Tuesday, July 29, 2014

Basic Incomes and Time Use Value

Sadly, this blogger isn't good at math. That's a shame and one I would rectify if I were a few decades younger. After all, math visuals would be a tremendous aid for explaining the point I make repeatedly, about the importance of equality in time use value in aggregate terms. For the life of me I can't figure out how to explain what's in my head so that my patient readers can easily understand, but I will continue to try as long as I am able. After all, the handwriting on the wall is all too evident, when it comes to the wishful thinking of basic income concepts and the simplicity they seek in complex realities.

Thankfully, a basic or otherwise guaranteed income would at least be capable of buying tradable goods, so long as the world remains capable of avoiding depression (in which case tradable goods would decline). Someone who is dependent on others for living circumstance could still "have a life" in marginal consumer terms. But basic income - hopeful though it may be as a political "solution" - is just not equipped for local and/or non tradable sectors of the present.

In many instances, local service sectors - alongside the asset formations they require - have distorted true monetary capacity at fundamental levels. Non tradable goods and many of their environments have become brier patches of obfuscation, extreme variance in time use value, and a tendency to constantly exclude more and more of what does not fit in the reigning equilibrium. The compensated variance in time values alone, is like a factory no longer capable of operating at full capacity, because too many factory components are single purpose rather than multiple function.
To achieve economic simplicity, time use value equalization is far more important, than the monetary "equalization" which basic income would promise with an income for all comers. Not only would equal time use value make a true services marketplace possible, it would do so on sustainable terms. However: in order to reach economic balance for time use aggregates, no more limitations in either healing or educational options would be possible, in regions which already suffer from limited economic access. Otherwise, low income populations would eventually learn to avoid the existing services marketplace. What's more, aggregate life expectancy would eventually suffer, as more citizens rely solely on self medication to avoid cost uncertainties.

At the very least, implementation of basic incomes would quickly highlight the primary issue of extreme supply side limitations. Lest anyone think basic income isn't really a possibility, many on the political left and right would likely agree to it in some form, once government budgets face greater difficulties catering to special interests. What's more, the limited marketplace devised by those special interests would still be in place. Even though many might consider basic income a "best" outcome in such a scenario, it is a total non solution, in the sense that human potential is still not being tapped for the solutions it holds. What's more, this scenario only continues the low growth trajectory which was initiated after the Great Recession.

Government redistribution for services is - and has been - complicated. However, reducing complications for low income consumers by scrapping welfare programs alongside basic income limits, does not reduce remaining supply side problems at all. Hidden costs still remain in terms of the taxation and redistribution services require, at local, state and national levels. Indeed many of those costs would remain, even if the present day services marketplace exists solely for the rich. In other words, we certainly need consumption simplicity at the consumer end. But the only way to get there without destroying the marketplace, is by generating real simplicity at the supply side end.

For instance, consider the population levels with unpaid debt which has gone to collections. The main problem in this regard is not stagnant wages or inflation, but the nature of service structures in the marketplace. Not only do these structures place undue demands on all aspects of budget capacity, but they limit marketplace formation as well. Institutions related to health and education in particular, have shaped multiple asset structures and hidden redistribution channels. These have considerable bearing on the ability of lower income levels to remain responsible in a money related capacity.

In Timothy Taylor's recent post about universal basic income - for instance - the poverty level of $18,000 for a family of three was mentioned, and he considered what could be a base income of $6,000 per individual. In some respects - particularly for the kinds of tradable goods that international markets remain adept at providing, this amount of money would indeed go a long way for ordinary ongoing expenses. The thorny issues arise when basic income capacity is aligned with non tradable services needs or local living requirements. Indeed, this is when human capital in aggregate, is desperately needed as a tradable good.

Let's look at a few aspects of that $6,000 income with ordinary services needs. In some states (Texas for one) $2,000 a year is an ordinary obligation for local property taxes. That's already one third of the basic income allotment suggested by Taylor, and no one need have a child in school to face that obligation. Also, think of the costs of many "garden variety" surgeries, and realize $18,000 seems as though "getting off easy". But in Taylor's example, that is a year's income for a family of three!

Giving everyone a basic income is little more than wishful thinking, in that it just doesn't solve for the problems which are most evident. Identity, economic access, the ability to reciprocate with others - all these elements are still missing. Any time society considers major changes to existing services structures, human capital and human aspiration need to be a real part of the equation.

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