Wednesday, March 16, 2016

Equal Time Value as a Marketplace Option

William Luther has an understandable response, "On Reimagining Money", to an Atlantic article which has a positive take on time banks. While I mostly agree with his arguments, time value still needs consideration, as means to overcome substantial limits in long term growth potential. Here's William Luther:
Time banks are usually premised on the idea that one hour of labor is equal to another hour of labor. It ignores the simple fact that some people are more productive than others. A heart surgeon creates more value in one hour than a plumber. (Both might replace a valve, but one is literally a matter of life and death.) By failing to take in the varying value of time (i.e. labor hours), time bank coupons offer a cruder record than traditional monies.
Admittedly, time banks do provide a crude monetary record. However, much of their purpose is as a short term response to overly tight monetary conditions. The bigger problem now, is that even when monetary policy is sufficiently accommodating, some regions continue to face problems of monetary liquidity. Especially those which lacked the economic complexity to encourage time banks in the first place.

In the twentieth century, economically sparse regions had more options. For instance: during the Great Depression, some rural residents compensated for a lack of local work by spending their prime working years in prosperous cities. Eventually they would return to the countryside to retire. In the present, it's not always as simple for the great grandchildren of Depression era citizens to continue this strategy.

The lack of economic complexity at local levels, needs recognition - as the long term growth issue it has become. Already existing problems were only exacerbated, by the deprivations of the Great Recession. Worse, some have become willing to blame rural residents for their own lack of economic access, much as blame was assigned to the poor residents of inner cities, decades earlier. Where people once said "get a job", some now say "Get a U-Haul." But does it really make sense to always insist people move elsewhere to find prosperity, especially when so many prosperous places seek to strengthen their own exclusionary walls?

One reason that William Luther didn't find time banks to be a viable employment solution, was the fact that their transaction costs have been too high. Some of these transaction costs represent confusion between broadly available resource capacity, versus the actualities of one's own scarce time. This, and the already existing requirements for special skills use, which impact services as a medium of account in today's marketplace formation. Again, here's William Luther:
I am all for reimagining money. But to do so, we should keep in mind the transaction-cost-reducing role of money.
This is why - in the details of local corporate structure - I have focused on natural divisions between non tradable sector time value (and adjacent asset formation), versus tradable sector activity, as further explained in my last post. In a perfect world, it might be best if no one needed equal time value as a marketplace option for services coordination. But given a smorgasbord of already existing claims on time value, a marketplace for time value would be easier than confronting the reality of sticky wages in general equilibrium. There's also the fact that sticky wages strongly influence asset values, which contribute to the stability of general equilibrium.

What, then, about the more obvious differences in skills aptitude as noted by William Luther? Today's institutions have actually become too efficient in separating the (supposed) wheat from the chaff. The result is an overall negative in terms of time aggregate value, as reflected by a low interest rate environment and low investment. So much aggregate time value has been "set aside", that the workplace "remainder" struggles to maintain broad services coordination, physical infrastructure and social support. Worse, still tight money conditions continue to remove even more "chaff" - albeit in slow motion.

An equal marketplace for time value could also slow the pace, for some who enjoy high skill work but face burnout in a workplace which expects full time commitments for high skills. For instance, healthcare providers are well represented in jobs which carry their own health risks.  Some individuals need means to reduce the repetitive stress, which can lead to unnecessary health problems of one's own. These individuals would likely welcome the introduction of robots to help with high skill repetition. High skill robots would also be a plus for knowledge use systems, which due to low population density would need high quality surgical assistance.

Among the many differences between time banks and a marketplace for time value, is the fact that skills sets would be far more flexible in the latter, and would be responsive toward changing needs over time in ways that group members can readily recognize. Unlike the local currency of time banks which exists solely for services transactions, the local currency of knowledge use systems is a monetary flow which gradually becomes asset stock, for each participant. Eventually, a sufficient degree of wage created stock, makes it possible for participants to gain the option of discretionary income from the monies of surrounding regions.

No comments:

Post a Comment