When did governments assume so much of the role of time coordination, for services obligations? As it turns out, decades earlier. In the U.S. many retirement costs, pensions and government subsidies are now associated with healthcare services. Expenditures for government investments and entitlements exchanged places in the early seventies, and even the military has difficulty keeping up with healthcare needs. One way to think about services coordination, is that governments have defined areas which were once cultural responsibilities, as more aspects of life transitioned into the formal economy. Services time coordination became an important component of fiat money, as it evolved in the twentieth century.
What about revenue for these still growing obligations? Income taxes are the most reliable source, and housing is an indirect contributor for services revenue. However, the housing market - as presently structured - is now limited to higher income brackets. Consequently, there are fewer sources of wealth for government to tap into, in order to meet the ongoing burden of asymmetric services coordination. In all of this, citizens are less inclined to trust Washington. Indeed, governments have made more promises than they will be able to keep in the near future.
As Nick Rowe indicated in a recent post, trust can also be a "time-inconsistency" problem. Incentives to pay for debts in the future, do not always match up with the decisions to buy a portion of that future now. Trust issues can become all the more difficult, when government promises appear uncertain. Services coordination presents another time inconsistency problem, of compensated rival (asymmetric) time value. How does one know if revenue can keep up with the services obligations which governments hold? In order for populations to keep faith in monetary systems, they have to believe in the promises which governments make.
The uncertain nature of matched services time capacity, has become one of the larger questions about future growth potential. Member of both political parties have become suspicious of present day monetary policy, but the wish to return to a gold standard is in many respects a blatant rejection of current services obligations. Tight money advocates have plenty of backing, because while some see little room for services growth, other see a diminished role for growth in terms of traditional production.
Part of the confusion regarding fiat money, is the compensation of rival time contributions to the services sector. Asymmetric time compensation makes it difficult to determine service sector value, in relation to the wealth of traditional manufacture. Also, think how some services sectors have responded. Due to reliance on government budgets, they gain respectability by utilizing the same "efficiency" dynamic which makes rival time so valuable for the tradable goods sector.
But all this has really accomplished is a partial destruction of countless hours in time investment. Hence there is little trust in services sector potential as a source of future growth, as human capital continues to be sacrificed. Unfortunately however, scaling back the services sector also means scaling back on traditional production, as labor force participation continues to be shorted. Is it possible for the symmetric value of time arbitrage to reverse this process?
Understandably, it is easier to compensate time value in relation to the skills sets of others. But there is only so much growth capacity for this method, in the present. Those who are willing to consider symmetrically matched time value, would be able to contribute to greater innovation and knowledge diffusion in the marketplace. Matched time would also provide clear record keeping, for coordinated services activity. It will not be easy to restore trust, regarding the debt loads which governments can reasonably carry. Even so, a better understanding of actual services capacity, would greatly aid the process.