Time Use as Asset Formation

There are good reasons to consider voluntary time use aggregates for asset and wealth formation - all the more so, for knowledge use. In other words, local citizens would have the option of organizing and educating so as to help one another, based on the actual time at their disposal. Compensated knowledge use systems could prove most beneficial, wherever services are persistently in short supply.

Why hasn't something such as this occurred already? In the twentieth century, a reimbursement dynamic was established for long term skills acquisition as a prerequisite to knowledge use. Even though ownership rights to given skills sets were not directly recognized as wealth, asset formation closely followed the consumption patterns of the knowledge use sets which were most highly valued.

Because knowledge use priorities occurred in basic areas of consumption, other options for reimbursed time use possibilities were gradually lost. It's a dynamic which is so entrenched, that much of the transmission mechanism for monetary policy has adapted as a result. Not only did this lead to widespread institutional obligations for healthcare, but further burdens were placed on hiring in general.

Knowledge use limits also meant not being able to benefit from time use as a flexible component in product creation. Unlike the interchangeable nature of factory components, knowledge use for services took on rigid settings in too many circumstance. If one were to measure aggregate time value on the part of populations, the result would actually be somewhat negative. This, in spite of the fact that people have far more potential value than individual factory components! Instead of becoming a direct link to asset formation, time use became reimbursed economically not based on human ties to resource use, but specific forms of human links to existing institutions.

While this knowledge partitioning approach will doubtless remain for years to come, its implementation has slowed - along with other forms of growth since the Great Recession. As "negative" time use value becomes more prominent (i.e. the ZMP worker), the income factor of wealth is still being pared back, other than housing representation. Even the effort of central bankers to maintain asset value is questioned, while populations also rely on the same asset values for the service formations still possible.

Consider the difficulty in these circumstance, of being able to determine realistic asset values. As Kevin Erdmann recently stressed, housing in particular is facing an arbitrary cap. Why? At first glance, it might appear as though housing in aggregate is overvalued. But the reality on the ground is quite different, for the housing marketplace is quite limited in both geographic terms and product based definition. Too much present value derives from limitation. As a result, aggregate wealth potential is difficult to ascertain, when substantial portions of the populace are not represented well in either time use or consumption terms. These arbitrary definitions apply to both time use and the asset formation which is presently possible.    

Time use as asset formation would also seek to redress imbalances of which healthcare is a major component. However, knowledge use systems need to take place in environments which do not compete with primary equilibrium. That is, they would form a secondary equilibrium for services and asset structures. Why bother, then? Doing so would effectively target millions, who presently have little economic access. It's difficult to target these groups with primary equilibrium "solutions". By taking on system wide problems in small scale settings, failures can be relatively low risk lessons for future reference. Successes can also be noted for the combined factors which make them possible.

What's more, coordination and education for equal time use would allow direct productivity measure in knowledge use - something not really possible when knowledge use is compensated through production residual and redistribution. Bringing time use into asset formation could eventually bring balance back to primary equilibrium. For instance, Steve Randy Waldman noted in a recent post that it has become quite difficult for (what I refer to as) primary equilibrium to accommodate the needs of the poor, without stretching the asset formation of the rich beyond what they are comfortable with.

By coordinating means to match time use directly, there is no residual debt to reimburse in order for knowledge use to take place. This is how an asset categorization for human capital becomes possible. However, a caveat. By definition, these wealth formations cannot be externally generated, for they rely strictly upon time use decision processes in local settings. In other words, knowledge sets need to be internally gathered, considered and acted upon.

This is also why knowledge use communities would likely not represent investment potential at the outset. In particular, the investment in human capital is an internal driver with individual and local community gains. Hence the primary investment opportunity is for those who wish to partake directly in community life. At some point, however, outside investment in such communities could exist as peripheral options. For instance, outside investors might benefit from a local services marketplace which has become attractive for retail opportunities. Instead of purchasing properties, outside investors could rent properties from locals who hold shares in land, physical infrastructure (such as permanent grid work), and building components. All of which provide a form of social security for retirement needs.

Today's post simply sketches out a few possibilities, and was in part prompted by the above linked post from Steve Randy Waldman. In particular the end of QE seems to be generating a bit of "soul searching" online, which is something I hope will continue.