Defining the Policy Space for Economic Expansion

Addressing a ground swell of populist sentiment, public policy is focused on the causes of The Great Recession.

Policymakers and analysts are busy confirming a policy space that will essentially define the problem in which the solution is to be logically deduced.

If it is true that government is largely captive to big business interests, definition of the policy space should confirm that hypothesis. With very little to suggest that policy will
eliminate management of risk that does not effect economic expansion but accumulates wealth, for example, it appears the hypothesis will be confirmed.

While deliberation of the financial system appears to be looking for new definition, the space is actually occupied by a pre-defined policy now being temporized to fit that space over time. Big business interests and populist sentiment will be forged to fit the defined policy space. The result will be policy that does not compromise the distributional properties--the means to ends--of the organizational structure while giving the appearance of change. Much of that appearance comes in the form of public-policy process both in the formation of policy and later in its administration.

Sufficient time passes within that space for a distribution to occur on the accumulation. Enough revenue can then be generated to pay on the public debt and secure its value without having to source the cause of the recession (the overaccumulation of capital into liquidity crisis--the benefit of accumulated wealth).

The debt needs enough support to make it worth buying. Securing that value is essentially accomplished by minimizing the amount the buyers are taxed to support it (essentially those that are too rich to fail the recession--the beneficiaries of the accumulation). The more you are taxed to pay the debt, the less value the debt returns to you and the less likely you are to buy it.

It is necessary to regress the tax system to give value to the debt for the people that have the money accumulated (the cause of the debt) to buy it. A VAT tax is being proposed to fill the policy space. It will give the appearance of change and regress the system to support the value of the debt without sourcing the accumulated benefit.

Through means of apparent change, the accumulated benefit, and the Hamiltonian model of finance that causes the problem, is conserved within the defined policy space over time.

Defining the policy space refers to a highly deliberative process that lends legitimacy to the dictates of legislative authority. That deliberative process functions to define a problem which will deliberately limit the probable outcome of the law, or provide large loopholes to ensure a probable behavior as result of those limitations.

It is important for legal consequences, like the legal act of a bank to sell securities long and proprietarily short at the same time, to have the appearance of a highly deliberative process that is intended to produce the public good.

In the absence of a directly effective democratic process, especially diminished by economies of scale, it is essential for the legal process to have the appearance of intentionally approximating the legitimately popular consent of the governed.

Defining the policy space is a game to be played out in the theatre of politics. Controlling this space is a defining characteristic of power and the ability to exercise control with the appearance of democratic process (without appearing to be dictatorial) is to exercise power with elegance.

While health care reform did little to provide a policy program that the public generally perceived to be the product of a popular consent, there was a social satisfaction of having successfully exercised power (the measure of popular consent: the less popular, the more power demonstrated).

We should not allow financial reform to seek the same measure of success as health care reform. It is critical the policy space be redefined for economic expansion instead of conserving the means of accumulating wealth in zero-sum and the pro-cyclical liquidity crises it causes, enabling a political-economic process to legitimately function without a popular consent.