As governments seek relief for long term budget obligations (with universal basic income as the latest "opt-out of the welfare state" wish), it becomes more important to understand the nature of services product that citizens expect - particularly in connection with present day entitlements. Presently, most citizens attempt to access the same forms of high skill services product which organized in response to global discretionary income. This, despite the fact some wage levels were too low, to support the resource capacity required for general equilibrium service formation.
To supplement the revenue that nations dedicate for skills arbitrage, some professionals are adapting with knowledge product which is aimed at a global marketplace. Unless actual travel is involved to access time based (high skill) product, global services product can shift away from present (perishable) time value to prioritize specific forms of knowledge and skills capacity.
Whereas local services product will hopefully continue to have the option of prioritizing time value in knowledge use settings. Not only is it important to maintain time value in an era of increased automation, local services product does not require the highest skill and knowledge levels in all instances of product access. This relative skill to time use context is hardly a negative, since many consumers value the personal time component of service product, just as highly as any knowledge or skill that may be on offer in the package. In particular, time value for services product is all the more important when education is sought as personal challenge; or for healthcare, where knowledge and skill come up short in providing answers for health outcomes.
The global search for specific knowledge and skill, contrasts starkly with knowledge and skill as it is frequently applied at local levels. In many instances, local consumers have little ability to negotiate for the service product they might prefer - whether it be simple or complex. This is especially true, when government provision of services means budget oriented "default" settings, in which limited sets of knowledge and skill options are applied with a broad brush.
These default settings are an unacknowledged problems in today's welfare systems. They also result from a lack of interest on the part of private parties, to broaden overall marketplace representation. There is too little cooperation and competition, for the kinds of services product which consumers find increasingly important.
Oddly, time based services are still viewed as economically unproductive, since their present formation means a need to siphon resources from other existing forms of wealth. Yet who could have imagined a world which would ultimately move towards automation for tradable goods, only to lose understanding, how best to approach non tradable sector activity in the 21st century?
What's more, money has become such an important part of daily life, that personal assistance on voluntary (non monetary) terms has continued to decline. Even the time banks of more prosperous regions, suffer from the fact many members seek asymmetrically compensated services product, which is too limited by design, to substitute for symmetrically coordinated time value. Today's marketplace has yet to structure for time value as local group priority. As a result, many individuals perform countless service tasks for themselves, much as they once had to build their own crude products centuries earlier with little societal coordination. And yet this self-imposed frugality - desirable though it may appear - scarcely translates into societal gain.
In recent centuries, asymmetric compensation (originating from disposable income and existing revenue) for time based services became more extensive, as tradable sectors continued to expand. Unfortunately, the recent worldwide slowdown in growth, puts asymmetric compensation for high level knowledge and skill in jeopardy, to some degree. When William Baumol indicated the relative lack of services productivity (in contrast with tradable sectors), he echoed Adam Smith in "The Wealth of Nations". Adam Smith referred to the revenue required for public servant and menial servant alike as "unproductive", since individuals being paid solely for the value of their time, weren't perceived as capable of contributing directly to wealth formation.
Nonetheless: since Smith wrote, there's been a growing number of instances when purveyors of time based services have found means to "pay their own way", or create services associated product. It was only with the broad expansion of published print, that more individuals associated with "unproductive" labor, gained the option of generating product value which existed separately of their time. Further - in recent decades - this services transformation has been amplified by the digital realm. Timothy Taylor writes of the services product that has now become international in scope and - somewhat unnoticed - even contributes to a trade surplus:
The US has been running a trade surplus in services for the last few decades and its getting larger...I wonder how many of those who think that trade deficits are a result of unfair trade practices by other countries are willing to stick to the logic of their position when it comes to US trade surpluses in services.Many of the digital services Taylor highlights, are also of an ongoing nature. Before the use of computers became ubiquitous, an international sharing of knowledge and skill sets was already beginning to take place. However, it was more closely oriented toward start up efforts in developing nations, for expanding tradable goods production. In other words, those additional expenses for personal transport and the actual element of time value, were deemed worthwhile since they were necessary for the start up process. In the present, the lower costs made possible through digital transaction, make services product a part of ongoing international communication as well.
However, there can be downsides to "paying one's way" as a knowledge and skill provider in this capacity. When knowledge as product is sold separately from time value, there is danger that the knowledge in question is forced into competition with other knowledge which may also have useful applications. Once economies begin to stagnate, populations become more inclined to insist that some knowledge is useful, while other forms of knowledge are consequently deemed useless or unnecessary. Sometimes, knowledge can be withheld and even lost from the marketplace. This unfortunate circumstance contributes to my rationale, to create a marketplace for time value. Time arbitrage - for everything from the mundane to research and development - could eventually make knowledge use less dependent on gaining support from disposable income or revenue.
This is already an overlong post, hence I did not have the chance to delve into the post which inspired me to write it, before coming across Timothy Taylor's discussion regarding international service formation. Recently, Dietrich Vollrath asked, "Is productivity the victim of its own success?" His post is definitely worth perusing, for those readers who have time. I was particularly happy that Vollrath noted the importance of time value in services product, and how that component might potentially affect a given growth trajectory.