The first point you are raising is the idea of a public good (which I view as an extension of ideal market principles beyond the boundaries of the “real” market), and the second is the idea of redistribution, which I have more trouble with.

The first one is uncontroversial and basically a good idea I think if conditions are right, since it can get rid of some pointless volatility. Roads, postal services, railroads and utilities all fit the model under some conditions (in the US though, recall that all these began as private enterprise). Usually, the ‘right conditions’ include a clear efficiency advantage and elimination of duplication of effort (which implies commoditization). I think somebody actually showed that postal mail services are actually more efficient as a monopoly, due to the unique characteristics of the service (FedEx and UPS are not true substitute services). This can change at any time, and the decision must be revalidated occasionally, since conditions change. Hence the regulation/deregulation see-saw. The fact that it is often terribly managed and timed doesn’t mean it isn’t unnecessary.

Today we have other options for creating public goods besides the government, the biggest being open source.

So I agree with the idea of public Wi-Fi if businesses can’t create a meaningful competitive market for delivering it efficiently. I also like the idea of such public goods being created in an open-source/self-organizing way, perhaps with eventual government support IF it isn’t just an entitlement program. The co-working movement seems to be developing in this way, as is the community-based home-ownership program NACA.. Accreditation networks of universities are another example of this sort of self-organization. I also think we should be open to deregulation and, by analogy, “de-open-sourcing” when necessary.

The second bit though, redistribution, worries me a heck of a lot more. Even in its most humane forms like “minimum wage.” When markets hit their efficiency limits due to imperfections (too few competitors, too little information transparency, leading to manipulation), they self-correct through the stock market, sometimes very painfully (as in the current situation), but still within the adaptation limits of the structure.

Redistribution though, is an idea full of arbitrariness with no natural check and balance. How do you know you haven’t set the minimum wage unsustainably high, given the current size of the pie and its growth rate? Where’s the feedback signal?

I think the two finite-term justifications for redistribution are a) to provide gentler-than-crash landings when the market self-corrects too violently and b) to drive the system away from a known and unacceptable and non-market inequity like slavery (which is enforced through imprisonment and threat of violence, not the logic of supply and demand). In each case, the operative term is “finite.” We unfortunately lack the checks and balances which make our short-term entitlements self-destruct when they’ve done their job.

In one case, redistribution sustains structural stability under the threat of collapse, in the other case, it catalyzes structural evolution which would otherwise happen through violent revolution.

Complex stuff going on here of course, and I guess I am not being too original in taking a position, but then, I have no deep new theory of economics to offer. We’ve all got to pick from the Keynes-Friedman-Hayek buffet.

Venkat

Glad I came back to check your response, those are good points you raise — I guess the question of whether national economies should provide life-long economic stability, within some reasonable parameters of individuals taking responsibility to train themselves, is an open one.

I would say, if an economy is incapable of delivering this promise, then one policy question is what can be done to make it capable. Perhaps the answer to that is in fact to create conditions that make it possible for cloud-working to co-exist with a good sense of community — for example, municipally sponsored free wi-fi might be one example of how to enable that.

I am also interested in general about the policy and sociological issues surrounding the cloud-worker ethos. I think on the whole, the possibility of cloud working could be one way to distribute wealth in a more egalitarian way which is good for the sustainability of community. I don’t mean that every one will be a cloud worker and make big technical consulting bucks, but if some critical mass does, then you get wealth flowing to more communities in the country which helps support the more conventional employment models in those communities.

Too optimistic?

Sameer.

Good point about what counts as ‘reasonable’ expectations. The psychological shock, as you say, comes not so much from the financial hit alone, but the disruption of a lifestyle and community existence predicated on a level (and stability) of income. This rather sardonic article in the NYT yesterday, You Try to Live on 500K in This Town shows that Obama’s 500k limit for bailout execs is a legitimate psychological shock.

That said, I don’t think we disagree. You say, “I think the jury’s still out on whether everyone is capable of such an extreme level of a self-made and untethered economic existence.” My point is that it is not capability that matters… it is whether you even have the choice. The alternative is worse: spiral down into serious depression furiously blaming the system all the way down. The question isn’t really whether the economy should guarantee stable and secure employment, but can it? And if the fundamental economics answer is ‘No’ then the only choice left is how you deal with this reality.

That said, I do think I asked more questions than I answered in this piece.
Venkat

It really made me think about the role of community in my life. I will have to leave behind all the connections and friendships I have where I live now — though I am lucky to not have to move too far away; it’s a two hour flight away. All the same, I do face a loss of emotional comfort and possibly a setback in my career occasioned by not having in my new place of residence the support structures I have where I am right now.

I am of course still young and unburdened by family responsibilities. I can realistically plan to return after a couple of years. Even the fact that I have a job — and with a large and reputable company, to boot — makes me vastly more fortunate than many in the same situation. I don’t think that it’s entirely fanciful or woolly-headed to imagine that for a large number of people, none of these conditions apply. You have kids in school. You have a mortgage on your first house, one that you purchased with an entirely reasonable loan and didn’t treat as an ATM but which all the same, you can’t afford on top of housing costs at your new place of work. You are over fifty, and no one wants to hire you with your medical pre-conditions and your expectations of a reasonable salary. Even in your early forties, you face the possibility that this job loss will mean irreparable damage to the rest of your career and for the aspirations you held out for your children’s future, aspirations that would hardly qualify as unreasonable in any regard — that they will attain a level of education higher than your own, for example.

I don’t think that having such aspirations would qualify as an unreasonable sense of entitlement. It might even be a straw man argument to contest that most people were in fact more absurdly ambitious than this picture I’ve painted. People made ordinary choices with ordinary lives, and now that the economy’s come undone due to financial systems that they never had control over the creation or perpetuation of, they are faced with a massive level of psychic disorientation.

I agree that the cloudworker lifestyle grants a great deal of independence and control to individuals, but I don’t think it fully answers the question of how one can manage this sense of dislocation. I think the jury’s still out on whether everyone is capable of such an extreme level of a self-made and untethered economic existence.