To what extent could tradable sector wealth be thought of, as an international form of (monetary) medium of account? For me, it is helpful to consider tradable sector formation on these terms, for a number of reasons. Each nation's income "share" of worldwide tradable sector wealth (as contrast with localized tradable sector wages), helps to determine a potential trajectory - or extent - of that nation's non tradable activity and asset formation.
The reason this matters: developed nations continue to maintain vast opportunities for organizational capacity (through financial means) from the wealth of tradable sectors, whether or not production is localized. In other words, the recent push for localized production - and the loss of international trade capacity that could imply, would not necessarily assist further funding and revenue for non tradable sector formation. Attempts to localize tradable production would not only limit worldwide production in aggregate, but also the localized organizational capacity which exists on asymmetric terms.
Regular readers know that I speak (in this post) of the non tradable sector formation which is already possible, without the additional wealth which could accrue from knowledge use systems or time arbitrage. It is better to generate new time based services production for the purpose of economic dynamism, than to attempt to reclaim earlier forms of production. Forward, not backward!
While tradable sector wealth has become - relatively speaking - a smaller component of GDP in more complex developed economies, it remains the most reliable indicator of active monetary flows at a global level. When nominal income is shorted at national levels (due to the targeting of credit instead of income and resource capacity), this international medium of account is also negatively affected.
Non tradable sectors - on the other hand - are (generally) more closely aligned with the medium of account as associated with a (developed) nation's nominal income capacity. Whereas tradable sector wealth is integrated with income flow in an active sense, non tradable sector wealth has a large and passive housing stock component, which is further tapped by governments to activate services income flows. While the process is fairly straightforward for education (in the U.S.), fiat monetary formation is especially important for other time based services on asymmetric terms. The latter is most dependent on globalized stabilization of tradable sector wealth.
An important aspect of the nationalist impulse, is to cease viewing tradable sector wealth as a positive in terms of global wealth potential. Presently, governments and their populations are reacting to their dependence on tradable sectors by threatening the vitality of worldwide production, instead of looking within to recreate wealth formation on more sustainable, time anchored terms. Nationalist worldviews are constricting worldviews. Some policy makers appear too willing, to forget the hard won economic lessons, how free markets and global trade contributed to worldwide prosperity.
There is a silver lining in the clouds of political and economic uncertainty, if central bankers are willing to help. Should central bankers become more willing to stabilize nominal income - this would provide further stability for the international monetary flows of tradable sector wealth. Which in turn would help to stabilize the fiat monetary formation, which allows so much spontaneous coordination of time based services activity for the middle classes of the present.