Monday, December 29, 2014

Direct Time Use Compensation in Alternative Equilibrium

Wealth begins in the formation of product - whether by purposeful attention to a simple commodity, or product which includes the transforming capacity of the human mind. No one questions the result - when materials are coordinated and fashioned into new product - that wealth has been created. Why should anyone question product or wealth capacity, which occurs within an experiential time context?

Thus far, organizational efforts have not been able to validate purposeful time use, as product in its own right. Like the paid servants and bought slaves of earlier eras, knowledge use - in context as a time resource - has been caught in patterns which gain productivity in a limited sense, but lose broader aspects of productivity in a collective sense. What's more, merit compensation results in the loss of time aggregate values, because other skills sets are devalued accordingly. Even though merit is broadly understood as deserving of further compensation, it nonetheless generates bottlenecks in time coordination capacity.

Because some time value is consequently lost, further resource value needs to be derived from elsewhere. However, this occurs in ways which cannot be directly observed - either spatially or chronologically. Which is why further wealth may not necessarily be generated (as a whole), when people "sell" high value skills sets as a small fraction of time aggregates. By their nature, artificially limited skills sets generate negative time aggregate residuals, which in turn require resource backing within a larger - always contested - framework.

In the course of a lifetime, everyone benefits from the skills sets of others, but no one knows what might actually be required or at least most useful at any given moment. Sometimes, one simply needs affirmation of personally acquired problem solving capacity, but this is not what services systems have been built to acknowledge. Because of the requirements of merit based compensation, high value skills sets generally need to be sold as if their ultimate value is needed in every instance - which may or may not be the actual case.

Where once individuals were able to offer skills sets directly to the public, most options are now filtered through institutional constraints which put hard limits on primary equilibrium. In primary equilibrium, one person's leisure time is - for another - like the proverbial sea..."water, water everywhere, but not a drop to drink". It does little good for technology to "free" our time, if no societal pact exists so that "forgotten" time can also be freed to find its own value.

How to think about the product of time, in monetary terms? Time use in general has largely required indirect compensation, for at least a century, in developed nations. However, this interpretation of time use has finally begun to place limits on labor force participation. Even so: direct compensation of time use is not viable without an understandable reference point for mutual gains. How so?

Economic time use gains additional value in direct proportion to voluntary exchange, outside of one's immediate circle. Voluntary in this sense means personally managed, initiated and arbitraged. Individuals would need to "start from scratch" in local services based terms, and lay a basic foundation at the outset. Participants would not expect benefits, subsidies or services from either state or national government - nor would they expect government taxation. What would be taxation in primary equilibrium, becomes shared investment in alternate equilibrium. One of the benefits of these agreements, would be a uniquely generated macroeconomic equilibrium at a local level.

Even though this economy is open in terms of potential participants, it is closed in terms of services offerings. Someone who lives elsewhere, would not expect to gain services from time pools of which one is not actively involved.* Time matching would tie into local coordination patterns, and add to new wealth formation as an ongoing continuum. Basic elements for local organization would already need to already be in place (i.e. "gaining steam"), before direct monetary compensation for time use would be possible.**

Private enterprise generates time compensation endogenously, through its own means. Whereas government directed time compensation, involves both the monies of redistribution and bond creation. In other words, present day institutional structures compensate time use indirectly, through either production residuals or the redistribution which taxation makes possible.

Both public and private time use compensation rely on money which is pooled through numerous avenues and financial products. For similar reasons, the Fed has not been able to assist wealth creation through better targeted means. Until recently, indirect processes were quite sufficient. What can be done, now that more direct intervention is needed?

Central bankers need a more precise tool for direct monetary injections, because open market operations are intended for the purchase of already existing assets, with bonds as guaranteed government loans in this regard. These open market operations also reflect the indirect nature of time use compensation, as assisted by institutions which coordinate at broad levels.

The difference for alternative equilibrium? Local knowledge use systems (as newly formed production and services institutions) would direct coordinated time use in a real time format. In a sense, mutual coordination can be thought of as a new asset. The fact there is no remaining time aggregate residual, makes it possible to categorize direct time use compensation as newly created wealth. This wealth would be valued according to the hourly compensation base which local residents establish at the outset, alongside investment structures. An internal transmission structure which makes few demands on primary equilibrium, would also provide the Fed with a tool for precise, targeted growth.

One positive outcome is that compensated time use would not need to be approached as a bond formation. While nothing is inherently wrong with bond formation structures: limits exist given their rationale, and sometimes it takes a long time for governments to address their lingering effects. This linked example is a good reason, why the trade offs of immediate time "loan" cancellations are a worthy option to have.

For most individuals, skills portfolios can (gradually) be arranged so that it is possible to generate sufficient time matching opportunities. Individuals who would not have means to do so, are the ones who need assistance from others which is truly understandable. Some children and older individuals would have limited participation, but they would all want to participate. "Labor" or externally defined work is one thing. Purposeful activity as linked to that of others, is what one's identity consists of.

While social (i.e. reimburse later) bonds for needed services have sometimes provided "convenient" options; like so many other indirect forms of compensation, they obscure the relationship of time use to resource use. Because that relationship isn't clear on multiple fronts, compensation for time use in general remains in a beta position. Specifically, that means one person's time ends up in competition with another person's time. For example, from Wikipedia re social bonds.
Social Impact Bonds do not actually raise additional capital for social programs, but instead displace funding for other programs.
When time use of any kind is indirectly compensated, our time ends up in a beta position, dependent on other wealth and circumstance. Don't get me wrong, there is nothing wrong with beta, or social bonds for that matter. However, from the beginning of this project, I have been uncomfortable with "solution sets" that only meant more competition, for already scarce time and resource availability.

Directly matched time not only generates new wealth, it puts time use into an alpha or starter position which does not have to wait for other resource options to "clear" or otherwise come available. In other words: local effort, coordination and training could prove sufficient for economic sustainability, in many instances. Even when some community starts don't take; the flexible resources and preparation they require, could still prove useful in similar settings. With time, an understandable transmission between productivity and services formation could become like gold in the ground - available for the taking and generation of new wealth.

*Communities with hunter gatherer options (which include hospitality systems for other knowledge use "travelers") would be able to coordinate services between different knowledge use communities to varying degrees. Some aspects of emergency "on location" healthcare could also tie into these systems.

**Emergent (beginning) processes might seek assistance in a temporary non profit capacity. This would provide time to determine whether a community can gain the self sufficiency production and services capacity, which allow it to become a candidate for direct wealth creation in terms of Fed monetary backing. Maintaining Fed status for direct wealth creation, would require that high skill services formation and investment structures remain locally possible.

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