Saturday, April 11, 2015

Natural Ability in Time Aggregates Context

Something about a recent discussion regarding innate human abilities, feels as though zero sum. Noah Smith and Scott Alexander went further into the particulars of Carol Dweck's growth mindset work than I am prepared to go. Still, I have to ask: is there a hard line between the success factors of innate ability, versus a strong work ethic? There are strong subjective factors in this regard, and "Lady Luck" also plays a role.

For instance: who doesn't adopt a stronger work ethic, when the work or education in question has a reasonable likelihood of eventual rewards (at some level) for one's commitment? Someone may even be trying to convince the student or worker that some reward - however tiny - is forthcoming. But chances are, in order for personal stamina to be maintained, that message needs to be duplicated somehow.

Rewards are also questioned, if it appears that education is all dressed up with no place to go. Why give false hope to those who supposedly don't have the stamina anyway, to follow through with their "highly illogical" hopes and dreams? Let's turn this argument on its head. What if all this negative judgement has more to do with the fact that the elite have become uncomfortable about maintaining a normal degree of aggregate demand? In other words, what if few are ready to generate a broad marketplace of knowledge and time based goods, for both producers and consumers?

Plus - given the present confusion as to economic circumstance - those wasted time investment arguments could still "win the day". Why? Right now, there are only so many knowledge use slots that can be compensated, by the external time use values assigned within primary equilibrium. And with ever more calls for tight money, the knowledge use slots which presently exist, could be further diminished.

Hence, might it be the end of the road, when people do not try "hard enough"? At what point does a public "judging" take place, if the masses do not expend sufficient energy to gain or "deserve" economic access? Is it possible to prevent human potential from needlessly dividing...even further? Today's matching processes for economic access mostly take place between a limited number of institutions and multiple individuals. Work based settings are also needed, which are capable of arbitraging multiples to multiples.

There are problems in the institution to multiples matching model. In time aggregate context, asymmetries now exist between the production and consumption for knowledge based services product. Indeed, one eventually ends up with a peculiar default scenario where due to constraints on healthcare production - as one commenter noted recently at Marginal Revolution - the eventual "cure" for cancer that most insurance companies may be willing to compensate for is...aromatherapy.

Wait...what!? What about the abundance of smart and extensively trained minds who stand at the ready to heal people? Scott Alexander - not the real name of this physician blogger - is among this group. But default positions in the artificially limited spectrum of healthcare are not very promising, right now. As far as career choices go, healthcare is also not going to appeal to every ("sufficiently") bright mind, because of the terms by which it is presently constructed. Some bright minds will not make the necessary sacrifices, because of heavy demands on both personal time and resource use.

It's difficult to express optimal aggregate supply and demand in terms of time based product, when no direct marketplace for time arbitrage exists. How many would consciously choose healthcare consumption for instance, if marketplace size were representative of natural, time based motivation? No one knows. Because time aggregates are missing in both producer and consumer context, individual choice does not line up with with the time based decision processes of any given group.

Observed prices for time based knowledge product, are often the result of political measures. These prices are less flexible, than the prices reflecting product which essentially exists separately from time use. Time use needs to be able to operate as a natural price mechanism. One's allotted hours in a day have a specific finite nature, and they exist as a fixed quantity relative to vast differences in other resource capacity. Without a marketplace for time use, any assumptions as to natural abilities are mostly educated guesses.

What's more, there is a often a "free lunch" of additional resources involved, when compensation for knowledge use becomes externally defined. The additional resource context which contributes to income privileges becomes a part of social patterns. This resulting natural ability and work ethic gets passed down to subsets of the next generation, but through income capacity instead of landholding.

All of which gives rise to natural limitations in knowledge use dispersal across populations as a whole. There are a couple of problems with this model. Populations assume the desired activity is more widely dispersed than is actually the case. It's difficult to envision knowledge use inequality, because knowledge is assumed to be able to carry out most necessary functions in the buildings which seek to represent it.

Governments will understandably continue to have the authority, to designate a number of "free lunches" for natural ability. In other words, they will be able to compensate a certain amount through unknown quantities of additional resources. But when nations endure recessions and budgetary constraints, questions quickly arise as to how many exceptional minds can be rewarded to the degree they appear to warrant.

The problem is not so much that skills capacity is compensated externally in a limited capacity. How else could the compensation of knowledge dispersal have begun, if not through the organizational capacity governments hold? However, government's role in the process is mostly complete. In the meantime the future of knowledge use is uncertain, and it remains suspended in a fragile state until preservation is sought on the part of populations as a whole.

Freedom is a vital part of the knowledge use preservation role. Time use freedom would also preserve the human capital investments which were avidly pursued and encouraged throughout the 20th century. Now that governments are becoming overextended in their obligations, they need to consider alternative means and settings for knowledge use and skills capacity. Varying degrees of natural ability need to be brought into the marketplace. Otherwise, too much human capital potential could die on the vine, for lack of economic access in primary equilibrium.

And it is possible to do a better job of tapping into natural ability, through the internal means of time arbitrage. By organizing activity from local time aggregate calendars, individuals can schedule both short and long range plans for skills portfolios. Personal effort and natural ability would not be questioned to the degree they are whenever skills compensation is limited by design.

Noah Smith begins another recent post:
One time, at a dinner, I asked a famous macroeconomist: "So what really causes recessions?" His reply came immediately: "Unexplained shocks to investments."
However in a sense, the recent shock to human capital is not unexplained at all. In recent decades, passive forms of investments came to replace the more active investments of traditional production. In this environment, it would have been difficult for knowledge use to gain more active positioning (through alternative services production), without disrupting the existing marketplace. As tradable goods production expanded across the globe, non tradable sectors elected to generate profits and windfalls through less innovative, less efficient means. All too often, governments and special interests alike profited by widening the placement of the goalposts.

In all fairness there were few easy alternatives. The process proceeded normally for a long time, and was in part about the improvement of living standards. Many who already benefited from a high degree of natural ability, didn't question the moat that was set up by governments and special interests alike. There are times when nothing is wrong with widening the distance between point A and point B. The problems occur when everyone is expected to bridge that space, or else.

Non tradable goods became the marketplace where innovation with broad gains, dared not speak its name. Good deflation in terms of knowledge use work or building environments, would have mostly meant smaller budgets for governments and fewer profits for local special interests. Just the same, the moat of high expectations has meant more hard questions for both natural ability and motivation. Who is still strong enough, to go the distance? It depends...

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