Polarization is a Problem for Progress in General

Today's lack of political good will is worrying enough, but it also comes with plenty of economic ramifications. For that matter, both NIMBYism and culture wars tend to reduce economic dynamism. Just as the "not in my backyard" mentality turned housing markets into major headaches, it even affects technological change such as transitioning to electric vehicular transportation. Many aspects of our lives and environments come down to what people of all political stripes don't want us to successfully engage in, as opposed to what could be accomplished.

In all of this, whatever happened to the hopes and dreams of centrist politicians and citizens? After all - even a decade earlier - moderates were still a meaningful part of public dialogue. While centrists occasionally held alternative views, they were often able to bring opposing parties to the table to get things done. 

Indeed, moderates have been important for societal progress up until recently. A relative few remain who still highlight economic progress and the benefits of growth. Unfortunately however, the majority of such gains became associated with prosperous citizens and regions rather than average citizens - let alone those with limited incomes.

If polarized landscapes weren't already dangerous enough, what might that mean for younger generations? Indeed, will they eventually become receptive to the idea of civil war? Don't forget also that younger generations aren't convinced of the future viability of Social Security in the U.S. Even though I hope Social Security continues to function as a glue for economic stability and common purpose, one can't be too certain. Should Social Security benefits be reduced in the near future, that might further destabilize political desires to remain united.

Polarization also represents a loss of what was once known as Third Way political thought. For instance, when I was much younger, Bill Clinton's presidency was associated with this line of reasoning. Alas, other than environmental protection, who still believes such rationale is relevant? From Wikipedia:

The Third Way supports the pursuit of greater egalitarianism in society through action to increase the distribution of skills, capabilities and productive endowments while rejecting income redistribution as the means to achieve this. It emphasises commitment to balanced budgets, providing equal opportunity which is combined with an emphasis on personal responsibility, the decentralisation of government power to the lowest level possible, encouragement and promotion of public-private partnerships, improving labour supply, investment in human development, preservation of social capital and protection of the environment.

Why was much of this abandoned? Part of the problem is how advanced education became a place for elite dialogue at the expense of economic dynamism. Meanwhile, active knowledge use - since it lacks any grassroots equivalency - is being confused with information and flawed logic mostly meant to circumvent action. Formal education is certainly not the place for increased distribution of skills and capabilities! Instead, the "gateway to the good life" hoards its limited slots according to what monetary compensation might amply reward. Worse, few policymakers remain willing to balance budgets, since abandoning financial restraint means squeezing a few more lucky participants onto the gravy train of human relevance. And decentralisation? The only decentralisation my state government is interested in, is the powers it can remove from both Washington and cities which might otherwise function better if they were allowed rights to do so. 

I continue to believe the best way to overcome polarization, is to create a knowledge based economy that can bypass the culture wars of educational access. However, while I remain guardedly optimistic, my hopes have radically diverged from what many once considered optimal paths for abundance and success. Is it still possible to use knowledge in more practical ways, instead of wielding it as the ultimate weapon for income divisions and urban rural divides? Perhaps we will find out soon enough. 

Frozen Foods Brought Economic and Cultural Change

As it turns out, frozen foods came with unanticipated effects which are still relevant. Once electrification transformed factory production, it also made widespread refrigeration feasible, which ultimately led to frozen foods manufacture. A quick Google search further elaborates:

During the 1940s, the volume of frozen foods available to consumers boomed. It wasn't until the 1950s, though, that the first frozen ready meals hit the shelves in the United States.

Once frozen meals made their way into our homes, the production based expectations of our interpersonal relationships began to dramatically shift. Not only did time use patterns change among those primarily responsible for kitchen duties, but also other family members - particularly for families with limited incomes. Even now, frozen foods in the form of prepared meals, remain one of the simplest cost effective ways to "save time" in the course of a day. 

However one trade-off in these recent changes, is that many processed frozen foods aren't necessarily healthy! Even so, frozen foods are valuable production and consumption options, since they promote personal autonomy by freeing more time for daily routines. Further, the trade-off decisions involved for optimal health versus time saving convenience, are a reminder how personal health involves more time based commitments, than today's healthcare systems can readily provide. 

There was also a cultural trade-off, in terms of the ambivalence surrounding what women could accomplish with their newfound freedom from domestic responsibilities. How might gender relationships change, once women experienced new lifestyle options? 

What was perhaps not widely recognized, is that women were only a part of this changed cultural equation. For one, frozen foods manufacture has given real benefits to men insofar as their own preferences for meals. Equally important is how young, old, and disabled individuals became able to assume more central and often desired roles in kitchen responsibilities. Nevertheless, some of us still love to cook from scratch, even though due to market evolution, cooking is no longer highly valued as a practical skill. Basically that means we end up having to eat more of the leftovers ourselves!

Consider what these changed realities also suggest, regarding other domestic burdens many still face. In particular, some individuals with limited income, lack the stamina to fully maintain dwellings which have yet to benefit from new technology. Only imagine, how innovation in building design and manufacture, might one day alter this unfortunate reality. Once individuals with limited means become better able to take care of needed renovations, their non economic time value would also be improved. Granted, frozen foods manufacture reduced non economic time value for many women. Hopefully these individuals (and countless others) can one day regain value for their non economic time, so as to master their environments with less need of expensive services and other assistance.   

In all of this, technological advances have changed social expectations and there's no going back to earlier cultural realities. This is relevant for both the right and left. Indeed, consider how many individuals of both sexes come to prefer cooking for one, to the compromises involved in routinely sharing meals with others. Likewise, some forget that a truly healthy diet includes more hours in the kitchen than what might be possible. Perhaps these are moments when one can at least cut some fruit and cook some fresh vegetables on the stove, to go with that prepared frozen entree which only needs to be briefly heated in the microwave. 

Basic Living Needs are Important for Long Term Growth

A quick economic recovery may prove more likely, if society does not neglect market potential for lower income levels. These markets tend to be built around basic needs as well. While I normally advocate for long term structural reform for low income levels, productive short term responses are equally important. If one isn't convinced this form of market representation really matters, only consider how companies such Dollar General and Walmart continue to prosper in pandemic times. These corporations share a similarity of willingness to provide for the needs of low income groups. Why can't more business models assume a similar useful approach?

It's not difficult to envision how market potential could be tapped, for basic needs in non tradable sector capacity. Indeed, entrepreneurs who are willing to invest along these lines, might also gain recession proof models as their reward. In particular, better market solutions are needed for low income groups which already faced substantial housing issues before the pandemic. How might one consider business possibilities for these groups?

For one, mobility strategies are key. Nevertheless, clear usage models or patterns are necessary, to prevent confusion with business strategies geared toward middle to high income levels. An apt example re the latter, is standard RV park rental costs, not to mention the expense of purchasing recreational vehicles or other transportation heavy enough to tow camper trailers. Fortunately, there's a wide range of amenities in RV and camper markets which could be made more accessible for lower income levels, by making their manufacture more portable and less dependent on expensive infrastructure or transportation.

Why hasn't RV living provided reasonable options for lower income levels already? A Google search result concerning RV park costs (and posted in 2014), illustrates how this market has been mostly out of reach of low income levels for some time:

Overnight campsite and RV park fees with hookups typically range from $30 to $50 per night or more. That is $900 to $1500 per month. However a lot of full timers avoid paying anywhere near that much and average closer to $500 to $900 per month. 

Alas, good luck finding suitable camps close to one's work on the lower end of this range! Since transportation costs make additional demands on small monthly wages and fixed income, many individuals end up living in their vehicles while furtively seeking places to park overnight for no charge. This reality needs to be changed.

Nevertheless, one challenge for low income market representation, is the understandable safety concerns on the part of communities which hesitate to provide temporary residence for low income groups. Because of these concerns, when land use is permanently altered with the appropriate physical infrastructure, often the only way business proposals for RV parks can get through, is by convincing communities that only financially secure consumers (middle and upper class) will be allowed. This is an important reason why lower income levels have lacked sufficient access to many living options which would otherwise be more affordable than traditional housing.

Perhaps the most feasible way to overcome this impasse, would be to seek out land where portable physical infrastructure can be brought in, rather than imposing permanent land alterations on reluctant communities. As to RV parks and similar arrangements, what about empty parking lots where big box stores and malls are no longer functional? Portable infrastructure mobile units could be trucked in, allowing entrepreneurs and communities to experiment with trial periods to discover whether proposed operations can prove suitable for all involved. Since safety issues would be carefully observed during these trial periods, some of the inclination to disallow low income groups could be overcome.

There are multiple options for what might be tapped on site or else trucked in. In some instances, local electrical, water and sewer connections may still be operational. In other instances, parks could cater to people without RVs by bringing in trucks containing portable showers, toilets, kitchen amenities, and even platforms where building components are configured for sturdy yet temporary shelters.

Such possibilities could also improve economic access to cities and regions where housing markets have been restrained in recent decades. Plus, these suggested business arrangements for underutilized properties, might ultimately help alleviate much of the hidden homelessness which now exists.

Notes on Practical and Experiential Wealth

Ultimately, the pandemic may encourage us to think differently, about the activities we associate with either practical or experiential wealth. For instance, it certainly didn't take long to discover - in the initial rush to social distance - that defining "important" versus "unimportant" business activities was no simple task. What further complicates the present crisis, especially in terms of possible wealth loss, is the extent to which the crisis includes both practical and experiential aspects of our economic lives.

For many of us in the past month or so (here in the U.S.), cabin fever set in almost as quickly as the decision to self quarantine. As it turns out, it is the rare person who doesn't crave novel experiences on a routine basis! Many learn - especially in later years - to make up for lack of travel opportunities via the interesting "escapes" of books, movies, music and more. Still, there are moments when nothing really substitutes for getting outside and experiencing the world in the company of friends, extended family and others.

Part of what sets this period apart from earlier pandemics, is how much of our economy has evolved away from practical consumption to many activities that scarcely seem practical at all, whether or not we happen to deem them emotional "necessities". When economic life was largely centered around goods rather than services, that earlier tradable sector dominance must have also made it simpler, to financially manage the economic disturbances brought about by pandemic circumstance.

By way of example, Ian Stewart recently noted how "The impact of this crisis will be as much on intangible capital as physical assets." Alas, it may take a while before we discover whether this crisis impacts how highly invested human capital is monetarily valued. Should considerable wealth be lost, that missing income potential would likely reduce the appetite for risk - especially considering the present requirements of capital risk in our physical environments.

Some wealth losses could be averted, should we elect to structure ownership potential in more incremental and flexible ways. Some of today's regulatory requirements could be amended via settings which allow simpler forms of physical infrastructure, for both living and working needs. Simpler ownership structures would maintain countless delicate webs of valuable human connections, even when those connections can't be as compensated as fully as before. As a society, we could try to ensure that valuable risk taking isn't lost, but instead transformed in easier to manage components than what are often deemed necessary in the present.

Even before the pandemic, we were already questioning the broader societal context of our educational systems. Where are the most meaningful experiences in these learning processes? What is the real difference between practical or experiential education, in an economic sense?

Learning is all the more complex, since it tends to include practical and experiential elements. Already, online learning appears to be more useful in terms of practical settings which can readily be managed by the individual. On the other hand, the most highly motivated learning often occurs when people get the chance to forge strong personal connections with others. If nothing else, temporary mandated closings of schools and colleges alike, might speed up societal incentive to generate more face to face interaction between people, wherever it is possible to do so. After all, the services generation which societies value most, tend to be of this nature.

How might technology lend support to a future capable of preserving experiential wealth? Roger Bootle believes the pandemic will encourage additional automation and use of robots, particularly for tasks which have been interrupted by social distancing. Nevertheless, he continues to hold confidence in new avenues for employment potential:

I draw comfort from human beings' need for other human beings. There's one thing that robots and AI will never be able to be better at than other human beings: being human. I think we are going to want to interact with other human beings in our work life and in our leisure life, and that's going to create demand for all sorts of new jobs.

When thinking about technological gains at a grassroots level, consider how near future tech could augment not just consumption potential for individuals, but production potential. The difference is crucial, and it matters for anyone who would assist others, yet needs additional tech support to augment their own skill and level of applied knowledge potential. Consider how technology could free individuals, it it assumes the practical tasks, while making room for individuals to exercise their own initiative in the experiential wealth they seek to share with others.

3D Printing Holds Vast Economic Potential

Some of the most encouraging news in recent years, is due to advances in 3D printing and technology. Recently I came across the video "3D Printing is Changing the World", which is well worth the twelve minutes it takes to watch.

Indeed, it's surprising that the near future possibilities of 3D printing have not been more widely discussed. Instead, artificial intelligence gets much of the innovation spotlight, despite the fact that 3D printing could prove equally significant - if not more so. For that matter, emerging 3D printing technology is already evident in cutting edge research applications.

Granted, it may take some time, before 3D printing technology finally benefits local environments and improves the quality of life for millions with limited incomes. But once this finally occurs, the process could also usher in long term productivity gains. After all, 3D printing for local manufacture, would produce building components in ways which vastly reduce required time (purchase) hours for a wide array of building needs.

In the meantime, the above linked video highlights some 3D printing applications which are taking place in the here and now. For instance, healthcare researchers are taking 3D printing to a wholly new organic level, in hopes that organ donor scarcity might finally be alleviated. Plus, 3D printing is already contributing to models, parts and tools on demand, thereby assisting multiple development processes. For that matter, we have already entered a crucial period in which prototypes are evolving into mass manufacture design. From here, 3D printing processes will assume their first widespread production stages.

What directions might all these efforts take? Since there are currently many unknowns, perhaps this transitional effect helps to explain a recent manufacturing lull. While everyone's attention has mostly been on national trade disputes as disrupting global supply side patterns, there's also the reality that initial mass manufacture changes are still in progress. Doubtless, some participants wish to observe what takes place in the next few years, before broad investment options become more obvious. Some manufacture response patterns may change the extent to which global manufacture supply side patterns are configured, as well.

Another interesting aspect of the video was how advanced recycling technology could emerge, from research efforts to create sustainable site based manufacture on Mars. Should this research come to fruition, it could create impetus to produce more plastics as a permanent component of local recycle for local manufacture. I find it most encouraging, that research intended for projects far from earth, could create vast potential at home, by restoring production possibilities for millions of us - quite literally in our own backyards.

Recall that in the not so long ago past, local production in tangible goods, made it much simpler for citizens to pursue intellectual and artistic challenges without dependence on revenues from centralized national budgets. With a little luck, 3D printing could not only lead to production gains in non tradable sector activities, but also tradable sectors, thereby restoring the viability of decentralized manufacture in millions of left behind communities.

Global Scale Adds to Local Diversity Potential

Might societies remain able to support local and global trade in a new community framework? Hopefully yes, because future prosperity may well depend on doing so. Globalization arguments on the part of progressives and conservatives alike, often don't take into consideration what is actually at stake. For one thing, too many discussions miss how vital it is for anyone with limited income to access affordable global product, even as free traders also tend to miss the importance of recreating local dynamism.

With a little luck, future communities which create local services diversity via time arbitrage, will also continue to advocate for the preservation of global trade. Otherwise, it could prove difficult to keep consumer options as open and diverse as possible. While time based services could be central to local production, by no means is augmentation of basic time scarcity the sole option. For instance, besides more traditional economic opportunities, citizens may also actively take part in 3D manufacture, even if only for their own flexibly constructed dwellings. With 3D innovations, especially in recyclable plastics, one of the most promising avenues for more affordable ownership in community investment, would be the local manufacture of building components and infrastructure.

Likewise, traditional transportation hubs at the periphery of walkable community core, will hopefully continue to bring mass manufactured product to most local communities in the foreseeable future. Nevertheless, daily economic strategies would focus on creating services diversity which to some degree would reflect what is now found in the most prosperous regions of nations. In all this, one imagines how future populations will be able to recreate new local diversity, while preserving the movable feast of global diversity to the greatest extent possible.

It's unfortunate that forms of capitalism which function reasonably well, are inexplicably catching much of the heat for other aspects of modern day economies which have functioned poorly for some time. Even more discouraging, is that the inability to face economic issues where they are most pressing, is leading to a cultural backlash. Everyone needs to take a deep breath, regain perspective in terms of resource scale possibilities and system potential, and put these disabling cultural wars to rest. Also: If product responds to scale with fully supplied markets, breaking up its representative firms may leave more negative than positive effects. On the other hand, if product is vastly limited because it does not scale to full markets due to monopoly, regulation, or knowledge use limits, try different economic approaches to create full market scale, but again, set the cultural wars aside.

Now it is time to address head on, the mixed economy additions of the twentieth century which never quite functioned properly to begin with. By way of example, many aspects of healthcare have essentially proven impervious to reform in recent decades. If we don't create new avenues for economic diversity in non tradable sectors, too many political constituents might end up even more determined to destroy wealth which holds considerable value. Why? Often for no better reason than when everyone gets mad, surely some relief can be had by breaking something!

If we can disregard the impulse to destroy wealth due to anger, it would also help to conceptualize two separate spheres in our minds at the same time - the local and the global. By tackling the present problems of insufficient scale in time based services and flexible housing ownership options, there's a good chance we could move beyond the growing political divisions of the present.

The Paradox of "Too Much" Productivity

Is it possible for some firms to be "too" productive? Considering how productivity gains have stalled in developed nations, or what such losses imply for future living standards and long term growth, why the recent focus on making successful endeavour a little less productive? Should enterprises learn to scale up too well, does it become necessary to draw the line?

More specifically, it looks like we've got problems in today's digital marketplace. There are players in this arena who have mastered something that many companies have only dreamed of: the ability to scale to such a level, that a majority of possible gains are in fact being captured. Hence the digital realm oddly appears "too" productive, in an economy which otherwise continues to suffer from a general lack of productivity. In a post for Project Syndicate, Diane Coyle explains the dilemma:

Digital markets often become highly concentrated with one dominant firm, because larger players enjoy significant returns to scale. For example, digital platforms incur large upfront development costs, but benefit from low marginal costs once the software is written. They gain from network effects, whereby the more users a platform has the more all users benefit. And data generation plays a self-reinforcing role: more data improves the service, which brings in more users, which generates more data. To put it bluntly, a digital platform is either large or dead.

Perhaps it would be a good idea to think twice before moving in for "the kill". Why not focus instead on responding to - and improving - markets which not only lack the ability to scale via the same means, but remain short on economic access. After all, today's most prosperous digital firms have created an array of product which provides benefits for millions of users, not just high income consumers. Much of this marketplace is of a discretionary nature, for that matter. If one doesn't care for some forms of digital products, generally it's no loss to simply not use them. Whereas the markets which pose real problems, also suffer from both lack of innovation and marketplace access - even though they tend to be non discretionary in nature. By far the most prominent examples are housing and an array of time based services.

In all of this, there's no such thing as "too much" productivity, just as productivity gains need not mean the ultimate loss of meaningful employment. However, in order to preserve economic dynamism, a different approach to scale may become necessary, than what companies have capitalized on in recent centuries. To some degree, traditional forms of scale may have even reached a temporary zenith, given their present lack of new market possibilities at local levels. How, then, might society proceed further from this vantage point, in ways which also continue to improve standards of living?

Let's renew our focus on the economic activities which are closely linked to place and time. Not only do these include our more personal aspirations, they also don't scale up in the same traditional sense that came to be associated with technology and the Solow growth model. Presently, what's most important in this regard, is that alongside use of the Solow model, vast quantities of productivity gains are simultaneously being lost to requirements for human capital inputs. The reason this matters, is that extensive losses are occurring in what is organized as dependent forms of economic activity. Human capital with an intangible veneer, can reduce total factor productivity to such an extent that standards of living end up reduced as well. There is danger in assuming that "intangibles" need not be measured, especially if no other viable options exist for services generation.

Human capital has the potential to function as a direct source of wealth creation, via the time use standardization of symmetric alignment. Where this process differs from traditional scale, is that human capital becomes central to economic processes, and no longer functions as a production residual. Gains in scale in these instances, come from measurable population gains in applied skills and abilities. Time arbitrage as a formal economic unit, makes possible a continuum in which knowledge and skill accumulate over time, thereby creating new means for the measure of productivity gains.

The good news of course, is that time value in the form of human capital, has actually provided similar productivity gains in the past. Successful societies have formed a continuum many times over, for the shared experience of applied knowledge and skill. Even though many recent aspects of knowledge and skill have inadvertently become rival in nature, it's possible to return the use and preservation of knowledge to all citizens.

Fortunately, productivity is about much more, than just the form of scaling up which requires gradually reducing labour to generate final product. When human capital is integral to final product, everything changes. And time value in a wealth creation context, gives the ability as well, to put long term productivity gains back on a steady course.

When is Technology Relevant in GDP Data?

Even though technology can appear mysterious in terms of GDP measure, there's actually a simple way to consider how tech gains particularly matter for aggregate output and productivity - especially if the product in question has become "free" for consumers. Technology holds an accountable position for productivity gains in GDP data, when tech contributes to reductions in non discretionary costs for both individuals and organizations. When this in fact occurs, individuals and organizations alike experience more economic options and opportunities for commitments than were previously possible.

While prices represent what people are willing to pay for tangible market product, prices can be misleading when they involve the intangible costs of getting things done, particularly when non tradable sector activity is responsible for those costs. In many respects, non discretionary costs lack the voluntary nature of other market decisions, and assuming those costs may lead to other transactions and commitments being (involuntarily) set aside. For any measured time frame in aggregate, many consumers, firms and organizations simultaneously make discretionary or non discretionary decisions which ripple out like waves across a pond. These ripples become cumulative institutional effects which - in the circumstance of excessive non discretionary obligations - can also reduce the clarity of aggregate output as data for GDP.

The most important technological potential of our time, could ultimately reduce the cumulative damage of non discretionary burdens which have settled like layers of sediment across many institutions. Just the same this possibility is not yet on the horizon, despite the fact some optimists believe the problem could actually be with GDP calculations. Hence I respectfully disagree with Tim Worstall's reasoning in "From Facebook to Skype, GDP is not keeping up with technology":

The most obvious answer is that the data has been counted wrong - that has long been my contention. 

Worstall believes we need to make amends in the measure of GDP, to address "low GDP growth in the middle of a technological revolution." But unfortunately, some of the apps he references could actually be making more demands on economic time priorities and overhead costs, than functioning as labour or time savers. Arnold Kling recently noted the problem of overhead costs that apply for labour not associated with traditional production:

Production labor can be incrementally increased or decreased as needed. But overhead labor is not adjusted strictly according to sales volume.

Labour and related personal time priorities function so differently in non tradable sector activity, that these intangible organizational processes have skewed our understanding of productivity. Yet how does any society continue to meaningfully coordinate divisions of labour, or clarify ongoing productivity gains, if aggregate output can no longer be accounted for in relation to overall costs? Due in part to how many professionals derive profit, our non tradable sectors lack the incentive to utilize technology for productivity gains, with the general exception of reducing or occasionally eliminating lower levels of the hierarchy in time based services.

By way of example for the latter instance, technology created productivity gains in the early nineties which could be readily observed. I was just one of many office workers during this time who reluctantly let go of governmental employment, due to the new software programs which made it feasible for attorneys in my workplace to assume activities which previously had been carried out by office assistants. While productivity gains such as these were associated with private enterprise, the fact local and state governments were also able to reduce overhead costs (even if only temporarily), doubtless contributed to Washington's balanced budget during the Clinton administration. Truly, this was a time when digital technology became quite relevant to GDP data.

Why has it proven so difficult to realize similar productivity gains today? One reason is that recent technological innovations actually threaten the organizational structure of today's non tradable sectors. It's one thing to apply automation which increases output in traditional production or services which readily scale, but altogether another to contemplate deep learning which in crucial respects can undermine the logic of extensive human capital investment. Especially when that investment augments the fixed scarcity of professional time value, for time based product.

Not only does AI seem to suggest that some professional human capital costs aren't "necessary", but 3D manufacture could eventually upend the rationale for much of traditional manufacture as well. However, traditional building methods are the bread and butter of countless local developers, in what is still one of the main wealth building activities for any community which continues to have an economic pulse. Yet as long as traditional development holds sway in most quarters, it will determine the nature of local economic activity which is even still feasible, despite what citizens would like to create if they had the chance to do so.

One of the main reasons for economic uncertainty, is that we still have no idea how our existing non tradable sectors will respond to the recent array of cutting edge technological possibilities. Even though the potential for productivity gains is extensive, it nonetheless comes with mind boggling cultural ramifications. Sometimes civilizations are able to coexist with new innovations alongside traditional systems, and sometimes they are not. In the meantime, no one can really pretend the crucial elements have come together for the best optimal economic outcomes, because technology. Again: In order for technology to make substantial contributions to productivity gains, its impact would contribute to overall cost reductions which improve the systems capacity of entire supply chains which coexist with applied knowledge production. Alas, free apps such as Skype and Facebook weren't made for this challenge.

Human Capital and the Efficiency Paradox

How might the changing roles of human capital in the marketplace, affect societal perspectives regarding efficiency gains? For instance, consider how the approach to 20th century quality service generation, dramatically affected the relationship of required human capital inputs to aggregate output for time based services. Indeed, these organizational patterns continue to negatively impact total factor productivity. While automation isn't always the appropriate response to achieve (further) gains in standards of living; much depends as well, on the human capital roles which are at stake in these processes.

The fact that knowledge production can be a meaningful form of consumption in its own right, helps to explain why knowledge providers are sometimes dubious about organizational patterns which promote efficiency gains. All the more so, since knowledge production for time based product is closely associated with personal identity, autonomy, and agency. Charles Handy in "The Hungry Spirit", observed how efficiency efforts might be ineffective in some instances or possibly even counter productive:

Unless we get efficiency in perspective we may find ourselves so busy being efficient that we forget the original purpose of the enterprise. Efficiency is not always the same as effectiveness.

Often, time based product is based on activities which people actively enjoy engaging in (whether via production, consumption or both), as opposed to activities that are mostly tolerated because they're perceived as necessary. Even so, is an hours long trip to the Department of Motor Vehicles "necessary" in the same sense as a non elective surgery, or does the former feel more like "lost" time? Nevertheless: When service producers are responsible for the preservation of services product (whether surgeons or government employees in this instance), they may naturally be more inclined to determine the present structure of those activities is totally necessary.

In order to discover more specific value sets for automation potential, we can also identify when a given service experience feels as though time lost, or time gained. One apt example: Is a service worker enjoying their time on the job, or are they mostly waiting to "get off the clock"? Yet presently we are are reluctant to lose mind numbing jobs such as this, because of uncertainty how automation will affect future employment patterns. If we are proactive regarding workplace potential, so that we can better preserve positive experiences on formal economic terms, with a little luck our services workplaces won't just devolve into the default circumstance of future budgetary realities.

Producers and consumers alike (in other words all citizens) may occasionally need to participate in decision making processes for time based product, if automation is to continue making a positive difference for standards of living. Unlike the separately existing product of tradable sector activity, the producer consumer relationship of time based product is more often a dual experience. These additional elements of human involvement can make notions of efficiency somewhat more complicated. It's when automation leads to the loss of meaningful or purposeful experience, that technology in this instances either needs to be reconsidered or otherwise approached differently.

Hence a useful societal dialogue could include questions such as "How important is the personal attention (time) element in a given service product? Does the producer version of this description differ substantially from the consumer version? If so, why, and how much should that matter? What distinguishes experiential service product so that it acquires personal meaning? What potential service product diversity has already been suppressed, due to regulatory restrictions? What makes rights to participation in a diverse range of multi skill service product, so important? Many individuals enjoy some aspects of production, more than consumption processes which are associated with these activities. For instance, as a pianist (decades earlier), I preferred playing classical music to listening to it either live or recorded. Might individual preferences such as this, encourage us to think differently about services supply and demand?

To sum up, the efficiencies of automation need not stand in the way of our natural desire to become more fully human. For that matter, automation has played a tremendous role in amplifying our desire to become more fully human, in part due to centuries of earlier automation processes which freed our time. Perhaps the more important perspective is, can we achieve such aspirations, while still encouraging means to increase aggregate output in relation to aggregate input - all without reducing the production experiences which hold meaning? Doing so, would make it simpler to preserve the kinds of human interaction which societies find so important for services generation - especially that which takes place as experiential product.

Price Taking, Price Making and Economic Inclusion

One aspect of future labour force participation rates - given continued advances in automation and budget cutting realities - is how price taking and price making options affect potential employment levels. For instance, when firms are more willing to coordinate with other suppliers via price taking means, this often results in increased employment potential.

Hence one important consideration for future employment, is whether price taking or price making is more prevalent. Presently, the dominance of non tradable sector activity is also reflected in the fact price making has become the broader choice. All the more so, in non tradable sectors where time based product is a major part of output.

When price making occurs in tradable sector activity, much of it is due to temporary market advantages. The changing nature of these advantages, especially when tradable sector activity is regularly exposed to competition, contributes to organizational flexibility. Such flexibility helps to account for periods of tradable sector dominance that proved less problematic for class divisions and inequality, especially during the twentieth century.

On the other hand, due to price making, the degree to which economic inequality occurs in non tradable sector activity can become "baked into the cake" over time. While non tradable sectors do encourage organizational flexibility up to a point, much of this doesn't actually extend to core staff which works in a professional capacity. Consequently, price making at upper levels means that economic inequality is gradually becoming more entrenched as a societal reality. Of course, this is often an implicit choice which limits full time employment, wherever possible.

Consider also, how technological factors play into this scenario. There's a noticeably polarized discussion developing, with widely divergent viewpoints re whether AI deep learning will eventually displace many well paid professionals. Normally, automation often contributes to greater productivity, especially when it reduces the inputs necessary for aggregate output. However: This time around, deep learning AI creates problems for non tradable sector time based product, since much of it translates into potential skills substitution, instead of increased output. It's not much of a stretch to imagine deep learning AI as an existential threat, because this process actually makes unnecessary, some important elements of the reigning class structure. Ultimately, deep learning AI reduces the absolute need for extensive human capital investment as an input requirement for quality product. Perhaps this issue could be glossed over more readily, were it not for the fact entire societies are expected to carry much of the load for these additional costs.

Might extensive price making continue to appear as though warranted for quality high skill services? We don't yet know the answer. High skill services sector price making became more extensive in the twentieth century, due to human capital investment requirements which today comprise some of the most important wealth structures of our time. What would cause nations to turn around and deem much of this unnecessary? These expectations for quality product, have been carefully tended as long as anyone can remember. And given extensive debates re many supposedly "irrational" human capital investments ("stupid" student choices), some of these employment possibilities are treated as the most "rational" of all! Possibly, the only extent to which deep learning AI could make inroads in this general equilibrium reality in the near future, is at the margins where budgetary matters finally leave no choice.

If price taking services coordination becomes an economic option, the resulting time arbitrage would considerably reduce the pressures of budgetary constraints. Thus, it might be feasible in the near future for high skill knowledge providers to preserve the price making organizational capacity they prefer, in part by giving permission for defined equilibrium settings (alongside deep learning AI) to relieve general equilibrium budgetary pressure via price taking means. There are countless communities where physicians prefer not to practice - for instance - where AI could make it possible for local participants to create valuable services product via mid range skill sets. Such an economic strategy could help to prevent further political breakdown, as different factions struggle over whether to even incorporate deep learning automated intelligence as a part of high skill services generation.

Can AI Reduce the Burden of Human Capital Investment?

Prior to the deep learning which is increasingly associated with AI, the progression of knowledge required ever more personal time commitments (in aggregate) on our part. Granted, AI has its own costs, as it would require extensive electrical capacity in the future. Even so, electrical resources could supplant extensive time requirements for high skill credentialing, for a mere fraction of today's human capital investment costs. Of course, the working terms of potential substitution are presently far from clear, even as pleadings for human-centric knowledge application are already underway.

However, there's an important aspect of this development which has yet to be taken into account. Only recall that (in part) due to human capital investment requirements, societies began to categorize skills use and labour divisions into ever hardening class structures. For that matter, lower income levels are increasingly being discouraged, from taking on the "necessary" human capital investment requirements of today's premier workplaces. The fact many workplaces are no longer capable of compensating formal educational costs, even as taxpayers remain on the hook for doing so, doubtless contributes to this gloomy dialogue as well.

The good news is that due to the low operational costs of AI deep learning, decades of human capital investment for high skill knowledge application are becoming less necessary. In other words: We no longer have suitable rationale to insist that strict divisions of knowledge based "labour" are "necessary" due to personal differences in income and resource capacity. The not so good news, however, is that societies may elect to not take advantage of AI's ability to reduce present day burdens of human capital investment - thereby keeping unnecessary class divisions in place. Should society choose the "not so good" option, the production and consumption of many important time based services, could eventually devolve mostly to higher income levels. As a productivity issue, one might frame such a choice as preserving excess inputs in relation to time based services outputs, so to preserve the "dignity" of our elite.

Yet AI could restore hope and economic progress, via its immense capacity to contribute to deep learning. By working with AI instead of in spite of it, most of us would become able to make knowledge and skill count in the immediate contexts of our daily lives. One benefit of working with knowledge on an "as needed" basis, is that this organizational process encourages the moderate skill levels so many individuals possess. Further, moderate skill levels are particularly well suited for the interdisciplinary approaches now required for problem solving. Options such as these are particularly important, as the half-life of knowledge can sometimes impact what we learn via traditional or formal educational settings. As Shane Parrish recently noted:

As a body of knowledge doubles so does the cost of wrapping your head around what we already know. This cost is the burden of knowledge. To be the best today in a general field requires that you know more than the person who was the best only 20 years ago.

Imagine being able to apply much needed knowledge and skill for a wide range of economic activity, in a fraction of the time presently required. In "Whiplash: How to Survive Our Faster Future" by Joi Ito and Jeff Howe, the authors describe their own extensive experimental efforts for learning processes. In the chapter "Practice over Theory" they write:

Putting practice over theory means recognizing that in a faster future, in which change has become a new constant, there is often a higher cost to waiting and planning than there is to doing, and then improvising. In the good, old, slow days planning - of almost any endeavor, but certainly one that required capital investment - was an essential step in avoiding a failure that might bring on financial woe and social stigma. In the network era however, well-led companies have embraced, even encouraged failure. Now, launching anything from a new line of shoes to your own consulting practice has dropped dramatically in price, and businesses commonly regard "failure" as a bargain-priced learning opportunity.

In time arbitrage, where learning would be integrated with workplaces as a time continuum, AI could assist individuals and groups in knowledge coordination processes, instead of replacing human capital components just because it seems "expedient" to do so. Should we give ourselves permission to fully participate in knowledge use, AI could also be given permission to relieve the burdens of human capital investment. The result might just be a new frontier, in which we can scarcely imagine the possibilities.

Technology Will Affect Skills Compensation

In a recent McKinsey Institute report, "What the future of work will mean for jobs, skills, and wages", the authors write:

Our key finding is that while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging - matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.

They highlight in particular that "Automation will have a far reaching impact on the global workforce." It also helps to consider what is being defined as "full employment" in this context, which is recent statistics and employment gains. Nevertheless, current employment levels don't account for what have been gradual losses in labour force participation, which were exacerbated by the downward monetary adjustments of the Great Recession. In other words, the oft stated challenge is mostly to maintain, what are already less than ideal levels of labour force participation.

Until recently, technology - more often than not - gradually led to increased output which meant further employment opportunities. But non tradable sectors tend to apply technology somewhat differently. Over time, intangible forms of input and product measure have become sheltered from general public view - perhaps for political and other reasons. As a result, it's difficult to ascertain how a wide range of resources are being measured and utilized, or how compensation is actually taking place. And when the relationship between aggregate input and output for services production becomes murky, human capital investment for specific skills use is less certain as well.

Fortunately, even though the extent of future skills compensation is in doubt, we can respond by assigning greater economic value to the use of our mutually held time priorities. Despite the uncertainties of technological change, our personal time preferences for getting things done, are important to us and for others as well. While it would be slow going at first - learning to measure and ascertain mutual time preferences - the eventual result would be organizational work patterns that are more spontaneous and transparent, than the institutional skills use patterns of the twentieth century.

Indeed, the subjective values of our work challenges and other personal commitments, would play out quite differently from the time commitments of institutional skill requirements. When we focus on time value and priorities, time management includes not just the higher skill levels our institutions seek, but also the full range of skill levels which we seek to coordinate with others in multiple aspects of our lives. And unlike the skills that our institutions sought - yet technology is now able to replace - we can still prioritize our time preferences, even as the skills we utilize, are more likely to be those ones we deem most important.

A marketplace for time value, would give voice to our time priorities. Another benefit of time arbitrage: By utilizing the time that individuals and groups actually have at their disposal, the price taking mechanisms which prevailed during times of tradable sector dominance (when resource use was more transparent), once again become possible. When individuals coordinate the time they actually have for daily activities, each hour in aggregate functions as a pricing mechanism for local group settings. Even though our time is rival (one cannot be in two places at once), the rival time/place limits of various skills functions would gradually become evident, allowing individuals to plan for what is already being provided, versus what might still be added to the overall mix of service generation.

Even though technology will continue changing the structure of present day workplaces, we all have more options for the work that matters most to us, than is currently recognized. Some of this work is complex, and some of it is simple. What's most important, is that all the work we find worthwhile, has value. A marketplace for time value, could also restore the value of our own personal priorities, in relation to others. Even though technology will affect skills compensation, it need not get in the way of the patterns we ultimately choose for out time commitments, in terms of mutual responsibilities and aspirations. Technology may pose a threat to today's skills arbitrage status quo, but it need not pose a threat to the potential of time arbitrage.

Still the Main Issue: Employment Uncertainty

If nothing else, I consider it good news that rural America has gotten some notice with the presidential election results, in spite of confusion in this regard. If only our nation's elites had been more cognizant already, of the lack of productive economic complexity and free market activity in so much of our country, and what those "Sounds of Silence" might eventually lead to. Ah well, what's done is done. From Reuters:

Donald Trump's promise to revive small town America faces a tough challenge in an economy that for decades has been wired to direct income and opportunities toward urban hubs and the better educated. 

The manufacturing jobs Trump pledges to bring back have disappeared as much because of automation as the trade deals he promises to rewrite, and that process will only continue. A promised infrastructure revamp would boost middle wage jobs but only as long as the programs last...

Economists say that even if economic growth accelerates under Trump, it may not do much to counter the downward pressure on wages and middle income jobs from automation, technology and longstanding trends.  

Brookings Institution senior fellow Isabel Sawhill said researchers on inequality agree on one point: it is hard to move the needle. "Even when you distribute all of the dividends from growth in a progressive fashion you don't change things very much." Sawhill said. "You shift things at the margin."

Another recent Wall Street Journal article spoke of the vast disconnect between Donald Trump and Silicon Valley, for instance. After all, Silicon Valley relies on both immigration, and the trade with other nations which Trump disavows. Indeed, automation has proceeded to such a point, that some factories no longer need illumination for normal procedures on the factory floor. In other words, no people or lights necessary where things are being built, unless something goes wrong! This is one of today's most tangible forms of progress. Is the wish to turn back the clock on such developments, Luddite in nature?

Inverse weighs in on these concerns as well, with "Runaway factory automation is making human manufacturing obsolete":

Study after study was released in 2016 that offered a cold truth: No amount of legislation can push back automation. The World Economic Forum reported in January that approximately 5 million jobs will be lost to automation the next five years. (A 2013 Oxford University study found that 47 percent of jobs in the United States are at risk of computerization.)

Meanwhile, Trump's campaign focused heavily on a plan to use tariffs and new trade deals as a way to bring jobs back from China and Mexico. The trouble with this strategy is that places like China and Mexico are also losing jobs to automation in large numbers. In fact, a United Nations policy briefing released this week projects that China's automation will outpace the world in jobs by 2018 with North America coming in second.

What's behind the wishful thinking about reclaiming earlier manufacturing as it once existed? For one, this work allowed people to build tangible - and often - useful goods. But something else contributed to the respectability of those jobs as well, which is proving equally difficult to bring back: the access to healthcare which manufacturing work once provided. One reason that today's time based services work doesn't feel as solid or reliable by comparison, is that much of it lacks healthcare access.

Paradoxically: by the same token, dependence on low wage work makes it more difficult to hold on to work as a lifeline, when medical issues intervene. Medical issues can affect one's ability to maintain a job, especially when these struggles negatively affect public perception of one's personal efforts. While policy makers and business interests continue to struggle over a failed healthcare system in the U.S., others increasingly feel the need to step in and help the ones who are still being forgotten.

There's another consideration. Even though Obamacare has not worked out well, by no means would it be easy to replace. In particular, supply is not only limited, but the supply that does exist, would only be put under further pressure, in the closed economy that would result should the U.S. take an isolationist position in the world. In all of this, non tradable sector activity of any stripe isn't built for closed economies, such as protectionist views encourage. Ultimately, an isolationist approach would not only mean further losses in asset value, but also in the tradable sector formation which has provided such extensive support for knowledge use in recent centuries. This is a historical moment, when undue reaction to world circumstance would mean further wealth losses than are necessary - whether or not some might rationalize that these losses don't matter. They matter.

Asymmetric Versus Symmetric Compensation

While the good news is that employment for knowledge workers is finally on the rise, another aspect of this development is less certain: the rise of non routine work, after centuries of what was most frequently compensation for routine work. Indeed, the asymmetric compensation that is connected to work as externally reimbursed (publicly and privately), is closely tied to the nature of general equilibrium conditions.

As a result, many who gain work in the near future - at any level of skill - will often do so on non routine terms. Further, it is mostly prosperous regions that will realize full employment levels through these means. Even though areas lacking in economic complexity will still have asymmetrically compensated work, much of this work will only be available for a fraction of the local population. Plus, the emphasis on non routine work in less prosperous areas will not be as substantial, as for larger city based employers which have more incentive to tap technology gains.

Many gains in scale have already been realized, for money in relation to the existing resource capacity of general equilibrium. As a result, further automation to replace labor is a primary remaining means of arbitrage for both public and private institutions. However, what does this development suggest, for cities and regions which sometimes lack the necessary capital, to use automation for routine activities?

Some could benefit from the organizational capacity of symmetric compensation - particularly to generate much needed services and time based product. For that matter, time based service product has scarcely been tapped for the wealth gains it represents at aggregate level of economic activity, due to the fiscal constraints of asymmetric compensation. Time based product also exists in relation to the environment that personal time value helps to create. Arbitrage potential can be generated through local definition and internal coordination of production and consumption patterns. As Dietz Vollrath recently noted:

...aggregate productivity growth depends not only on individual technologies, but crucially on the distribution of workers using those technologies.

Symmetric compensation takes place through equally coordinated time availability. Symmetric compensation can also generate new wealth, since existing time value is matched so as to back other time value. Those who participate in the local corporate structure of knowledge use systems, would also have greater choice as to routine work patterns, before investing further in automation capacity. For instance, it helps to remember that maintenance is still the base for many forms of economic activity. Some of the replication that is needed for maintenance - in particular for educational purposes - benefits from personal and individual attention.

Another benefit of symmetric compensation is the fact it allows greater economic complexity for services formation. Otherwise it can be difficult to generate a wide range of time based activity in many areas, particularly on self sufficient terms. Once the initial hurdles of skills variance are accounted for, groups become able to set up and organize self sufficient services activity which would otherwise require either extensive assistance from state and national revenue, or private wealth sources.

Matched time value is not just employment for employment's sake. Unlike externally defined employment options, individuals would take part in an ongoing process of mutual employment, which allows them to determine the kinds of activities they can best accomplish on their own, versus those which they particularly gain from sharing with others. Once the organizational capacity of symmetric compensation is better understood, no one would need to fear the decimation of the workplace by automation.

For Long Term Growth, Proactive Responses are Needed

Unfortunately, Robert Gordon's dismissal of long term growth potential, is emblematic of a passive approach which has likely contributed to changes in economic circumstance since the Great Recession. His rationale is but one example, how long term growth needs a more proactive response, than has been the case thus far.

But in the meantime, there's supposedly "solace" to be had, in resignation! People are encouraged to believe that in terms of the real economy, "little" can be done. Paul Krugman also reviewed Robert Gordon's recent book, for the New York Times. One of the things which struck me about Krugman's review, was the fact he wasn't inclined to question Gordon's assertions about the lack of future growth potential ("Is he right? A definite maybe.") Krugman continues:

Robert J. Gordon...has been arguing for a long time against the techno-optimism that saturates our culture, with its constant assertion that we're in the midst of revolutionary change. Starting at the height of the dot-com frenzy, he has repeatedly called for perspective. Developments in information and communication technology, he has insisted, just don't measure up to achievements. Specifically, he has argued that the I.T. revolution is less important than any of the five Great Inventions that powered economic growth from 1870 to 1970.

Also, here's Robert Gordon in a recent Bloomberg View post (part one of two), entitled "Goodbye Golden Age of Growth":

The rise in the U.S. standard of living from 1870 to 1970 was a special century--and won't likely be repeated...Future growth in output per person, therefore, will fall short of growth in output per hour. 

And he reasons:

The good news is that the economy will be able to maintain relatively full employment as the fruits of computerization cause work to evolve slowly, rather than in a great rush. I'm optimistic that job growth will continue and that new jobs will appear as rapidly as technology destroys old ones. 

Regular readers likely know where I find fault with Gordon's assertions, as to a supposed lack of potential for future growth and gains in living standards. Technological gains created the possibility of a completely new foundation for communications, knowledge use and physical infrastructure as well. This foundation could transform our burdensome non tradable sectors, which now sap the collective will and resources of governments, citizens and tradable sectors alike.

Yet organizational patterns which could contribute to widespread gains in knowledge use application, have scarcely begun. The same I.T. revolution which Gordon has downplayed, is the same infrastructural mechanism which could act as the conduit for a completely new services based economy. As to those "horrifying" aspects of slow Southern development he described, I can attest (as someone old enough to remember baths in a washtub), that it is more horrifying to be left out of economic loops at some point in one's lifetime, than to experience living structures which don't necessarily have every basic amenity.

I also need to address Gordon's apparent confidence that the economy can maintain relatively full employment, should structural shifts in organizational capacity (innovation) not be given a chance to take place. Granted: for a long time, new jobs appeared as quickly as old ones disappeared. However, a gradual decrease in knowledge based work as tradable sectors shift to non tradable sectors, has not been acknowledged. Given the fact that so much of non tradable sectors are supposed to be about knowledge work, this is what is truly "horrifying" so to speak.

The future growth in output per person which Gordon mentions, is directly tied to the knowledge use potential which could make human capital a direct component of wealth creation. Further, this is the missing element of capital as a whole, which has so many onlookers still mystified. Another important factor is that current services formation places too many participants outside of actual production capacity, at all stages of life.

In fairness to Gordon's continued observations, however, much of what attempts to pass as innovation in public dialogue is not real. Only consider how vested interests frequently promote what amounts to artificial "disruption", so as to prevent the real thing from happening, as was pointed out in this Techcrunch Davos presentation:

It's clear that the Forum gets whats happening and the Fourth Industrial Revolution is a critically important topic, but it's being filtered through a corporate reality of these large players carefully controlling the conversation...This is dangerous.  

By continuing to operate under the assumption that the biggest multi-national corporations are on the cutting edge of disruption, we risk not acting on globally significant opportunities like radical reform of education systems, government bureaucracies, energy management and transformation of transport systems...In the words of Buckminster Fuller, "We need to build new models that make the existing models obsolete."

Exactly. It's not so much I am intent on "destroying" outdated models, because oftentimes that's not the point. I just don't want outdated models to have the chance to needlessly destroy us. And right now, some of them (including wrongheaded monetary reasoning at the Fed) would do so, if nothing is done to short circuit all the hand waving and high profile excuses.

Energy Technology as "No Need to Work" Rationale

This post mostly serves to make a simple point - albeit one which has slowly evolved (at least) since the Great Depression without being directly addressed. Growing use of technology contributed to greater government involvement, in the twentieth century economy. However, technological dispersion now encourages a rationale on the part of both public and private interests, that not everyone needs steady work as a lifetime option. I disagree...people not only need work, but work is necessary in terms which matter at a personal level, to have a meaningful life.

In spite of what is said publicly, too many on the political left and right have reached a tacit agreement that not only is the economy incapable of generating full employment, supposedly it doesn't even matter. As someone who became long term unemployed too early (i.e. prior to what one normally associates with retirement), I heartily disagree with that perspective.

So long as traditional manufacture was capable of generating international expansion, these wealth proceeds greatly contributed to time based services growth (hence employment), as well. Only think what energy related production contributed to broad based knowledge use till recently, for a growing services economy. Mark Perry posts a reminder, regarding the life choices this created for populations: "Each American has the energy-equivalent of nearly 600 full-time "human energy servants". Perry's reference is Brian Wang at the Next Big Future blog, where Wang titles his post:

Average american has energy equivalent of 450 human slaves working 8 hour shifts every day

By no means is the concept of energy slave, a new one. Wikipedia notes:

The term was first used by R. Buckminster Fuller in the caption of an illustration for the cover of the February 1940 issue of Fortune magazine, entitled "World Energy".

The Encyclopedia of Human Thermodynamics states that Buckminster Fuller introduced the term circa 1944, (a bit of confusion here!) and defines it:

In terminology, energy slave is an abstract conception referring to the technologic-mechanical energy equivalent that a healthy human youth could do.

Consider for a moment, one perspective which earlier forms of slavery were said to impart to culture. To what degree did ownership of slaves, encourage people to question the necessity of work? Many who owned this form of - yes, human capital, often did not need to do hard work, and intellectual pursuits were taken on for enjoyment. Indeed, many who were too poor to own slaves before the Civil War, must have realized what a luxury those intellectual pursuits actually represented.

As today's economy begins to encounter limits to knowledge use formation as supplied by other wealth, will technology - as a latter day "forced" labor substitute of sorts - become an excuse for rich and poor alike to no longer work, while a few are fortunate enough to keep well compensated intellectual pursuits? Or will human capital - hence knowledge use in aggregate - have a chance to become better distributed wealth in its own right?

Granted, the "no need to work" perspective isn't openly acknowledged, for obvious reasons. The U.S. in particular insists on a harsh work ethic, in spite of an economy which is no longer doing a good job of providing work where it is most needed. Meanwhile, as technology continues in its latest version of work shifting organizational capacity, the left is starting to emphasize the importance of capital ownership, even as they negate the importance of human capital in the process. And others on the right - even while emphasizing the importance of work - are doing little to encourage economic growth, to maintain stable labor force participation.

Energy slaves in the form of energy technology have provided a most fortunate human capital multiplier in recent centuries. However, asymmetric compensation has begun to claim the wealth aggregates, that are possible for knowledge use as funded by traditional forms of wealth. Fortunately, symmetric compensation (or time arbitrage) could retrieve the thread of meaningful work potential, before other threads become unraveled - on the part of monetary policy, government and the supply side as well. Hopefully, knowledge use systems will have a chance to address full employment and continued growth, in the years ahead.

How Can Local Economies Harness Productivity?

Local productivity potential has been one of the most exciting challenges over the course of my project. With the designation of aggregate time use as a finite quantity - hence allowing for spontaneous coordination of the time at our disposal - services production could finally have a chance to come into sharp focus.

That would also allow services production the clear designation (and measurement capacity) it needs in economic activity, which could be developed through local experimentation. Certainly it is about time, given the large percentage of the economy which services have represented in developed nations.

Today's thoughts were triggered by a blog post from The Growth Economics Blog, which touched on productivity in ways that provide contrast for the knowledge use systems which I promote. There are important aspects of productivity gains which are not readily amenable to capture at either the firm level, or the national level, for that matter.

Local economies would be able to allow for variations and fine tuning, in activities and solution sets. Whereas state or firm dictates, constrained by budgets which only can only utilize time as residual instead of product, simply do not have the time use capacity to do so. Likewise, local economies can embrace diversity in activity sets which otherwise could not be conceived of, in the same optimizing framework. This is what gives the local economy such an advantage over national, state or firm level planning, for potential services organization.

Presently, society benefits from tremendous time saving capacity through technological and productivity gains. However, far too many of these gains in time use options have ended up being substituted out for activity sets which few are happy with, as default time use in either production or consumption. That is, unnecessary complexities arise in some knowledge use production, and sticky marketplace definitions tend to constrain consumption choices for time use. As a result, not only is too much time use lost to these rigidities, but time use often ends up in all or nothing scenarios as well.

Productivity gains often end up compromised, in that individuals don't always have a chance to substitute freed time from technological gain for the activities they would prefer. This is where group coordination especially comes into play, so that all participants might discover time use management preferences. One advantage of coordinating multiple services options across groups, is that rent seeking would no longer be perceived as necessary in many instances. Because skills sets would become fluid and less connected to specific individuals, many skills sets could be utilized when they are actually needed, instead of in every instance according to previous group dictates.

One way to think of potential labor market coordination for services, is along the lines of video gaming which have moved ever closer to economic scenarios, as described in this Reason interview with Yanis Varoufakis. Some aspects of social gaming also provide ways to think about productivity capture, which communities can generate through the alignment of individual and group aspirations.

From the infrastructure that can be derived through common incentive, relatively public choice aspects as to "how" (to get things done), then translate into private considerations of "what" (to get done). In that "what" changes more frequently than how, it becomes the larger part of the coordination process over time, so long as resource options do not drastically shift.

Indeed, the "how" functions of infrastructure in times of resource change, are how governments really need to assist their citizens. That is, governments need to be better facilitators for societal shifts in resource use. If in fact this were the case, local economies would be able to generate stronger effects in total factor productivity. Of course, this is a more complete understanding of productivity than productivity measures as cost per unit between capital and labor functions, within firms. Total factor productivity can be thought of as a process which scales up in knowledge use and resource coordination, to the wide set of capital and labor potential which is a local economy.

Given the variety of skills sets and asset potential which exist, optimizing these possibilities could certainly tell some interesting stories. In other words, what do individuals and community wish to capture? Specific forms of productivity are normally determined by who does the "capturing", which leaves a myriad of externalities. Local coordination is capable of bringing previous externalities into the population fold, so as to positively affect total factor productivity.

Intelligent Tech Can Coexist With Human Intelligence

That's my positive take for the day...now I just need to stick with it! Even so, I am compelled to begin by highlighting a quote from Timothy Taylor which Arnold Kling also noted:

We have now returned to an economy where those who leave their jobs are more likely to have done by quitting voluntarily than by being laid off or discharged involuntarily.

Yikes, so full recovery is here. Do I hear a collective groan? Seems like a few "duhs" being voiced as well. Taylor's observation implies any number of economic factoids, so to speak. As the workplace increasingly appears normal, there's another aspect to this development which - while it would be no surprise in singularity terms, doesn't often get the statistical spin that Kling also noted last month. From the NY Fed:

...the broader V-shaped pattern in the unemployment rate over the past two decades is consistent with new research arguing that there has been a reversal in the demand for cognitive skills since 2000.

Observant readers want to know - why only now, a nearly month old link from me, on something as important as knowledge use reversal in the workplace? As is sometimes the case, I reacted to the (apparent) approaching singularity, in an earlier draft response with too much negative emotion. Which in turn leads to the kind of language use that even offends me afterward - let alone some of my readers. Hence I deleted out last month's post draft, along with its useful links. Fortunately, the above quote stayed in my mind thus I was able to fish it out of January postings.

What brought me back to the thoughts in that discarded post draft was this book review from The Capital Spectator, "Mindless: Why Smarter Machines are Making Dumber Humans" by Simon Head. Today I am happy to allow a summary from the esteemed publisher Basic Books, do the complaining for me!

We live in the age of Computer Business Systems (CBSs) - the highly complex, computer-intensive management programs on which large organizations increasingly rely. In "Mindless", Simon Head argues that these systems have come to trump human expertise, dictating the goals and strategies of a wide array of businesses, and de-skilling the jobs of middle class workers in the process. CBSs are especially dysfunctional, Head argues, when they apply their disembodied expertise to transactions between humans, as in health care, education, customer relations, and human resources management. And yet there are industries with more human approaches, as Head illustrates with specific examples whose lead we must follow and extend to the mainstream American economy. 

To be fair, I've been in hospital environments where patients were not only treated with respect and dignity by healthcare staff, but received a reasonable amount of their time. But I've also been in hospital environments where practically the only reason a healthcare provider ever came into the patient's room, was to interact in some capacity with a wide array of high tech devices and instruments. Said high tech devices also take up an increasing amount of the room's space, in recent years. Environments where healthcare employees didn't even glance at room occupants as they arrived and left, were a bit unnerving. Those were the places one sensed a palpable fear on the part of management, that if staff spent any "unstructured" time with patients, the organization might quickly lose their ability to pay the bills.

What to make of widespread singularity trends which are becoming more difficult to discount? Consider workplaces that are returning to normal, both in business and economic terms. They rely on fewer people not only for those earlier middle class skills sets; but also fewer knowledge based capacities in general. Even though some workplaces maintain a "human touch", the volunteers who are eager to provide that in healthcare environments are stymied by insurance related regulations. That often prevents them from assisting patients when healthcare providers are not available. Unfortunately, many people will not realize how impersonal the singularity feels, until they need to spend a couple of weeks or months in a hospital or other assisted care environment.

In order for intelligent tech to coexist with human intelligence, knowledge use and skills sets need to be reintegrated and coordinated at local levels. People can then become partners with technology, rather than being subjected to social destruction by technology through the centralized services formations of the present. Otherwise, healthcare providers which care about patients and spend time with them, could be "undone" by organizations which realize more profit by cutting out "unnecessary" social or personal time. That circumstance alone should give proponents of centralized services systems reason for pause. Knowledge use as dictated by decisions from elsewhere - hence reliant on minimal social interaction, cannot help but be dehumanizing.

Another aspect of lost social relationships in the workplace, is that people rely on those social aspects to bring positive structure home, and into their personal lives. Some with higher incomes still benefit from adequate social structure in the workplaces they inhabit. However, the loss of workplace social structure for lower income levels, also means these individuals have little social interaction to positively emulate in their own personal circumstance. By decentralizing services so that knowledge use is a part of all workplaces and income levels, the present threat of polarization between classes could be greatly diminished in the process.

What's Important - People, Results, or Both?

In the real world of course, the quick answer is people and results. And yet, many people have difficulty approaching dialogue in this way. Results tend to be about rationality instead of emotions, even though both are part of the process. Turns out it's not easy to engage both at the same time, which explains why leaders (for instance) who happen to be adapt at both, turn out to be the most highly valued leaders of all. So...how might this question get answered for Market Monetarism? Or, when we think of optimal action for economic stability, how does one also express this in personal terms?

This morning I found some links that also continue a few thoughts from yesterday's post: a good thing as economic uncertainty is still very much on my mind. This link suggests it's not "just me" as 70 percent in a recent U.S. survey indicated they didn't feel the economy was truly on the way to recovery. Pus, what I refer to as the forgotten rural areas, are where this lack of confidence is most keenly felt. Small wonder, as some people with little choice but to live in rural environs, despair over whether they can keep the car running so as to continue the job an hour away in the city.

If it's tempting to snicker at presidential candidates re their lack of ability to empathize with average voters, sometimes economists have trouble relating to the average citizen as well. How so? For one thing, economists tend to hone in on aspects of the economy, which don't necessarily reflect the average person's ongoing and daily challenges, in community. This is particularly true if the economist sees government or business in general as the only means of positive action, rather than the coordinated actions of individuals. Plus whatever inferences the economist makes, tend to be the ones that are going to gain the most public consideration as well. Unfortunately, that means a lot of second guessing occurs, as to the circumstances people are actually trying to work with to improve their lives.

For instance, Paul Krugman recently complained that "...high unemployment has greatly weakened workers' already weak position in the relationship." i.e. the power relationship between employer and employee. While this scenario might well be observable at times, unfortunately it has little to do with what actually needs to be done in the present. In other words, it gives not a clue how anyone might approach the present dilemma of economic uncertainty.  Of course it never hurts for employers to be more considerate of their employees!  But how does that meaningfully correlate with the fact that far too few of us have workplace participation in the present - especially in areas which have been economically forgotten?

Or sometimes, thought processes that would be conducive to economic progress get lost in translation, because of the limited academic environments where they take place. Indeed, political adherents on the left and right don't always listen to the more important elements of economic discussions. Thus the most important and substantive arguments are often made on the behalf of people who don't understand their significance. An overt political stance in particular, can obstruct the economic reasoning that people need the most. As for those power relationships Krugman is fond of speaking of, my readers already have a sense how I feel about this.

Power relationships exist mostly in our lives to the degree we lack the confidence (or the imagination), to take part in coordinating ongoing patterns for production and consumption. No one gets real economic results by keep seeking out villains and ransacking their village in yet another morality war. Why does anyone think that is the best way to appeal to people and emotion? Instead of looking for the "right villages to burn", why not consider increasing total economic participation instead. That's the way to put jobs back on the agenda.

The fact that we still don't have adequate passageways for knowledge use and services, also holds back the technologies that can support them. This partly accounts for the fact that 3D printing remains a somewhat "iffy" proposition, in terms of what it will be able to do in the next few years. Not so long ago, the news was full of debate in the U.S. as to 3D printing of guns, whilst in Iran (HT Mark Perry, AEI), 3D printing is already being used for medical purposes. Meanwhile, some states here are putting their primary efforts towards getting rid of the burden of Obamacare, with (???) to replace it. Has anyone noticed that some medical people are even having to take second jobs lately because they aren't getting paid on time by the government?

Clearly, there has to be a positive turnaround in local economic formation, before 3D can be utilized where and how it is actually needed - for production and services of all kinds. I will feel we have arrived when recyclables can be used in efficient, low cost and flexible production, for local building components and by all local citizens. No small community will need to be completely dependent on governments, cities or even auto transportation in the future, once it is allowed to utilize knowledge and resources for production needs locally.

Think about these changes on the horizon: with a bit of effort, we could already be preparing for local manufacturing which adapts to specific needs of all kinds. If we can do this, it also means things can change for the better, before millions of people fall away from the ability to participate economically. What's more, we don't know how those changes in local production capacity will affect overall costs for more basic living requirements of all kinds. Still, there are many legal hurdles to be cleared out of the way first.

How to think about the near future in monetary terms? For one thing, I see long term growth potential as a possible beneficiary of good deflation trends. Just the same, nothing realistic has been done to clear the way for them presently. That is why I am so set against a strong taper on the part of the Fed any time soon. Our local communities have to be permitted to take care of themselves in production and services based terms, before the stimulus levels of the present are no longer needed.

Presently, people in power are still acting as though little of significance has to change structurally, in spite of the realities. Or some power holders give structural needs "lip service" as an excuse to do absolutely nothing. By so doing, everyone ends up ignoring the reasons why so much additional stimulus was needed in the first place: to support the kinds of lifestyle expectations which special interests don't want to change now. So to just take away the stimulus because "it's gone on long enough", yet refuse to do anything to change the environments which required those infusions of money, would be like an ostrich putting its head into the sand.

Future generations need living and working environments that are better tailored to their needs. If ignoring that reality isn't enough, attempts to force them to live by the standards of earlier generations only invites more "bubbles" for asset formations. Meanwhile, government debt loads are the inverse of the "bubble" problem, in that they try to cover societal expectations which go well beyond what many family incomes actually represent.

Hopefully, we can find our way to dialogues that include emotional appeals and results oriented action in the same argument. But until we do, it would be most helpful to maintain the environments we presently have, to the best of our ability. That also means printing as much money as necessary, for total spending capacity. Building societies up only to knock them down again when no one agrees on anything, is no solution.