Wednesday, July 27, 2016

Government and the Secondary Marketplace Factor

Lately, the term "secondary marketplace" seems to have become more prominent in my posts. And - once again - my usage refers to a supply side or "real economy" structure, which in this instance varies widely from the financial definition normally associated with secondary markets. However, a recognition of today's secondary market status is warranted for knowledge and time based product, because of the macroeconomic and microeconomic issues at stake.

Macroeconomic considerations are particularly important, because the government budget dependence which generates a wide range of knowledge use, negatively impacts long term growth capacity. Governments cannot move ahead of private interests in the provision of knowledge/time based product, in part because of the way this good is presently defined. When knowledge use is monetarily compensated by governments in a secondary market position, the redistribution required, means each unit of knowledge based product needs to be paid for twice.

In a sense, this organizational structure limits knowledge based economic participation by half, of what is already the case in a merit based framework of economic possibility. Whereas much of private industry compensation for knowledge/time use on merit based terms, exists via discretionary income (for personal high and low skill services), or by the degree to which asymmetric compensation contributes to the final marketplace product of tradable sectors. Even though today's private industry utilization of knowledge use is incomplete, this form of time value can be accessed more directly.

Unfortunately, in terms of arbitrage, governments nonetheless attempt to treat knowledge based product as though its resource capacity exists much as any other resource category across the spectrum. Too few have truly come to terms, with the fact that time based product exists in relation to other (comparable) time based product. As a result, far too many knowledge based coordination functions, do not have direct relation to the monetary representation that is aggregate resource capacity.

For example: one way to break down this time based product reality in the U.S., are those "neighbor" healthcare emergency clinic commercials, which encourage the random television viewer to believe their "neighbors" are always "there" for them. Yet this form of services product mostly holds in relative income terms, i.e. not those of the resource strapped individual who needs an emergency room which can accept most anyone at some odd hour of the night.

Since knowledge use - as a secondary market - is only partially compensated by discretionary income and government redistribution, increased merit is now mandatory, in order for most individuals to be able to take part in the economy. Decades earlier, merit as a requisite for knowledge use, was less problematic on a number of levels. Today however, efforts to initiate economic access without ("appropriate") merit are rapidly becoming a first mover problem in general equilibrium conditions, even as personal production options other than knowledge use, give way to technology and automation,

These limits on personal economic time value, increasingly pose risks for long term prosperity. Should governments eventually opt for providing basic income to citizens as a budgetary defense, associated efforts to scale back welfare states make the process far too complicated. Too many aspects of welfare states have subsidized the same knowledge use requirements, which now limit economic participation for citizens as a whole. As a result, no amount of basic income - at least in a normally understood supply and demand resource framework - would provide access to earlier knowledge use structures which were built and intended for higher income levels.

This is why knowledge use systems are needed, to provide means for lower income levels to engage in the production and consumption of time and knowledge based product, well into the foreseeable future. Best, this process would allow knowledge use and time value to exist as primary forms of wealth generation. As a primary marketplace, symmetric compensation would allow time value in aggregate to slowly - but surely - restore the growth trajectory which existed until the Great Recession.

Monday, July 25, 2016

Some Notes on Stock Management Potential

For as long as anyone can remember, many individuals with limited incomes held a stock management option in the form of agriculture, when other means for wealth generation were beyond their reach. Even though farming often didn't compare to more lucrative forms of employment, nonetheless, in most seasons it could be relied on as means for survival. Why aren't more stock management options now available, especially in places and at times when other employment options are scarce? And - if such options were available - what might they consist of?

Knowledge use is particularly important as a stock management option. All the more so, since much knowledge use exists as a secondary marketplace, where discretionary income and government redistribution limit the knowledge applications which can be compensated. By treating time value as a basic commodity, a primary market would gradually become possible for time and knowledge based product - one that would consequently be available to multiple skill levels. Even as a marketplace for time value would help restore economic freedom, it would also help to restore the civility which in some respects has been lost to automation.

When time value is assigned an internal economic relation for mutual coordination, group time value becomes capable of stock management. Since time arbitrage need not rely on outside revenue in order to take place, human capital becomes capable of directly generated wealth. By far one of the best benefits of a time based marketplace as well, would be renewed local economic activity, which would help to stem the present political backlash against the benefits of globalized tradable sectors.

Many forms of knowledge and skill can be likened to fertile "soil" that could generate a wide variety of time based services product. Unfortunately, too much knowledge use is now associated with controlled flows (via patents, etc.) of specific knowledge sets, which take little notice of the much larger pools of individually and mutually held knowledge stock. Controlled knowledge flows can also translate into limits for total economic output. For instance, Tim Worstall, in speaking of trade offs, writes:
We can, for example, promote primary innovation by giving strong intellectual property rights to it, but at the cost of, the stronger such right, the derivative innovation that we've just banned.
Indeed, Worstall was speaking of the potential for new knowledge applications from recently acquired knowledge sets. Today's arbitrary knowledge use limits contribute to a sustained loss of knowledge and time value in aggregate, particularly for tried and proven stock knowledge applications in the marketplace.

Loss of potential for innovation, is just one of the ways wealth capture endangers total output and inhibits long term growth. One reason why public and private interests alike appear to "double down" on forced flow strategies for knowledge value, is that other revenue sources don't always provide what is needed, for budgets that are just as demanding as ever.

Why did a preponderance of earlier stock management organizational patterns, give way to present day reliance on resource flow patterns? Some of this shift came about in the process of settling the New World. Often, settlers did not need to tend to a specific set of resources for long. This ability to steadily move forward to the next set of options, established resource use patterns which extended well beyond the land use most associated with this phenomenon. Institutions of all kinds became dependent on short term resource maximization, in part because of the ways system responsibilities were consequently established. For instance, preferences for extraction flow patterns in the photos of a recent Market Urbanism post, come through loud and clear.

Ironically, many incentives exist to continue knowledge suppression, since stock management of time value (and other resource capacity) generates less revenue flow in the short run. Hence stock management is yet another difficult first mover position for general equilibrium conditions - all the more reason to begin these formats via alternative equilibrium. For instance, consider a general equilibrium circumstance: Who can be expected to argue against any specific institutional extraction based flow approach, if that approach has become the primary redeeming component of one's 401K?

Healthcare is an apt example, how populations have gradually lost stock management approaches (which include personal time value and common knowledge pools) to flow structures which specifically emphasize new technique and specialty skill. All the more unsettling, when physicians are expected to bear responsibility for all potentially relevant health knowledge stock, even though they need to maintain lifetime learning, simply to stay relevant in their field.

Often patients would benefit from already existing knowledge stock, which does not necessarily have suitable replacements in today's marketplace. This escapes notice, since the issue at hand is not always economically rewarding in an environment of optimized knowledge revenue flow. Hence, 1) one's doctor may only be partially aware of suitable alternative approaches, and 2) the doctor's time is not optimized to apply what he does know, in terms of stock knowledge that is specific to the unique circumstance of the patient. While other healthcare providers can sometimes provide assistance in this regard, more often they need to follow through a physician's directives.

Even though healthcare is one of the more obvious contenders for additional wealth creation in the form of stock management, it is simply one of many examples. Time arbitrage would make it possible for populations to discover both pragmatic and experiential forms of product which are not widely utilized in the present. Equally important, are physical stock management options in the environment. One reason recycling benefits are somewhat mixed, is that they tend to be approached in a revenue flow construct, which makes it difficult for specific groups to adapt unique (local) recycling strategies.

3D printing is one of the best examples of stock management potential, given the fact it is especially well suited for local and decentralized group activity, in contrast to the scaling up processes associated with centralized organizational capacity. So long as local populations are able to maintain future balance between tradable and non tradable sector production (one can only hope), 3D printing would eventually be able to provide on site local augmentation, for mass produced building and physical infrastructure components.

Friday, July 22, 2016

Land as Symbolic Coordination Value

To what degree is the physical component of land, responsible for today's wealth?  After all, much has changed in this regard, in recent centuries.

When land value meant coordination of time value for agricultural capacity, land value was widely dispersed, and also intensively utilized. Once land use began to transition to manufacture and industrial patterns, social coordination and land use gradually became more concentrated as well. As production processes became more efficient, even smaller quantities of land were needed, in relation to total output. Changes in land use mean greater organizational clustering, and the value of  spontaneous societal coordination, gradually assumed greater monetary and economic value.

This intensification of land value for coordination processes continues apace, as manufacturing makes way for services based economies in developed and developing nations alike. Today, primary land use value exists in relatively tight clusters, particularly in regions where a high degree of coordination takes place for time value and knowledge based product. Imagine for a moment, clusters of spontaneous coordination as a highly desirable marketplace component (which they are) as "wild salmon". Since the serendipity of spontaneous coordination ("wild salmon") is in short supply, why not supplement it with the "farmed salmon" of organizational design for time and knowledge value?

In other words, generate more of the knowledge "value added" marketplace which populations now seek, via more closely designed organizational patterns. These knowledge use clusters would still be tightly arranged, but different from regional or major city formation since they would be small, broadly dispersed, and capable of utilizing digital potential. Even though some might argue that a "farmed salmon" version of knowledge use isn't economically "healthy", others would be more than happy to have a viable economic option, to today's limited services marketplace. And multiple benefits would accrue, beyond those that directly affect participants in knowledge use systems. After all, corporations have already been coordinating time value for centuries, and there's no reason why a new corporate structure couldn't do the same, within a combined supply/demand and production consumption construct.

Why hasn't a similar process already occurred? Asymmetric compensation has meant a secondary marketplace for knowledge use, and the resulting discrepancies in land use options, increasingly reflect the partial nature of knowledge use in aggregate. Some of the most important forms of knowledge based product have been subjected to extreme forms of location clustering, in spite of the digital promise of wide knowledge use dispersion. Knowledge use wealth capture is an inefficient and incomplete outcome, for the wealth potential of time based product. Indeed, the recent decline in nominal income is one of the major indicators as to what has occurred, even though the problem has not been openly discussed by either policy makers or central bankers.

Land values - over time - can be greatly affected by the degree of economic complexity that not only accrues but remains intact in a given location. However, even though organizational capacity can be nurtured and developed, other more specific aspects of location often lie beyond the ability of individuals to control. Because many aspects of the economy remain in flux, assigning specific attributes for land use beyond that of time value, presently involves more risk.

Consequently, capital intensive infrastructure for specific locations could prove a better follow up strategy for successful knowledge use system formation, than initial development along these lines. Even so, some building and infrastructure components would be flexible enough that they could readily be relocated, should an equilibrium corporation decide to move and start anew. Many environments would respond to group efforts that make them pleasing places to live and work, without requiring the major expenses associated with today's development patterns.

The equilibrium corporation would establish an ownership structure in which actual land use holds a symbolic coordination value, one that would eventually be reflected as rent options for non locals to live and work within these communities if they so desire. This symbolic value would also be a reflection of local incentive patterns, which derive ownership benefits to supplement a time value commodity wage. Even though specific locations would gradually accrue additional monetary value as they mature, initially these communities are built to nurture a time value continuum as the primary component of community formation. Fortunately, should specific locations turn out to be temporary, the time continuum for coordinated activity would readily transfer to new settings.

How to envision ownership in the equilibrium corporation? Time value allows participants to accrue ownership shares which exists in (at least) three dimensions. First, the initial processes of discovering time value in relation to others, provides access to coordinated services activity and the educational structure associated with it. Then, the physical components which include living and working accommodations, in the form of land availability and building use options. The third aspect of this process is more closely related to local business opportunities, especially in terms of investment pools.

Possibly the greatest productivity potential of the present, is taking advantage of spatial land characteristics so as to make greater efficiency possible for combined group action. In spite of the broad coordination gains of an automobile defined environment, these gains came at the expense of aggregate time loss in the form of extended commutes and the need for separately existing time choices. By bringing spatial components into a close framework, groups would not only regain time use options, but also greater flexibility in terms of time use decisions during the course of any given day.

What counts most, is effective coordination for the shared experiences both pragmatic and experiential, that do a better job of organizing scarce time availability. Ultimately, it is the experiences we share with others, that lend the most meaning to daily existence. With a little luck, our economic organizational patterns can do a better job of reflecting this reality. As Paul Romer noted in a recent post, "At the most basic level, an economy grows whenever people take resources and rearrange them in a way that makes them more valuable."

Wednesday, July 20, 2016

A Mid Range Level of Intelligence

Ultimately, that's all this blogger can really claim. In spite of a love of learning that has lasted a lifetime, my capacity for learning via the "proper means" has always been compromised to some extent. Indeed, there's little I've posted about that could even be considered "new". If my arguments appear different, not everyone has incentive to make similar arguments in the same context, i.e. can economics be a great tool even for those with limited resources?

And - such as what many others experience - age related health issues have seemingly arrived "too soon". Am I ever grateful now, for long hours spent outdoors hiking, exploring, gardening and the like, when it was easy to do so! Consequently, I feel for anyone who lives in a low services state and is letting health concerns accumulate while still in the workplace, before "giving in" to ask the assistance of physicians via Medicare. Sometimes I look back and wonder what the "alternate life" would have been, with the college degrees I so wanted in my twenties. Perhaps I'd still be writing Beethoven-inspired classical music...

All personal musings aside, there's a larger question. Does society have room to utilize a mid range level of intelligence in the marketplace? Right now the answer appears as though "no", especially since one of the more important indicators (mortgage credit) is now being denied to average and below average income levels. Today's asymmetrically compensated knowledge use is mostly that of the "best and the brightest", as institutions have slowly adjusted to making do with less in terms of labor force participation.

The problem is that too much knowledge potential, and time value beyond that of the best and the brightest, is now going to waste. The result could be thought of as "plantings" of high skill knowledge gardens, whereas the planting of less capable gardens are mostly denied, since they would not bear "produce" in the same abundance. And when those of average or below intelligence cannot plant their own gardens, they remain in limbo, as to whether they can plan for life as a willing and responsible participant.

Knowledge is today's most important property holding, yet much knowledge application takes place as though existing in a "new state", whereby institutions treat knowledge use as one of many other resource options locally available to the public for production potential. Knowledge use properties are comparable to what land properties once represented for primary production. However, consider two different aspects of the earlier reality, which still apply: land use and rent depend on whether properties are used for resource extraction (flow), or ongoing care and maintenance of resources (stock).

This particularly matters for knowledge use, which is often treated as a form of extended extraction via patents, as opposed to the general maintenance that is possible for long term knowledge use management. As to the difference, David Ricardo explained how he was primarily concerned with property in the "use of its original and indestructible powers". And land, just as knowledge properties and individual time value, varies in quality. Of the need to further develop land, Ricardo wrote:
If all land had the same properties, if it were unlimited in quantity, and uniform in quality, no charge could be made for its use, unless where it possessed peculiar advantages of situation. It is only, then, because land is not unlimited in quantity and uniform in quality, and because, in the progress of population, land of an inferior quality, or less advantageously situated, is called into cultivation, that rent is ever paid for the use of it. When, in the progress of society, land of the second degree of fertility is taken into cultivation, rent immediately commences on that of the first quality, and the amount of that rent will depend on the difference in the quality of these two portions of land.
When land of the third quality is taken into cultivation, rent immediately commences on the second, and is regulated as before by the difference in their productive powers. At the same time, the rent of the first quality will rise, for that must always be above the rent of the second by the difference between the produce which they yield with a given quantity of capital and labor. With every step in the progress of population, which shall oblige a country to have recourse to land of a worse quality, to enable it to raise its supply of food, rent, on all the more fertile land, will rise. 
Once, those with a mid range level of intelligence could seek out the lesser fields which were in fact those of land. So long as working the land was an option, time value existed in relation to the earth's resource potential. Today, however, time use exists primarily in relation to the time use potential of others. Given this important relationship, time use possibilities have been arbitrarily limited, yet no one's time value can be left completely unaccountable without undue loss of freedom. Even though asymmetric compensation can not consider time value as a complete set of aggregate potential, symmetric compensation could still capture the lesser fields of knowledge use. Again, Ricardo:
It is true, that on the best land, the same produce would still be obtained with the same labor as before, but its value would be enhanced in consequence of the diminished returns obtained by those who employed fresh labor and stock on the less fertile land. Notwithstanding, then, that the advantage of fertile over inferior lands are in no case lost, but only transferred from the cultivator, or consumer, to the landlord, yet, since more labor is required on the inferior lands, and since it is from such land only that we are enabled to furnish ourselves with the additional supply of raw produce, the comparable value of that produce will continue permanently from its former level, and make it exchange for more hats, cloth, shoes, etc., etc. in the production of which no such additional quantity of labor is required.
Today's knowledge potential is also today's property potential, which could restore the growth trajectory in a way that no one of sound mind would be able to argue with. Notice how tending the lesser fields would also increase the total output of tradable sector production, as indicated in the last sentence of the above quote.

P.S. And - in the "never say never" category, I would be remiss in this post if I did not also offer the potential of symmetrically compensated mid range level use of intelligence in towns, villages and small cities, as a protection factor.

Monday, July 18, 2016

A Plea For Economic Vitality

No economy or general equilibrium state can be considered vital or truly dynamic, if it is faltering at the margins. Why do policy makers and others turn a blind eye to local examples of economic abandonment, particularly in places which had extensive investment - in some instances - only decades earlier? Has everyone given up on long term growth?

It's one thing if existing structures clearly need to be torn down, for some reason. Is this what we are to expect when so much expense is poured into buildings and locations that are mostly intended to be usable for fifteen years, as has occurred in recent decades? Why not either build with the hope of greater permanence, or else design for greater flexibility at the outset via yearly spatial adjustments? In some instances, "permanent" new buildings are constructed with the promise of new business tenants, only to end up underutilized as extra storage space and the like, such as occurred recently on a nearby Main Street. What a waste!

The fact that neither public or private interests have addressed what can only be considered a wide array of economic abandonment, contributes to the kinds of social unrest which many of us who are older, never expected to see again in the course of our lifetimes. Faltering Main Streets were the first indication of trouble. Presently, abandoned businesses and homes in suburban areas are continuing the cycle.

Is it possible that shifts in middle class income patterns (less "middle", more "high" and "low") affect the dearth of local investment? After all, those with lower income levels have long taken advantage of existing real estate opportunities, when higher income levels shifted to new options elsewhere. A lack of investment along a full (diverse) income spectrum, contributes to an economic "deepening" of investment (instead of widening), as David Glasner noted in a recent post. His example highlighted capital deepening in relation to hiring decisions and efficiency in scale on the part of major companies, but these processes doubtless affect small business formation as well.

What is at stake in all this, is whether today's economic constructs remain vital to a point of being able to replicate themselves. Thus far it's been too easy to be fooled, when replication does takes place in developing nations (or more recent arrivals), but not in developed nations. What's the difference? A cellular organism has to divide (i.e. new wealth source) to generate new life. Not just stretch! In other words, economic vitality is not just a matter of expanding or bringing more entrants into already prosperous areas, but starting anew.

Meanwhile, cities and nations tell potential newcomers in no uncertain terms that they are basically full. Only so much augmentation is possible in the reigning circumstance of the present. And no one wants to hear it, because it is still too difficult to contemplate starting over. If today's economic conditions are to remain amenable to long term growth, this is no time to give up on places which have experienced less prosperity. Yet one reason it has been difficult to start the process - at least in the U.S. - is the lack of a national dialogue as to how citizens would like to live, work, and economically engage with one another in the 21st century. Instead, legislators and special interests are busily enacting laws to make many options in this regard off limits, across an entire realm of possibility.

Perhaps my outlook is even more "Malthusian" than usual (about economic vitality), due to a telling set of pictures and story line which provided a much needed warning. While prosperous regions and their residents mostly remain convinced all is well, economic stagnation continues apace at the periphery. From Johnny Sanphilippo at Market Urbanism, in "Your Town is a Financial Timebomb":
I keep up with the reports and journalists proclaiming that America's suburbs are thriving and will continue to do so forever. Yet I keep scratching my head since these depictions are  in conflict with what I keep seeing on the ground as I travel around the country.   
Many citizens don't have the current option of living where service formation and tradable sector production both exist in abundance. The above linked article also alludes to the fact that extensive government infrastructure is questionable, when much of it appears to encourage abandonment sooner, rather then later. Are we using the wrong kinds of infrastructure, if these forms of government investment end up being treated disrespectfully? How can governments contemplate further investment spending along the same lines, if too much ends up being squandered? It's time to recreate not just the environments that some of us live in, but also the ways in which we wish to interact with, and assist one another.

Saturday, July 16, 2016

Is Time Based Product Amenable to Value in Exchange?

It's difficult to know for certain. All the more so, during periods of economic stagnation, when time based product - as a secondary component of market formation - distorts the tradable sectors which directly coordinate prices, supply and demand, and output. When a slow growth economy is services dominated, and merit based compensation is the only means to provide time based product, this can limit all output in aggregate, as services gradually become limited in their turn as well. As this process continues, populations become less able to support the tradable sectors which generate the initial revenue for non tradable sector formation.

Fortunately, the time arbitrage of knowledge use systems would make time based product more amenable to value in exchange capacity. Presently, the growth limitations of asymmetrically compensated time based product, remain hidden in ongoing struggles which often appear as though austerity, versus the roles of fiscal and monetary policy for long term growth. I was reminded of the validity of the post title question, after reading this from David Ricardo:
In speaking, then, of commodities, of their exchangeable value, and of the laws which regulate their relative prices we mean always such commodities only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint.
What is problematic about time based product in its present formation? Unlike the time value associated with tradable goods, when high quality investment is a central component of time based product, the investment does not increase the quantity of time based product available to the marketplace. Human exertion increases the value of time based product, but not the quantity of product as in tradable sectors which would otherwise generate further revenue to compensate additional resources utilized in relation to time value.

Lacking a sufficient quantity of time based product, multiple institutions end up paying for increased investment in skills capacity, as indeed as occurred for the array of institutions which now pay for healthcare, in addition to the consumer. Growing budgetary restraints in this regard, also account for the fact that automation will gradually begin to substitute even for skills at the highest levels, as it becomes more difficult for budgets to meet sufficient asymmetric compensation for vital skills sets.

Marketplace representation of time based product exists solely in relation to itself (i.e. the potential reciprocity of time aggregates), which is why time based services are not amenable to the same direct coordination that money provides for other forms of resources. While money can partially coordinate prices for time based product, it cannot do so as a first order process, given the secondary nature of time based services in the marketplace. Other resource relationships are more capable of providing clear price signals for large scale coordination processes. So long as finished product exists separately from time value, money captures the relationship between both resource availability (scarce or not) and also the ways in which time value affects a given product.

Healthcare - for example - would only reflect value in exchange in purely monetary terms if it were completely automated. However, time arbitrage could preserve sought after human activity, by providing a value in use function for healthcare time investment, which allows time based healthcare product to approximate a value in exchange framework. The "catch"?  Value in exchange in this instance, would be a result of coordinated product in terms of time, rather than price. Why would such a strategy even be worth pursuing? Is that really economic? Let's pick up Ricardo's discussion regarding value, from the above quote:
In the early stages of society, the exchangeable value of these commodities, or the rule which determines how much of one shall be given in exchange for another, depends almost exclusively on the comparative quantity of labor expended in each. 
"The real price of everything," says Adam Smith, "what everything really costs to the man who wants to acquire it,  is the toil and trouble of acquiring it"..."Labor was the first price - the original purchase-money that was paid for all things." Again, "in that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labor necessary for acquiring different objects seems to be the only circumstance which can afford any rule for exchanging them with one another."
Today, healthcare is still paid for according to the original price of labor - i.e. the amount of labor that is actually required in total for an individual to present a product. It's fair to suggest that healthcare remained in the "primitive state", in terms of labor compensation, as contrast with the labor associated with tradable sectors.

Granted, it makes sense to compensate a physician for the extensive investments taken in order just to practice. However, if the value of the physician's time based product were equivalent to that of a tradable good, it would be as though - instead of paying the price of a toaster in today's terms which means good deflation benefits from divisions of labor and organizational capacity  - the product is instead compensated in consideration of the fact one person undertook this vast investment process, alone. It would be like paying someone to build a toaster who had to seek out each piece and assemble the whole toaster, again, alone.

Presently, a physician's time investments cannot be tapped as sustainable revenue to compensate him or her during the course of early learning processes. Which makes it necessary for the physician to demand "more" when the time finally comes, in terms of monetary compensation. This effect is also an increase in one's time value in relation to the time value of others. The relative differences in time investment, force down the aggregate time value of those who did not need the same extensive dedication to time investment in order to accomplish various tasks and endeavor. In many instances it is possible for individuals make up differences according to access to other forms of resource capacity, but even this strategy has proven inadequate for healthcare as a marketplace.

When institutions have to share the expenses of deferred compensation for a physician's time investment, they have more incentive over time, to prefer automation which would make it less necessary for them to pay for that level of expense. Hence a physician's time becomes as vulnerable to automation (in aggregate), as the asymmetric compensation of a low skill maintenance worker.

Lifelong education for knowledge use is important. The problem for all of us, is that we make one another wait till an arbitrary point in learning processes, before many of us can ever offer sets of services skills to one another. This process imposes unnecessary expenses on all concerned, and detracts from other resource use potential as well.

No one wants their doctor to know "less" in any relative sense, especially when it's a matter of life and death. That's why multiple institutions have been willing till now, to pay what has been deemed absolutely necessary. But what happens when supply and budgets alike simply become too constrained for this process? It is possible to continuously reinforce (compensate) important skills sets along the entire continuum, through peer to peer sharing of knowledge use and application.

Instead of presenting a barrier for long term government budgets, the time investments of time arbitrage would become a stepping stone process of incremental growth for all concerned. Knowledge acquisition would serve as both investment and compensation, simultaneously. Time arbitrage could eventually put the knowledge use of non tradable sectors on a more sustainable wealth creation path. One that is more amenable to time use as a value in exchange process.

Thursday, July 14, 2016

Monopolies Versus the Value in Use Option

In "The Costs of Monopoly: A New View", James Schmitz Jr. of the Federal Reserve Bank of Minneapolis writes:
Imagine what types of substitutes a monopoly might try to weaken or eliminate. It would not go after those with broad political support. Rather, it would target those with little support, those purchased by politically disadvantaged low-income segments of the population.
Consequently, some of the damage from monopoly is actually hidden from the middle class, even though it often affects them just the same, since lower income levels end up competing with them for (purposely) limited services and housing. The article is worth reading in its entirety, and Schmitz does a good job of explaining how monopolies are productivity killers. However, it is no easy task to challenge monopolies, entrenched as they are at multiple levels.

At issue is not really a matter of "breaking up" monopolies, but reexamining the marketplace conditions they impose on all involved. How do monopolies impact the trajectory of long term government obligations and future growth potential? Much of the economic damage imposed by monopolies, is due to the ways they define the scope and character of today's environments. Citizens are not only limited in their choices of housing and building components (no price saving mass production of yet) but also in terms of the services that individuals are able to offer one another.

Indeed, central banking has become a part of this restrictive scenario as well. Given today's volatile political climate, I have to swat away my skepticism when I hear "All lives matter". If monetary representation is no longer adequate for the full range of nominal income, how can that possibly be true? Central bankers are becoming less inclined to provide full economic representation, as the alternative marketplace conditions needed for lower income levels to participate, are still being regulated out of existence. 

By far the most common monopolist restriction is a citizen's right to produce - a right which was once taken for granted in the U.S. Indeed, our country's founders worried about potential losses in this regard, as they were hashing out the messy details of constitution making. Yet many of today losses added up slowly. They can be difficult to notice when the loss occurs, because citizens have had plenty of means for economic engagement, during most periods. And more is at stake than diminished output or economic stagnation. How so? Frugality and resourcefulness are no longer enough to make the difference, between success and failure.

Resourcefulness and frugality were still celebrated qualities, as recently as the Great Depression. It's a sign of my age, but I am still shocked when I observe the ways in which people "prove" to their peers how they don't have to be careful in this regard. Apparently this is a social signal, one that associates success with an income which makes such attributes an unnecessary throwback to an earlier era.

Throwback or no, an equilibrium corporate structure could still create economic environments in which personal resourcefulness and frugality would count for something. In the past, formal environments for value in use options certainly would not have been necessary. However, too many possibilities in this regard have been gradually undermined, in general equilibrium conditions - possibilities which once included shared productivity as a part of marriage. Hence an alternative equilibrium scenario, would also include resource use elements which go beyond the standard pricing of normal economic exchange.

Consider what is at stake, when of value in use options are lost. As David Ricardo noted in "Principles of Political Economy":
Utility is not the measure of exchangeable value, although it is absolutely essential to it.
For lower income levels, value in use options for time value and asset formation would serve as stepping stones for incremental progress, and as safe harbor during life's inevitable setbacks. These additional means would make it possible for those with small wages and income, to not only reciprocate with others on economic terms, but take part in the mutual security that every society seeks to build.

It can be difficult to discern value in use production and consumption options, in part because there is no clear line between economic wants and needs. Just the same, the difference between the two is invariably felt at a personal level, in times of uncertainty. All that is needed during most periods of life, is a simple fallback position, by which one can bounce back and once again thrive. The value in use option during such times in life, would be valuable indeed.