Progress Has a Direction

When it comes to politics, there are a lot of people who believe that the truth lies somewhere in the middle and that if only we listened to each side we'd find the truth there.

I actually agree with this on one dimension. Imagine a scale of 0 to 100. 0 is a world in which not a dollar of income is taxed, not a dollar of government money is spent, and not a single activity is regulated. 100 is a world where every dollar of income is taxed, every dollar spent is government money, and every activity is regulated. (And you could make this more complex and have three scales for the tax, spending, and regulation.) I have my own opinions about where we should be on this scale and so do you. (Mine involves more hand waving than precision.) It might be a simple thing to have democracy by averages in this instance and simply let every single American pick a value from 0 to 100 and let the tyranny of the average (or median) define our policy. We now have the technology for this. If every voter's opinion matters, we could easily weight every opinion equally and find our truth in the middle and let it move around over time as awareness of problems and possibilities changed.

(And it annoys me that we spend so much time debating this. Again, we have the technology that would let people quickly express their values and opinions on this. Once in place, we could know the answer to the question of where Americans think we should be on this scale in an instant.)

But some policies are not subject to average. Is slavery legal or illegal? Abortion? Do we make schooling mandatory for every child? Do we make child labor illegal? Or more relevant to my own obsession with economic progress, do we put in place policies that assume and support a national industrial economy or a global information economy? Or even better, an economy that popularizes entrepreneurship?

Progress has a particular direction and for me it can be captured along these four dimensions or scales. Progress isn't found in some average on these scales but always in one direction. 

Greater Interdependence and Specialization

Progress steadily makes us part of larger groups. Progress is coincident with greater levels of complexity and interdependence. One of the simpler ways that shows up is that we move from economies largely bound by tribes to city-states to states to nation-states to global markets. Individuals specialize more and more and their work is coordinated with bigger groups (partly through management and partly through markets and partly through platforms like Fiverr). When you are self-sufficient, you have to be a generalist rather than specialist and your living standard is very low. When you are interdependent, you specialize and your living standard has the potential to be very high. Nobody on a deserted island is living a life of luxury; some people in big cities are.

Autonomy Supportive vs. Control or Abandonment

William Deci makes really great distinctions for parents, teachers and managers. You can control a child or employee, driving them towards the fulfillment of your own goals. At the other end of the spectrum you can abandon them, leaving them to do what they want without your control, influence or help. He advocates instead supporting their autonomy by enabling them to define and pursue their own goals. Rather than dictate goals you help them to articulate their own. Rather than shrug and say, "Good luck with that," you help to develop their ability to pursue those goals.

Autonomy supportive is relevant in so many dimensions but for now I'll simply say that it applies in this matter of greater interdependence. Empire is one way to expand the circle of people upon whom we depend. In that sense it is progress. A global market is even better than an empire as a mechanism for increasing our level of interdependence. And of course even better than free markets is a world in which government enables individuals to succeed in markets, is autonomy supportive. What does that look like? Regulating health and safety so that the person can trust the water and transportation systems they depend on. Providing lots of research and education so that the individual has the benefit of a steady parade of new knowledge and best practices. Education and training so the person knows how to be productive. The government neither dictates nor abandons its citizens but instead is autonomy supportive.

Greater Inclusion

At one level of progress, white, male, land-owning Protestants are able to use government as a tool for their goals. At another level of progress, minority women atheists who rent are able to use the government as a tool for their goals. One dimension of progress is Carl Benz inventing the car. Another dimension of progress is Henry Ford applying the concept of the assembly line to building cars and making them affordable for 90% of households. It is the same concept for our government, laws, and institutions. The more people able to use them and call them their own the better.

More Inventive

As we make progress, our world becomes more inventive. We invent computers and canned goods as well as banks and corporations. The speed with which we travel across town is less defined by how fast we can run than it is by whether we have access to a bike, car or subway. Our level of affluence is less dependent on our ability to hunt or build our own hut than our access to great schools or venture capital markets or table saws and nail guns. Progress means increasing reliance on inventions - social and technological. This can be disruptive.

Given the above, progress clearly has a direction. Policies that are autonomy supportive rather than controlling or abandoning represent progress. Policies that help us to become more specialized and more reliant on a larger group are progress. Policies that are more inclusive, that allow more and different kinds of people to have the same access to the institutions - institutions like credit markets, courtrooms and schools - we rely on is progress. Policies that encourage more invention - technological and social - is progress. 

There will be times when we move backwards on these scales. Such movement might even be necessary. For instance, during war we no longer trade with some group of people we were formerly reliant upon. There are people we will have to imprison, to control. Again, that is not progress but is instead a breakdown at the individual level from what is ideal to what is necessary. Moving backwards on these scales is not progress. It is - at best - an interruption to progress.

It is true that for some issues, the best resolution is in the middle. Progress, though, is not somewhere in the middle but further along. 

The Loneliness of the High-Priced Home Buyer

"No one goes there anymore. It's too crowded."
- Yogi Berra

Around the world, people are talking about a housing bubble. It may be that the rise in housing prices is a function of a fundamental economic trends that are bigger than the housing market.

In some parts of the country, people can talk about weather. In San Diego, there is not much weather to talk about. No snow or tornadoes, hail is rare, rain is infrequent (about 6 inches since last July) and heat waves, while increasingly common, are still the exception to the rule of mild temperatures. So, our small talk trends towards real estate prices.

Median home prices vary by zip code, from $375,000 (for people willing to commute about 2+ hours each day) to $3.3 million, but average more than $500,000. This suggests a mortgage payment of about $3,000 a month, or a gross income of nearly $60,000 a year just for the property taxes and mortgage. Sadly, San Diego is not hugely different than many metropolitan areas around the country.

It's easy to believe that this isn't sustainable and home prices have indeed nudged downwards in the last year. But it may be that we'll look back at this as an affordable time for housing. Or, more accurately, a time when stand alone homes on lots could be had for cheap.

Every decade, a higher percentage of folks live in the city and that's a trend projected to continue for a few more decades. As demand increases, prices for real estate will rise. It is quite likely that even suburban neighborhoods will see more high-rises. I'd argue that there are at least three reasons for this - all related to specialization.

Specialization in work means that a person is more likely to live in or near an urban center. A person whose expertise is creating the glass stunt men can leap through in movies is unlikely to base his business in Grimes, Iowa. The same is true for specialists who do things like arrange clinical trials for drug testing or write ad copy or calculate amortization tables. As the work force becomes more specialized, and the number of specialists with whom one needs to collaborate is more extensive, the draw to work in the city is stronger.

Specialization in consumption also draws people into cities. It is difficult to find sushi in Ronan, Montana or calypso band concerts in Bellingham, Washington. Large towns and small cities have a great allure, but offer little variety. Food, concerts, museums, and stores struggle to market even main stream products in a sparsely populated region. As people become more discerning consumers, more demanding of options to support vegan or gluten-free diets, or love of French film or metal-rock, they find themselves drawn to metropolitan centers.

Finally, one principle that guides the design of public places is that people are drawn to people. It is not just that people come together at the fair or into downtown in order to find food or entertainment. We are drawn into groups because we find people fascinating. As much as we hate congestion, lines, and high prices, people like to be around people.

And this last impulse, too, may be a product of specialization. As our production and consumption habits seem to separate us more from others, it may be that we feel a stronger pull towards them, a visceral need to connect with those from whom we would otherwise feel disconnected. Physical separation coupled with the isolation of mind and culture may simply be too much for the soul. It may be that we're drawn to live amongst more people as an antidote to the isolation that would otherwise overtake us as specialists.

Forecasting a fall in home prices
Ivine Housing Blog

Forecasting steady or rising prices
The Daily Reckoning