Saturday, February 7, 2015

Time, Price and Incentive

The main problem for general (or primary) equilibrium in the present, is the lack of a marketplace for time aggregates. Presently, some of life's most important skills exist in secondary, hence partial or incomplete economic settings. Time use concerns can be difficult to measure purely in terms of standard pricing, because money needs to represent all resource value and potential - not just the choices one seeks through time use.

Resource aggregates as a whole are immense, in relation to the finite resource of time. This is why government obligations - divided up as representative of per capita responsibility - seem immense. Even though governments have vast resource capacity, many economic activities now take place at levels surpassing the time value most "mere mortals" hold.

Hence a leap of faith is involved, even given the fiscal capacity Washington holds. Any perceived risk also exists in relation to other risks. In terms of time based support, governments already have quite a few promises to keep. What's more these obligations have increased, relative to a slowdown in growth for broader resource representation. This is why further taxation has little ability to address the underlying problem of a missing marketplace in time value.

So long as an economy grows at a fast pace, it is not difficult for associations representing high skill value, to stake claims existing in relation to the broader equilibrium. But should an economy begin to slow, it can be more difficult to coordinate time use patterns at general equilibrium level. Indeed, the most important monetary functions are called into question, when governments struggle to provide the same services balancing and coordinating functions as before.

Increasingly, it is difficult for price levels to provide reliable markers for time use aggregates in services. Even the question of participation in today's services marketplace is highly politicized. Until now, the most highly valued skills sets were built on decades of preparation, and they needed to be reimbursed on those same terms - not what other economic participants could "afford".

However, those earlier stakes in time use value, left too many economic participants without reliable economic functions. Time as value in personal use, has to be sacrificed for value in personal exchange - when in fact it remains possible to do so. Furthermore, if value in exchange is either missing or insufficient, time value in use no longer retains the same productive dynamic, because it may not be possible to utilize resources other than in consumer context. Most individuals need stable and ongoing relationships with others, in order to utilize resources in any productive capacity.

Only consider that at the beginning of the twentieth century, self employment was still a reality for many individuals. Incentives tended to be internally aligned, even at the level of families which still held similar production goals in common. This was a simpler reality, in which individuals took for granted the ability to transform resources and arbitrage the resulting product. There were reasonably reliable economic gains to be had, when incentive meant getting up early in the morning to undertake activity for economic and personal gain.

Once product became more associated with institutional production, time balance gradually shifted away from both individual and family efforts, as incentives were externalized. With a little luck and a reliable work role, "early risers" continued to benefit from personal effort. However, without a career or ownership stake in a production base, incentive could still gradually be lost.

As the twentieth century progressed, the odds became greater for success in terms of paid employment, rather than production on personal terms. Even though that meant externally aligned incentives (if one didn't "own" some crucial aspect of the job, a day could feel "long"), the tradeoff could mean not worrying about money to pay the bills. Once again, the pendulum is swinging towards a need for internal alignment - even while business formation slows and older firms dominate the national stage. Where to begin?

A marketplace for time use would realign incentive, but many aspects of life would be unrecognizable from a century earlier. To be sure, locals would still coordinate for commonly shared goal sets and activities, just as they once coordinated for agricultural and simpler production activities. The main difference is that services would become the first focus of time alignment, and further production would follow. Using services as a central organizational factor, would allow individuals to rediscover production on the changing terms of automation and 3D printing as well.

By realigning time use within locally acquired resource context, more individuals would have a chance to learn services and production on new terms. Fortunately, individual groups are capable of balancing and coordinating functions which governments should not have to be entirely responsible for. Not everyone needs high pay as the primary incentive for high skill work. How many would choose environments which support high skill levels on simpler terms? It would be interesting indeed, to find out.

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