Depression was only narrowly averted, in the last decade. One way that it's easy to tell, is the fact present day stagnation talk resembles dialogue from the Great Depression - albeit with a few twists this time, given important changes in the makeup of economic activity in recent decades. The "traditional" stagnation view also comes across in a recent post from Timothy Lee, who looks at the maturation of scale and consumption fatigue (of physical goods or "things") as contributors to slow growth. He echoes the thoughts of many, that supply side growth is supposedly not even necessary. Only consider that fiscal infrastructure arguments aren't exactly compelling, either. Who wants to invest in human capital, for a job in bridge and road maintenance?
Regular readers know I find talk of economic stagnation, concerning. "No growth necessary" arguments ignore the reality of those who still invest heavily to access a general equilibrium setting not structured for full high income access. New institutions are needed for broader inclusion, and economic stability could also be sought on terms which don't require sticky wages. However, many remaining problems regarding economic access aren't widely recognized. The fact they are not, comes across in reasoning from a commenter in Lee's post who opined, "we need new strategies for excess money to support our economies".
None of this is about a need for "excess" money! The circumstance of a rapidly evolving economic environment is still being missed. And what about the fact nominal income still needs stronger support from central bankers just to maintain present economic stability, let alone the issues of long term growth and inclusion? Okay, I'll take a deep breath and back up a bit. First, think about what is happening politically. "Too many" consumer goods or no, there's heavy irony in "spent out" reasoning, given the fact that so many want tradable sectors to "come home" so a baseline of fiscally provided service structure can be maintained. The threat of protectionism has returned, and it has been roundly discussed of late.
But another problem looms on the horizon. Economists - whose reasoning is in many ways based on quantification - appeared to be arguing in high places recently for what amounts to less quantification. Granted, there are aspects of economics which do need to be expressed on less quantitative terms. Only consider how we continue to rely on centuries of economic reasoning, prior to today's statistical approach.
Just the same: there's reason for concern, when Davos movers and shakers muse about happiness and the supposed inadequacies of GDP, instead of the vital 21st century services economy which desperately needs greater clarification in GDP terms. Let's don't use "faulty or outdated GDP" to obscure the fact that making sense of time/knowledge based service product is hard work. When services are not well understood in terms of wealth contribution or long term growth potential, accurate monetary representation for citizens is also lost.
In fairness to all concerned, the measure and understanding of services formation (in total resource aggregate context) is not a straightforward process, because what is asymmetrically compensated does not exist in the same linear dimension as product which directly generates new wealth. However, without careful quantification for time based product, it becomes more difficult over time to coordinate the time based services product that people wish to produce and consume. The fact that many time based services remain ensconced in government activity, obscures the marketplace coordination factors which could contribute to more productive organizational capacity.
How to think about the time based product that has proven difficult to quantify? These services are asymmetrically compensated in general equilibrium. In other words, time based product which includes knowledge use, has not yet been generated as a direct source of wealth, but is funded either through either privately or publicly held wealth. This is why time/knowledge based product hasn't (yet) been able to "grow" the market for knowledge use diversity, at an aggregate level.
Consequently, too much knowledge (in time based product) is compelled to prove "superiority" over other forms of knowledge which are competing for the same pool of public or private wealth. Since this form of knowledge competition is in a beta position (to the alpha position of existing wealth/revenue), knowledge use competition has been expected (thus far) to drive out other knowledge use options, instead of growing a knowledge use market in aggregate. And with the loss of knowledge use, goes the loss of employment potential - especially given the fact government pays twice for each product unit of time based knowledge, whereas private industry only pays once.
The latter should mean greater efficiency for time/knowledge based product, right? However, organizational cost efficiency was lost, due to the fact private knowledge use compensation in aggregate was limited by design. Hence government provision of knowledge based product was mistaken at the start. Even though the government beta limits on knowledge use growth are involuntary, the alpha limits on a broader knowledge use marketplace are intentional. The sought after production and consumption of the 21st century can't gain traction in terms of marketplace growth. Fiscal policy has no choice but to pay two dollars, for employment that could have been had for a dollar on monetary terms, had the supply side been willing. Indeed, if governments could "magically" pay once, knowledge based work may have been viewed as the best fiscal option for the recessions of the 21st century.
What about growing the knowledge use marketplace on private terms? Unfortunately, for presently existing private institutions, that would mean diluting the salaries that already exist. This is one reason I suggest creating an alternative equilibrium, to make it possible to grow knowledge use without damaging the wage structure of general equilibrium. It is difficult for all concerned, to directly address the reality of time based services as the most important GDP component of the present. Small wonder it's too easy to bash GDP and talk about happiness instead! At the very least, service provision can be quantified through compensation for mutual cooperation and assistance, so that general equilibrium can better meet the obligations for knowledge production it already holds.
Wednesday, May 11, 2016
Monday, May 9, 2016
Notes on Value in Use vs Value in Exchange
In a value in exchange world, is there still room for value in use in any real context? To a utilitarian such as myself, that matters. Often, one hears that not everything in life is - or even "should" be - economic. But given the fact that people structure the majority of their lives around value in exchange routines, too few patterns remain, for value in use activity to contribute to important outcomes. A marketplace for time value, would help to restore personal habits and routines which include value in use functions.
Here's a Wikipedia definition for value-in-use:
Contrast the above definition of value-in-use with value in exchange, from InvestorWords:
Time as value in use, still contributed to value in exchange activity, as recently as the twentieth century. Familial value in use functions began to decline, as the production patterns of agriculture changed. This is also when women began to enter the workplace in large numbers, and marriage became more associated with consumption roles instead of production roles.
Given the present lack of organizational capacity for value in use functions, the majority of aggregate time value has been structured according to the wealth of other existing resource capacity. However, organizational patterns for time value don't exist in direct relation to marketplace representation for services and goods.
Instead, present nominal income depends on how profits for tradable sector production are diffused through other means. How many time based services - for instance - have to be paid for twice through fiscal policy? Roughly speaking, when time based services are fiscally generated and have to be paid for twice, the result is half the time based services product in the marketplace than would otherwise be possible. Which is an unfortunate result for both potential producers and consumers of time based product.
This also helps to explain why there is limited utility in revealed preferences, which do not sort by direct or linear patterns with the goods and services that are actually available. A marketplace for time value, which would create a base price structure for time use alongside income potential, could help to alleviate the resource disconnect between preferences for services and goods. By generating new value in use patterns on monetary terms, value in exchange activity would be reinforced as well.
Here's a Wikipedia definition for value-in-use:
Value-in-use is the net present value (NPV) of a cash flow or other benefits that an asset generates for a specific owner under a specific use. In the U.S., it is generally estimated at a use which is less than the highest-and-best use, and therefore is generally lower than market value.While this description is more cash oriented than my "time as meaning" interpretation, "a specific owner under a specific use" is on the mark. Internal definition for consumption potential, could lead to cost savings for both service formation and building components, in group settings specified to meet that purpose. Participating groups would be able to consider a full range of resource potential, to generate new non tradable sector growth.
Contrast the above definition of value-in-use with value in exchange, from InvestorWords:
The ability to trade an asset, such as money, for goods and services. Money has no "value in use". In itself, it does not satisfy wants or needs. To satisfy wants and needs, it must be traded. Although money has no value in use, it has value in exchange.Money needs to be exchanged in order to have value, just as time needs to be exchanged in order to have value in use. A new form of corporate structure could legally back value in use functions, for purposeful time based activity. In this setting, time value would exist as a basic production commodity, available to almost everyone who is willing and able to take part in a marketplace for services, knowledge and skill.
Time as value in use, still contributed to value in exchange activity, as recently as the twentieth century. Familial value in use functions began to decline, as the production patterns of agriculture changed. This is also when women began to enter the workplace in large numbers, and marriage became more associated with consumption roles instead of production roles.
Given the present lack of organizational capacity for value in use functions, the majority of aggregate time value has been structured according to the wealth of other existing resource capacity. However, organizational patterns for time value don't exist in direct relation to marketplace representation for services and goods.
Instead, present nominal income depends on how profits for tradable sector production are diffused through other means. How many time based services - for instance - have to be paid for twice through fiscal policy? Roughly speaking, when time based services are fiscally generated and have to be paid for twice, the result is half the time based services product in the marketplace than would otherwise be possible. Which is an unfortunate result for both potential producers and consumers of time based product.
This also helps to explain why there is limited utility in revealed preferences, which do not sort by direct or linear patterns with the goods and services that are actually available. A marketplace for time value, which would create a base price structure for time use alongside income potential, could help to alleviate the resource disconnect between preferences for services and goods. By generating new value in use patterns on monetary terms, value in exchange activity would be reinforced as well.
Sunday, May 8, 2016
Incremental Growth, Incremental Ownership
In too many instances, today's requirements for economic participation can be steep. While it's easy to recognize the difficulties for individuals, the problem also extends to numerous communities and even some regions of the country. How to address this problem? Even as prosperous regions begin to consider a more decentralized approach, the incremental ownership of knowledge use systems could also provide local means for decentralized viability. Whereas prosperous cities gain their economic efficiency through carefully culled skills capacity, i.e. by hiring the "best and the brightest", knowledge use systems could bring more economic viability for - yes - the rest of us.
Instead of making further demands on existing resource capacity, knowledge use systems could use local aggregate time value as a starting point, for further wealth generation. Incremental forms of growth and ownership, would make the requirements of economic access more flexible. A marketplace for time value would allow incremental growth - for instance - by making it possible for peers to (economically) assist one another, through "stair step" learning processes from a young age. Even though the means to do so would be relatively simple, the system can gain complexity by capitalizing on the numerous forms of knowledge and information now available in the digital realm.
Incremental growth would generate economic patterns that make it possible for those with less stamina to achieve their goals, and become more self sufficient in the process. However, it is important not to confuse learning patterns such as this with the requirements of prosperous regions. For understandable reasons, the concept of easy economic access in any form, could antagonize those who were expected to put their lives on the line, in order to take part in state and nationally driven requirements. Indeed, many of today's health costs for higher income levels, are associated with maintaining the long term stamina required to participate on general equilibrium terms.
Hence I've suggested alternative equilibrium conditions for economic participation, so that greater ease of participation in more marginal regions would not pose a threat to the stricter requirements individuals face, in order to take part in today's prosperous regions. This is another reason why time based wages for services coordination would accrue internally for asset formation, as well.
Knowledge use systems would also increase what is termed "employability", for some who have experienced little employment thus far. Angela Rachidi of AEI responds to a recent bipartisan effort to revitalize communities left behind with this post and writes, "Increasing the employability of poor people must accompany job creation efforts." In order to do so, a wide range of considerations apply, which include everything from spatial work/life arrangements to the kinds of mutual employment for services that matter most.
When time value is neglected in aggregate, too many come to believe their time value is insufficient as compared with that of others. A marketplace for time value would provide means to once again believe in one's personal worth in relation to others. Increased confidence would provide further incentive, for people to make the constant effort that is required to remain in productive economic relationships.
And by making the terms of economic engagement simpler, the process can be likened to a lockstitch sewing pattern. In other words, earlier "stitches" (efforts to acquire useful procedures or concepts) are reinforced through matched economic replication with others before moving ahead. It's an approach which makes it easier for individuals to hold earlier efforts "in place", so those efforts will be less likely to "unravel". Not only would this method provide benefits for long term memory, it could alleviate some of the stress that contributes to any number of health issues.
Whereas incremental growth is associated with economic time value on personal terms, incremental ownership is linked to the spatial components of land and environmental definition. Economic time value is linked to a secure base for ownership in local land and building components, without need of a loan structure within the system. Most important, is the ability to link personal time value to life's most basic needs, for living and working with others on economic terms. However, the secured portion of time value is also recognized as a starting point, to transition towards other forms of resource arbitrage which contribute to discretionary income, greater personal freedom, and the global links to continued progress.
Instead of making further demands on existing resource capacity, knowledge use systems could use local aggregate time value as a starting point, for further wealth generation. Incremental forms of growth and ownership, would make the requirements of economic access more flexible. A marketplace for time value would allow incremental growth - for instance - by making it possible for peers to (economically) assist one another, through "stair step" learning processes from a young age. Even though the means to do so would be relatively simple, the system can gain complexity by capitalizing on the numerous forms of knowledge and information now available in the digital realm.
Incremental growth would generate economic patterns that make it possible for those with less stamina to achieve their goals, and become more self sufficient in the process. However, it is important not to confuse learning patterns such as this with the requirements of prosperous regions. For understandable reasons, the concept of easy economic access in any form, could antagonize those who were expected to put their lives on the line, in order to take part in state and nationally driven requirements. Indeed, many of today's health costs for higher income levels, are associated with maintaining the long term stamina required to participate on general equilibrium terms.
Hence I've suggested alternative equilibrium conditions for economic participation, so that greater ease of participation in more marginal regions would not pose a threat to the stricter requirements individuals face, in order to take part in today's prosperous regions. This is another reason why time based wages for services coordination would accrue internally for asset formation, as well.
Knowledge use systems would also increase what is termed "employability", for some who have experienced little employment thus far. Angela Rachidi of AEI responds to a recent bipartisan effort to revitalize communities left behind with this post and writes, "Increasing the employability of poor people must accompany job creation efforts." In order to do so, a wide range of considerations apply, which include everything from spatial work/life arrangements to the kinds of mutual employment for services that matter most.
When time value is neglected in aggregate, too many come to believe their time value is insufficient as compared with that of others. A marketplace for time value would provide means to once again believe in one's personal worth in relation to others. Increased confidence would provide further incentive, for people to make the constant effort that is required to remain in productive economic relationships.
And by making the terms of economic engagement simpler, the process can be likened to a lockstitch sewing pattern. In other words, earlier "stitches" (efforts to acquire useful procedures or concepts) are reinforced through matched economic replication with others before moving ahead. It's an approach which makes it easier for individuals to hold earlier efforts "in place", so those efforts will be less likely to "unravel". Not only would this method provide benefits for long term memory, it could alleviate some of the stress that contributes to any number of health issues.
Whereas incremental growth is associated with economic time value on personal terms, incremental ownership is linked to the spatial components of land and environmental definition. Economic time value is linked to a secure base for ownership in local land and building components, without need of a loan structure within the system. Most important, is the ability to link personal time value to life's most basic needs, for living and working with others on economic terms. However, the secured portion of time value is also recognized as a starting point, to transition towards other forms of resource arbitrage which contribute to discretionary income, greater personal freedom, and the global links to continued progress.
Friday, May 6, 2016
The Knowledge Prior in Action
While I've not referred to the knowledge prior recently, it is one of several dual terms I began using some years earlier. This one exists in relation to what could simply be thought of as a monetary prior, for wealth formation. A knowledge prior would allow time value to work in concert with monetary arbitrage, to generate further economic momentum. Through its value in use (alongside the value in exchange of money) function, knowledge can serve as a initial wealth building component, by directly linking time value to local resource use patterns.
Whereas a monetary prior refers to a point of economic origin which generally begins with production of physical product. In turn, these activities gradually progress (at least in relatively complex economies) to non profit activity which culminates in a certain degree of support for knowledge use. Often, the fact that some areas cannot readily support knowledge is obscured by the fact revenue often comes from elsewhere. System structure which incorporates a knowledge prior, could make useful and experiential knowledge use less random - regardless of region.
Through symmetric time coordination, important elements of wealth generation can be turned "inside out", by tapping additional knowledge capacity at the outset. Knowledge use systems would coordinate and - over time - magnify existing resource capacity and time value in small decentralized groups. While the monetary prior is associated with general equilibrium conditions, knowledge prior use would be associated with alternative equilibrium growth capacity, which includes flexible definitions for both time value and environment.
In particular, innovation for flexible physical infrastructure would be key in these settings. When people age in place in their environments, so does their housing and local infrastructure. The ability to replace old components with new components can be vitally important in these circumstance. The object for small wage patterns working in concert is not to seek out "low quality" infrastructure and housing components. Rather, it is to mass produce less costly components which can be readily changed out when it is clearly time to do so. Indeed, the vast majority of tradable product has been created with similar intent for as long as anyone can remember. While some of this process is disparagingly referred to as throwaway product, the changing circumstance by which one makes best use of a given product, cannot be denied.
No fiscal budgets are going to get any real relief, until non tradable sectors are willing to make room for innovation. Non tradable sectors have already benefited from the innovation of tradable sectors for centuries, and now it is their turn to contribute to the process. Consider today's municipal dilemma, in which aggregate time value for populations as a whole, is no longer sufficient to meet today's requirements for infrastructure. Much of the appearance of lost income gains in recent decades, is due to the stubborn nature of non tradable sectors, as they continue to resist innovation in their own ranks. And the fact that policy makers have grown weary of printing more money for what basically amounts to infrastructure rigidity, is now reflected in a growing lack of ability to fund time based service capacity.
Consider also what has happened to aggregate time value, since a subset of the population now holds the majority of economic time value. If one were to roughly surmise, what policy makers imagine aggregate income potential (for all ages) to be in terms of available revenues, basic income for all citizens is a reasonable way to arrive at such a figure.
However: the basic income that governments might actually be able to provide citizens (say, in the event of an automated future), is a far cry from the revenue governments actually need to maintain their already existing building and infrastructure requirements! An apt context for this approximation is the fact municipalities no longer include many new start up homes. From a recent WSJ article, "How City Hall Exacerbates the Entry-level Housing Squeeze", regarding the need for impact fees:
A basic tenet for knowledge prior contribution to employment potential, is that general equilibrium conditions aren't capable of providing a given asymmetric wage across entire population sets. Domestic home activity is an excellent example, why asymmetric wage structure does not automatically apply for all who might otherwise just stay home to take advantage of market wages.
For example, how many parents could realistically pay their children for housework at the going rate of home cleaning services? It helps to remember that only so many employers can meet the requirements of an asymmetric wage, and that ability remains dependent on availability of additional revenue at any given moment. This could partly explain why housework did not become a part of the GDP measure, given the fact sufficient revenue did not exist to pay voluntary domestic labor in a routine workplace capacity.
Symmetric wage structure would not be limited by existing revenue in the marketplace, but by the number of participants who are willing to equally coordinate for group time value alongside the option of discretionary income through resource arbitrage. Even so, a small base wage would go far, because knowledge use systems would recreate non tradable sector consumption. By maintaining innovative and flexible infrastructure, knowledge use systems can be built at a fraction of what the costs would be in general equilibrium conditions.
A knowledge prior function can also provide greater social cohesion for knowledge use patterns, which are otherwise difficult for lower income levels to access. One of the most unfortunate instances in this regard has been the ongoing obligation of public school for all citizens. In spite of required attendance for students, not to mention lifetime taxation responsibilities for U.S. homeowners, public schooling provides little if any social or economic cohesion for those who participate, once they graduate from high school. Knowledge use systems would take care to ensure that local responsibilities for education include economic results for time value, so that all participants can take part in knowledge based activity.
As Buckminster Fuller said, "We are called to be the architects of the future, not its victims." While one often imagines the infrastructure possibilities for general equilibrium conditions, imagination also holds promise for environment definition at all income levels. The knowledge prior could provide a much needed point of origin, for new economic communities. Even though symmetric monetary compensation may not appear equivalent to the rewards of asymmetric compensation, aggregate time value could finally gain the respect it deserves, through better links to potential resource capacity.
Whereas a monetary prior refers to a point of economic origin which generally begins with production of physical product. In turn, these activities gradually progress (at least in relatively complex economies) to non profit activity which culminates in a certain degree of support for knowledge use. Often, the fact that some areas cannot readily support knowledge is obscured by the fact revenue often comes from elsewhere. System structure which incorporates a knowledge prior, could make useful and experiential knowledge use less random - regardless of region.
Through symmetric time coordination, important elements of wealth generation can be turned "inside out", by tapping additional knowledge capacity at the outset. Knowledge use systems would coordinate and - over time - magnify existing resource capacity and time value in small decentralized groups. While the monetary prior is associated with general equilibrium conditions, knowledge prior use would be associated with alternative equilibrium growth capacity, which includes flexible definitions for both time value and environment.
In particular, innovation for flexible physical infrastructure would be key in these settings. When people age in place in their environments, so does their housing and local infrastructure. The ability to replace old components with new components can be vitally important in these circumstance. The object for small wage patterns working in concert is not to seek out "low quality" infrastructure and housing components. Rather, it is to mass produce less costly components which can be readily changed out when it is clearly time to do so. Indeed, the vast majority of tradable product has been created with similar intent for as long as anyone can remember. While some of this process is disparagingly referred to as throwaway product, the changing circumstance by which one makes best use of a given product, cannot be denied.
No fiscal budgets are going to get any real relief, until non tradable sectors are willing to make room for innovation. Non tradable sectors have already benefited from the innovation of tradable sectors for centuries, and now it is their turn to contribute to the process. Consider today's municipal dilemma, in which aggregate time value for populations as a whole, is no longer sufficient to meet today's requirements for infrastructure. Much of the appearance of lost income gains in recent decades, is due to the stubborn nature of non tradable sectors, as they continue to resist innovation in their own ranks. And the fact that policy makers have grown weary of printing more money for what basically amounts to infrastructure rigidity, is now reflected in a growing lack of ability to fund time based service capacity.
Consider also what has happened to aggregate time value, since a subset of the population now holds the majority of economic time value. If one were to roughly surmise, what policy makers imagine aggregate income potential (for all ages) to be in terms of available revenues, basic income for all citizens is a reasonable way to arrive at such a figure.
However: the basic income that governments might actually be able to provide citizens (say, in the event of an automated future), is a far cry from the revenue governments actually need to maintain their already existing building and infrastructure requirements! An apt context for this approximation is the fact municipalities no longer include many new start up homes. From a recent WSJ article, "How City Hall Exacerbates the Entry-level Housing Squeeze", regarding the need for impact fees:
These fees fund the local infrastructure needed to support a growing population - schools, transportation, environmental mitigation and utilities.Basically, the above article implied that for most municipalities, their hands are tied and it has become difficult to provide (housing) room for those who are just starting out, or have otherwise become marginalized in some capacity for that matter. Knowledge use systems would not only provide a point of economic entry for lower income levels, but coordinate time value so as to allow greater economic and social cohesion. At the outset, knowledge use systems would set up and maintain a lower cost threshold for all local non tradable sector activity, which would be reinforced with symmetric compensation for time value.
A basic tenet for knowledge prior contribution to employment potential, is that general equilibrium conditions aren't capable of providing a given asymmetric wage across entire population sets. Domestic home activity is an excellent example, why asymmetric wage structure does not automatically apply for all who might otherwise just stay home to take advantage of market wages.
For example, how many parents could realistically pay their children for housework at the going rate of home cleaning services? It helps to remember that only so many employers can meet the requirements of an asymmetric wage, and that ability remains dependent on availability of additional revenue at any given moment. This could partly explain why housework did not become a part of the GDP measure, given the fact sufficient revenue did not exist to pay voluntary domestic labor in a routine workplace capacity.
Symmetric wage structure would not be limited by existing revenue in the marketplace, but by the number of participants who are willing to equally coordinate for group time value alongside the option of discretionary income through resource arbitrage. Even so, a small base wage would go far, because knowledge use systems would recreate non tradable sector consumption. By maintaining innovative and flexible infrastructure, knowledge use systems can be built at a fraction of what the costs would be in general equilibrium conditions.
A knowledge prior function can also provide greater social cohesion for knowledge use patterns, which are otherwise difficult for lower income levels to access. One of the most unfortunate instances in this regard has been the ongoing obligation of public school for all citizens. In spite of required attendance for students, not to mention lifetime taxation responsibilities for U.S. homeowners, public schooling provides little if any social or economic cohesion for those who participate, once they graduate from high school. Knowledge use systems would take care to ensure that local responsibilities for education include economic results for time value, so that all participants can take part in knowledge based activity.
As Buckminster Fuller said, "We are called to be the architects of the future, not its victims." While one often imagines the infrastructure possibilities for general equilibrium conditions, imagination also holds promise for environment definition at all income levels. The knowledge prior could provide a much needed point of origin, for new economic communities. Even though symmetric monetary compensation may not appear equivalent to the rewards of asymmetric compensation, aggregate time value could finally gain the respect it deserves, through better links to potential resource capacity.
Thursday, May 5, 2016
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:
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.
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.
Tuesday, May 3, 2016
Knowledge Use: Hegel's Rationale is No Longer Enough
One of the main reasons free market economies don't feel free, is the fact that many forms of knowledge use received special privileges (and consequent limitations), prior to the emergence of modern democracies. The lack of free markets for time and knowledge product, has meant less competition and choice in terms of personal endeavor.
Time based product exists in both practical and experiential forms. What is paramount in this regard? A marketplace for time value would highlight how individuals choose to assist one another, and influence one another, given the vast options that have emerged in recent centuries. Even though both pragmatic and experiential time use are basic in our lives, many individuals end up attempting to offer time based activity to others on non economic terms. How well is this state of affairs turning out? The institution of marriage is a prime example, since it fares poorly when both partners do not have substantive and reliable employment.
Since economic relationships overtook other resource use patterns (especially in the twentieth century), individuals have been slowly losing the ability to negotiate for personal time value. This is especially true as people age - and one's preferences become better understood. Historically, populations become more susceptible to slavery and other non voluntary circumstance, when too few have access to resource capacity or an ability to negotiate time value. Economically, arbitrary limits on time value also translate into reduced non tradable sector activity. Further, there is subsequently less demand for tradable sector activity than would be the case with sufficient economic access.
Knowledge use privilege can be thought of as a form of asymmetric compensation or externally assigned value for specific skill sets. My primary concern is the time based product of non tradable sectors, since diffused social support (taxation redistribution) is beginning to reach a political tipping point. Asymmetric compensation is also associated with the sticky wages which contribute to job loss in recessions, for both tradable and non tradable sectors. Regular readers know that I support the asymmetric time value that fiat monetary policy makes possible. Still, I don't believe this employment and market option is enough, to maintain stable and broad economic participation in the 21st century.
It's been more than two centuries, since knowledge workers began to assume a greater role in developed economies. National governments gradually took advantage of new revenue streams that resulted from specialization in manufacturing. Most important was the fact that national governments gained much of their power from the Industrial Revolution, and Georg Wilhelm Friedrich Hegel provided many important philosophical arguments which contributed to the process.
Four years earlier, in an internet discussion, some commenters compared my reasoning to Hegel. Apparently, they thought I was arguing for more state control! At the time, my familiarity with Hegel was quite limited. And I'd forgotten what I read about him in "The Mind and the Market" some years earlier, due to intervening life events that were quite stressful. So after a reread, I found myself grateful to those commenters, for encouraging me to take note of historical developments in the marketplace I might otherwise have missed. Even though Hegel was concerned about individual freedom, he believed the state was the primary means to greater freedom for the individual.
As a result, many observers have mixed feelings about this important philosopher. Jerry Muller, author of "The Mind and the Market", is somewhat sympathetic to Hegel given the historical framework of his era. The specialized labor of factory work which was transforming the marketplace, also appeared as though permanent economic losses at local levels. Nations gradually became more powerful and centralized further. Hence specialization in tradable sectors, also contributed to the asymmetric compensation (and organizational capacity) of specialized knowledge use as well.
Fast forward two hundred years, however, and "the end of history" which seemed certain only a decade earlier, is in doubt. Indeed, the entire "scaling up" process which provided an economic foundation for some of Hegel's reasoning, is winding down. Unfortunately, this has yet to be acknowledged by policy makers. Even though governments may recognize that tradable sectors can't continue (more of) the same patronage for knowledge based endeavor, policy makers continue to seek further avenues for taxation, in spite of already existing levels.
How to think about the fact, that most gains in scale for tradable sectors have already been realized? Paul Graham - in a recent essay - referred to this reversal as The Refragmentation. Even though consolidation of centralized power appeared to be permanent, decentralization processes are likely to become more prevalent in some capacity. The challenge for all involved in the near future, is one of maintaining the more practical elements of economic complexity and coordination that national governments provide. By meeting the challenge head on, democratic extinction events would also be less likely. However, national governments are best equipped to assist global commodity patterns, while local communities are best suited to maintain and coordinate time value and knowledge based resources.
Part of the challenge would involve a reexamination of today's institutions. Only consider how Hegel once stressed that individuals needed to adapt to the newly evolving institutions of his time. If institutions of the present are to retain their economic viability, it will be because they prove able to respond to the needs and desires of the individual. Vital economic complexity could in fact be lost, should power simply devolve to states which mimic the centralized power structures of national governments.
Knowledge use and time based product could make the transition to a more decentralized world. However, the journey to a dual local to global economy would be a fragile road, due to the levels of local sustainability that are needed to preserve economic complexity. Often, knowledge use complexity has declined in the past, when civilizations were unable to maintain productive resource use patterns. Today's patterns aren't the "wrong" patterns. They simply need more marketplace structure, than has been possible thus far.
Time based product exists in both practical and experiential forms. What is paramount in this regard? A marketplace for time value would highlight how individuals choose to assist one another, and influence one another, given the vast options that have emerged in recent centuries. Even though both pragmatic and experiential time use are basic in our lives, many individuals end up attempting to offer time based activity to others on non economic terms. How well is this state of affairs turning out? The institution of marriage is a prime example, since it fares poorly when both partners do not have substantive and reliable employment.
Since economic relationships overtook other resource use patterns (especially in the twentieth century), individuals have been slowly losing the ability to negotiate for personal time value. This is especially true as people age - and one's preferences become better understood. Historically, populations become more susceptible to slavery and other non voluntary circumstance, when too few have access to resource capacity or an ability to negotiate time value. Economically, arbitrary limits on time value also translate into reduced non tradable sector activity. Further, there is subsequently less demand for tradable sector activity than would be the case with sufficient economic access.
Knowledge use privilege can be thought of as a form of asymmetric compensation or externally assigned value for specific skill sets. My primary concern is the time based product of non tradable sectors, since diffused social support (taxation redistribution) is beginning to reach a political tipping point. Asymmetric compensation is also associated with the sticky wages which contribute to job loss in recessions, for both tradable and non tradable sectors. Regular readers know that I support the asymmetric time value that fiat monetary policy makes possible. Still, I don't believe this employment and market option is enough, to maintain stable and broad economic participation in the 21st century.
It's been more than two centuries, since knowledge workers began to assume a greater role in developed economies. National governments gradually took advantage of new revenue streams that resulted from specialization in manufacturing. Most important was the fact that national governments gained much of their power from the Industrial Revolution, and Georg Wilhelm Friedrich Hegel provided many important philosophical arguments which contributed to the process.
Four years earlier, in an internet discussion, some commenters compared my reasoning to Hegel. Apparently, they thought I was arguing for more state control! At the time, my familiarity with Hegel was quite limited. And I'd forgotten what I read about him in "The Mind and the Market" some years earlier, due to intervening life events that were quite stressful. So after a reread, I found myself grateful to those commenters, for encouraging me to take note of historical developments in the marketplace I might otherwise have missed. Even though Hegel was concerned about individual freedom, he believed the state was the primary means to greater freedom for the individual.
As a result, many observers have mixed feelings about this important philosopher. Jerry Muller, author of "The Mind and the Market", is somewhat sympathetic to Hegel given the historical framework of his era. The specialized labor of factory work which was transforming the marketplace, also appeared as though permanent economic losses at local levels. Nations gradually became more powerful and centralized further. Hence specialization in tradable sectors, also contributed to the asymmetric compensation (and organizational capacity) of specialized knowledge use as well.
Fast forward two hundred years, however, and "the end of history" which seemed certain only a decade earlier, is in doubt. Indeed, the entire "scaling up" process which provided an economic foundation for some of Hegel's reasoning, is winding down. Unfortunately, this has yet to be acknowledged by policy makers. Even though governments may recognize that tradable sectors can't continue (more of) the same patronage for knowledge based endeavor, policy makers continue to seek further avenues for taxation, in spite of already existing levels.
How to think about the fact, that most gains in scale for tradable sectors have already been realized? Paul Graham - in a recent essay - referred to this reversal as The Refragmentation. Even though consolidation of centralized power appeared to be permanent, decentralization processes are likely to become more prevalent in some capacity. The challenge for all involved in the near future, is one of maintaining the more practical elements of economic complexity and coordination that national governments provide. By meeting the challenge head on, democratic extinction events would also be less likely. However, national governments are best equipped to assist global commodity patterns, while local communities are best suited to maintain and coordinate time value and knowledge based resources.
Part of the challenge would involve a reexamination of today's institutions. Only consider how Hegel once stressed that individuals needed to adapt to the newly evolving institutions of his time. If institutions of the present are to retain their economic viability, it will be because they prove able to respond to the needs and desires of the individual. Vital economic complexity could in fact be lost, should power simply devolve to states which mimic the centralized power structures of national governments.
Knowledge use and time based product could make the transition to a more decentralized world. However, the journey to a dual local to global economy would be a fragile road, due to the levels of local sustainability that are needed to preserve economic complexity. Often, knowledge use complexity has declined in the past, when civilizations were unable to maintain productive resource use patterns. Today's patterns aren't the "wrong" patterns. They simply need more marketplace structure, than has been possible thus far.
Sunday, May 1, 2016
Some Musings on Money and Freedom
Why is it so important, to equate an ability to earn money with freedom? So long as individuals have the capacity to earn money for their work efforts, they maintain the chance to create new beginnings for themselves, when life's unexpected "endings" and other scenarios leave them compromised. Even though lack of economic access is also closely related to broader circumstance, for those who lack access, that loss is keenly felt at a personal level. All too often, it manifests as the pain experienced due to one's own personal shortcomings.
When it becomes difficult to maintain vital economic connections through work, social connections with friends and family tend to break down over time. Money is a resource conduit for understandable and reciprocal interaction in today's world, which people otherwise would not have. It is the link between the resource capacity the world holds, alongside the resource capacity of our time value. The Beatles sang "Money Can't Buy Me Love" when another generation was beginning to question the validity and importance of money. Just the same, access to money through own's own personal efforts is more important now, than it ever was in the past.
Even though excessive requirements for living and working mean less work for governments to raise tax revenue, the high bar for access also means governments end up assisting or otherwise managing externalities (crime) for the individuals who fail to make the grade. These access limitations make it more difficult for the marginalized to take part in life's most important primary relationships, as well. Often, the unemployed will convince themselves they've found the fortitude to overcome such losses, only to keenly and unexpectedly experience them again. In one sense I am fortunate for having lost economic access late in life, because that means fewer years will be needed to manage the consequences. I would not wish such a loss on anyone at an early stage in their lives. That is far too long, to be expected to live with the reality of exclusion.
Basic or other forms of guaranteed income pale, as compared to the self respect that money can buy through employment. While this approach may appear "moral" as opposed to welfare or disability payments, basic income nonetheless amounts to a lifetime judgement from society. It would be far better, for today's institutions to generate sufficient economic room for inclusion, so that people can continue to make their way in the world. Unfortunately, a basic income would strengthen class divisions which are already starting to become apparent.
No one can equate a basic income with new beginnings. This approach is solely a public apology, since the efforts of many are not wanted or needed in today's existing institutions. Arguments for basic income, are in some respects an uneasy truce for opposing political parties, given a lingering economic stagnation. It's a response which reflects a growing belief that there is only so much room in society, for individuals to achieve success.
Of course others also doubt the connections between money and freedom. In some instances, it isn't easy to equate the money that results from work with true freedom, because the need to work appears as though a burden if one doesn't have the "right" employment. And when there are more bills to be paid than money to pay them, money may not appear as though freedom!
But think about the alternative scenario, of a life without work. Weekends and vacations are meaningful when one has a job, whether or not one's work week holds sufficient meaning of its own. Yet when jobs are lost, those who no longer have employment are more likely to prefer the activity of the workweek taking place around them, to feel some sense of normalcy. For these individuals, it is clear, that money is key to personal freedom and respect. While psychology pays close attention to problem solving in interpersonal relationships, spiritual writings often stress the necessity of personal self sufficiency as key, before other aspects of mental clarity are truly possible.
As present day economies were beginning to evolve, those who believed in the potential of the marketplace, knew just how important the correlation between money and freedom really was. Jerry Muller, in "The Mind and the Market", stressed how Adam Smith felt about this connection:
When it becomes difficult to maintain vital economic connections through work, social connections with friends and family tend to break down over time. Money is a resource conduit for understandable and reciprocal interaction in today's world, which people otherwise would not have. It is the link between the resource capacity the world holds, alongside the resource capacity of our time value. The Beatles sang "Money Can't Buy Me Love" when another generation was beginning to question the validity and importance of money. Just the same, access to money through own's own personal efforts is more important now, than it ever was in the past.
Even though excessive requirements for living and working mean less work for governments to raise tax revenue, the high bar for access also means governments end up assisting or otherwise managing externalities (crime) for the individuals who fail to make the grade. These access limitations make it more difficult for the marginalized to take part in life's most important primary relationships, as well. Often, the unemployed will convince themselves they've found the fortitude to overcome such losses, only to keenly and unexpectedly experience them again. In one sense I am fortunate for having lost economic access late in life, because that means fewer years will be needed to manage the consequences. I would not wish such a loss on anyone at an early stage in their lives. That is far too long, to be expected to live with the reality of exclusion.
Basic or other forms of guaranteed income pale, as compared to the self respect that money can buy through employment. While this approach may appear "moral" as opposed to welfare or disability payments, basic income nonetheless amounts to a lifetime judgement from society. It would be far better, for today's institutions to generate sufficient economic room for inclusion, so that people can continue to make their way in the world. Unfortunately, a basic income would strengthen class divisions which are already starting to become apparent.
No one can equate a basic income with new beginnings. This approach is solely a public apology, since the efforts of many are not wanted or needed in today's existing institutions. Arguments for basic income, are in some respects an uneasy truce for opposing political parties, given a lingering economic stagnation. It's a response which reflects a growing belief that there is only so much room in society, for individuals to achieve success.
Of course others also doubt the connections between money and freedom. In some instances, it isn't easy to equate the money that results from work with true freedom, because the need to work appears as though a burden if one doesn't have the "right" employment. And when there are more bills to be paid than money to pay them, money may not appear as though freedom!
But think about the alternative scenario, of a life without work. Weekends and vacations are meaningful when one has a job, whether or not one's work week holds sufficient meaning of its own. Yet when jobs are lost, those who no longer have employment are more likely to prefer the activity of the workweek taking place around them, to feel some sense of normalcy. For these individuals, it is clear, that money is key to personal freedom and respect. While psychology pays close attention to problem solving in interpersonal relationships, spiritual writings often stress the necessity of personal self sufficiency as key, before other aspects of mental clarity are truly possible.
As present day economies were beginning to evolve, those who believed in the potential of the marketplace, knew just how important the correlation between money and freedom really was. Jerry Muller, in "The Mind and the Market", stressed how Adam Smith felt about this connection:
For Smith, the most liberating effect of the rise of commercial society was its replacement of direct and open ended personal dependency with the cash nexus, the contractual relations that limit the entitlement of men to dominate one another. To the extent that every man became a merchant, rather than a slave, retainer, serf or servant, society became more interdependent, while direct, personal dependence declined. This was one of the many senses in which commercial society provided a greater degree of freedom than previous social systems.We need to make certain everyone has means to remain economically viable. There are ways to utilize knowledge in incremental ways, which would allow the marginalized greater inclusion than they now experience. There are ways to structure ownership so that those who are not as strong, can maintain a life which doesn't overwhelm the skills capacity and ability they do hold. By making certain that money as concept remains linked to money as personal freedom for all concerned, many other problems can be addressed as well.
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