Decades ago, in my working association with marginalized groups which benefited from library literacy programs and related projects, I recall a common refrain which basically went like this: We want the freedom to associate with others who are different from us in some respects. But there are still times when what we appreciate most, are the meaningful connections in our own groups.
There's good reason for such a response. But why does segregation still appear as such a problem? It depends in part on whether segregation is actually imposed from without, especially since today's exclusionary regulations for production and consumption are quite subtle (or convoluted) as compared with the upfront discrimination of the recent past. In times of economic stagnation, there's a stronger perception of zero sum outcomes as well, implying "too little room" for everyone to participate in centralized national redistribution. When the economic pie appears as though already accounted for, more struggles ensue, involving anyone perceived as somehow standing "at the back of the line".
Could group self selection (voluntary decentralized segregation) alleviate this reality? New forms of decentralized community could prove effective, should voluntary groupings gain permission to generate broader marketplace capacity for non tradable sector wealth. Even better, by doing so, voluntary groupings would not have to remain in a dependent position, for the limited resources deriving from centrally managed economies. This matters, since so many of today's institutions representing the middle classes are already in a dependent position, in this exceedingly long single line.
It's worth thinking about the forms of natural segregation that people actually desire, especially since self selected segregation makes it easier for individuals to trust one another enough to engage in productive collaboration and wealth building. Recently, for example, Steve Randy Waldman wrote of segregation as a normal good. Nevertheless: Even though housing segregation sometimes come across as racial in nature, the deeper segregation of our time is actually occurring between income levels and rights of production.
The casual segregation of shared consumption levels, is increasingly a common response for social groupings in multiple respects. One obvious example is variations of consumption patterns which have increased the social divisions of extended families. Today, family get togethers tend to revolve around recreational getaways (rather than family homes), which effectively limits the participation of family members who are deterred by the additional travel costs. This is one instance in which consumption patterns have directly contributed to the loneliness which lower income levels can experience.
Decentralized communities could create new forms of infrastructure which also reinforce shared consumption that need not be completely income driven. This would also alleviate loneliness to a great extent, because lower income levels would gain more local infrastructure which encourages positive means of association.
By focusing on greater economic freedom for lower income levels, I believe that libertarians would ultimately be able to do a better job of preserving greater economic freedom for all citizens of advanced nations. The extensive libertarian focus on economic freedom for high income levels, while it encourages the economic development of emerging nations, has unfortunately backfired for citizens in advanced nations. Yet everyone needs relief from the chaotic effect of extensive dependence on the single, centralized line that is the economic access of the present. Economic inclusion is - more than anything - about the ability of any given society, to find means to expand the production frontier of its general equilibrium potential.
Only consider how the right of exit has been far less effective for groups with limited income, because they too often lack the internal means to legally generate non tradable sector production and consumption. After all, it is the efforts of society to protect itself from the chaos of the marginalized, even as the marginalized face extensive production restraints, which limits the economic and social freedoms we all desire. Again, the segregation that would be of a positive nature, would allow groups to sort for common values and preferences in working together, so as to build new sources of wealth and prosperity.
Tuesday, January 30, 2018
Sunday, January 28, 2018
Time Value: Reskilling, or Perhaps Reorientation?
Should we focus entirely on reskilling for our (hopeful) inclusion in future workplaces? After all, reskilling implies shedding for good, previous skills investments on our part which are supposedly outdated. Yet many of us have committed extensive resources over the course of a lifetime, for the costs of economic access, with limited results. While lost skills value on our part is sometimes true, perhaps it would be worth our while, to examine more closely, whether the "broken value" of our skills capacity is not always so.
I've questioned "useless" skills consensus, in part because much of what we learn and experience, also provides value for others in contexts beyond our present day workplaces. These informal contexts deserve more of our attention than they've received, thus far. Indeed, I found reason to question the rationale of "useless skill" in the early nineties. Upon losing a valued job, I was told certain work opportunities were "disappearing" and I should consider a career change, yet younger individuals were still being hired in a position I'd recently paid more than a thousand dollars to acquire. While the rationale for that lost job opportunity (automation) could have been understandable, how to explain the fact that individuals younger than myself, were still preparing for essentially the same work?
Granted, these new hires were coming in with more (skill specific) formal education, than what was necessary when I entered office work. Even now, many office responsibilities are still secretarial in nature, but full time secretarial work with benefits is mostly reserved for those with college degrees. That long ago job loss was frustrating, since secretarial work was strongly recommended by my family (and a few bosses as well) for those such as myself who didn't complete college. Fifteen years after my first office work, when so many baby boomers were let go, it was easier for many of us who lost the opportunity cost gamble, to simply restart in a new direction, rather than prolong the frustration by suing for discrimination when our jobs went to younger workers.
As it turned out, the secretarial job loss would not be the only lost investment in economic access. Plus, later investment losses for self employment ventures were much higher. Life experiences such as these, make me question the idea of reskilling as capable of solving future employment needs for all concerned. In particular: When our institutions no longer need the workforce capacity that was once necessary, it's time to reconsider how our mutual commitments with one another, might safely take place well into the future.
Present day firms will continue to discriminate from pools of potential job applicants, simply because it is so easy to do so. There's a lot more of us looking for meaningful economic engagement, than society is presently organized to accommodate. Worse, this circumstance has created false impressions that vast numbers of us aren't "up to speed" or "good enough", for something as incredibly basic in life as economic participation.
Meanwhile, others keep telling the marginalized how we are making the "wrong" human capital investment choices, even as policy makers cross their fingers and insist all citizens will somehow be able to adapt, to today's increasingly concentrated institutional needs. From a recent report by the World Economic Forum:
Some economists now argue that if fewer of us go to college, businesses may once again become willing to hire folks without college degrees. If only this were true, but it scarcely seems likely for firms which still offer full time employment with benefits. And this is the kind of work which presently allows people to take responsibility for their lives. Even though the exhaustive costs of reskilling pay off in some instances, many can't reasonably afford to place their bets on this approach. Chances are, the status quo workplace of the near future is only going to need a mere fraction of today's humanity. The rest us would do well, to reorient how we approach mutual employment and economic engagement.
I've questioned "useless" skills consensus, in part because much of what we learn and experience, also provides value for others in contexts beyond our present day workplaces. These informal contexts deserve more of our attention than they've received, thus far. Indeed, I found reason to question the rationale of "useless skill" in the early nineties. Upon losing a valued job, I was told certain work opportunities were "disappearing" and I should consider a career change, yet younger individuals were still being hired in a position I'd recently paid more than a thousand dollars to acquire. While the rationale for that lost job opportunity (automation) could have been understandable, how to explain the fact that individuals younger than myself, were still preparing for essentially the same work?
Granted, these new hires were coming in with more (skill specific) formal education, than what was necessary when I entered office work. Even now, many office responsibilities are still secretarial in nature, but full time secretarial work with benefits is mostly reserved for those with college degrees. That long ago job loss was frustrating, since secretarial work was strongly recommended by my family (and a few bosses as well) for those such as myself who didn't complete college. Fifteen years after my first office work, when so many baby boomers were let go, it was easier for many of us who lost the opportunity cost gamble, to simply restart in a new direction, rather than prolong the frustration by suing for discrimination when our jobs went to younger workers.
As it turned out, the secretarial job loss would not be the only lost investment in economic access. Plus, later investment losses for self employment ventures were much higher. Life experiences such as these, make me question the idea of reskilling as capable of solving future employment needs for all concerned. In particular: When our institutions no longer need the workforce capacity that was once necessary, it's time to reconsider how our mutual commitments with one another, might safely take place well into the future.
Present day firms will continue to discriminate from pools of potential job applicants, simply because it is so easy to do so. There's a lot more of us looking for meaningful economic engagement, than society is presently organized to accommodate. Worse, this circumstance has created false impressions that vast numbers of us aren't "up to speed" or "good enough", for something as incredibly basic in life as economic participation.
Meanwhile, others keep telling the marginalized how we are making the "wrong" human capital investment choices, even as policy makers cross their fingers and insist all citizens will somehow be able to adapt, to today's increasingly concentrated institutional needs. From a recent report by the World Economic Forum:
Economic value creation is increasingly based on the use of ever higher levels of specialized skills and knowledge, creating unprecedented new opportunities for some while threatening to leave behind a significant share of the workforce. In a recent survey of OECD countries, more than one in four adults report a mismatch between their current skills sets and the qualifications required to do their jobs.One in four? What does the high institutional mismatch suggest, about the ways we are currently going about all this? The report continues:
Even among people formerly working good jobs, disrupting technological and socio-economic forces threaten to swiftly outdate the shelf life of people's skill sets.At the very least, we observe a wide range of multiple skill sets in our personal lives which we highly value - from the practical to the experiential. But we have inexplicably lost the social and economic context by which we could make them valid, on terms that could be mutually honored. Perhaps all of this is less a matter of reskilling, and more a matter of desperately needed reorientation.
Some economists now argue that if fewer of us go to college, businesses may once again become willing to hire folks without college degrees. If only this were true, but it scarcely seems likely for firms which still offer full time employment with benefits. And this is the kind of work which presently allows people to take responsibility for their lives. Even though the exhaustive costs of reskilling pay off in some instances, many can't reasonably afford to place their bets on this approach. Chances are, the status quo workplace of the near future is only going to need a mere fraction of today's humanity. The rest us would do well, to reorient how we approach mutual employment and economic engagement.
Friday, January 26, 2018
Is Asymmetric Compensation Compatible With Decentralization?
Have we reached growth limits for full asymmetric compensation (institutional pay for specific skill), in today's centralized settings? When centralized economic systems become excessively fragile for any reason, public and private sources for asymmetric compensation can begin to break down. This matters. After all, personal commitments to institutional employment instead of reliance on self employment - many of these scarcely a century earlier - were not made lightly.
Should losses in full time employment "with benefits" continue too long, populations will eventually fall back on simpler means by which to live - regardless of myriads of regulations which suggest doing so is "impossible". Many survival mechanisms include a wide range of symmetrical resource capacity, where reciprocity "settles" exchange at the outset. Self employment is just one way to describe, what over the course of a lifetime becomes an extensive range of personal skills capacity.
When economic activity devolved to decentralized settings in the past, many societal priorities and forms of resource management lost the financial networks which had previously allowed them to shift responsibility for costs into the future. Alas, these losses of economic complexity were hardly voluntary, and they generally included the loss of extensive capacity for knowledge dispersal at a societal level. While these long ago coping mechanisms sometimes brought a greater measure of personal choice, the production options which tended to survive were often crude, especially by comparison with jealously guarded knowledge which too often disappeared with the productive complexity of centralized systems.
Today, decentralized economic options are needed not as some crude form of survival for the working classes, but as means to preserve economic complexity, and prevent modern day centralized economies from remaining excessively fragile. These new forms of community could provide symmetric organization and compensation for skills capacity, which would gradually make up for today's ongoing losses of asymmetric compensation, in the form of full employment with benefits.
Chances are, most of today's asymmetric compensation will mostly remain in the realm of centralized organizational patterns. Since this skills specific employment option has become increasingly limited, some forms of specialization are likely to be approached differently in the near future, as individuals increasingly seek multiple forms of specialization over the course of a lifetime.
Also, formal education should not have to bear excessive blame for this state of affairs. Rather than continue denigrating formal education, why not instead build organizational patterns which make learning an integral part of wealth creation processes. After all, it serves little useful purpose to stigmatize formal education, when societies still have precious few options to human capital investment on these terms.
Symmetric services organization could help to restore meaningful economic roles for the working classes in today's knowledge based economy. Perhaps such options would finally put an end to the patronizing discussions regarding these individuals, as though they are in need of some sort of consolation prize for their arbitrary exclusion. New forms of symmetric resource and time management, could finally give these groups the opportunity to regain their self respect. After all, the best way to preserve knowledge and productive economic complexity for future generations, is to make certain everyone takes part in the process.
Should losses in full time employment "with benefits" continue too long, populations will eventually fall back on simpler means by which to live - regardless of myriads of regulations which suggest doing so is "impossible". Many survival mechanisms include a wide range of symmetrical resource capacity, where reciprocity "settles" exchange at the outset. Self employment is just one way to describe, what over the course of a lifetime becomes an extensive range of personal skills capacity.
When economic activity devolved to decentralized settings in the past, many societal priorities and forms of resource management lost the financial networks which had previously allowed them to shift responsibility for costs into the future. Alas, these losses of economic complexity were hardly voluntary, and they generally included the loss of extensive capacity for knowledge dispersal at a societal level. While these long ago coping mechanisms sometimes brought a greater measure of personal choice, the production options which tended to survive were often crude, especially by comparison with jealously guarded knowledge which too often disappeared with the productive complexity of centralized systems.
Today, decentralized economic options are needed not as some crude form of survival for the working classes, but as means to preserve economic complexity, and prevent modern day centralized economies from remaining excessively fragile. These new forms of community could provide symmetric organization and compensation for skills capacity, which would gradually make up for today's ongoing losses of asymmetric compensation, in the form of full employment with benefits.
Chances are, most of today's asymmetric compensation will mostly remain in the realm of centralized organizational patterns. Since this skills specific employment option has become increasingly limited, some forms of specialization are likely to be approached differently in the near future, as individuals increasingly seek multiple forms of specialization over the course of a lifetime.
Also, formal education should not have to bear excessive blame for this state of affairs. Rather than continue denigrating formal education, why not instead build organizational patterns which make learning an integral part of wealth creation processes. After all, it serves little useful purpose to stigmatize formal education, when societies still have precious few options to human capital investment on these terms.
Symmetric services organization could help to restore meaningful economic roles for the working classes in today's knowledge based economy. Perhaps such options would finally put an end to the patronizing discussions regarding these individuals, as though they are in need of some sort of consolation prize for their arbitrary exclusion. New forms of symmetric resource and time management, could finally give these groups the opportunity to regain their self respect. After all, the best way to preserve knowledge and productive economic complexity for future generations, is to make certain everyone takes part in the process.
Wednesday, January 24, 2018
Notes on Time Value and Other "Fixed" Scarcities
Regular readers are familiar with my emphasis of time aggregates as a fixed scarcity which is not yet sufficiently taken into account. Earlier in the month, Tyler Cowen listed some examples of theoretical reasoning re fixed factors, and also noted the lack of a fixed factor in a Solow framework. He adds:
If citizens were free to explore their full economic potential, less exponential tradable sector growth would be necessary, to maintain production and consumption levels in today's dominant services sectors. Even though Georgescu-Roegen was concerned about entropy and limits to growth, time value is mostly squandered when citizens have too few meaningful means of economic engagement with others. Greater freedom of economic participation, would allow more inputs to flow into the system as a whole. This matters, given the fact entropy becomes more likely when systems lack sufficient inputs to balance extensive demands on their output.
What of the concerns Henry George held, regarding land as fixed scarcity? Fortunately, land doesn't hold the same relevance as a fixed factor, as it did in the past. However, one reason land appears excessively valued or scarce, is due to the centralized nature of productive agglomeration, whereby important forms of (land correlated) knowledge use are artificially scarce. Productive agglomeration could be greatly expanded, if new patterns for knowledge and mutual coordination were adapted for use in decentralized settings. After all: Via greater possibilities for productive agglomeration, the land which qualifies as meaningful economic access, would become less scarce as well.
The constraints of daily life in the 19th century, likely made it difficult for individuals such as Edward Gibbon Wakefield to imagine the possibility of knowledge dispersal in smaller communities and via the coordination of multiple skill levels. Even though he envisioned humans as the ultimate scarcity, he seemed to dismiss a wide range of human capital potential if it were not also well reimbursed on monetary terms.
Alas, others lack this appreciation as well. Consequently, it is becoming an increasing struggle for groups with widely divergent skills sets to live in close proximity to one another, given today's inflexible divisions of labour which are physically separating the most basic of human functions. Given the understandable desire of individuals to live among others who hold similar values and skill capacity, more groups might eventually resolve this coordination problem by sharing both their higher workplace aspirations and lower valued skill sets. By internally coordinating a full range of skill sets, groups with a similar income range would also share similar levels of responsibility for the local infrastructure and other local amenities they find most desirable.
For that matter, today's digital realm makes it all the more compelling, for societies to begin sharing better integrated skill sets wherever people work and live. In particular, automation poses its own challenges to societal expectations of divisions of labour and specialization, especially since the IQ "losers" often have to settle for work which makes it difficult to meet their personal responsibilities. One reason computer deep learning may be unsettling for professionals, is that the same dismissal these groups tended to assign to "deplorables", is the same dismissal that automation could impose on them, should the arguments of efficiency and rationality be carried even further to "cold" logical conclusions.
Perhaps the main problem for Robert Solow's framework of complete interchangeability, is that we increasingly struggle to substitute the fixed scarcity of time value, for other resource capacity in services dominant economies. Granted, it was once a simpler matter to substitute time value with other factors. Given that tradable sector dominance assigned extensive production roles for time value for so long, perhaps it is understandable, how Solow and many others were convinced this approach was valid.
My own view is that the ultimate scarcity in today's system comes from what the political economy of our societies and polities can bearArbitrary production constraints on our time, are increasingly at variance with the growth and output levels needed for general equilibrium stability. So long as human capital potential remains left on the sidelines, non tradable sectors will continue to make excessive demands on general equilibrium, which only further displace economic participation at the margins.
If citizens were free to explore their full economic potential, less exponential tradable sector growth would be necessary, to maintain production and consumption levels in today's dominant services sectors. Even though Georgescu-Roegen was concerned about entropy and limits to growth, time value is mostly squandered when citizens have too few meaningful means of economic engagement with others. Greater freedom of economic participation, would allow more inputs to flow into the system as a whole. This matters, given the fact entropy becomes more likely when systems lack sufficient inputs to balance extensive demands on their output.
What of the concerns Henry George held, regarding land as fixed scarcity? Fortunately, land doesn't hold the same relevance as a fixed factor, as it did in the past. However, one reason land appears excessively valued or scarce, is due to the centralized nature of productive agglomeration, whereby important forms of (land correlated) knowledge use are artificially scarce. Productive agglomeration could be greatly expanded, if new patterns for knowledge and mutual coordination were adapted for use in decentralized settings. After all: Via greater possibilities for productive agglomeration, the land which qualifies as meaningful economic access, would become less scarce as well.
The constraints of daily life in the 19th century, likely made it difficult for individuals such as Edward Gibbon Wakefield to imagine the possibility of knowledge dispersal in smaller communities and via the coordination of multiple skill levels. Even though he envisioned humans as the ultimate scarcity, he seemed to dismiss a wide range of human capital potential if it were not also well reimbursed on monetary terms.
Alas, others lack this appreciation as well. Consequently, it is becoming an increasing struggle for groups with widely divergent skills sets to live in close proximity to one another, given today's inflexible divisions of labour which are physically separating the most basic of human functions. Given the understandable desire of individuals to live among others who hold similar values and skill capacity, more groups might eventually resolve this coordination problem by sharing both their higher workplace aspirations and lower valued skill sets. By internally coordinating a full range of skill sets, groups with a similar income range would also share similar levels of responsibility for the local infrastructure and other local amenities they find most desirable.
For that matter, today's digital realm makes it all the more compelling, for societies to begin sharing better integrated skill sets wherever people work and live. In particular, automation poses its own challenges to societal expectations of divisions of labour and specialization, especially since the IQ "losers" often have to settle for work which makes it difficult to meet their personal responsibilities. One reason computer deep learning may be unsettling for professionals, is that the same dismissal these groups tended to assign to "deplorables", is the same dismissal that automation could impose on them, should the arguments of efficiency and rationality be carried even further to "cold" logical conclusions.
Perhaps the main problem for Robert Solow's framework of complete interchangeability, is that we increasingly struggle to substitute the fixed scarcity of time value, for other resource capacity in services dominant economies. Granted, it was once a simpler matter to substitute time value with other factors. Given that tradable sector dominance assigned extensive production roles for time value for so long, perhaps it is understandable, how Solow and many others were convinced this approach was valid.
Sunday, January 21, 2018
Price Taking as a Useful Services Production Norm
How could price making processes ultimately lead to disequilibrium? Each supplier or provider expects given levels of general equilibrium resource capacity, yet not all participants have sufficient understanding where (current) aggregate capacity actually stands. Whereas price taking, with sufficient view to the resource capacity currently in use, implies a more sustainable general equilibrium.
Even though the wealth capture of price making does occur in tradable sector activity, these suppliers tend to have greater awareness of a full range of specific resource capacity in play, especially as it pertains to the product in question. Consequently, tradable sector prices are more likely to contribute to broad resource coordination or "best use" for everyone concerned. An added benefit for monetary policy, is how price taking patterns for tradable sector activity include reasonably constant price levels over time. This in turn contributes to their potential as a recognizable production norm, as a useful consideration for monetary representation.
Alas, the random mining of human capital in non tradable sector activity, has led to a different outcome for coordination potential - especially since the latter decades of the twentieth century. And, as the price making of non tradable sector activity came to dominate tradable sector price taking, monetary policy makers responded by capping aggregate monetary representation (inflation targeting) which effectively sets limits for high skill participation, via the asymmetric compensation which today's professionals require.
While the Baumol effect of price making for skilled time product is understandable in some settings, it creates problems elsewhere, when local income conditions lack the additional benefit of global wealth. Increasingly, professionals avoid such settings as well, which often limits pragmatic knowledge use where it is needed most. This disequilibrium of sectoral imbalance, and its exacerbation due to tight monetary policy, has led to what is essentially the equivalent of human capital dumping on a wide scale, not to mention the lost sunk costs of educational investment.
Nevertheless, there remain arguments in favour of non tradable sector price making, particularly given its capacity for spontaneous national coordination of time product. With a little luck, governments could continue to support this form of knowledge use, so long as they recognize that other means of knowledge use generation will become increasingly necessary in the future. At least since the turn of the century, asymmetric compensation has proven insufficient to integrate millions who continue to invest in human capital, with hopes of full economic participation.
It's the economic connections to time and place which make it difficult to determine the full extent of human capacity at a general equilibrium level. Once price making for human capital reaches a certain threshold in a services dominant economy, societies find it more difficult to maintain general equilibrium potential for all citizens. Even though local price making is rational for time based product, the aggregate pricing effect creates a disequilibrium of reduced production and consumption. And as central bankers have become more focused on combating the inflation implications of price making, monetary representation becomes less effective for all economic participants. What can be done?
First, we can make peace, with the fact today's professionals can only coordinate time based product with others up to a point. From here, we can begin the process of recreating time based product, via the price taking means of time arbitrage. Such an approach would make it possible to generate new wealth which builds stable connections for the valuable product of time and place. Best, doing so would establish service generation patterns which more closely follow the stable production norm patterns of tradable sector activity.
Time arbitrage would eventually allow a rebalancing of services generation to take place. Since time value in relation to itself does not generate inflation, services generation on these terms would eventually make it simpler for monetary policy to fully represent all economic actors, as central bankers (finally) become less inclined to continue their irrational fight against sectoral imbalance. Even though there will always be a certain degree of non tradable sector inflation via professional price making, other citizens have a more sustainable option for knowledge use, via the price taking of a services production norm.
Even though the wealth capture of price making does occur in tradable sector activity, these suppliers tend to have greater awareness of a full range of specific resource capacity in play, especially as it pertains to the product in question. Consequently, tradable sector prices are more likely to contribute to broad resource coordination or "best use" for everyone concerned. An added benefit for monetary policy, is how price taking patterns for tradable sector activity include reasonably constant price levels over time. This in turn contributes to their potential as a recognizable production norm, as a useful consideration for monetary representation.
Alas, the random mining of human capital in non tradable sector activity, has led to a different outcome for coordination potential - especially since the latter decades of the twentieth century. And, as the price making of non tradable sector activity came to dominate tradable sector price taking, monetary policy makers responded by capping aggregate monetary representation (inflation targeting) which effectively sets limits for high skill participation, via the asymmetric compensation which today's professionals require.
While the Baumol effect of price making for skilled time product is understandable in some settings, it creates problems elsewhere, when local income conditions lack the additional benefit of global wealth. Increasingly, professionals avoid such settings as well, which often limits pragmatic knowledge use where it is needed most. This disequilibrium of sectoral imbalance, and its exacerbation due to tight monetary policy, has led to what is essentially the equivalent of human capital dumping on a wide scale, not to mention the lost sunk costs of educational investment.
Nevertheless, there remain arguments in favour of non tradable sector price making, particularly given its capacity for spontaneous national coordination of time product. With a little luck, governments could continue to support this form of knowledge use, so long as they recognize that other means of knowledge use generation will become increasingly necessary in the future. At least since the turn of the century, asymmetric compensation has proven insufficient to integrate millions who continue to invest in human capital, with hopes of full economic participation.
It's the economic connections to time and place which make it difficult to determine the full extent of human capacity at a general equilibrium level. Once price making for human capital reaches a certain threshold in a services dominant economy, societies find it more difficult to maintain general equilibrium potential for all citizens. Even though local price making is rational for time based product, the aggregate pricing effect creates a disequilibrium of reduced production and consumption. And as central bankers have become more focused on combating the inflation implications of price making, monetary representation becomes less effective for all economic participants. What can be done?
First, we can make peace, with the fact today's professionals can only coordinate time based product with others up to a point. From here, we can begin the process of recreating time based product, via the price taking means of time arbitrage. Such an approach would make it possible to generate new wealth which builds stable connections for the valuable product of time and place. Best, doing so would establish service generation patterns which more closely follow the stable production norm patterns of tradable sector activity.
Time arbitrage would eventually allow a rebalancing of services generation to take place. Since time value in relation to itself does not generate inflation, services generation on these terms would eventually make it simpler for monetary policy to fully represent all economic actors, as central bankers (finally) become less inclined to continue their irrational fight against sectoral imbalance. Even though there will always be a certain degree of non tradable sector inflation via professional price making, other citizens have a more sustainable option for knowledge use, via the price taking of a services production norm.
Friday, January 19, 2018
Musings on "Free Market" Healthcare
Even though it's difficult to imagine today, healthcare in the U.S. prior to the twentieth century, once resembled a free market for the use of one's skills. Before extensive formal educational requirements were put in place, rural areas were still more likely to have practitioners as well.
Much has changed. In a post for the Mises Institute, "Do We Have a Free-Market Medical System"? Hunter Lewis notes that for some observers, profit based healthcare "should be outlawed", while others are upset that healthcare is "socialized". How to think about this? He writes:
Nevertheless, physicians have lost some of their hard won autonomy in recent decades. The added healthcare value they worked diligently to create, is now shared by hospitals, insurance and pharmaceutical companies. However, at a macroeconomic level, a symbolic focus on physicians remains relevant, for their earlier twentieth century successes have shifted the relative value of other human capital representation downward somewhat, in general equilibrium.
How so? Physicians increasingly expressed a preference for a customer base which was only partially representative of general equilibrium. In other words, they increasingly catered to clientele who were the most advantageous to serve. Through a focus on wealthier patients, physicians were ultimately able to raise the status of healthcare to that a respectable profession, on a par with other highly skilled professions.
For physicians in the U.S. healthcare is still largely a free market, in the sense that many physicians remain free to choose both their patients and the services they wish to provide. The problem of course is that this circumstance is one sided, since too many rights to the use of practical knowledge are now limited. Consequently, here's where any semblance of a free market for healthcare starts to break down, for citizens lack means to pursue healthcare options outside the services of today's physicians. Production rights need to be restored so that citizens can once again improve their lot through their own efforts, which is all the more important when they lack the monetary means to reimburse skills which require high levels of investment and sacrifice.
Again, physician discrimination for the use of one's scarce time, is understandable. That's a form of discrimination which - given the scarce reality of our time - all of us have little choice but to employ. Just the same, we need to extend that freedom of our time preferences both ways. In particular, it would be cruel for the physician to discriminate, if he or she does so in ways that deny others the ability to help themselves, especially when no one else can reasonably be expected to come to their aid. First, let's do no more harm. Why not think twice, before we needlessly tie the hands of those who otherwise might discover not only means to help themselves, but also others as well.
Much has changed. In a post for the Mises Institute, "Do We Have a Free-Market Medical System"? Hunter Lewis notes that for some observers, profit based healthcare "should be outlawed", while others are upset that healthcare is "socialized". How to think about this? He writes:
So what do we have? I think the most apt description would be "crony capitalist" medicine, one in which powerful special interests conspire with government officials to create legally mandated monopolies, with the specific goal of thwarting free market competition...There are many honest and dedicated medical professionals sincerely devoted to the healing arts. But they are trapped in a system that can more accurately be described as a crony capitalist nightmare.Granted, while healthcare in the U.S. is hardly the result of a vast conspiracy theory, crony capitalist medicine does describe a relative default position, for knowledge use protectionism. This approach has undermined legislation time and again, which possibly could have made the system more accessible and efficient.
Nevertheless, physicians have lost some of their hard won autonomy in recent decades. The added healthcare value they worked diligently to create, is now shared by hospitals, insurance and pharmaceutical companies. However, at a macroeconomic level, a symbolic focus on physicians remains relevant, for their earlier twentieth century successes have shifted the relative value of other human capital representation downward somewhat, in general equilibrium.
How so? Physicians increasingly expressed a preference for a customer base which was only partially representative of general equilibrium. In other words, they increasingly catered to clientele who were the most advantageous to serve. Through a focus on wealthier patients, physicians were ultimately able to raise the status of healthcare to that a respectable profession, on a par with other highly skilled professions.
For physicians in the U.S. healthcare is still largely a free market, in the sense that many physicians remain free to choose both their patients and the services they wish to provide. The problem of course is that this circumstance is one sided, since too many rights to the use of practical knowledge are now limited. Consequently, here's where any semblance of a free market for healthcare starts to break down, for citizens lack means to pursue healthcare options outside the services of today's physicians. Production rights need to be restored so that citizens can once again improve their lot through their own efforts, which is all the more important when they lack the monetary means to reimburse skills which require high levels of investment and sacrifice.
Again, physician discrimination for the use of one's scarce time, is understandable. That's a form of discrimination which - given the scarce reality of our time - all of us have little choice but to employ. Just the same, we need to extend that freedom of our time preferences both ways. In particular, it would be cruel for the physician to discriminate, if he or she does so in ways that deny others the ability to help themselves, especially when no one else can reasonably be expected to come to their aid. First, let's do no more harm. Why not think twice, before we needlessly tie the hands of those who otherwise might discover not only means to help themselves, but also others as well.
Wednesday, January 17, 2018
Will We Heed Adam Smith's Warning?
How so? After all, his warnings regarding arbitrary government limits to trade with other countries, are still taken to heart by many economists. Indeed, Adam Smith's anti-mercantilist arguments from "The Wealth of Nations" are perpetually relevant.
Nevertheless, Smith had other equally important concerns about economic dynamism. In particular, his emphasis on the dangers of spending in excess of ongoing wealth generation, is often either dismissed or approached in an altogether incomplete framing. Since many of these debt and austerity related discussions tend to be ideologically, financially or mathematically oriented, the underlying nature of real economy wealth creation versus wealth capture or redistribution, has yet to be fully taken into account. If only more dialogue could be devoted to a close reexamination of real economy wealth creation, given the recent historical context of service sector dominance!
Perhaps Adam Smith's warning re continuous progressive wealth origination wasn't taken seriously, since it wasn't as crucially relevant during centuries of tradable sector growth and dominance. Plus, Smith's framing of "irresponsible" individuals who were inclined to spend in excess of what they contributed to the marketplace, has long since shifted to institutions in which "irresponsibility" isn't quite the relevant issue.
Rather, time based product as organized by non tradable sector institutions, has displaced much of the individually provided time based product still largely supported by wealthy individuals in Smith's time. This institutionally supported time based product, continues to rely on price making (for administration) within the monetary circulation of general equilibrium, because it never seemed necessary before, to organize via the price taking patterns which immediate reciprocal capacity makes possible. Only recall that a marketplace for time value, would allow for the immediate (time "debt") reciprocity and wealth generation of price taking.
Meanwhile, even though both policy makers and citizens are concerned about the possibility of shifting too much debt responsibility into the future, no one has yet envisioned structural means to avoid this problem. Yet not doing so means the problem gradually worsens. Too many national institutions can eventually become fragile, if all of them extensively compete for an equilibrium dependent set of available resources, during periods of economic stagnation.
Also, in Adam Smith's time, he could hardly have imagined, how financial tools would eventually change the structure of economic activity beyond recognition. Alas, these financial tools also reduced the economic "inconveniences" that came with "just in time" wealth creating reciprocity, by replacing them with the institutional conveniences - if occasionally uncertainties - of future responsibility.
Smith didn't need to think about how time based services generation might be reorganized so as to generate wealth, since centuries would pass before indirect services compensation would place excessive demands on original wealth. Smith's primary concern in this regard was simpler in nature. One might think of it as a request for societies engaging in wealth creation, not to squander too much of their participation in activities which could potentially reverse the forward path of progress.
At some point that rationale was lost, yet there were understandable reasons as to why. One only wonders how Adam Smith might have felt about the proliferation of financial product in our time. Much of today's services dominance was also made possible due to financial product innovation. Valuable though much of this process became for twentieth century growth and dynamism, increasingly it poses new problems, as societies struggle over which groups "should" even be allowed to benefit from institutions participating in high skill and time based services.
Heeding Smith's warning is not about imposing austerity, even though some have confused it as such. We need to step well beyond the economic theoretical circumstance of Smith's lifetime, to envision a reciprocal mechanism which also functions as a wealth creating mechanism for present day knowledge. Yet it's not enough to accomplish this part of the task and consider the job done, because the macroeconomic context for doing so, is every bit as important. Without a sufficient macroeconomic understanding for time centered wealth, chances are too many arguments for mercantilism would still hold sway, for policy makers and citizens alike.
Adam Smith's warning has even more relevance in today's economic circumstance, as nations shift away from wealth creation dialogue, towards the cultural dialogue of who "deserves" redistribution. While some moral arguments are certainly worth having, I do not believe that moral arguments which pit one group against another for government benefits, serve any productive purpose. It's time to concentrate instead on new forms of wealth creation, so that talk of nationalism might ultimately fade into the background. Fortunately, we have the ability to pick up wealth creation dialogue where Adam Smith left off, in this historical moment of service sector dominance.
Nevertheless, Smith had other equally important concerns about economic dynamism. In particular, his emphasis on the dangers of spending in excess of ongoing wealth generation, is often either dismissed or approached in an altogether incomplete framing. Since many of these debt and austerity related discussions tend to be ideologically, financially or mathematically oriented, the underlying nature of real economy wealth creation versus wealth capture or redistribution, has yet to be fully taken into account. If only more dialogue could be devoted to a close reexamination of real economy wealth creation, given the recent historical context of service sector dominance!
Perhaps Adam Smith's warning re continuous progressive wealth origination wasn't taken seriously, since it wasn't as crucially relevant during centuries of tradable sector growth and dominance. Plus, Smith's framing of "irresponsible" individuals who were inclined to spend in excess of what they contributed to the marketplace, has long since shifted to institutions in which "irresponsibility" isn't quite the relevant issue.
Rather, time based product as organized by non tradable sector institutions, has displaced much of the individually provided time based product still largely supported by wealthy individuals in Smith's time. This institutionally supported time based product, continues to rely on price making (for administration) within the monetary circulation of general equilibrium, because it never seemed necessary before, to organize via the price taking patterns which immediate reciprocal capacity makes possible. Only recall that a marketplace for time value, would allow for the immediate (time "debt") reciprocity and wealth generation of price taking.
Meanwhile, even though both policy makers and citizens are concerned about the possibility of shifting too much debt responsibility into the future, no one has yet envisioned structural means to avoid this problem. Yet not doing so means the problem gradually worsens. Too many national institutions can eventually become fragile, if all of them extensively compete for an equilibrium dependent set of available resources, during periods of economic stagnation.
Also, in Adam Smith's time, he could hardly have imagined, how financial tools would eventually change the structure of economic activity beyond recognition. Alas, these financial tools also reduced the economic "inconveniences" that came with "just in time" wealth creating reciprocity, by replacing them with the institutional conveniences - if occasionally uncertainties - of future responsibility.
Smith didn't need to think about how time based services generation might be reorganized so as to generate wealth, since centuries would pass before indirect services compensation would place excessive demands on original wealth. Smith's primary concern in this regard was simpler in nature. One might think of it as a request for societies engaging in wealth creation, not to squander too much of their participation in activities which could potentially reverse the forward path of progress.
At some point that rationale was lost, yet there were understandable reasons as to why. One only wonders how Adam Smith might have felt about the proliferation of financial product in our time. Much of today's services dominance was also made possible due to financial product innovation. Valuable though much of this process became for twentieth century growth and dynamism, increasingly it poses new problems, as societies struggle over which groups "should" even be allowed to benefit from institutions participating in high skill and time based services.
Heeding Smith's warning is not about imposing austerity, even though some have confused it as such. We need to step well beyond the economic theoretical circumstance of Smith's lifetime, to envision a reciprocal mechanism which also functions as a wealth creating mechanism for present day knowledge. Yet it's not enough to accomplish this part of the task and consider the job done, because the macroeconomic context for doing so, is every bit as important. Without a sufficient macroeconomic understanding for time centered wealth, chances are too many arguments for mercantilism would still hold sway, for policy makers and citizens alike.
Adam Smith's warning has even more relevance in today's economic circumstance, as nations shift away from wealth creation dialogue, towards the cultural dialogue of who "deserves" redistribution. While some moral arguments are certainly worth having, I do not believe that moral arguments which pit one group against another for government benefits, serve any productive purpose. It's time to concentrate instead on new forms of wealth creation, so that talk of nationalism might ultimately fade into the background. Fortunately, we have the ability to pick up wealth creation dialogue where Adam Smith left off, in this historical moment of service sector dominance.
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