Educational Supply Chains: A Decentralized Role for AI

First, consider the potential for learning processes as self supporting supply chains, which in turn allow educational investments to directly disperse wealth and knowledge. Why education as a supply chain for growth? Since today's institutions mostly "random mine" skills and knowledge, the benefits of human capital are somewhat lacking in growth statistics. In "The Importance of Education and Skill Development for Economic Growth in the Information Era", Charles Hulten argues that the BLS assigns a "relatively small role to education", which he (understandably) believes is insufficient. How might we create a better organizational platform for human capital, in which education becomes a stronger component of economic dynamism?

Presently, as institutions randomly mine the investments of human capital, many aspects of knowledge use have to "wait in line" for tradable sector wealth origin - even to the extent that advanced economy workers "wait" for resource origin flows from emerging economies. Granted, these original wealth sources are supplemented via the monetary flows of physical assets (housing) and a wide array of debt backed instruments. Nevertheless, too much non tradable sector activity remains on the negative side of the ledger, in terms of a general equilibrium growth base. Possibly the non tradable sector activity of new housing (not its loan activity), is the major non tradable sector contributor, to the positive side of the wealth creation ledger.

Meanwhile, too much educational investment in general, has come up short in terms of providing directly to economic dynamism. Another way to think about this: When labour and human capital serve primarily as residuals (for both primary and secondary market activity), the potential for a knowledge continuum is broken or at least disrupted, at numerous junctures. Is it possible to provide stronger connection points - even a recognizable supply side chain - for knowledge use in general?

One way to approach this problem, is via the use of coordinated time arbitrage in knowledge use systems. Time arbitrage as a single price commodity unit, would allow individuals and groups to immediately cancel time debt, as it occurs in daily activity. Individuals would also be able to "buy" time insurance from others in the event they can't work, via voluntary service hours. This approach would allow purposeful matched time (and its accompanying knowledge use) to function as an ongoing continuum. Personal time value, along with skill and knowledge, would function as a supply chain model, making human capital a central component of growth and wealth creation.

Among the reasons people fear artificial intelligence, is the fact that human capital - despite its importance -  is still organizationally structured as a production residual. Whenever individuals need to specify their time as containing higher monetarily value than that of others, their time use becomes dependent on general equilibrium system flows. In other words, the costs of skills differentiation will frequently remove any first mover position for knowledge use we might hold, since one must enter their knowledge and skill into organizational processes which are also aligned to "wait" for the total compensation of the system.

So long as an excessive amount of labour remains in either secondary markets or residual production positioning, even professional groups end up in defensive positions, arguing for humans to remain "embedded in the loop". Calls for continued management via human judgement, have a more emotional element than the technical maintenance which AI will (more naturally) require, in the form of human assistance. In all of this: Since human capital is still organized as peripheral or "as needed", high and low skill levels are becoming default positions - even though average skill is more representative of human populations in general. Consequently, average intelligence would likely be an important characteristic, for the time based and educational supply chains of the future.

It is the central role of our time in knowledge based supply chains, that makes it possible for deep learning AI to assist us - meaning not inevitably the other way around. How so? For instance: One of the primary advantages of time based services in desirable regions, has been their ability to replicate specific and desirable skill sets - think brain surgery as an example. The deep learning of AI makes it possible to disperse specific skill replication functions as well, so that many skills sets can eventually be applied in environments which otherwise may lack "cutting edge" human skills capacity.

Decentralized services generation would mean an altogether different approach for deep learning AI is possible: One that includes helping locals assist one another with important service functions, especially during their primary educational years. It's the wealth generating capacity of equal time coordination, which allows these groups to make their dependency break with general equilibrium monetary flows for time use. By decentralizing service capacity, each group can build a continuum for progress which holds a reasonable chance of permanence, insofar as time use functions are recorded and preserved.

In knowledge use systems, humans would often seek the assistance of deep learning AI. However, this approach accentuates personal autonomy, and is quite different from that of human assistance for technology as part of a centralized system. Time arbitrage can allow for greater dispersal of knowledge use. It's the use of knowledge - not just its acquisition as investment - which drives economic dynamism and moves society forward.

When human capital functions primarily as a production residual, there's good reason to be concerned about educational investment roles, once general equilibrium capacity becomes constrained. Yet it is precisely the ability to build time based local wealth, which could allow human capital to fully function as a central part of knowledge based processes. When purposeful time serves as an economic core, deep learning AI - important though it is - would often provide a supportive role for the experiential product that people wish to share on more personal terms.

Some General Equilibrium Issues for Small Incomes

A couple of recent posts, papers and articles remind me of the general equilibrium problem which lower income levels face. Housing as a "set aside" store of wealth which inhibits liquidity and velocity, is of course one of the more obvious issues. Further, general equilibrium distribution or redistribution no longer responds well (efficiently) to resource dictates - no matter the source or purpose. Let's briefly consider both.

For instance, there's Scott Sumner's suggestion to make peace with "unaffordable housing". While this approach is far from perfect, it remains the logical way to increase output via general equilibrium means. Recall that general equilibrium can only coordinate aggregate wealth in a complete context of full resource capacity, yet aggregate time value does not yet contribute to general equilibrium capacity in a wealth origination context. Meanwhile, new traditional construction is a leading edge of wealth generation, insofar as it serves as a repository for the higher income levels of skills compensation.

Nevertheless, the output which could bring more of the marketplace within reach of lower income levels, has proven difficult to imagine in ways that are agreeable to all concerned. Possibly the best way to supplement this unfortunate general equilibrium result, is to create new forms of productive agglomeration which would thrive in scattered and decentralized settings. Such an approach would reduce the global extremes of skill and income coordination, which now inhibit the framing of services generation for low income groups. A defined equilibrium for services and broad ownership of building components, would make it possible for lower income levels to expand the marketplace definition (hence output) of non tradable sector activity.

Otherwise: Without options such as these, many citizens with small incomes, will struggle to maintain sufficient levels of personal responsibility and social engagement in today's society. This reality holds not only locally, but across international contexts and cultures as well. After all, much of today's recognized economic time value aligns with global wealth capacity, hence no longer exists in relation to other time value in aggregate.

And so long as societies rely on the prosperity of human capital which lacks any internal coordination point for time aggregates, human capital can't be allocated as efficiently as other forms of capital. One could even think of a marketplace for time value, as a framework in which human capital experiences efficiency gains that place time use capital on a par with financial capital. So long as aggregate time value only exists in relation to total or global resource capacity, traditional housing and service generation will continue to present problems for lower income levels.

Land contributes the largest general equilibrium coordination of value, in terms of productive agglomeration for knowledge use, as today's most important wealth source. Wherever productive agglomeration is clearly evident, housing valuations begin to align with the same land valuations which are correlated with the aggregate values of global resources. In "Land is Underrated as a Source of Wealth", Noah Smith cites a recent Vox study and emphasizes at the outset:

In the long run, housing does about as well as stocks. It's also a major driver of inequality.

Alas, his reasoning is another way of describing how extensive land value is closely associated with certain forms of human capital valuation, even as other vital aspects of human capital have little formal economic definition in general equilibrium dynamics.

Also note that land isn't easy to tax so as to make a tangible difference for redistribution, in terms of inequality. How do we know? There's a recent, even somewhat odd example which just occurred. Rather than completely remove the mortgage interest deduction, policy makers opted to cap mortgage deductions instead. The result is that higher income levels will consequently still be taxed for - yes - land which holds the highest values in terms of economic access and value. Given renewed arguments for land taxation as redistribution to address inequality, there's too many complex general equilibrium dynamics at play, for policy makers to claim taxation sources for the "right" reasons - however those reasons are perceived.

General equilibrium settings have proven notoriously difficult, for any redistribution which purportedly addresses inequality. I believe it would be helpful to distinguish housing, land and time based service generation as defined equilibrium components, so as to reduce exposure to global extremes in skill and compensation which are not readily amenable to redistribution. It's worth a try this time to allow people to help themselves, since policy makers and other elite have bungled the process of doing so in their stead.

How so? When societies attempt to "help" lower income levels from what they often perceive as a never ending supply of wealth, they become tempted to serve up portions out of that general equilibrium pot with major helpings for themselves. Timothy Taylor provides some beautiful examples how this unfortunate reality plays out, in "When Invoking Poverty and Necessity is a Ruse". His post is absolutely spot on and deserves to be read in its entirety.

Ultimately, no one can "force" affordability in the wealth dynamics of general equilibrium. And today's major issue in terms of general equilibrium values, are the constraints of productive agglomeration. This is where the vast majority of today's wealth is contained, yet the primary sources of knowledge use are still limited at the core. That - in turn - impacts the housing output and land values which are perceived as "well suited" for economic access.

Fortunately, it's possible to greatly expand the output of productive agglomeration, via defined equilibrium settings. After all, arbitrary limits for productive agglomeration bear the greatest responsibility, for today's extremes in terms of land use valuations and housing options. And just as Scott Sumner emphasized, increased output is the best way to make a marketplace more accessible to all.

Can Political Extremism be Reversed?

Might there be a common thread that illuminates similarities between the nationalist extremism of the early twentieth century, and what has appeared more recently? Thus far, many observers remain confident that today's forms of political extremism should remain - at the very least - manageable. But what if this confidence doesn't hold?

Perhaps there's an underlying rationale regarding our present approach to wealth generation versus wealth distribution, which exacerbates political divisions. Even though some supply side advocates are quick to highlight government dependencies, there's too much dependency for already existing revenue, on the part of private interests as well. And both dependencies are now responsible for structural imbalances. Yet rather than challenge excess claims on wealth in relation to new sources of wealth generation, central bankers - in part due to their excessive financial interests - have unfortunately responded with lower levels of monetary representation, particularly since the Great Recession.

Still, many remain unconvinced that those earlier monetary losses matter. These individuals often believe that monetary representation is presently too "easy". Worse, without an adequate understanding of the role a nominal level serves (as a symbol of total and ongoing economic participation), some can be swayed by monetary historical contexts such as hyperinflation, which have no bearing on present circumstance in today's advanced economies.

In all of this: Despite recent economic gains, structural imbalance means long run growth is still compromised to an extent that the marginalized - more than ever - tend to be perceived as a societal burden. And history has shown that if wealth creation is stymied for too long, populations often begin to add more prosperous citizens to their list of perceived burdens. Perhaps the fact so many populations feel threatened - in spite of apparent prosperity - should serve as a call to include all human capital as sources of wealth generation. This, instead of imagining "inclusive economies" as mostly further redistribution from what is already stretched too thin, in the collective imagination of many a taxpayer.

When monetary policy stays relatively tight for long periods, that could be part of the common thread which leads to extremism. After all, more demands continue to be made on monetary representation by all concerned, than central bankers are willing to accommodate, or entrenched interests are inclined to account for. And even though tight money vastly contributed to the Great Depression, it's hardly a simple matter to trace wealth creation in relation to wealth capture for that earlier period. Oddly, similar problems for quantification still exist today, since neither governments or private interests fully account for the ways in which human capital is used at a mere fraction of its full potential.

So why bring up (yet again) tight monetary conditions and lackluster dynamism, if little can be done? Because resignation to structural issues such as this, may worsen nationalistic impulses in the near future. Fortunately, we still have the ability to craft a supply side response which could eventually cut through much of today's divisiveness and excessive blame.

Only remember how long it took over the course of the Great Depression, before the marginalized of the South finally gained economic access, via Washington's commitments to physical infrastructure. How much twentieth century prosperity in the U.S. stemmed from what was essentially an invitation for the marginalized to finally participate, after what had been decades of economic isolation after the Civil War? Recently, while gathering together a near century of immediate and extended family pictures, I was fascinated how that invitation to prosperity played out in those images over the course of the twentieth century, in terms of wealth gains and family outcomes.

Today, much of the infrastructure for potential participation is already in place. Yet oddly, an extended invitation to the full use of knowledge in every community, seems to be the hardest part. But think about who - and what - has become marginalized this time: Cities, towns and rural areas which have little access to the globalized economy of the present.

Hence the new call to wealth creation, needs to take a different form. It now means allowing those who have been left behind, to gain the chance to make full use of their human capital investments and and aspirations. Today, an invitation to take part in knowledge based wealth creation, is the only form of inclusive economy which matters. It is the only one that has any validity, in a time of stretched government budgets. There's even a chance that a broader invitation to wealth creation, could be the best means we have, to lessen political extremism.

What is the Real Issue for Work Expectations?

Does our present day work ethic feel as though a matter of societal coercion, necessity, or possibly even both? In an article for Aeon, "If work dominated your every moment would life be worth living?", Andrew Taggert writes:

Imagine that work had taken over the world. It would be the centre around which the rest of life turned. Then all else would come to be subservient to work. Then slowly, almost imperceptibly, anything else - the games once played, the songs hitherto sung, the loves fulfilled, the festivals celebrated - would come to resemble and ultimately become work. And then there would come a time, itself largely unobserved, when the many worlds that had once existed before work would vanish completely from the cultural record, having fallen into oblivion.

And how, in this world of total work, would people think and sound and act? Everywhere they looked, they would see the pre-employed, employed, post-employed, underemployed and unemployed, and there would be no one uncounted in this census. Everywhere they would love and laud work...An ethos of hard work would be championed as the only means by which success is to be achieved.

This is quite a burdensome interpretation of work! Especially for those of us who - in part because we came into this world lacking in "social graces" - experience work as freeing and meaningful. Yet, as Miles Kimball recently wrote:

...it would be a great advance in human happiness if we can figure out how to make the experience of work more like dressing and keeping the Garden of Eden than eking out survival from thorny ground by the sweat of our brows.

Indeed. In a time of great tradable sector abundance, one would think the economic results might have been somewhat closer to a Garden of Eden outcome. But instead, societies have inadvertently created their own "thorny ground", via the wealth capture of today's non tradable sector institutions. How much of our excessive work mentality, is simply a response to claims on our time, via the arbitrary expectations (better known as "quality product") in the social designs of our housing, education and healthcare?

Fortunately, we can think differently about these vital products in the future, through the local equilibrium recognition of non tradable sector design. Such an approach would make it possible for us to discover the levels of work we are mentally and physiologically equipped for - especially that which is other oriented - without the excessive sacrifice of our scarce time. When we have the ability to seek out steady and "doable" levels of mutual responsibility, it becomes easier to preserve sufficient time in life for our own personal challenges as well.

Locally designed settings for non tradable sector product, would allow groups to better align common resource use, so that participants can discover similarly oriented patterns of work and play. Individuals would finally be able to set aside time for the public goods they find most important. By creating a broad range of infrastructure concepts, much of today's all or nothing framing of personal responsibility, could finally be put to rest.

Chances are, most people are not inclined to be workaholics, simply because this is what society seems to "expect". Rather, many have ended up as workaholics because there appeared to be "no choice", given today's additional non discretionary costs. With a little luck, those expectations might be reduced, so that all of us can once again seek the levels of work and mutual responsibility that are reasonably within reach.

Wrap Up for December 2017

Which "death blow" is more definitive? An apt description from Scott Sumner, re an important difference between the negative shock and the monetary response.

For time arbitrage, ongoing experimentation with skills capacity and time preferences would be part of the process. Participants would match (their mutually sought) time priorities across a diverse range of skill levels, with as many different individuals as possible. The more options for mutual employment any individual has in the long term, the more security one might maintain for social connections as they age. Equally important, is that diversity in one's offerings to others, is one of the best means by which to preserve personal autonomy. Nevertheless, experimentation does not come naturally to us, for we tend to be set in our ways and habits. An article from the NYT explains why.

"An oligarchic democracy may be worse for the poor than an arbitrary government."

"The money was supposed to go toward buying a legendary music studio..."

Is high productivity associated with low employment?

"Asset prices and macroeconomic outcomes."

Scott Sumner has reservations re a Cowen/Tabarrok video

What was bitcoin supposed to be able to do?

"Endogenous Technological Change" (Paul Romer) and, again, "The Trouble With Macroeconomics"

"The facts are that a widening trade deficit, or more importantly, rising US imports, is associated with greater nominal GDP growth."

"Inadequate Equilibria: Where and How Civilizations Get Stuck"

For now, higher budget deficits.

Perhaps the flaw in modern macro is that "the efficient markets hypothesis is not deeply embedded into all of our models."

A most useful course on "Nobel Prize-Winning Contributions to Economics"

"Is It Better to Learn From People or From Books?"

What explains the decline in labour costs?

The University of Pennsylvania has an online books page for books that are freely available.

A recent study shows the close link between health care spending and lobbying by interest groups.

Hospitals are moving quickly to preserve their revenues.

Since 2014, Yellen has "seen fit to end QE and raise interest rates repeatedly".

"When it comes to urban density, we're not all goldilocks. We don't all want the same porridge."
This would be an important defined equilibrium consideration for any group that seeks to identify - via their own terms and capacity - the extent of local non tradable activity that is (reasonably) possible through mutually held time and resources. Both in the sense of physical environment, and time preferences for given sets of mutual responsibilities and benefits. No debt formation necessary.
Likewise...
"Communal-mode interpersonal skills may become increasingly important to life success - not less, as techies hope."

Baumol's disease, intangibles, path dependence, incentives and anti-intellectual prejudices could all eventually lead to regress.

the cascading effects of poor productivity: "The Network Origins of Aggregate Fluctuations"

"The safe asset shortage, the rise of mark-ups, and the decline in the labour share"

James Pethokoukis interviews Brink Lindsey and Steve Teles re their new book. Also, their interview with Russ Roberts.

When history is abused, it flattens the complexity of human experience.

"It's the first time I have noticed a persistent spread between inflation in one area and the rest of the country..."

Are the young subsidizing the old?

Some simple ways to think about models.

An AEI interview with Hal Varian

Bill Niskanen preferred a target path for total (final) demand.

The U.S. dollar has multiple roles in the global economy.

Scott Sumner has a simple but important message re inflation, for U.S. News.

Nick Rowe explains the natural rate of interest.

Sweden offers an interesting historical example of monetary experimentation in action, which also illustrates the quantity theory of money.

Alex Tabarrok takes a look at the sectoral approach He also highlights this recent paper, "The Macroeconomic Impact of Microeconomic Shocks: Beyond Hulten's Theorem" which is part of a notable research list for 2017

The rise of intangibles plays a large role. "Investmentless Growth: An Empirical Investigation"

Intentional Dynamics: Claims on Wealth Change Its Structure

Does it matter whether intentional claims on wealth are of public or private origin? Sometimes, neither public or private interests are willing to support marketplace access, and both have become engaged in the design of strategies which discourage full economic participation. Equally important, is that today's requirements for economic participation, have become a major contributor to excessive debt formation.

Only consider how these marketplace requirements presently play out, as Washington "helps" citizens (via subsidies) to engage in the production and consumption of a wide range of arbitrarily limited activities. According to the IMF (from a recent WSJ article), while U.S. debt as a portion of GDP was 93rd out of 169 nations in 2001, the U.S. is in fifth place among large countries today, for debt as a portion of GDP. That's a dramatic change in wealth structure, and one that citizens need to actively change, towards wealth creation which can be reciprocated at the outset.

Meanwhile, differences between wealth claims and wealth origination in general equilibrium, aren't well understood. While reading a post from Tim Harford, "Could We Run the Economy With an App?" I noted that no equilibrium algorithm would be able to take crucial supply and demand differences for aggregate wealth, into account. Still: Why should such important matters be left to algorithms in the first place?

Harford explains that when socialist calculations were being debated earlier in the 20th century, policy makers lacked the computer power to assist their data collection. Of course this didn't stop economists and central planners from imagining the economy as a "series of simultaneous equations for supply and demand". Harford writes:

But the power of computers is growing far more quickly than economic output. Could we build an app to run an economy...? The idea has resurfaced in the writings of two Chinese economists, Binbin Wang and Xiaoyan Li. Wang and Li argue that modern computers make it possible to optimise production in real time, personalised to the needs of citizens. In some ways this has already  happened.

He cites some of the more obvious algorithm examples. Clearly, platforms such as this can be problematic, regardless of who controls them:

One enduring obstacle is tacit knowledge. A textbook economy of supply and demand curves is, in principle, the kind of system that can be understood mathematically. But as Friedrich Hayek argued in 1945, there is a great deal going on in any economy that cannot be counted or even described.

Decisions to produce, to consume, and to take a risk trying to create something new, are all taken with the knowledge of "particular circumstance of time and place". Wang and Li believe that big data make this once-tacit knowledge explicit; I am not convinced. 

Nor am I. Harford emphasizes how big data can give the wrong incentives to both public and private interests. To some degree, hierarchical patterns which make claims on our scarce time, will always necessary for the organization of complex forms of tradable sector product. Such patterns never should have been necessary, however, for the ways that people opt to spend their time in experiential circumstance with others. The fact society imposes countless rules on personal discretion, and that too many of us are already judged as incapable of personal responsibility, is beginning to dehumanize us all. These are patterns which - such as Hayek described decades earlier - individuals should have adequate means to discover for themselves.

If today's hierarchical and expensive patterns of social organization weren't enough, many of these service centered activities occur as wealth capture, instead of wealth creation. Fortunately, citizens have an opportunity to think differently about these processes in the near future. Our personal priorities can't safely be left to impersonal supply and demand algorithms which are mostly built to capture wealth. Fortunately, we have the chance to build wealth anew, based on the aspirations and challenges we might experience in the scarce time we actually have. Given the level of debt the U.S. is already experiencing, one can only hope that new means of wealth creation aren't postponed for too long.

Post Highlights from 2017

Since there was an overall increase in page views starting about midyear, and I wanted a fair representation of the full year, a bit of guesswork is involved as to post favorites.

Market Position Matters, for Output Potential  Why would policy makers subsidize demand, even as they cooperate with private interests to restrict supply for the same product? Often the market position of the specific sector (primary or secondary), provides clues. Whereas advanced economy government subsidies once supported tradable sector activity which benefited from expansion, today's most likely beneficiaries of government subsidies (non tradable sectors) don't necessarily benefit from marketplace expansion.

Notes on Investment vs Consumption Outcomes  How could we do a better job of visualizing human capital in terms of marketplace options? How to reconsider time based product which does not benefit from gains in scale, so that it might become simpler to quantify?

Jobs Are Also a Cost. How to Respond?  Expanded job opportunities are logical when they follow new wealth creation. Nevertheless: When market observers accuse governments of being illogical in hiring that doesn't generate new wealth, are the same observers also cognizant of missed potential for new wealth which could be reducing employment potential? Fortunately, new platforms for wealth creation are possible, so that individuals do not always have to wait for other institutions to make the first move. Time as an economic unit, can function as a commodity in the form of coordinated mutual employment. Workplace participation could ultimately be restored at community levels by making it possible for everyone to bear mutual responsibility for job costs, via the opportunity costs of their own time use preferences.

What if Governments Owned the Robots?  Much of today's automation is associated with procedures which reduce costs rather than increasing output. Consequently, automation (or robots) doesn't always lead to the increased output which would be necessary for further redistribution. Instead, more of today's automation benefits accrue to the (robot augmented) income of high skill service providers. Indeed, this wealth source is hardly what most people envision, when they discuss robot taxation or consider government supported robot ownership. Alas, productivity is no longer a simple matter of increased output.

Aggregate Time Value: Demand, Supply, or Both?  Granted, we need economic participation to be possible on more productive terms than is presently the case. And there will be times when we need to split the difference on how productivity is conceptualized, depending on the institution. Nevertheless, should our institutions allow us to lose too much aggregate time value in the form of supply, we cannot expect to maintain the economic stability of aggregate demand, indefinitely.

"Equal" Income Presupposes Abundance. Equal Time Value, Scarcity  Income based approaches to inequality, don't get at the underlying problems of our actual time scarcity, in relation to what non tradable sectors and governments expect of us. One approach to inequality, would be for those with limited incomes to contribute to non tradable sector activity outcomes, via the time they actually possess.

Time Value in Relation to Total Factor Productivity  During historical moments of tradable sector expansion, it's often possible for societies to coordinate economic participation, based largely on the new wealth that is being generated. But once the monetary flows of non tradable sector activity begin to dominate, that creates excess demands on existing wealth. Hence societies may need additional means to generate wealth as a point of (reciprocal) origin. Economic time value  - given today's high levels of human capital investment - is an obvious choice.

Why Are Normative Healthcare Arguments So Confusing?  Too much healthcare discussion takes place as though supply side limits were not actually in effect. How does one redistribute from a supply side which is constrained at the outset? Over the years, recurring discussions as to what "should be" (at the microeconomic level), have been squelched via legislation. And many of these earlier efforts are already forgotten, once normative arguments resume in a broader societal context.

Deep Learning in a Time of Increasing Automation  We can't expect to continue deep learning as a "race against the machine". Yet the deep learning we continue to embrace, needs a stronger economic context in terms of personal experiential value.

Only 25% Can Support Non Tradable Sector Requirements  Why isn't this growing discrepancy more obvious? Some of it is hidden by debt and financial structures which smooth non discretionary consumption capacity. Nevertheless: Useful though our financial tools have been, they can't fill the gaps between institutional expectations and actual income capacity for the long term. Before any society can expect to meet its infrastructure maintenance needs, it has to make certain its aggregate income capacity and non tradable sector requirements are reasonably well aligned.

Medicare Cutbacks? No Rationale for Monetary Tightening  Even though healthcare in the U.S. lacks full marketplace capacity, this sector is far from ready to accept limitations in revenue capacity (note recent hospital consolidations). Yet central bankers have been too quick to use Washington gridlock re healthcare policy, as yet another judgement call to reduce overall monetary representation.

Can General Equilibrium Wealth Become "Overfished"?  Up to a point, the secondary market activities of asymmetrically compensated time, government redistribution, credit formation and financial instruments can work alongside tradable sector wealth to define general equilibrium. However, if these forms of wealth capture are excessively preferred over new wealth generation that is free of debt or redistribution, the common pool of circulating revenue may experience greater demand from all participants than central bankers are willing to accommodate.