Monday, August 4, 2014

Why Do We Need Time Use Markets?

There are diverse answers for this question, but a few in particular stand out. When we don't have markets which cater to and arbitrage time use specifically as an anchor, our time can be readily hijacked or otherwise claimed by markets which tempt us, such as lifestyle choices and housing options. Or, some markets are presented as though they are the only "reasonable" option possible, such as today's healthcare.

The problem? There is a world full of potential resources and markets which monetary policy attempts to represent. Just the same, aggregate time representation is being discounted in the overall equation, as other markets appear to somehow be "more important". We end up "losing our health" individually and collectively, just trying to pay the bills of healthcare for instance. That's a real paradox, because the ability to define time on our own terms is one of the best health options we have. Being in control of one's time use patterns is also the primary option that tempts people to work, when they otherwise might not choose to do so.

Often, one hears there is much about life that should not be connected to money. However, this thought process has led everyone down some very confusing roads. Consequently, many are currently in the process of convincing themselves that some of the most important things about life should be taking place without money.

I insist this line of thinking is wrong, because we need the use of money to compensate and record both intellectual and practical activities we consider important as a society. Without monetary compensation for time use, we could lose general awareness regarding vital knowledge which everyone relies upon. Non compensated time use would also take away the ability for citizens to utilize time in ways which make the most sense to all concerned. Services markets without compensated time use, are often subjected to cultural regression and even slavery.

Time use is important not just in the sense of aggregate intellectual capacity, but also for multiple practical aspects of life. No marketplace is truly complete without vital elements of time application. Even so, we have found ourselves forced to reason that markets function with time as represented by "only the best", in terms of what is necessary to realize profit. And yet, each individual remains responsible for his own destiny in a monetary sense. It is not politically possible to apportion for those whose skills were not deemed necessary. This is one of the most important reasons why monetarily compensated markets in time use are needed.

In order for time use markets to flourish, they also need to be paired with options for current and ongoing needs that anyone can participate in. In particular, this approach would reward the present bias. How so? Often, the "strong" have been separated from the "weak" according to the degree that they can avoid the present bias. Certainly a "reward later on" mentality has done wonders for finance, real estate interests and other special interests, but not so much for the rest of us.

Unfortunately, that approach devastated any remnants of incremental growth, along with the capacity to survive by being resourceful. Even as recently as the Great Depression, people still had access to incremental possibilities. Indeed, that likely accounts for some of the bounce back in growth immediately afterward - growth which was disallowed by the Fed in the aftermath of the Great Recession. The reality is that individuals could contribute to continued prosperity on more gradual terms - if only their nations would allow them to do so. Such growth would be every bit as significant as any "deferred" gratification growth, further down the line. Let alone the fact it's a strategy to open doors for those who remain excluded.

Incremental growth in services compensation and (local) property share options could be likened to a Zen approach for monetary representation. Both strategies would reward flow of ongoing activity over results. Also, seemingly tiny incomes would not have to be perpetually punished (i.e. burn in hell?), as they struggle to achieve the ever so "moral" deferred gratification.

As much of our spiritual literature tells us, living for the present is what's most important. I for one am glad to see the measure of GDP (measured flow) as a reminder of that spiritual message. In a real sense, money can "set us free", when we don't allow yesterday's stock to overcome what today's flow actually represents. Let's make sure we don't lose the validity of GDP. And even better, make compensated time use a valid component of GDP so that both can gain the respect they deserve.

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