Platt Perspective on Business and Technology

Open markets, captive markets and the assumptions of supply and demand dynamics 15

Posted in macroeconomics by Timothy Platt on September 2, 2016

This is the fifteenth installment to a brief series on underlying assumptions as they arise and play out in economic systems, and in production and marketplace systems (see Macroeconomics and Business 2, postings 230 and loosely following for Parts 1-14.)

I began this series with a brief succession of installments in which I discussed supply-side and demand-side approaches to macroeconomics in general, and how they both have political implications and politically minded adherents and detractors. I followed that with an installment where I first defined and conceptually discussed a phenomenon that I have come to refer to as politically grounded economic friction (see Part 8.) And I followed that with a succession of historical example-based postings, and then more current events-oriented ones that I used to further discuss this phenomenon and illustrate how it plays out in the real world. I ended that progression of postings with this series’ Part 14, where I briefly and I add very selectively discussed some of the politically driven current events taking place in the United States and the West, and in China as they are being shaped by this type of politically motivated and driven friction.

Then at the end of Part 14, I stated that I would:

• Conclude this series in a next installment where I will step back from this historical to current events narrative, to reconsider macroeconomic models and their use and misuse in general.

I begin that by going back to the fundamentals and to the issues that prompted me to begin writing this series in the first place. I begin this concluding note to it with the concept of economic friction per se, and what shapes and drives it.

• Ultimately, economic friction is the deleterious consequence of communications failure and of crucial information not being available in usable form, when it is needed or where it is needed, if it is to facilitate smooth, informed decision making and action.

Economic friction and its perhaps specialized, but still all but universally occurring manifestation: politically grounded economic friction, are driven by miscommunication and by the inefficiencies and problems that this creates. And economic friction and this particular form of it in turn, facilitate and even compel the creation of next-round friction in these systems too, further perpetuating the cascade of problems that I write of here.

• If I were inclined to offer a technological “magic bullet” solution to all of this here, as wrapped in fad-friendly bromides and over-simplifications,
• I would say that simply increasing the flow of information available, everywhere and all of the time – as is increasingly possible and commonplace now with wireless online connectivity and telephony and the interactive internet, can fix everything here
• And from the availability and use of the right technologies, in and of themselves.

That leaves out at least two crucial details though. First, is the simple fact that the easier the information sharing and the larger the overall volume of it shared, the more challenging it can be to select out and discern, and critically analyze reliable information from the flow, that would in fact address friction’s challenges, and certainly on anything approaching a here-and-now, real-time basis.

• Volume of information, in and of itself can become the greater and more limiting form of friction here. Think of this as the steganographic challenge.

And as a second crucial detail here, and a consequence of that first point and its realities,

• We all tend to become more and more selective in where we gain knowledge and insight – raw data and processed knowledge and opinion from out of this deluge,
• And particularly as the flow of information that we can access becomes a real deluge.

And all too often and at least to a degree for all of us, that can mean our expending more time and effort gaining news and information from sources that we already know and have in some way vetted for ourselves – and that we know that we agree with.

Open-ended high volumes of information can and do mask the details that we would most need in order to make a more informed choice, and particularly when facing and dealing with new and different, and the unpredictably unexpected. And our perhaps commonest, and certainly easiest way to address this, usually involves adding blinders to our search for the information that we need, and even particularly when crucial information would be novel and new to us and come best from new and unexpected directions.

• This applies to every day citizens and to business employees. It applies to elected and appointed government officials, and to business managers and owners and for businesses great and small.

How would I respond to this challenge and what would I offer as possible resolution to it? What would I recommend that might help government policy and law makers, pursue macroeconomic theory and policy that is based on it, free (freer) from political friction-driven ideological blinders?

What I have been at least attempting in this series, is to explicitly raise one of the key challenges that we will have to resolve societally and even globally for this 21st century, and both individually and as we assemble and interact as larger communities. We all face this challenge and its ongoing consequences, and that includes all of us as citizens and marketplace consumers and it includes us as business or politically elected officials and leaders too when we bear those responsibilities.

And I end this posting by raising some generally stated puzzle piece elements that I would expect would have to go into any generally applicable, equitable and fair resolution to this challenge:

• I start with education. Open education that is as free of bias and doctrinal assumption as possible, and that actively encourages thoughtful questioning is essential here. When data and processed knowledge that is based upon it are everywhere and in seemingly unending volume, then the key to education is not so much in memorizing specific facts – that can always be gathered in and in detail when and as needed. It is in critically thinking and evaluating the flow of information that we now, of necessity live immersed in.
• But the entire burden here cannot simply be put on the information recipient side of these communicative exchanges. It is just as important for explicitly unbiased news and information sources to step forward that can be relied upon to clearly separate news from opinion and fact from bias and preconception. And it is important that such news sources – and here I refer to explicit news channels, to openly accept and respond to challenges of possible bias, when and as they arise.
• How could such news sources in effect vet themselves here as being fair and unbiased? By how they rise to and respond to any challenges offered in that, and with an informed public deciding for themselves, the bias or openness merits of competing views and their champions here.
• So ultimately, this requires active participation from both sides of our communications and information sharing exchanges, and it requires both sides have to be willing – and able to actively participate. This demands feedback and its acceptance as a basic and I add essential element too.
• Ultimately, my goal in all of this is to find ways to identify and limit friction in our communications and information sharing systems, and politically grounded economic friction in particular.

And even as I write this, I see it as bromide and oversimplification and certainly when stated in such general and largely abstract terms. How do societies, and particularly open democratic societies fall into the quagmires of problems that I have been writing of in this series? How can these societies at least, find ways to lessen the likelihood and severity of the types of challenges that I have written about here? Platitude, bromide and oversimplification aside, any real answers will likely have to include elements of those four “resolution-oriented” bullet points as just offered above. And that applies to how macroeconomic theory-costumed political bias is turned into policy and law, and to all of the rest that I have touched upon here and more. This twenty first century is, if nothing else a period of profound change, and disruptive change. So the issues that I write of here are vital and even if they are seemingly intractably difficult at times – and certainly now in the United States as I write this, with our 2016 elections approaching.

I am essentially certain to return to issues that I have touched upon in this series, in future writings. Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation.

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