There is a new paradigm affecting economics that economist seem not to recognize. I am going to try to shed some light on the subject in this blog.
Here is the new paradigm. The generation of wealth by human value added labor has shifted and is shifting at a faster and faster rate. That shift is from physical labor to intellectual labor. It has been further compounded by the fact that the human race now faces a limited amount of intellectual ability. Do you follow that and agree with it? If so, I will try to show the new path forward.
The objective of an economic system should be to produce the greatest amount of wealth and thus the greatest quality of life for its participants. Simple, right? This does not conflict with my basic objective of increasing the median income either. To accomplish the above, what is needed is for every individual to produce the maximum amount of wealth that they are capable of. That means that us humans have to utilize the abilities that we have to the greatest extent possible from physical to intellectual. Again, these are simple concepts!
Now, any economic systems does not operate in a vacuum. There are other players around he world who are looking after their own interests just like we should be. This means that we can't buy with out limits cheaper products from one country like China if it put some of our lower skilled people totally out of work and out of our economic system. By protecting their jobs thru tariffs if necessary may be the correct decision to optimize our basic objective. It is in this area where old fashioned economic thinking is wrong. A "no holes barred" economic model does not optimize the generation of total wealth as a centrally controlled economic systems does not either. I feel that there is a difficult balance that does and that is what we need to focus on.
The thing that we have to accept is that the world of economics has changed and intellect is the wealth generator of the future and that it is limited. Further, we have to accept that the difference in worth between physical labor and intellectual labor will continue to grow as never seen before or considered before. How to deal with this new paradigm is the big challenge for social and economic systems of the future.
As pointed out in prior blogs, if we individually "game" our own economic system we will never reach our goal of maximum median income. What we need are socially acceptable ways of limiting "gaming" and changing the way we teach economics in our colleges and universities is a first step in the right direction.
Here is the new paradigm. The generation of wealth by human value added labor has shifted and is shifting at a faster and faster rate. That shift is from physical labor to intellectual labor. It has been further compounded by the fact that the human race now faces a limited amount of intellectual ability. Do you follow that and agree with it? If so, I will try to show the new path forward.
The objective of an economic system should be to produce the greatest amount of wealth and thus the greatest quality of life for its participants. Simple, right? This does not conflict with my basic objective of increasing the median income either. To accomplish the above, what is needed is for every individual to produce the maximum amount of wealth that they are capable of. That means that us humans have to utilize the abilities that we have to the greatest extent possible from physical to intellectual. Again, these are simple concepts!
Now, any economic systems does not operate in a vacuum. There are other players around he world who are looking after their own interests just like we should be. This means that we can't buy with out limits cheaper products from one country like China if it put some of our lower skilled people totally out of work and out of our economic system. By protecting their jobs thru tariffs if necessary may be the correct decision to optimize our basic objective. It is in this area where old fashioned economic thinking is wrong. A "no holes barred" economic model does not optimize the generation of total wealth as a centrally controlled economic systems does not either. I feel that there is a difficult balance that does and that is what we need to focus on.
The thing that we have to accept is that the world of economics has changed and intellect is the wealth generator of the future and that it is limited. Further, we have to accept that the difference in worth between physical labor and intellectual labor will continue to grow as never seen before or considered before. How to deal with this new paradigm is the big challenge for social and economic systems of the future.
As pointed out in prior blogs, if we individually "game" our own economic system we will never reach our goal of maximum median income. What we need are socially acceptable ways of limiting "gaming" and changing the way we teach economics in our colleges and universities is a first step in the right direction.
