilizations could become, to face moments of crisis and uncertainty.

Clearly, we should no longer rationalize that it is somehow reasonable, to limit the use of valued knowledge and skill to areas of high population densities. But how to begin the vital task of reinvigorating small communities? Even though I've long argued for time arbitrage as a way to do so, admittedly a part of me is now overwhelmed by current events. I find myself wishing "if only" such processes had been put into motion earlier, so the preservation of already existing human capital, might also be a simpler matter.

Alas, I did not realize how the need for new knowledge use patterns, would become particularly relevant during my own lifetime. Like many others, I feel as though being swept along in a vast tide of change - one which makes me question my own ability to return safely to shore this time. And like many, I'm not certain whether it is still feasible to craft a fully effective response, or to safely bypass the political battles now occurring. If only new patterns of wealth creation had already been pursued in earnest! Dare we still hope that much of our wealth is not lost in the years to come? Can our most productive areas still reach out to other regions, in hopes of lifting them up?

Meanwhile, society continues moving in the opposite direction, as exemplified by additional closings of rural hospitals. As it turns out, hospitals - despite their institutional importance - are exceedingly fragile in economic terms. If we are to deal successfully with the present crisis, we also need for healthcare to transition from the fragility of skills arbitrage, to the open ended and simpler nature of time arbitrage. Time arbitrage would not attempt to offer "perfect" solutions. Rather, it would seek to remain present for all concerned. In time arbitrage, patients could hopefully express what they need from others, and perhaps gain a real chance of being taken seriously. Sometimes, when illness strikes, it's not so much survival which is at stake, but rather finding the most peaceful way possible to overcome one's fear of the unknown. Each of us as patients deserves in moments of fear, not to have to face those moments completely alone.

Healthcare could be envisioned as a most basic element of organizational potential, for all citizens of community. Healthcare provision in all its countless variations, deserves to be part of the reciprocity of mutual assistance. Such assistance could eventually be paid in the real time of people who are alive today, instead of future generations which deserve better than to be saddled with debt obligations of a past which never really belonged to them. We can build meaningful ways to be with others in their moments of greatest need, and yet do so without bankrupting anyone or anything. It's time to build anew, starting with more flexible versions of rural hospital organizational patterns.

As Marc Andreessen recently noted, "We're all necessary, and we can all contribute to building." Should we embrace the mindset of crafting stronger realities, we also gain the ability to create long term solutions which can benefit governments as well. We might finally be able to offer our governments a viable path to address the debt burdens they have already accumulated. Living with one another on reciprocal terms in the here and now, is no small matter. Let's get started. Again, we are all in this together.

Three Basic Ingredients for Economic Stability

While there are many ways to envision what contributes to economic stability, the current pandemic suggests a closer look at basic ingredients. Should it prove difficult to maintain current wealth levels, a focus on the essentials could also lead to sturdier safety net options. I find it useful to think about three elements in particular: First, the importance of stabilizing what is nominal. Then, building a simpler framing for physical and non physical aspects of the real economy which the nominal represents.

As a market monetarist, I also believe it is vital to maintain a level nominal target, so that general equilibrium will (hopefully) remain stabilized. And even though level NGDP targeting is not the stated approach of the Fed, central bankers have more closely adhered to nominal stability since the mistakes of the Great Recession. The greater danger now, however, is that monetary stabilization could be threatened by extensive supply side disruptions. Adjusting for optimal aggregate demand will be quite the challenge, since present supply side uncertainties - unlike many previous shocks to the real economy - are due to factors too numerous to understand.

Consequently, despite what it can accomplish in the near future, monetary policy still needs to adjust to lost general equilibrium capacity, at some point. In other words, accurate nominal representation also depends on what the real economy is able to accomplish. Clearly, there is a great deal of interdependence between the nominal realm, the physical realm, and human oriented aspects of our economic lives.

Again, consider what present uncertainty consists of, insofar as many chains of financial obligation are being disrupted. How will society respond? Understandably, fiscal policy also seeks to stabilize general equilibrium conditions. Nevertheless, doing so is only feasible up to a point. All the more so, when fiscal stabilization attempts to include many activities that are not essential to getting things done.

In all of this, many small businesses won't survive, and some Main Streets could end up even less dynamic than before. For instance, one third of Americans missed their rent payments in April. This means problems for renters and landlords alike. Stephen Cecchetti and Kermit Schoenholtz explain what financial institutions also face:

Banks will not be able to dodge the financial fallout. Many borrowers are likely to suspend repayment soon, presaging widespread default. We will not know the extent of the damage or who will ultimately bear the costs, for some time.

Yet this time really is different, as they further note:

Rather than the financial system undermining the real economy, it is very much the other way around. With few exceptions (like Sweden), advanced economies have entered a form of suspended animation. As a result, households and business are losing income that they can never replace. The hope is that the COVID-19 crisis does not trigger a full-fledged financial crisis, exacerbating what is already destined to be the most severe global downturn since the 1930s. 

Many households and businesses are going to need financial options in the foreseeable future, which rely on lower monthly expense levels. Hence when considering basic ingredients for economic stability, simplification of everyday living circumstance is key to making this possible. By way of example, in my most recent post , I suggested flexible building and infrastructure options as a way to address structural physical aspects of the real economy.

Likewise, broader options for economic participation and use of human capital, are needed for non physical aspects of our environments. We need locally applied time arbitrage, to rescue what are increasingly endangered knowledge chains. Two recent articles offer unsettling examples. From NPR:

According to a report released this month by the Chartis Center for Rural Health, nearly half of rural hospitals were already operating in the red before the COVID-19 crisis.

Further, Dylan Scott writes for Vox that hospitals are cutting staff "just when America needs them most". Even though the initial healthcare losses took place largely outside of hospitals, staff cuts are beginning to spread inside of these institutions. Only recall that much of this problem stems from the fact today's healthcare is heavily dependent on existing wealth - much of which is in jeopardy at least in the short term.

Let's create simpler procedures and settings for ownership and economic participation, so that individuals and businesses aren't jeopardized every time a month's revenues fall short. Ultimately, we could end up struggling to maintain general equilibrium in its present configuration. But even if existing wealth is somehow diminished, imagine what could still be done, to strengthen and preserve its core.

Why not make our physical and non physical environments easier to access for all concerned. If we can shake loose structural rigidities how productive activities are "supposed" to occur, oppressive financial burdens could be lightened as well. A direct structural approach today, would be better than the indirect response of a debt jubilee later on. Perhaps debt jubilees of the past also reflected the unwillingness of societies to relax their own expectations for working and living requirements. Debt jubilees may have been no real panacea, if they left in place the same rigid requirements that negated the economic participation of millions - even in good times. Let's work on reducing unnecessary barriers to ownership and economic participation, so that a better new normal might eventually emerge.

Utilitarian Capitalism (Could Be) Anti-Fragile

How sturdy will our capitalist systems prove to be, in a time of international pandemic? More specifically, are our present day organizational structures more fragile than we previously imagined?

If only it were possible to address this crisis with more utilitarian options, additional fiscal stimulus might prove worthwhile. Instead, most current fiscal stimulus - other than provisions for pressing healthcare needs - will scarcely alleviate the financial burdens which emerge during the course of this pandemic. And unfortunately, too much of our non tradable sector capacity is structured in ways that are profoundly anti-utilitarian. A lot of fiscal stimulus is going to be lost to portions of the economy which are not basic to getting things done, in the days ahead.

In recent decades, much of our supply side capacity became focused on experiential and "quality product" markets. While these markets are valuable, all too often they leave few options for lower income citizens - as consumers - to meet life's basics first. For the most part, our non tradable sectors chose anti-utilitarian routes, in that they were largely designed to create the greatest good for the least number of participants. As governments come to the aid of these now (unexpectedly?) fragile systems, policy makers will find it difficult to meet the needs of their most vulnerable citizens. Unfortunately, the sum total of fiscal stimulus in the days ahead, will create additional debt burdens which still don't address overall economic stability or a safety net for lower income levels.

Eventually, people are likely to demand more basic and utilitarian systems than we presently have, for what are largely non discretionary needs. As Arnold Kling noted in a recent post, "Normal is not an option...Expect supply chains in the future to have a lot more redundancy and to be less driven by cost minimization." An important challenge, however, is to also preserve wealth and productive economic complexity as best we can. The sooner we bring a more utilitarian and flexible approach to our non tradable sector markets, the better.

Regular readers know how much I've praised tradable sector activity in general, since much of its dynamism stems from a uniquely utilitarian impulse. How so? Tradable sectors tend to create the greatest economic good for the greatest number, via product options which represent all income categories, not just those of the middle and upper classes. This is a profound utilitarian result which underlies the prosperity of the recent era we have mostly taken for granted.

But achieving such results in our domestic settings, would mean a refusal to arbitrarily limit supply side definitions in (mostly) non discretionary markets. Until non tradable sectors gain some room to breathe freely, our economic systems are going to become increasingly fragile. Alas, it has finally become evident that strict adherence to specific definitions of quality product, costs lives. At a White House conference earlier this week, Dr. Deborah Birx defended our late start in diagnostics testing for COVID-19, and in doing so she often repeated the need for "quality" product. I must have cringed every time she did so. While the quest to allow only "quality" product is understandable, unfortunately it has led to fragile and incomplete markets, especially in housing and the use of time centered knowledge and skill.

Only recall for example, how continuous calls for quality product eventually led to losses of healthcare provision in rural areas. David McCullough wrote in The Pioneers that when Dr. Samuel Hildreth settled in Marietta, Ohio (1808), the town had "about 180 dwelling houses, and nearly 1500 inhabitants". Yet Dr. Hildreth would be sharing his new practice with five other doctors who were already there!

In all of this, there are both physical and intellectual dimensions to the kinds of utilitarian markets which are urgently needed. Once we finally open the participation of applied knowledge to all citizens, we may also gain greater chances of surviving pandemics. Likewise, should we decide to build a full range of living options representative of all income levels, utilitarian capitalism could come to the rescue of both lives and financial systems. Granted, all such efforts will take time. But it is worth pursuing them now, to make a difference for personal and economic stability in the years to come.

Mutual Reciprocity Could Alleviate Fragile Systems

One of the main issues many communities now face, is the fact that neighbors who live in close proximity to one another, lack reliable methods for mutual assistance on a regular basis. What were once common and spontaneous forms of social reciprocity, have gradually been supplanted by formal service roles. However, these more recent patterns of social and economic organization, feature "empty spots" which are exacerbated by unfortunate events such as the COVID-19 threat. Regular readers are familiar with my advocacy for time arbitrage. I remain convinced that a marketplace for time value, could help to fill empty areas where there are now few roadmaps for mutual reciprocity.

In the months ahead, attempts to control the spread of COVID-19 will doubtless add more burdens to healthcare and financial systems alike. Ultimately, societies are going to need more than centralized patterns of knowledge and skill, to bring productive agglomeration in services to areas where it is needed most. How might we build a stronger economic context, for time based services at local levels? After all, decentralized patterns for the use of applied knowledge and skill, could help restore personal autonomy to average citizens. Plus, local patterns for skilled services generation, would make it simpler for all individuals to assist one another, during all kinds of public emergencies.

Healthcare providers already struggle with the limited capacity of present day healthcare systems. The U.S. in particular, is ill prepared to fully respond to widespread health threats. For example, self quarantine might become an important strategy, since little additional hospital capacity exists if millions become seriously ill at once. It would not take much, for a pandemic to overwhelm what our present systems can realistically provide.

Another way to think about what is possible for local services coordination, is the integration of lifetime education with local strategies for applied knowledge. Only consider what could be gained, if local property taxes were redirected to support local educational efforts which augment the possibilities of informed mutual assistance. Fortunately, there are viable ways to create stronger knowledge use systems. Long term commitments to the time value of all citizens, would help address the systems fragility of our times.

Does Internal Inflation Affect Market Outcomes?

How could internal inflation affect aggregate market capacity? When most participants choose price making over price taking in non tradable sectors, crowding out elsewhere becomes more likely. Plus: When price taking is not an option for time based services production, societies gradually lose their ability to fully coordinate activities that require considerable knowledge and skill.

One point of confusion regarding internal inflation, however, is whether it also occurs at the level of an entire economy. For the most part, mature economies have learned to avoid such an outcome. Consequently, even though internal inflation can negatively impact discretionary spending as a market outcome, it doesn't pose direct issues for monetary representation at a general equilibrium level.

Indeed, when it comes to inflation at macroeconomic levels, policy makers are now inclined to go too far in the opposite direction. Since central bankers have little - if any - patience for general equilibrium inflation, healthcare providers, given their dependent market status, are now responding in kind with their own supply side limits. After all, healthcare is such a substantial part of GDP, that there is little remaining political freedom for more healthcare revenue burdens, in spite of the challenges of today's aging demographics.

Perhaps recent efforts by healthcare providers to control aggregate or supply side level cost burdens, could be better appreciated, were it not for their organizational inefficiency, as recently noted by Jerome Powell. For that matter, a post from Tyler Cowen earlier this month, highlights how healthcare doesn't necessarily lead to the market outcomes one might expect. From the abstract of the Health Affairs study:

In the period 2010-17 the number of NPs in the US more than doubled from approximately 91,000 to 190,000. This growth occurred in every US regions and was driven by the rapid expansion of education programs that attracted nurses in the Millennial generation. Employment was concentrated in hospitals, physician offices and outpatient care centers, and inflation-adjusted earnings grew by 5.5 percent over this period. The pronounced growth in the number of NPs has reduced the size of the registered nurse (RN) workforce by up to 80,000 nationwide.

Cowen also questioned the relative losses in nurse capacity:

Given the growth of the health care sector, should not the number of nurses, broadly construed, be rising at a higher rate?

When organizations face revenue constraints due to dependent or secondary market status, a slowing economy can lead to hard choices regarding the most important skills sets for the medium term. Likewise, just as some believe we would benefit from more nurse capacity, others argue that more physicians are needed in rural areas. At the very least, the decision to place more nurse practitioners in rural areas makes sense, since many physicians prefer not to practice in rural regions. Still: While nurse practitioners for rural areas are a partial solution, too many left behind places nonetheless lack specialized knowledge among their own citizens.

What might be done? Eventually, time arbitrage could create long term solutions for rural communities which seek vital roles for their own citizens in a knowledge based economy. Where once it was difficult to bring knowledge specialization to limited population densities, the digital realm has the potential to change this.

While debating organizational possibilities for applied knowledge, only consider how tradable sector activity has successfully internalized knowledge and skill in small groups, for centuries. Plus, these organizational forms have often thrived in areas which otherwise lack economic complexity. Recall also, how tradable sector activity has achieved vast productivity gains via internal resource reciprocity, thereby reducing internal inflation. Fortunately, with sufficient time and effort, the good deflation of tradable sector activity which brought such progress to humankind, is possible for non tradable sectors, as well.

Why Do Services Need Monetary Equivalence?

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

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

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

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

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

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

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

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

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

When is Hierarchical Structure a Good Approach?

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

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

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

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

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

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

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

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

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

Musings on Retirement and Defined Equilibrium

Many who have recently turned 65 probably have retirement budgeting on their minds, even though full Social Security in the U.S. for this group is now age 66. Yes I decided to wait. While I've found it helpful to review retirement advice online, lots of suggestions are geared towards people who are retiring on more than Social Security alone.

What about the rest of us? If Social Security income is going to be the only buffer, hard choices come into play - especially if it's just one income for life's exigencies. Chief among these is when we are tending to an aging body and an aging home at the same time. Often, expenses for one are going to edge the other out!

So I've gained new appreciation, for moments when financial care of body and home don't appear as though simultaneously necessary. One consideration re the body option: Medicare costs might initially outweigh benefits, for those in reasonably good health who have managed (thus far) to avoid regular doctor's visits. In particular, basic Medicare doesn't cover as much as one might assume. Perhaps that escalating 10 percent penalty per year on monthly payments, might not be so bad after all if I could tend to some housing needs first. Nevertheless, should a major heath issue arise, I may need to rethink that strategy.

Should our initial major choices run along these lines, recall how - fortunately - improvements in physical environment can also improve health. Two for one budgeting, so to speak. How often does a doctor's prescription actually stem from a house which was "ill" in some respect, making more health problems for its inhabitants as well? This possibility occurred to me when I was reviewing a migraine log with its list of potential migraine triggers, only to realize those triggers can be magnified by a house in need of repairs.

Of course, the above decision making process on my part is a short run approach, or a response to relevant circumstance in the here and now. Wherever we are, however we live, we work with resources we already have in any given moment. But how might our resource options appear, if we could conceptualize new possibilities for long term gain? In other words, what could expand our choice sets for a fixed retirement income in defined equilibrium settings?

Presently, zoning and regulations both get in the way of what most low income retirees can accomplish. Living simply and frugally is no easy matter, when building requirements are excessively rigid and complex.

Hence first, some groups would need to set aside places where the physical infrastructure of defined equilibrium can be legally set into motion. Then, once ground infrastructure is manufactured and locally assembled as a community grid, flexible building components attach to this semi permanent network. These components would in turn attach to electrical wiring, plumbing pipes and fixtures in self contained units. Once old connections need to be replaced, these disposable units would readily detach from others. Old electrical wiring and plumbing would no longer contribute to so many life hassles. What a relief for millions of future retirees, when they no longer have to tear into their homes just to access electrical lines and water pipes throughout the building!

Separate units for plumbing and electrical alone, could immensely contribute to the well being of aging retirees. Yet the benefits don't stop here, since such building options could help people of all ages and abilities. Not only would self contained plumbing units mean less termite damage; self contained electrical units could ultimately mean fewer house fires as well. The added flexibility of these self contained units could make it easier for communities to bounce back after natural disasters. Plus, ground level electrical work between these communities might make it less necessary for power companies to turn off community power during periods of extreme drought.

Alas, potential innovations such as this are not yet on the immediate horizon. But I can dream. After all, the real wage value of Social Security income will only become thinner in the years to come, if we don't get extensive innovation in our non tradable sectors. That said, should these possibilities come to fruition, even low income retirees would be better able to manage body, mind, and house. Again, at least one can hope!

Many Services Need Better Market Coordination

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

For example, a community worker discovered in one locale that women were mostly working full time with wages at approximately $24,000 a year. Alas, even though this sounds like reasonable wages to old folk like me, it's not sufficient to cover much more than basic bills in many instances. How on earth do these individuals successfully coordinate their services with those of others? And since many of these women worked as home health aides and personal care aides, they were actually seeking assistance in the form of uniforms or scrubs. Ouch, these don't cost much. I priced them at $10 at the local Dollar General after reading the above linked article, and that's when they're not on sale. Weese continues:

Over the next 10 years the occupations with the most job growth in America will not be the techy jobs that most of us think of as the jobs of the future, like, say, solar-panel technicians or software engineers. Instead, they'll be the jobs held by the women in Hyde-Miller's community center neighborhood: home health aide and personal care aide. More than one million new aides will be needed over the next decade, in addition to the 3.2 millions already in the field, the Bureau of Labor Statistics reported Wednesday. What's more, six of the 10 occupations providing the most new jobs over the next decade will pay less than $27,000 a year. That's more than 15 million people, working hard at jobs that simply don't pay the bills.

There's another problem regarding this reality which is not always taken into account. She asks: What about those who do gain the needed education to exit this kind of work, for better wages? More to the point: what if everybody did so? Who would be left to tend to those who are in need of additional assistance from others?

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

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

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

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

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

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

Let's Focus on Means, Not Outcomes

Alas, sometimes the Fourth of July serves as a reminder that freedoms have become less certain than they once appeared. Political ideology has especially been damaging for personal liberties, as it increasingly focuses on outcomes instead of means. If Democrats once appeared as though the party most responsible for struggles over governmental redistribution, that has changed. It is disconcerting that Republicans who once advocated for wealth creation on the part of all citizens, continue to shift toward a deterministic and essentially outcome based stance.

Any time a nation decides to limits means of production to the province of special interests, it may eventually be in danger of losing both economic and political freedoms. Organizational hierarchies for knowledge based means, have led to supply side realities which left little room for reform from within. Yet sharing the means of production is quite a different concept than it once was. Unlike the traditional manufacture of discretionary goods, much of knowledge based production is non discretionary. As a result, individuals have lost much of their freedom to participate in activities which - instead of being largely a matter of choice - are often basic requirements for living a normal life.

Outcomes for knowledge based endeavour, also tend to be couched in terms of access and cost. Is there a difference? Not as much as one might imagine, because they are both about supply side outcomes rather than means. Tim Taylor recently noted the distinction, perhaps in hopes that dealing with healthcare policy in terms of cost rather than access might bear fruit. Nevertheless, cost and access in this instance are inextricably linked, making them all the more difficult to internally resolve.

Again, nothing can really be done without ultimately addressing the limits of today's knowledge centered production. Likewise, the desire to slash public spending for education and healthcare, in hopes that private enterprise will step in to fill the void, misses the fact that the supply side would still be faced with a constrained equilibrium, in terms of the extent to which it can fully compensate human capital investment seeking entry. Production means have long since determined marketplace outcomes for the organizational patterns currently in use. Unfortunately, these patterns have inadvertently led to a devaluing of human capital potential at a global level, even though that would scarcely have seemed possible before the recent era of high skill services dominance.

Since the product of time and place are scarce and don't readily scale, today's time based product providers needed to create revenue for income and overhead costs by limiting supply. Otherwise, it would not have been easy to fully function in the high value equilibrium generated via centuries of tradable sector wealth. Importantly, these earlier hierarchies were an understandable approach, which also worked reasonably well for a long time and for much of the populace. However, as services sector activity has come to dominate the economy, fewer individuals are now monetarily compensated at a level they can still access high skill services as currently constructed.

Consequently, greater means of production potential will need to be restored to those with limited sources of income, so they too will be able to participate in and contribute to a knowledge based economy. By creating new patterns of organizational means, full participation in a modern economy could once again become possible for the vast majority of citizens. For the sake of freedom and liberty, let's focus on restoring means, instead of struggling over restricted outcomes.

Does the Baumol Effect Impact Long Term Growth?

What might the Baumol effect suggest for continued future prosperity? Kudos to Eric Helland and Alex Tabarrok for exploring this issue in "Why Are the Prices So D*mn High?". Tabarrok has been following up with a series of explanatory Marginal Revolution posts as well. For instance, in "The Baumol Effect" he notes the growing cost differential between education and cars:

Yet the rising costs in the education sector are simply a reflection of increased productivity in the car sector. Thus, another deep lesson of the Baumol effect is that to understand why costs in the stagnant sector are rising, we must look away from the stagnating sector and toward the progressive sector.

Regular readers may recall that even though the correlation isn't perfect, I generally refer to "stagnating" sectors as non tradable, and "progressive" sectors as tradable. Tradable sectors benefit from a degree of mobility which often allows them to escape cost constraints imposed by various forms of NIMBYism and many other factors which inhibit innovation. Whereas non tradable sectors haven't been as fortunate, due in part due to the fixed nature of their connections to time and space. Thus far, it's been difficult to try radically new approaches for building components in municipal settings which have long relied on centuries old physical infrastructure. Likewise, professional services remain burdened with societal expectations regarding the inputs supposedly necessary for quality product.

Helland and Tabarrok particularly focus on services generation. Healthcare, along with professional services such as legal, accounting and other business services, " increased in price by a factor of more than three since 1950." Their findings are apt illustrations as well, how stagnant sectors reflect the aggregate wealth generating capacity of general equilibrium. By way of example, statistics for long run trends showed that

The growth rate of healthcare expenditures per capita has declined because the growth rate of GDP per capita has declined.

Should we be concerned? They claim that "The Baumol effect explains a slowing rate of productivity growth and the reason the Baumol effect will decline", and continue:

The price of services relative to goods has been rising because productivity in services has increased more slowly than productivity in goods. At the same time, the services sector has been growing as a share of the economy. In 1950, for example, services accounted for approximately 60 percent of the economy, measured as a share of either GDP or employment. In 2018, services accounted for approximately 80 percent of the economy...Because society is moving more resources into lower-productivity sectors, the inevitable result is slowing net productivity growth. 

However, what if this is actually a positive outcome?

Even though shifting resources to services is slowing down the rate of productivity growth, the shift itself is not a bad thing. Over the past 60 years, consumers have used their higher incomes to buy relatively more services than goods. It is unfortunate that productivity is not increasing faster in services, but faster productivity growth is good only if it increases consumer satisfaction. Shifting resources to the service sector increases consumer satisfaction even if it reduces productivity growth. There is nothing wrong with a future world in which consumers spend most of their income on live musical performances. 

Dietrich Vollrath is another economist who isn't alarmed by these developments, and he refers to the recent slowdown in productivity as "optimal stagnation". As it turns out, he's in the process of publishing a book entitled Optimal Stagnation: Why Slower Economic Growth is a Sign of Success. Given the extent to which tradable sector activity has cut costs for centuries already, perhaps one might reasonably ask, how much do standards of living really need to improve?

Nevertheless, it doesn't hurt to question whether this is a stable reality since - unlike tradable sector markets which create something for everyone - non tradable sector options are now mostly geared for middle to higher income levels. Plus, the lack of options for those with low wages isn't just about consumption opportunities, but in particular those of personal production. Areas lacking in economic complexity, especially illustrate this reality. Not only are they hard pressed for the revenue required to build new traditional housing, but also that of traditional services generation. And since economic activity in general has assumed a lower gear, there are relatively fewer city jobs for rural residents, who in the not so distant past, tended to spend their most productive employment years in prosperous cities and regions.

Indeed, more communities in the near future might start to find themselves in similar circumstance. After all, since the Baumol effect only extends so far in a low growth economy, more citizens will need to accept lower wage employment than the revenue sources many municipalities and governments actually need, to maintain today's services and traditional infrastructure patterns.

Granted, a reduced Baumol effect might prove mostly benign. That said, many real economy adjustments are needed which have not yet even begun to take place. Of course, as Helland and Tabarrok stressed, quality product is a good thing. Who wouldn't want the luxury of experiential goods and services that are well within reach of one's income?

Even so, no one should expect an economy which remains essentially incomplete at low income levels, to be enough. In recent centuries, societies have standardized many product specifications which have improved standards of living across the board. Now it is feasible to also standardize time units, so that quality services might ultimately be generated for all income levels. It is feasible to standardize basic flexible building components, so that settings for life and work might easily be arranged and rearranged as needed. With a little luck, services professionals and municipalities won't stand in the way of the low wage millions who now need to create their own organizational patterns for services generation - not to mention entirely new industries in physical building components and infrastructure.

Supply and Demand Still Determine Equilibrium

Supply and demand are conceptual basics not only in microeconomics, but also for economic activity at the macroeconomic level. However, Raj Chetty recently returned to Harvard with a different introductory approach in mind, than what Greg Mankiw has taught. Mankiw's basic emphasis and textbook contributions have likewise been utilized by other universities for some time. Interestingly enough, Chetty also aims to make his course a model for other schools. An article for Vox by Dylan Matthews, explains:

The courses could hardly be more different. Chetty has made his name as an empirical economist, working with a small army of colleagues and research assistants to try to get real-world findings with relevance to major political questions. And he's focused on the roots and consequences of economic and racial inequality...

There's little discussion of supply and demand curves, of producer or consumer surplus, or other elementary concepts introduced in classes like Econ 10. There is no textbook, only a set of empirical papers. The material is relatively cutting-edge. Of the 12 papers students are required to read, 11 were released in 2010 or after. Half of the assigned papers were released in 2017 or 2018. Chetty co-authored a third of them.

Is econ 101 broken across the university system, as some now believe? Granted, students aren't being well prepared for a world in which markets do frequently fail. But what if markets function poorly because they have gradually become less complete, not "broken"? If so, it would seem that supply and demand remain as relevant as ever.

If introductory economics students aren't acquainted with the basics of supply and demand in the near future, it may only become more difficult for the average individual to envision the less than optimal trade offs between sectors which are presently occurring at system wide levels. Lack of understanding in this regard, further inhibits the potential of public policy responses as well. Given this reality, a stronger emphasis on supply and demand is needed, not less. Already, non tradable sector dominance has considerably altered how many aspects of supply and demand play out in the marketplace as a whole.

What also encouraged me to write this post was a recent conversation between Tyler Cowen and Ezekiel Emanuel. Their discussion provides an apt example of supply and demand dynamics in general equilibrium, for high quality services which are dependent on other sources of wealth origination. When Tyler Cowen pressed him on physician shortages, Ezekiel Emanuel noted the existing human capital investment burden, and why it's better to task shift going forward instead of adding more doctors:

once you train a doctor, it's basically a million dollars or more.

That's quite a societal burden! And since today's healthcare is organized as a market which is dependent on general equilibrium dynamics, adding more doctors would only drive up the cost for all concerned, in ways which subtract other aspects of general equilibrium potential. Yet even though the supply side would appear relatively more adequate, this general equilibrium dependence on a limited revenue pie, dilutes salary potential. In other words, a lose lose scenario. Hence Emanuel adds:

Medicine is a classic case of supply-induced demand. Doctors write orders, and they have a certain income in mind, and they will do things to get to a certain income, and especially on the margins, where what's called unnecessary care, or low value care.

He would like to see more tasks assigned to other health professionals, even as physicians remain in control of the outcomes. That said, hierarchy is vitally important for how healthcare is currently structured. Which means the desire of physicians as a group to maintain control over both income and the processes of patient diagnosis and response, could make task shifting somewhat difficult. This poses a problem, given recent changes in demographics and also healthcare losses in regions without sufficient economic activity.

In the meantime, worsening budgetary realities for healthcare compensation, suggest a different approach is needed for applied knowledge in general. In recent years I've suggested the horizontal patterns of time arbitrage, which would make it feasible for services to more directly align as wealth creation, rather than budgetary burden. Symmetric organization of time as an economic unit, could also make it feasible to integrate healthcare with other high skill services activities via deep learning AI.

Even though we don't yet know, whether more physician supply might be deemed "necessary", the real issue for many physicians is to be able to preserve human capital investment in its current form. Indeed, a horizontally aligned knowledge use system would likely pose less of a threat from without, than the internal reforms of traditional healthcare that could make it difficult to preserve the integrity of human capital value for physicians today. When services markets such as healthcare are dependent on other sources of wealth, societies can only generate supply side high quality human capital, up to a point. I remain convinced that since this point has basically been reached, given today's low growth economy, it's time to pursue more direct means, for the continuation and preservation of high skill knowledge in the 21st century.

"Keeping the Faith" in Services Generation

Much of today's high skill services generation and knowledge preservation are closely linked to government budgets, even though financial obligations toward this end are being rolled over and delayed as long as possible. One is compelled to wonder: How much GDP is even made possible through current resource capacity and reciprocity, instead of expectations for future claims on wealth? The fact so many rely on presently provided services which won't be repaid anytime soon, is creating problems for long term growth and output. This is already being reflected in the negative political scenarios many nations now face.

As Timothy Taylor noted in a recent post, there was a certain predictability about long run U.S. budget deficits that would eventually come to pass. According to Taylor:

Because two major federal spending programs are focused on older Americans--Social Security and Medicare--it has been utterly predictable for several decades that the long-run budget situation would come under strain at about this time.

When it comes to high skill services generation, healthcare is one of the more pressing concerns. He continues:

But the projected rise in government health care spending of 3.2% of GDP is a challenge that no one seems to know how to fix. It's a combination of the rising share of older people, and in particular the rising share of the very-old who are more likely to face needs for nursing home and Alzheimer's care.

Let's briefly consider some recent historical context. I just finished reading the book I.O.U.S.A. by Addison Wiggin and Kate Incontrera (sorry I couldn't provide an online link), which was published in 2008. Even though this book is all over the map in certain respects, it's an apt reminder that long term debt obligations were still being taken seriously by practically everyone, prior to the Great Recession and shortly thereafter. Perhaps that explains why some who contributed to I.O.U.S.A. expressed optimism: Once the need became obvious, people would step up to the plate and government debt would be addressed before it could spiral out of control.

Alas, the need is quite obvious yet nothing on the horizon suggests this hopeful scenario will occur, after all. Consequently, much of the decades long optimism re budgetary sustainability, is giving way to dismay, blame games, and wishful thinking such as MMT. It feels odd after having read I.O.U.S.A., to realize that expending energy on solutions for government debt is now basically a fool's game for anyone in a position of power. Yet nothing has changed. Once long term debt loads reach a certain point (and no one knows when that is or what it consists of), the genie cannot be put back into the bottle. We would be facing a very different national economic reality.

With such a dramatic shift, the marketplace for high skill time based services as they are currently constructed, would greatly suffer. What has finally become obvious - and none too soon - is that reform from within is proving impossible. No one will tolerate spending cutbacks until governments are no longer able to borrow on the terms they have come to expect. Timothy Taylor highlights the inertia we face in the meantime, for healthcare:

...every dollar of government health care spending represents both care for a patient and income for a provider, and both groups will fight hard against cutbacks.

In a sense, there is an awareness what could happen, just under the surface of today's dialogue. Since nothing has been taken care of in positive terms, however, that subtle awareness is expressing itself in negative ways. Hence demand for healthcare and other vital time based services is cloaked in insistence that existing supply side limits be reserved for natives - in other words leading to "this nation/system is full" talk. Likewise, another sidelong approach to the problem, has been the demand from conservatives and progressives alike for job creation which includes income levels or benefits capable of meeting healthcare expenses as they are now - despite the fact such talk runs counter to economic realities.

Even though interest payment levels are just one facet of long term debt issues, it's an important one. Timothy Taylor also stressed that interest payment obligations for past borrowing stood at 7.9%  in 2018. While that doesn't sound like a big deal, if nothing fundamental changes (which is of course the main concern of this post), interest payment obligations could balloon to 22% of all federal spending by 2048. That's one heck of a difference and a total game changer as well.

How to "keep the faith" that nothing will go wrong? Can we embrace production reform which buttresses the wealth creation of our existing systems, instead of posing threats to them? Can we ask our healthcare providers to join the effort in stepping away from a debt centered existence, to wealth creation which utilizes time based services as sustainable knowledge preservation?

If we can create forms of services generation which build new wealth at the outset, perhaps our governments won't ultimately end up with higher interest rates which force their hand in unwanted austerity, not to mention the havoc that would cause for what has become our services oriented economic existence. In the long run, wealth creation utterly relies on circles of sustainability, which means more use of resources that can be reciprocated in the present. Fortunately, it is feasible to build a new social contract for a wide range of services generation. Let's give it a try, while there's still time. Because time is running short.