While I remain quite anxious to be posting more than occasional notes, technical (computer) issues have continued to dominate recently, along with the ongoing distraction of bad weather! So I'll focus as best as possible today on skills arbitrage, especially in regard to barter terminology as means of exchange. Barter in the normal sense is of course not practical, for our fixed amount of time alongside random resource use never "lines up" or finds predictable equilibrium, either internally (as a local group) or externally. What's more, even though the time available to us is fixed, the time we need to establish product formation (create product) is not fixed at all - it is random. This remains true whether we are the sole provider of product separate from our time, or if our work provides a labor component for other production settings.
That is why price setting (rather than broad informal voting measures) is more efficient for coordination, wherever time use (labor) and product separate from time, are mixed. Fluctuating prices serve as signals for the constantly changing quantity of the product or resource. On the other hand, endogenous voting processes (internally coordinated groupings) provide a more efficient construct for the fixed nature of services time that is compensated without additional product.
Since the time available to us does not fluctuate, we can provide greater economic stability by managing and supporting our aggregate time use in group settings. We need to do this whenever we provide services that are structured on the basis of our limited time. Time vote structures also serve as a constantly changing signal, in that no one wants the same service sets all the time. Time use options take place in an understandable context of service target possibilities, which random resource use is often not capable of providing.
A good way to think about what may appear similar to barter in skills arbitrage, is that our time is fixed while all other economic associations with our time are random, or constantly changing. Skills arbitrage would seek to compensate time use in terms that restore time value for all participants and their (accepted) time use offerings. What's more, a stabilized context for time use in services potential, can provide greater monetary stability for overall target predictions in the long run. A systems method such as this could make economies less reliant on resources separate from our time, as monetary anchors.
The mixed equilibrium of random and fixed components is what makes barter inefficient for product that exists separately from time input. Because random elements are generally utilized alongside fixed elements, the pricing mechanism makes it possible to at least coordinate the values of resources that are separate from the use of our own time. The fact that our time use does not line up to random resource use, is also why the idea of labor as a fixed component in production also never made sense.
Just the same, people tried to rationalize the idea of labor theory of value as best as they could, because it never appeared necessary to tease out the idea of one's actual time use from production in general. As inadequate as the labor theory of value actually was, it allowed people to reconcile time use with pricing mechanisms, in lieu of other means for coordinating skills use activity. Today however, Baumol's disease make it necessary to reconsider the uneasy economic distribution of fixed time use alongside random resources. This fixed-to-random juxtaposition becomes all the more problematic, when people are fooled by the seemingly infinite nature of certain random production processes.
Amazingly enough, we have managed to reach the point where services now comprise 80 percent of the economy. Services coordination in society came a long way through taxation and redistribution this time, before the process finally started to break down with overburdened asset formations. However, this feat has mostly been accomplished by government debt loads, which are no longer as manageable as they were in the recent past. It's not that government couldn't provide for many services directly - indeed, skills arbitrage compensation would give it a decentralized way to do so. Only, the process could happen monetarily. That is, instead of through massive regulation and arbitrary limits on knowledge use - let alone inefficient and complex redistribution patterns that reward private contractors instead of populations.
Unfortunately, government debt loads are now constrained through both knowledge limitation entitlements and pension entitlements. Those entitlements create a long and tortuous path to services formation. How to go about more direct means of supporting knowledge use wealth, so that entitlements are no longer caught between a rock and the hard place of the previous fragile equation?
Think for a moment about the pricing mechanism. In a real sense, the prices we are willing to pay in the marketplace represent our votes for the product that are offered. If only these were as voluntary as they seem! The fact that much of today's pricing has strayed from actual choice, is what makes the pricing mechanism less flexible than it once was. Therefore the first challenge any direct services coordination would face, is that of creating more flexible pricing mechanisms than now exist in the marketplace. The confusing aspect of this is that we need to "price" something (in terms of commitment and resource allocation) that we each have in equal measure - our time. It is the fixed element of time that needs to have representative pricing at an internal or endogenous group level. How so?
Return to the idea of barter for skill. Even though our time is fixed, people often try to barter for skills unsuccessfully in recessionary economies, as though skills sets were fixed components. However skills sets are also random while our time use is not random at all. The difference here is crucial. It is our time that is fixed, not our skills sets. Not only do people need different skills abilities at different times, but absolute time limits mean that artificial skills rigidity creates tremendous market breakdowns as well.
Thus, the time factor is the room for coordination that we actually have. By so doing, we treat our skills sets as baskets of ongoing options in time, which allow for smooth economic function on a daily basis. Fortunately, people have been able to work with time and skills this way in the past. Even the artificially fixed skills sets which society currently pays for are quite arbitrary: the highest portion of the skills set on the part of skills providers, are not what is always needed.
In a sense, one could say that direct monetary compensation is needed for a form of arbitrage that appears as barter in terms of supply and demand. That is, there is no aggregate supply and demand variance management in the fixed element of time use. Even so, the ongoing monetary management for supply and demand variation continues to exist, for all product of a random nature which remains separate from the use of our time. The resource coordination which created a need for macroeconomic management, will always exist in random product formations.
It's the artificially random nature of time value (we all have the same time) that especially thwarts macroeconomic management. This happens because asset structures remain forced to reflect the "winning" power holding in skills use, which in turn is backed by the demands of financial interests. Those aggregate services demands - which take the form of countless budgets - do not match up to actual household economic potential. If that were not enough, governments have tried to compensate by further limiting the economic potential of their own populations as a response, instead of empowering them.
The barter aspect of endogenous pricing (internal group voting mechanisms for services) exists in contrast to the exogenous structure of pricing that relies on random formations. Monetary printing expands not just because of a fixed element of new participants, but also the degree to which those participants are able to integrate random product formation in their own activities. The non barter aspect of supply and demand is simply that there is no expectation of equilibrium in the exogenous realm of random resources. However it is possible to achieve equilibrium locally in services, so that exogenous and random monetary components have a more reliable anchor. Importantly, the inclusion of most individuals at an economic level is the primary means of achieving low inflation as well. Much inflation is a direct result of too many without adequate economic access, which the overall equilibrium is then forced to account for.
One important aspect of skills arbitrage is present day differences in IQ levels. Even though we have relative differences in IQ, in many instances they need not remain as polarized as monetary compensation, or lack thereof, indicates in the present. Even if skills arbitrage were not employed to reduce skills use rigidity, robots would eventually make up the difference for what are frequently artificial limitations. Why not also make up the difference with more flexible skills use options, wherever possible? Any time that skills sets are made artificially rigid, that tendency unfortunately increases over time, till it creates castes or unnecessary divisions between individuals. This is not to say that IQ differences would be miraculously "leveled" with skills arbitrage in equal time use. Just the same, today's apparent differences could be greatly reduced, over time.
Before wrapping up this post, I want to go back and illustrate a few differences that occur in our time use, versus time use that result in separate product. First: when we create service product solely through time use, the customer seeks a strictly limited quantity on our part. That is the fixed element which time arbitrage - resembling barter in terms of a predictable supply and demand equilibrium - would seek to address by every means possible. There may also be separate product involved which we aren't charging for in time arbitrage. When this is the case, it needs to be factored in such a way as to correspond with product that backs the time of others, instead of creating roadblocks for participants to find equilibrium in skills use.
Whereas, when our time leads to product formation that can be exchanged separately from our time, we do not need to worry about time coordination with supporting product, because it becomes possible to pay for additional capital use through the wealth that separate product allows beyond the use of our own time. In other words, product separate from our time becomes random in the sense that it no longer follows our time limitations. Thus, it becomes applicable to the normal pricing structures which do not involve coordination of skills education and skills set voting processes.
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