When are service sector institutions capable of supporting themselves via their own resource means? The answers can sometimes be complicated. As input requirements become more demanding, increasing non tradable sector organizational costs tend to become funneled through irregular revenue flows that originate elsewhere. Such flows encourage patterns of resource use which can't be sustained over long periods, for vital forms of high skill service product.
Revenue dependencies turn into quagmires, when multiple factors in organizational costs are met through price making at numerous points - whether through knowledge production chains or elsewhere. And yet, paradoxically, price making also becomes a strategy to cope with insufficient aggregate output, in relation to the aggregate input that is expected at an institutional level.
Indeed, a recent news story illustrates what can occur in these circumstance: "Auditor 'shocked' by massive billing schemes at rural hospitals." According to the article, many rural hospitals in the U.S. are "closing at the highest rates in decades". When costs get out of control, the very structure of knowledge based service product can become fragile. What might be done, when the output that is necessary just to pay bills, becomes fraudulent or near fraudulent? Clearly, the "aggregate output" claimed by some rural hospitals has been dodgy at best. But does this mean struggling service providers should just close their doors and call it a day? Many have to, whether they are willing to do so, or not.
Societies don't always recognize when they're in the process of losing vital aspects of knowledge dispersal, since the process takes place slowly and in ways which - in part due to how the problem gets framed - aren't immediately obvious. Further: Unlike tradable sector activity - where many goods can be readily distributed from relatively few points - centralized knowledge use in non tradable sector activity, is more likely to indicate lost marketplace capacity for time based product. And while the business profits of price making are sometimes defined as a moral problem, the real problem for long term economic sustainability, is when important institutions are structured so their ongoing input continually requires more, than they can expect to recoup via their own resources and aggregate output.
Regular readers are familiar with my arguments for time arbitrage as a potential contributor to aggregate output, via means that simplify the process of time based services inputs. The reciprocity of symmetric time use could reduce the need for debt by building wealth at the outset. Symmetric time matching would also maintain inputs in a stable, recognizable relationship to system outputs. By coordinating the totality of time aggregate potential, time based service product would function in a true price taking context. Fortunately, it is often possible to create relevant input and output, in the same units of time that are apportioned to service based activities. Eventually, time arbitrage could generate circles of sustainability, for the use and preservation of knowledge.
Might greater use of apprenticeship also contribute to more productive resource capacity? While some forms of apprenticeship could prove meaningful, rural areas lack the population densities to make highly specific skills sets a practical approach in many circumstance. Eventually, however, the deep learning of artificial intelligence could assist "just in time" learning processes for high skill activities in low population densities. By visualizing time based services as an internalized, cost efficient production process for producers and consumers alike, important aspects of knowledge could finally assume a more stable role, in the marketplaces of the foreseeable future.