These recent posts from Tyler Cowen and Scott Sumner, encourage everyone to take a closer look at their own beliefs regarding macroeconomics. If only my own understanding was more complete! For example: even though I'd like to call a "time out" (to condense what I've written thus far into easier to read formats), I know I'm not ready. For me, this whole process is still evolving, and regular blogging keeps me connected and engaged.
What mental clarity I had yesterday, has also been thwarted by the terrorist attacks in Paris. The tragedy only deepens my resolve to do something. Surely, one way a productive world could remain strong, is for people to monetarily compensate one another for mutual and voluntary assistance. As things stand now, many still expect the strong to help the weak...even though the strong may be struggling to maintain their own economic circumstance.
One aspect of my thinking has not changed, since I began blogging. Through government policies, monetary transmission mechanisms ultimately distribute wealth towards service formation and time based product. Even though much of this occurs at national levels on the part of central banks, local factors need a chance to reemerge. Local corollaries for wealth creation and monetary transmission are possible, through closely coordinated services and investment formation.
Decentralized economic activity would allow time based product to become a stronger economic component, and it would reverse the slow motion train wreck of hollowed out work structures. I believe that local economies could generate sufficient complexity, to create simplified versions of a monetary transmission process. Even though wealth originates from tradable goods production in general equilibrium, new wealth is also possible from coordinated systems of symmetric time value. This process would generate an observable alternative equilibrium, as well.
Since many governments work with wealth creation results (in the form of income derivatives), they cannot contribute more to growth, than the fiscal flows which result from prior wealth formation. Monetary activity accounts for those initial flows. Monetarism is crucial, to provide accurate monetary representation and the acknowledgement of individuals as central to real economy conditions. Wages and income need to be dynamic - not static - to maintain ongoing activity. Market monetarism adds to this process, through representation based on what market participants are actively planning for the near future.
In order for the macroeconomic discipline to further evolve, it needs better definition and production capacity for services formation, than has been provided thus far. In particular, time aggregates are at stake, given the fact that services coordination faces growing imbalances. The dynamics of time and knowledge based service product are quite different from those of tradable goods. Most important: time based services capacity exists along a fixed spectrum or continuum. When that continuum is not followed in terms of coordination, services product is lost in ways that cannot be recaptured for the currently participating groups.
Fortunately, this single continuum is not a problem for tradable goods which exist separately from time, in that their volume can take place in multiple time periods without distorting product potential in aggregate. There's a simple way to think about the process: even though we can never regain lost time, we can often regain other lost resources.
Time based product, as a fixed component of a single continuum of time based possibility, needs knowledge use as a conduit between economic actors for better coordination. Even though individuals partake in intensive time based investments for healthcare, their time use continuum for actual participation, is a mere fraction of what insurance programs or governments may imply. Time aggregate value, instead of having broad applicability in production terms, exists mostly in consumer context.
By no means is the present the first occasion, in which time aggregate value has been inadvertently lost. This is partly why I disagree with Tyler Cowen's assertion (the first point in the above MR link), that 99% of all business cycles are real business cycles. Granted, traditional production (product separate from time value) can sometimes function for a long time, before aggregate capacity begins to shift in relation to the formation of time based product. But when that shift occurs, time based services coordination becomes increasingly difficult - both for budgets and the individuals who lose their roles in the process.
While everyone has understandably grown weary of hearing about tipping points - especially given the fact so many have already occurred - there is still one more which is important. The wealth of traditional production can no longer support all the needs of time based product through asymmetric compensation. Fortunately, this is only a problem insofar as it remains unacknowledged. Symmetric time value could provide much needed wealth creation, at the moment it is most needed.
There is more at stake, than just gaps in services coordination for consumption needs. Time based product exists in both consumption and production dimensions. The potential for broad based service structure, translates into human capital as a direct source of wealth. Through symmetric compensation, services could provide a starting point for new economic formation, as well as secure backing for more traditional production. This process would place new services into a monetary context, to buttress still existing fiscal capacity. And even though the real economy is responsible for growth potential, monetary policy is responsible for the maintenance of what the real economy creates.