Since Congress sets the basic parameters of monetary policy, what goals should the Fed be trying to achieve? And what tools are appropriate? Scott Sumner and Patrick Horan for U.S. News
Recommended by David Beckworth, this paper from David Schleicher also takes legal issues into account which impact economic mobility: "Stuck! The Law and Economics of Residential Stability"
Is it possible to use the word "and" too many times in one's paper? This post from Tim Harford, explaining why he could relate to Paul Romer's frustration re excess complexity, made me smile. http://timharford.com/2017/05/economics-lessons-from-dr-seuss/
"Reducing the supply of reserves while doing nothing to reduce banks' demand for them is a recipe for demand driven deflation..." (George Selgin) https://www.alt-m.org/2017/06/01/ioer-and-banks-demand-for-reserves-yet-again/
Why jails are booming: https://www.citylab.com/politics/2017/06/why-jails-are-booming/528759/
"...the race for a better understanding of what drives the income distribution is just getting started..."
Why does the Fed still believe that low unemployment is contributing to inflation, especially given the lack of evidence? (Marcus Nunes)
A conversation with Timothy Taylor
If it's free, there's important reasons it's not being measured.
Larry Summers has his own concerns about the Fed.
Has Summers become a market monetarist? Scott Sumner takes a closer look.
If only occupational licensing were "good politics"!
The oil glut has not been advantageous for OPEC.
"Oil will increasingly have to compete for customers"
From Ed Luce, in a Q &A with James Pethokoukis:
"What we need is somebody...to talk about what would happen if there were a big investment program, an intelligent large scale one - with the private sector involved as partners - in the skills, lifetime skills not just one-off hits, the continuous learning skills of people in the middle class and beyond. And that's actually not such a hard thing to imagine."
"Officials will not take their rate hike plans and go quietly into the night, even in the face of low inflation." (Tim Duy) https://www.bloomberg.com/view/articles/2017-06-22/fed-s-labor-market-forecasts-don-t-make-sense
"In-Work Poverty in the United States"
"Nursing homes account for 42 percent of all Medicaid spending, even though only 6 percent of Medicaid enrollees use them. 64 percent of Americans in nursing homes depend on Medicaid."
A speech from Ben Bernanke: "When Growth is Not Enough"
Nick Rowe responds to a recent post from Miles Kimball.
"A better monetary policy wouldn't set any inflation target."
Scott Sumner provides a summary of his views on monetary economics.
Thursday, June 29, 2017
Tuesday, June 27, 2017
When Markets No Longer Feel "Free"
Of course, in a sense, markets have never been free. That fact partly accounts for this blog's all too sober name. Even as I advocate to regain monetary equivalence for time value, there's no denying the ongoing reality of tight monetary conditions across the globe. NIMBYs appear to have won the day. I was reminded of extensive political interference in markets, and the excessive confidence of free market defenders who don't appear concerned, by a recent post from Gavin Kennedy, who is as well versed as any economist I know, regarding Adam Smith.
Regular readers already know what I believe to be missing from the marketplace: time value. I'm convinced that it's crucial, for individuals to have a functioning marketplace for the time they actually have, to meet their own personal obligations. Too many markets are constructed, so as to make it impossible for individuals with limited income to use their time effectively. When free market defenders dismiss those with additional burdens, and neglect to explore proactive alternatives for the crony capitalism which causes these problems, free market defenders ultimately risk the demise of the markets they celebrate. If and when people lose the ability to freely exchange with one another, some are going to lose faith in the process.
Time is the one resource we all have, which naturally functions as an exchange behavior: whether through our physical abilities, our skills, or both. Yet time value has been subtracted from economic exchange in too many instances. We need the full approximation of our time to build and maintain our environments and seek exchange with others - particularly when monetary representation is limited, due to general equilibrium constraints.
As to the ongoing reality of exchange as a human trait, and in response to an article which highlighted Adam Smith, Gavin Kennedy writes:
Time value has often been a crucial economic element, when populations didn't have sufficient money at their disposal for the local markets which are now referred to as non tradable sector activity. If funds were limited, people built dwellings through their own stamina and natural resources, and coordinated their time to realize mutually desired ends. The progress of the last century has fooled us to some extent, in assuming no one needs to rely on neighbors anymore for economic purposes. While these assumptions may hold true for higher income levels, lower income levels have not only lost the resource patterns of the past, but are quickly losing access to the expected patterns of the present, as well.
Because of this circumstance, I've promoted a new institutional construct, which - since it would generate an alternative equilibrium for local non tradable sector activity - could be referred to as an equilibrium corporation. Via alternative equilibrium for non tradable sector activity, people could more closely anchor the use of their time to the requirements of their local environments. The equilibrium corporation would be designed to preserve pathways for economic freedom - at least to the extent it is possible, given the natural constraints of time and resource capacity.
Every nation needs to make certain they don't lose the capacity of their citizens with limited incomes. Granted: it's okay if higher income levels don't want mass produced lightweight building components for living and working, especially if these components would reduce local property values. But it's not okay that lower income levels don't have these options, and equilibrium corporations would make building components central to an asset creation role which combines tradable and non tradable sector functions.
Only remember that when political leaders ignore the circumstance of their own citizens, even the strongest economies can falter. Adam Smith also knew, how the possibilities of falling backward were always there, even when nations were experiencing tremendous economic progress. "The Wealth of Nations" was understandably viewed as a celebration of prosperity. Still, this important work held warnings which are still important, centuries after he penned them. If policy makers do not stand behind strong economic pathways that allow freedom of choice, the intentions which do win the day, could be the ones which make freedom a forgotten memory.
Regular readers already know what I believe to be missing from the marketplace: time value. I'm convinced that it's crucial, for individuals to have a functioning marketplace for the time they actually have, to meet their own personal obligations. Too many markets are constructed, so as to make it impossible for individuals with limited income to use their time effectively. When free market defenders dismiss those with additional burdens, and neglect to explore proactive alternatives for the crony capitalism which causes these problems, free market defenders ultimately risk the demise of the markets they celebrate. If and when people lose the ability to freely exchange with one another, some are going to lose faith in the process.
Time is the one resource we all have, which naturally functions as an exchange behavior: whether through our physical abilities, our skills, or both. Yet time value has been subtracted from economic exchange in too many instances. We need the full approximation of our time to build and maintain our environments and seek exchange with others - particularly when monetary representation is limited, due to general equilibrium constraints.
As to the ongoing reality of exchange as a human trait, and in response to an article which highlighted Adam Smith, Gavin Kennedy writes:
In short, exchange behaviors are not unique to a 'capitalist economy', nor specifically only to markets. Smith notes that the 'exchange propensity' functioned long before capitalism...
The notion that a "capitalist economy works efficiently to determine what people really want as opposed to what they say they want" is pure fantasy. That capitalism can be more efficient than non-capitalist and pre-capitalist economies is broadly true; that they are always faultless is less certain...
Free markets do not, and arguably never have, operated in the real world. Smith understood this and indeed makes many references to the behaviour of 'merchants and manufacturers' who in his day (and still in ours) colluded with each other and with governments to introduce the very same 'peverse effects'...No one who feels strongly about a dynamic marketplace should be resting on their laurels now, especially as attacks from the left become more insistent in the Trump era. What's unsettling about this latest round, are the numerous historical examples when (spreading) lost faith in markets, ultimately meant lost national dynamism. Lest policy makers and pundits in the U.S. imagine themselves "immune" to this problem, why even take a chance on misplaced confidence becoming the "pride before the fall"? If no one is willing to pursue measures which can finally generate dynamic non tradable sectors, we may all be in for a bumpy ride, in the foreseeable future.
Time value has often been a crucial economic element, when populations didn't have sufficient money at their disposal for the local markets which are now referred to as non tradable sector activity. If funds were limited, people built dwellings through their own stamina and natural resources, and coordinated their time to realize mutually desired ends. The progress of the last century has fooled us to some extent, in assuming no one needs to rely on neighbors anymore for economic purposes. While these assumptions may hold true for higher income levels, lower income levels have not only lost the resource patterns of the past, but are quickly losing access to the expected patterns of the present, as well.
Because of this circumstance, I've promoted a new institutional construct, which - since it would generate an alternative equilibrium for local non tradable sector activity - could be referred to as an equilibrium corporation. Via alternative equilibrium for non tradable sector activity, people could more closely anchor the use of their time to the requirements of their local environments. The equilibrium corporation would be designed to preserve pathways for economic freedom - at least to the extent it is possible, given the natural constraints of time and resource capacity.
Every nation needs to make certain they don't lose the capacity of their citizens with limited incomes. Granted: it's okay if higher income levels don't want mass produced lightweight building components for living and working, especially if these components would reduce local property values. But it's not okay that lower income levels don't have these options, and equilibrium corporations would make building components central to an asset creation role which combines tradable and non tradable sector functions.
Only remember that when political leaders ignore the circumstance of their own citizens, even the strongest economies can falter. Adam Smith also knew, how the possibilities of falling backward were always there, even when nations were experiencing tremendous economic progress. "The Wealth of Nations" was understandably viewed as a celebration of prosperity. Still, this important work held warnings which are still important, centuries after he penned them. If policy makers do not stand behind strong economic pathways that allow freedom of choice, the intentions which do win the day, could be the ones which make freedom a forgotten memory.
Monday, June 26, 2017
Notes on Human Capital in Relation to Productivity
Why have we been slow to recognize the relation of excessive inputs for human capital, for the total output of time based product? Possibly one reason, are expectations for rising income over time, as automatic with aggregate output gains, regardless of sector. To this end, purveyors of time based product have additional rationale to increase aggregate inputs (human capital investment requirements) in relation to total output, as a quality factor.
Rising wages as automatically correlated with rising productivity, are a major point of contention, where productivity mysteries are concerned. Since productivity benefited from centuries of expanding tradable sector output, it's an understandable societal expectation. But ever more demands on human capital input in relation to output (for time based product), greatly affects total factor productivity. There's also the Baumol effect, which lends further weight to the expectations of human capital input, prior to output.
Also interesting, are the cultural factors involved. The difficult impasse of today's healthcare as a contributor to poor productivity, is due in part to society's acceptance of low final product output, in relation to the human capital input that has been required. Many years of formal education take place, before students can pass the torch of knowledge to others, either through understanding or knowledge application. Even though such requirements detract from total factor productivity, these organizational patterns are backed by such strong cultural expectations, that it is difficult to contextualize them as lost output or marketplace capacity.
Indeed, one normally associates cultural factors with positive economic gains, even though cultural expectations for human capital investment, stand in the way of long term growth and productivity! Fortunately, for a long time, tradable sector productivity was dominant to such an extent, it provided sufficient revenue that extensive cultural requirements for human capital weren't so problematic. In "Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity", the authors (including William Baumol) agree with the importance of culture for economic dynamism, while wondering if Hernando de Soto's emphasis on turning informal economic activity into formal activity, might have been oversold to some degree.
Yet as it turns out, Hernando de Soto has been proven right in downplaying culture's role as a positive contributor to economic dynamism. All the more so, since many individuals held reservations regarding his efforts to formalize capital. In all of this: Only remember that when human capital is held in check by excessive input in relation to total output for time based product, this gets reflected in the physical capital that receives a "green light" for aggregate representation. Not everyone wants the additional wealth valuation for general equilibrium settings, which is also expressed via monetary means.
Human capital investment in the form of education "inputs" (also noted in "Good Capitalism, Bad Capitalism") ultimately occurs in a total factor productivity context. At least one recent study has highlighted the problematic nature of total factor productivity since the Great Recession, alongside what I believe to be a consequent diminished labour force participation. Again, note the confusion of human capital as it relates to total factor productivity, in tradable/non tradable sector context, where Liberty Street Economics explains,
Understandably, economists continue to view rising income - regardless of sector - as crucial to progress. However, this view of continuous progress was established long before anyone imagined a services dominant economy, in which total inputs (while externalized in the form of educational investment) might come to dominate actual output. Again, what matters in terms of time based product, is what the consumer can buy. If output could be incrementally gained alongside input, individuals with limited incomes would no longer remain locked out of vital, time based service markets.
Tradable sectors multiply output gains via resource capacity. Whereas the time based product of non tradable sectors, contributes to marketplace output and knowledge diffusion via replication and additive means. Or, one could express this as passing on the torch of knowledge for economic progress, two people and one shared interaction at a time. Continuous output, while it can certainly appear as though small and incremental, nonetheless adds up a lot more quickly than decades of human capital preparation, so often required before many have a chance to participate on economic terms for the first time.
In alternative equilibrium settings, the human capital investment that is part of time based product, would quickly become eligible as continuous output for final product. Individuals would have the chance to pass on the torch of knowledge, even as they are experiencing its benefits for the first time. The result? Not unlike the output gains in relation to input, which are a result of far more complicated versions, of technological progress.
Rising wages as automatically correlated with rising productivity, are a major point of contention, where productivity mysteries are concerned. Since productivity benefited from centuries of expanding tradable sector output, it's an understandable societal expectation. But ever more demands on human capital input in relation to output (for time based product), greatly affects total factor productivity. There's also the Baumol effect, which lends further weight to the expectations of human capital input, prior to output.
Also interesting, are the cultural factors involved. The difficult impasse of today's healthcare as a contributor to poor productivity, is due in part to society's acceptance of low final product output, in relation to the human capital input that has been required. Many years of formal education take place, before students can pass the torch of knowledge to others, either through understanding or knowledge application. Even though such requirements detract from total factor productivity, these organizational patterns are backed by such strong cultural expectations, that it is difficult to contextualize them as lost output or marketplace capacity.
Indeed, one normally associates cultural factors with positive economic gains, even though cultural expectations for human capital investment, stand in the way of long term growth and productivity! Fortunately, for a long time, tradable sector productivity was dominant to such an extent, it provided sufficient revenue that extensive cultural requirements for human capital weren't so problematic. In "Good Capitalism, Bad Capitalism and the Economics of Growth and Prosperity", the authors (including William Baumol) agree with the importance of culture for economic dynamism, while wondering if Hernando de Soto's emphasis on turning informal economic activity into formal activity, might have been oversold to some degree.
Yet as it turns out, Hernando de Soto has been proven right in downplaying culture's role as a positive contributor to economic dynamism. All the more so, since many individuals held reservations regarding his efforts to formalize capital. In all of this: Only remember that when human capital is held in check by excessive input in relation to total output for time based product, this gets reflected in the physical capital that receives a "green light" for aggregate representation. Not everyone wants the additional wealth valuation for general equilibrium settings, which is also expressed via monetary means.
Human capital investment in the form of education "inputs" (also noted in "Good Capitalism, Bad Capitalism") ultimately occurs in a total factor productivity context. At least one recent study has highlighted the problematic nature of total factor productivity since the Great Recession, alongside what I believe to be a consequent diminished labour force participation. Again, note the confusion of human capital as it relates to total factor productivity, in tradable/non tradable sector context, where Liberty Street Economics explains,
A major economic concern is the ongoing sluggishness in the growth of output per worker hours, generally called labor productivity. In an arithmetic sense, the growth of the economy can be accounted for by the increase in hours worked plus that of labor productivity.However, standard productivity gains have accrued on behalf of employees, due to a centuries long process of output gains via tradable sector dominance. What has yet to be actively considered, is that non tradable sector time based product works differently, which is particularly important given its recent market dominance. Marketplace expansion takes place when time participation is allowed to expand through both inputs and outputs. Yet when wages automatically rise for time based product alongside tradable sector wages, equilibrium coordination for time based services gradually becomes reduced to higher income categories. Which then limits the total marketplace for time based product. The result? Limits to both labour force participation and total factor productivity (marketplace size), as mentioned (above) in "The Disappointing Recovery of Output after 2009".
Understandably, economists continue to view rising income - regardless of sector - as crucial to progress. However, this view of continuous progress was established long before anyone imagined a services dominant economy, in which total inputs (while externalized in the form of educational investment) might come to dominate actual output. Again, what matters in terms of time based product, is what the consumer can buy. If output could be incrementally gained alongside input, individuals with limited incomes would no longer remain locked out of vital, time based service markets.
Tradable sectors multiply output gains via resource capacity. Whereas the time based product of non tradable sectors, contributes to marketplace output and knowledge diffusion via replication and additive means. Or, one could express this as passing on the torch of knowledge for economic progress, two people and one shared interaction at a time. Continuous output, while it can certainly appear as though small and incremental, nonetheless adds up a lot more quickly than decades of human capital preparation, so often required before many have a chance to participate on economic terms for the first time.
In alternative equilibrium settings, the human capital investment that is part of time based product, would quickly become eligible as continuous output for final product. Individuals would have the chance to pass on the torch of knowledge, even as they are experiencing its benefits for the first time. The result? Not unlike the output gains in relation to input, which are a result of far more complicated versions, of technological progress.
Saturday, June 24, 2017
Preserve Knowledge Through Books and Time Value
Those of a certain age, remember knowledge as a tempting marketplace housed in books, in second hand bookstores filled to overflowing with every imaginable subject just "begging" to be read. This morning I recalled one Houston bookstore from three decades earlier, which had a good sized room solely dedicated to history books. Just history books!
Today, knowledge has become even more important in the marketplace. Nevertheless, our basic time scarcity has not changed one iota, even as digital information further expands the choices for our focused attention. Hence making room in one's life for the pleasures of the printed page, not to mention pursuing intellectual challenges with others on personal terms, means even more difficult choices are involved.
Perhaps these claims on our time, help to explain the occasional struggles re what "should" be included in high school history books, for instance. Some worry: might required exposure to a subject be the only storyline some students encounter, especially if their interests lie elsewhere? As to that requirement aspect of learning: It's one thing to argue for or against interpretations, via one's own written format which others can support as they wish. But what happens when these arguments instead become part of a roster of educational expectations?
Consequently, multiple threads of interpretation and persuasion end up mercilessly jumbled, in a single, somewhat incoherent source. Among other problems, these combinations don't readily tell convincing stories, which students can later recall. For Texas in particular, many subjects tend to end up as ideological battles. Recently, the local news asked in their "question of the day": should LGBTQ history, be taught in Houston public schools? Indeed: Doing so could be difficult, since Texas has laws on the books which prevent teachers from "discussing gay and transgender issues in a positive light".
Jumbling multiple fragments of history together in a single required book, is in many respects a disservice to all concerned. The integrity of historical thought is lost, for different historical strands need to be discovered via personal means. The marketplace for intellectual challenges, needs better representation on terms that are far more spontaneous than what is occurring today. Yesterday's local bookstores once provided the story lines that contributed to critical thinking - not to mention lasting connections to individual authors who could made subjects far more interesting than the ways they were often presented in classrooms.
Indeed, many classrooms are experiencing limits, in their ability to make knowledge vital for the course of our daily lives. Even the subjects which do make their way into today's history books, may be passed over by teachers who are already pressed for time. When education is expected to be take place mostly through the efforts of credentialed teachers, the preservation of knowledge as challenge and shared critical thought, can be lost.
Unfortunately, the association of formal education with the value of books, is also not as strong as one might suppose. Over the course of my lifetime, the homes I've visited which contained a wide range of books, sometimes belonged to individuals without college degrees. And while visiting homes of those with college degrees, often they contained no books in places which were obvious to their visitors.
Credentialed teachers cannot be expected to serve as a sole knowledge source for students, who need economic opportunities to explore subjects on more personal terms. Yet it's not the credential which is the problem, but rather, the misplaced expectations of many educational settings. Students especially should not be limited to subject matter which has become part of a societal minefield. And while much can be discovered or achieved online, it's shared dialogue that gives subject matter its most meaningful context. This is when it becomes possible, to pass the torch of knowledge to others in ways that can be measured and quantified.
In a recent and more spontaneous past, brick and mortar booksellers contributed to the marketplace of knowledge, even on the back roads and hidden places. Many a non fiction writer was discovered, and consequently supported, by those who simply loved to wander about far flung towns and communities to see what they could discover. And it wasn't just independent booksellers (often without college degrees) who offered options such as these. Many other store keepers who sold second hand goods, also maintained broad book selections to tempt the student of life.
Students need the ability to share their own subject interests with others, in settings that are also reinforced at an economic level. So many ideas and concepts which contribute to critical thinking, are the result of spontaneous interaction. Time arbitrage would provide new opportunities for experiential education, instead of a required format for economic access. Presently, the latter doesn't quite serve the purpose which it was built for. Everyone has the potential to be a torch for knowledge. It's time to free our desire to learn about the world, from the struggles over the curriculum of formal education.
Today, knowledge has become even more important in the marketplace. Nevertheless, our basic time scarcity has not changed one iota, even as digital information further expands the choices for our focused attention. Hence making room in one's life for the pleasures of the printed page, not to mention pursuing intellectual challenges with others on personal terms, means even more difficult choices are involved.
Perhaps these claims on our time, help to explain the occasional struggles re what "should" be included in high school history books, for instance. Some worry: might required exposure to a subject be the only storyline some students encounter, especially if their interests lie elsewhere? As to that requirement aspect of learning: It's one thing to argue for or against interpretations, via one's own written format which others can support as they wish. But what happens when these arguments instead become part of a roster of educational expectations?
Consequently, multiple threads of interpretation and persuasion end up mercilessly jumbled, in a single, somewhat incoherent source. Among other problems, these combinations don't readily tell convincing stories, which students can later recall. For Texas in particular, many subjects tend to end up as ideological battles. Recently, the local news asked in their "question of the day": should LGBTQ history, be taught in Houston public schools? Indeed: Doing so could be difficult, since Texas has laws on the books which prevent teachers from "discussing gay and transgender issues in a positive light".
Jumbling multiple fragments of history together in a single required book, is in many respects a disservice to all concerned. The integrity of historical thought is lost, for different historical strands need to be discovered via personal means. The marketplace for intellectual challenges, needs better representation on terms that are far more spontaneous than what is occurring today. Yesterday's local bookstores once provided the story lines that contributed to critical thinking - not to mention lasting connections to individual authors who could made subjects far more interesting than the ways they were often presented in classrooms.
Indeed, many classrooms are experiencing limits, in their ability to make knowledge vital for the course of our daily lives. Even the subjects which do make their way into today's history books, may be passed over by teachers who are already pressed for time. When education is expected to be take place mostly through the efforts of credentialed teachers, the preservation of knowledge as challenge and shared critical thought, can be lost.
Unfortunately, the association of formal education with the value of books, is also not as strong as one might suppose. Over the course of my lifetime, the homes I've visited which contained a wide range of books, sometimes belonged to individuals without college degrees. And while visiting homes of those with college degrees, often they contained no books in places which were obvious to their visitors.
Credentialed teachers cannot be expected to serve as a sole knowledge source for students, who need economic opportunities to explore subjects on more personal terms. Yet it's not the credential which is the problem, but rather, the misplaced expectations of many educational settings. Students especially should not be limited to subject matter which has become part of a societal minefield. And while much can be discovered or achieved online, it's shared dialogue that gives subject matter its most meaningful context. This is when it becomes possible, to pass the torch of knowledge to others in ways that can be measured and quantified.
In a recent and more spontaneous past, brick and mortar booksellers contributed to the marketplace of knowledge, even on the back roads and hidden places. Many a non fiction writer was discovered, and consequently supported, by those who simply loved to wander about far flung towns and communities to see what they could discover. And it wasn't just independent booksellers (often without college degrees) who offered options such as these. Many other store keepers who sold second hand goods, also maintained broad book selections to tempt the student of life.
Students need the ability to share their own subject interests with others, in settings that are also reinforced at an economic level. So many ideas and concepts which contribute to critical thinking, are the result of spontaneous interaction. Time arbitrage would provide new opportunities for experiential education, instead of a required format for economic access. Presently, the latter doesn't quite serve the purpose which it was built for. Everyone has the potential to be a torch for knowledge. It's time to free our desire to learn about the world, from the struggles over the curriculum of formal education.
Thursday, June 22, 2017
Healthcare: Societal Burden, or Wealth Potential?
According to Reuters, "Most Americans Say Republican Healthcare Plan Will Be Harmful":
How to think about the fact, so many are "giving up" on healthcare as even having the potential of positive outcomes? Whichever way one slices it, the news does not appear good. While policy makers will likely reduce healthcare access wherever possible in the foreseeable future, these reductions still don't get at the root circumstance today's healthcare has generated, regarding long term federal budget obligations. Indeed, that would still hold true, even without the added consideration of aging demographics.
As healthcare (in its present organizational capacity) continues to become a larger part of GDP, relatively less revenue from other sources remains available, to fund its growing costs. As a dependent equilibirum component, healthcare's present requirements for (excessive) input in relation to total output of time based product, contribute to the present low productivity patterns of economic stagnation. This unfortunate reality leaves policy makers on both sides of the aisle, with few choices or long term solutions.
Plus: Even as more healthcare cuts inevitably take place, more senior citizens will seek access to healthcare in the years ahead. Since today's healthcare is still equilibrium dependent rather than capable of providing equilibrium growth, it slowly - but surely - reduces the same economic growth which so many had hoped would be able to reverse its growing burdens. Paradoxically, the way healthcare is currently organized, contributes to its dependent equilibrium status. What is needed, are ways that healthcare could actually contribute to wealth creation, instead of detracting from wealth creation.
In the meantime, the crowding out effects of healthcare are also exacerbated by monetary policy. The Keynesian 20th century approach to inflation, was an approach which had little means to respond to the crowding effects of relative inflation or deflation, depending on sector. Healthcare has become a major source of supply side inflation. Yet when central bankers attempt to compensate, they inadvertently make the situation much worse, by leaving less money for the representation of other vitally important marketplace obligations.
There are ways out of this dilemma, but they include thinking about today's healthcare burdens somewhat differently. Ultimately, populations could internally coordinate healthcare alongside other important time based services. There are wide swathes of knowledge which could can be tapped, that have been available for centuries and are not subject to the same knowledge use protections, as present day "cutting edge" procedures. New wealth could be incrementally built by focusing on everyone's skills capacity, and healthcare could function with other knowledge as components of tangible, time based product. This increased quantification could do much to restore productivity.
Eventually, healthcare would become part of a broader marketplace where - until now - productive agglomeration has largely been missing. These new service generated marketplaces would relieve considerable pressure on policy makers, not to mention the pressures for services which have been borne by taxpayers, governments and employers alike. Human capital investment would be compensated as a continuous part of educational processes. This is all the more important, since the normal investment burdens of today's physicians make it difficult for them to practice in rural areas of the U.S. By making organizational capacity for healthcare less equilibrium dependent, the healthcare of the future would no longer have to present such a societal burden.
When U.S. Senate Republicans unveil their plan to overhaul America's healthcare system, they will face a skeptical public that already does not buy the justification for an earlier version that passed the House of Representatives...a majority of the country thinks the American Health Care Act would be harmful for low-income Americans, people with pre-existing health conditions and Medicaid recipients.Among those polled, even a Trump supporter said, "It'll make people's deductibles skyrocket. So I'm not for this healthcare act. I'm for insurance for everyone." And Joseph Antos, a healthcare expert for AEI, said of the still rising costs, "It would be great if a politician had the nerve to be brutally honest. None of them seem to."
How to think about the fact, so many are "giving up" on healthcare as even having the potential of positive outcomes? Whichever way one slices it, the news does not appear good. While policy makers will likely reduce healthcare access wherever possible in the foreseeable future, these reductions still don't get at the root circumstance today's healthcare has generated, regarding long term federal budget obligations. Indeed, that would still hold true, even without the added consideration of aging demographics.
As healthcare (in its present organizational capacity) continues to become a larger part of GDP, relatively less revenue from other sources remains available, to fund its growing costs. As a dependent equilibirum component, healthcare's present requirements for (excessive) input in relation to total output of time based product, contribute to the present low productivity patterns of economic stagnation. This unfortunate reality leaves policy makers on both sides of the aisle, with few choices or long term solutions.
Plus: Even as more healthcare cuts inevitably take place, more senior citizens will seek access to healthcare in the years ahead. Since today's healthcare is still equilibrium dependent rather than capable of providing equilibrium growth, it slowly - but surely - reduces the same economic growth which so many had hoped would be able to reverse its growing burdens. Paradoxically, the way healthcare is currently organized, contributes to its dependent equilibrium status. What is needed, are ways that healthcare could actually contribute to wealth creation, instead of detracting from wealth creation.
In the meantime, the crowding out effects of healthcare are also exacerbated by monetary policy. The Keynesian 20th century approach to inflation, was an approach which had little means to respond to the crowding effects of relative inflation or deflation, depending on sector. Healthcare has become a major source of supply side inflation. Yet when central bankers attempt to compensate, they inadvertently make the situation much worse, by leaving less money for the representation of other vitally important marketplace obligations.
There are ways out of this dilemma, but they include thinking about today's healthcare burdens somewhat differently. Ultimately, populations could internally coordinate healthcare alongside other important time based services. There are wide swathes of knowledge which could can be tapped, that have been available for centuries and are not subject to the same knowledge use protections, as present day "cutting edge" procedures. New wealth could be incrementally built by focusing on everyone's skills capacity, and healthcare could function with other knowledge as components of tangible, time based product. This increased quantification could do much to restore productivity.
Eventually, healthcare would become part of a broader marketplace where - until now - productive agglomeration has largely been missing. These new service generated marketplaces would relieve considerable pressure on policy makers, not to mention the pressures for services which have been borne by taxpayers, governments and employers alike. Human capital investment would be compensated as a continuous part of educational processes. This is all the more important, since the normal investment burdens of today's physicians make it difficult for them to practice in rural areas of the U.S. By making organizational capacity for healthcare less equilibrium dependent, the healthcare of the future would no longer have to present such a societal burden.
Tuesday, June 20, 2017
Time Based Product: The Same Results Via "Less" Effort?
What if we were to think about achieving the same (aggregate) result with less effort, in terms of time based product, at a macroeconomic level? The productivity of time based product, includes some hidden factors which have yet to be explored. Individual firms often reduce time input via automation for time based product, in order to reduce budgetary burdens. Nevertheless, potential losses of time based product, need to be understood, in relation to the inputs that society already expects for human capital investment, as one's personal responsibility.
Time value needs better representation as aggregate supply potential. Today's managed pools for aggregate demand, are resulting in arbitrary input reductions at the level of the firm, in spite of ongoing input expectations of human capital investment, outside the firm. This result also suggests problems for Solow Residual effects in time based product. Not so much because of firm specific input limits, but in terms of broader limits to output potential. It means that due to externalized investment expectations for human capital, there are far more investment inputs than are actually being utilized by today's knowledge use organizational patterns. Some human capital investment never gains economic compensation, while other investment processes for human capital end up reimbursed many times over; by consumers, governments, businesses and taxpayers alike.
If one were to consider the production of input requirements (formal education) in a total or aggregate input/output context, the ongoing losses for wealth potential and marketplace formation, would become more obvious. When extensive human capital investment (input) is required before output ever becomes possible, multiple institutions and populations are held responsible for the balance. Individuals bear ultimate responsibility for building time value, and the consequent human capital losses for knowledge use production primarily as institutional aggregate demand, have not been well understood.
One can only imagine, how an incomplete production process such as this would impact tradable sectors. It would be as though multiple suppliers were making tangible product, of which only a small portion would finally be sold as final product. Few companies in such a position would last very long. Yet this has been the institutional process for time based product, thus far. We are fortunate indeed, that so much lost human capital potential in the twentieth century, did not have the negative effects which are beginning to accrue in the present.
A more rational approach is more output via better use of already existing input, for time based product. Time based product needs to be understood as a macroeconomic variant, to the normal institutional application of the Solow Residual. By internalizing input and output for services generation, more educational inputs would result in matched time use outputs, for all concerned. Through time arbitrage, one's human capital investment would begin to receive compensation much earlier than is presently possible, by making services output an integral part of the process. Whereas now, formal education has little room for output formation, until the participant has spent years completing input requirements.
Historically: So long as tradable sector activity remains dominant over non tradable sector activity, management of time value as pools of institutional aggregate demand, need not be problematic. But once non tradable sector activity and its associated knowledge use comes to the fore, it is no longer enough to treat time value as institutional demand. The introduction of time value as an aggregate supply function, could restore the productivity patterns which move growth forward. Managed pools of human capital supply, would bring greater transparency to the input to output ratios that are currently required for human capital.
In summary, if we consider educational inputs as part of the reality of aggregate input, the entire picture for aggregate input in relation to aggregate output (for time based product) takes on a whole new meaning. Yet the current dependence of today's time based product on other existing wealth, has obscured this important fact. Instead of creating more uncertainty for human capital investment through arbitrary reductions of time value, better results could be achieved by reinforcing educational input as continuous output. At issue is not so much a further reduction in input as contrast with output, but instead, allowing aggregate output in time based product, to gain greater quantification and representation, throughout the entire process.
Time value needs better representation as aggregate supply potential. Today's managed pools for aggregate demand, are resulting in arbitrary input reductions at the level of the firm, in spite of ongoing input expectations of human capital investment, outside the firm. This result also suggests problems for Solow Residual effects in time based product. Not so much because of firm specific input limits, but in terms of broader limits to output potential. It means that due to externalized investment expectations for human capital, there are far more investment inputs than are actually being utilized by today's knowledge use organizational patterns. Some human capital investment never gains economic compensation, while other investment processes for human capital end up reimbursed many times over; by consumers, governments, businesses and taxpayers alike.
If one were to consider the production of input requirements (formal education) in a total or aggregate input/output context, the ongoing losses for wealth potential and marketplace formation, would become more obvious. When extensive human capital investment (input) is required before output ever becomes possible, multiple institutions and populations are held responsible for the balance. Individuals bear ultimate responsibility for building time value, and the consequent human capital losses for knowledge use production primarily as institutional aggregate demand, have not been well understood.
One can only imagine, how an incomplete production process such as this would impact tradable sectors. It would be as though multiple suppliers were making tangible product, of which only a small portion would finally be sold as final product. Few companies in such a position would last very long. Yet this has been the institutional process for time based product, thus far. We are fortunate indeed, that so much lost human capital potential in the twentieth century, did not have the negative effects which are beginning to accrue in the present.
A more rational approach is more output via better use of already existing input, for time based product. Time based product needs to be understood as a macroeconomic variant, to the normal institutional application of the Solow Residual. By internalizing input and output for services generation, more educational inputs would result in matched time use outputs, for all concerned. Through time arbitrage, one's human capital investment would begin to receive compensation much earlier than is presently possible, by making services output an integral part of the process. Whereas now, formal education has little room for output formation, until the participant has spent years completing input requirements.
Historically: So long as tradable sector activity remains dominant over non tradable sector activity, management of time value as pools of institutional aggregate demand, need not be problematic. But once non tradable sector activity and its associated knowledge use comes to the fore, it is no longer enough to treat time value as institutional demand. The introduction of time value as an aggregate supply function, could restore the productivity patterns which move growth forward. Managed pools of human capital supply, would bring greater transparency to the input to output ratios that are currently required for human capital.
In summary, if we consider educational inputs as part of the reality of aggregate input, the entire picture for aggregate input in relation to aggregate output (for time based product) takes on a whole new meaning. Yet the current dependence of today's time based product on other existing wealth, has obscured this important fact. Instead of creating more uncertainty for human capital investment through arbitrary reductions of time value, better results could be achieved by reinforcing educational input as continuous output. At issue is not so much a further reduction in input as contrast with output, but instead, allowing aggregate output in time based product, to gain greater quantification and representation, throughout the entire process.
Friday, June 16, 2017
How Common are Non Compete Settings? Or, You Don't "Own" That!
Now that I think about it, there seem to be examples everywhere I look. For instance: Why does it bother some schools, when their teachers gain additional work related income beyond salaries? Consider the framing, in "Teachers are Making Millions Selling Their Lesson Plans Online". From the article:
Alas, public institutions appear to be following the lead of closely held knowledge use in private sectors - much of which takes place as non compete agreements. Even as policy makers become aware of consequent limits to long term growth, many such restrictions are local in nature, which also factors into the difficulty of a broad based response. The growing atmosphere of closely held ownership - regardless of subject or object - has become so widespread, it even translates into cultural appropriation outrage, something I never expected to witness in my own lifetime.
Apparently, cultural appropriation has become the latest version of you don't "own" that, so you can't use it! Some of this ownership hoarding, which is just as impractical as money hoarding, has been around for a long time. In the seventies, a friend made improvements in lab work which were appropriated by the company, but with no recognition of his contribution. Almost two decades later, while preparing to open a bookstore, I found myself unexpectedly making certain no legalities stood in the way of doing so. That's when I first became aware of non compete agreements.
Miles Kimball recently touched on an anti-growth aspect of non compete settings in storified tweets with Dan Abrams. Kimball wrote:
Such settings would be clearly delineated to a degree that all concerned, understand the potential of the knowledge which could be shared, and the new forms of construction which could take place. In the future, communities might once again be willing to embrace competition, if they see how it in fact can contribute to long term growth. If we are able to create economic settings where the use of knowledge is more widespread, perhaps some of the present day cultural backlash will fade away as well.
Some legal experts argue that the resources teachers produce while working for a school district may actually be the property of the school district.Yet behind the stories of a handful of millionaire educators, is a different reality of low cost provision, for time savers that include the teachers' ingenuity. Marketable lesson plans are certainly practical, given the fact schools don't compensate teachers for the hours in which they prepare for classes. In yesterday's post, I noted time saving mechanisms such as these as a useful form of fixed (human) capital, which contrasts with the working capital employers often expect employees to provide via their own time and resources.
Alas, public institutions appear to be following the lead of closely held knowledge use in private sectors - much of which takes place as non compete agreements. Even as policy makers become aware of consequent limits to long term growth, many such restrictions are local in nature, which also factors into the difficulty of a broad based response. The growing atmosphere of closely held ownership - regardless of subject or object - has become so widespread, it even translates into cultural appropriation outrage, something I never expected to witness in my own lifetime.
Apparently, cultural appropriation has become the latest version of you don't "own" that, so you can't use it! Some of this ownership hoarding, which is just as impractical as money hoarding, has been around for a long time. In the seventies, a friend made improvements in lab work which were appropriated by the company, but with no recognition of his contribution. Almost two decades later, while preparing to open a bookstore, I found myself unexpectedly making certain no legalities stood in the way of doing so. That's when I first became aware of non compete agreements.
Miles Kimball recently touched on an anti-growth aspect of non compete settings in storified tweets with Dan Abrams. Kimball wrote:
To do better at state level, Dems should push pro-growth occupational licensing reform as Obama Administration did.To which Abrams explained that while this would be good policy, it would unfortunately be poor politics, because
There's an organized block of current licensed hairdressers. No block of future hairdressers.Again, helping those who lack economic access, remains a thousand battles in a thousand places - and many places lack a sufficient organized block, on the part of those who seek entry. However, even though national governments are in no position to force greater competition on anyone, they do have the option of backing new settings in which people have sufficient production rights to recreate non tradable sector growth. This is an important reason why I've suggested alternative equilibrium settings, as a single organized productive response to the closely held ownership which stifles economic dynamism.
Such settings would be clearly delineated to a degree that all concerned, understand the potential of the knowledge which could be shared, and the new forms of construction which could take place. In the future, communities might once again be willing to embrace competition, if they see how it in fact can contribute to long term growth. If we are able to create economic settings where the use of knowledge is more widespread, perhaps some of the present day cultural backlash will fade away as well.
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