First: Happy New Year! Second: Tech Tuesdays will resume next week. And now on to the topic of this post. Washington is starting us off into 2013 with a whimper. In a slightly past the artificial fiscal cliff deadline compromise we find ourselves with a nano bargain that amounts to the proverbial rearranging of the deck chairs on the Titanic. There are lots of analyses published today about what’s in the bargain (increased taxes) and what isn’t (debt ceiling). Also lot’s of talk about what this means about Obama’s negotiating style and leverage.

What’s mostly missing though is the larger economic and social context. I wrote a little bit about this in yesterday’s 2012 Year In Review post. We are at the beginning of a transformation as profound as the transition from agricultural to industrial society. We are headed for a post industrial world in which fewer people than ever are required to produce the output that the world consumes. So we need to fundamentally rethink long held beliefs about employment and social security.

For instance, what are the jobs of a traditional job? A job provides income, a sense of purpose, access to healthcare, interaction with others, etc. But if traditional jobs are disappearing (and there is lots of evidence that they are) then we need to look at unbundling these different aspects of a job. And that unbundling will have profound consequences for taxation, social security, etc. One thing we certainly wouldn’t do is increase payroll taxes as we just did in the nano bargain.

There are two different views of how we might eventually get there. One is a grand bargain in Washington, a kind of “New New Deal.” I don’t believe that this is a real possibility unless things get incredibly bad first. Bad on a level of the Great Depression. The other is more local and regional experimentation with alternative systems. Some of this is happening internationally (eg Denmark). I am hoping for more of that among states here in the US as well but that will require ways of moving budget away from the federal government. I will write about a radical idea for doing that in an upcoming post on taxation.