Wrap Up for April 2016

Why now? It's not immediately obvious, why recent public dialogue is damaging some basic tenants of economic thought. And the macroeconomic causation which affects political realities, is complex as it is. People relate to economic issues so differently, that it's not easy to have discussions with others where participants have common points of reference. One of the main "casualties" in recent months is free trade. In a recent post, David Glasner asks, "What's so great about free trade?" and notes what has been missed in the latest protectionism debate. Here's Glasner:

The goal of this post is not to make an argument for protectionist policies, let alone any of the candidates arguing for protectionist policies. The aim is to show how inadequate the standard arguments for free trade are in responding to the concerns of the people who feel that they have been hurt by free-trade policies or feel that the jobs that they have now are vulnerable to continued free trade and ever-increasing globalization. I don't say that responses can't be made, just that they haven't been made...the idea that we can reliably make welfare comparisons between alternative states of the world when welfare is assumed to be a function of consumption, and that nothing else matters, is simply preposterous. And it's about time that economists enlarged their notions of what constitutes well-being if they want to make useful recommendations about the welfare implications of public policy, especially trade policy.

According to Brookings, poverty is becoming more concentrated in some areas, than had been the case prior to the Great Recession.

"The creative class flocks to a handful of happy cities, abandoning the rest." A thoughtful essay from Paul Graham, "The Refragmentation," about the forces which (once again) appear to be pulling us apart. Refragmentation could be a reversion to the mean. http://paulgraham.com/re.html

...and with refragmentation, there will not always be the good jobs that were associated with twentieth century work. Timothy Taylor's post served as a reminder, what individuals hoped to gain in their working environments. With a little luck in the near future, people will have the chance to generate mutual employment for one another. In some respects, local groups can recreate the benefits that yesterday's corporations were once able to provide.

City density possibilities? Emily Badger has some eye opening charts (in an article I had missed from last year, ht Miles Kimball) what the differences really are between American cities, versus cities in other nations. https://www.washingtonpost.com/news/wonk/wp/2015/10/06/there-is-no-such-thing-as-a-city-that-has-run-out-of-room/

"The centre left is in sharp decline across Europe."
http://www.economist.com/news/briefing/21695887-centre-left-sharp-decline-across-europe-rose-thou-art-sick?fsrc=scn%2Ffb%2Fte%2Fpe%2Fed%2Frosethouartsick

Among the many reasons central bankers need to do a better job of maintaining continuous nominal stability, politics gets quite messy when they don't. And far right parties gain after severe recessions.

Some people are momentarily taking leave of their common sense, regarding the broader benefits of free trade. But thankfully, Kenneth Rogoff is not:
https://www.project-syndicate.org/commentary/us-presidential-campaign-protectionist-rhetoric-by-kenneth-rogoff-2016-04

Bryan Caplan takes a closer look at some of the legal concerns regarding licensing and knowledge use.
http://econlog.econlib.org/archives/2016/04/ungag_the_exper.html

A 2005 paper from Peter Ireland, re the monetary transmission mechanism: http://www.bostonfed.org/economic/wp/wp2006/wp0601.pdf

More culling of the poor and low skilled: http://www.economist.com/news/britain/21695959-who-benefits-introduction-national-living-wage-poor-economics?fsrc=scn/fb/te/pe/ed/britainlivingwage

Justin Fox suggests that states consider outright bans: http://www.bloombergview.com/articles/2016-04-11/the-tyranny-of-the-noncompete-clause

Dani Rodrik weighs in on the recent trade debates: https://www.projectsyndicate.org/commentary/progressive-trade-logic-by-dani-rodrik-2016-04

"Far from being a guarantor of price stability, the gold standard can be a source of price level instability, depending on the policies adopted by individual central banks." (David Glasner) https://uneasymoney.com/2016/04/13/whats-so-bad-about-the-gold-standard/

"Bigotry and contempt make it impossible for America to do many great things...To lift up the next two billion people advocates for the poor need to work together with people who are passionate about the role of free markets - roughly speaking, the left and the right". http://www.nytimes.com/2016/04/10/opinion/bipartisanship-isnt-for-wimps-after-all.html?_r=1

Connectivity is a 21st century issue:
http://mobile.nytimes.com/2016/04/17/opinion/sunday/a-new-map-for-america.html?_r=0

Social justice does not always come from the places one might expect:  http://www.newyorker.com/magazine/2016/04/25/the-corporate-fight-for-social-justice?mbid=rss

"There are far more functional cities in the world today than there are viable states."
http://qz.com/666153/megacities-not-nations-are-the-worlds-most-dominant-enduring-social-structures-adapted-from-connectography/

"Nearly 40 percent of the Ph.D.s surveyed in 2014 hadn't lined up a job - whether in the private industry or academia - at the time of graduation."
http://www.theatlantic.com/education/archive/2016/04/bad-job-market-phds/479205/

Monetary policy primer from George Selgin, Part 1: http://www.alt-m.org/2016/04/21/a-monetary-policy-primer-part-money/
Part 2: http://www.alt-m.org/2016/04/28/monetary-policy-primer-part-2-demand-money/

Anton Howes, a "historian of invention" http://antonhowes.tumblr.com/post/143173119024/how-innovation-accelerated-in-britain-1651-1851

What is the future of the library? http://dare.uva.nl/document/2/162448

"China is now the top trade partner for twice as many countries as America" http://www.businessinsider.com/5-critical-maps-to-understand-for-presidential-candidates-2016-4

Due to a misdemeanor charge more than two decades earlier, LaTonya Anderson was permanently barred from nursing. The denial came from the state licensing board "after she spent tens of thousands of dollars on training and passed the exam."
http://blogs.wsj.com/economics/2016/04/26/where-just-a-misdemeanor-could-keep-you-out-of-a-job/?mod=WSJBlog

Two more on basic income
https://fivethirtyeight.com/features/universal-basic-income/
http://equitablegrowth.org/the-not-so-basic-economics-of-a-guaranteed-income/

Noah Smith responds to neoliberalism charges with some good points: http://www.bloombergview.com/articles/2016-04-27/free-market-probably-isn-t-what-s-making-you-sick

Maintenance as the First Economic Discipline

Lee Vinsel and Andrew Russell, in an essay for Aeon (ht The Browser), advocate fiscal stimulus, by reasoning that innovation is "overvalued" and maintenance "often matters more". Might this assessment be accurate? Not so fast. Let's explore maintenance and innovation in a broader setting. Their essay provided suitable context for me to revisit a simple structure, with maintenance as the base. I began thinking about the framework in the early years of this project, and described it in notes as five economic disciplines. While I wrote various paeans to maintenance some years earlier, most of those earlier versions haven't surfaced in blog posts. Hence I found the article title and opening lines by Vinsel and Russell, quite interesting:

Hail the maintainers. Capitalism excels at innovation, but is failing at maintenance, and for most lives it is maintenance that matters most.

Economically and socially, the latter part of their sentiments is accurate, insofar as maintenance requires more commitment than other time based elements of economic activity. However, one problem is the fact their context for maintenance is entirely too narrow. Also, I somewhat disagree that "capitalism excels at innovation", given the numerous structural impediments which presently stand in the way of innovation at multiple levels. And oddly, the authors only associate innovation (which they devalue at length) with private endeavor, instead of public endeavor!

Fiscal stimulus is no longer a reliable source for even simpler, government defined forms of maintenance, given what are now relatively full general equilibrium conditions. While "full" (static or reform resistant) equilibrium need not mean zero sum economic activity overall, it does imply less revenue for proactive fiscal measures, given the arbitrary restraints on growth which private revenue sources now face.

Most important for this post, is that the full scope of economic maintenance extends well beyond present day government definition. Maintenance can be thought of as of the bottom supporting layer of an economic pyramid. In particular, maintenance is integral to the purpose of time based services product which incorporates knowledge and skills on a routine basis. When fully utilized, this function replicates previously agreed upon economic activities or disciplines (as represented by four "higher" economic roles), so they may become broader marketplace components.

Note in particular, that building new physical infrastructure is not equivalent to the maintenance of "old existing things" as described by Vinsel and Russell. These are two distinctly separate economic activities. Often, governments are responsible for physical infrastructure, but mostly generate real progress in this regard whenever broader sets of resource capacity include elements of serendipity (In other words, good fortune for government investment generally includes more than a low interest rate environment). The act of generating new infrastructure, can be thought of as part of a building discipline, which occasionally includes creating additional definition for the (prior) building process. Some readers might remember the five economic disciplines which I referred to in earlier posts:

maintenance - building - creating - understanding - healing

While the above authors are right that maintenance is a basic building component of economic activity, this is also true for the majority of today's time based activity - of which time based maintenance for physical infrastructure is only a small part. Time value as maintenance, also provides education as to what has already occurred in the four higher components of the economic pyramid.  Physical infrastructure is a component of the second step, and exists on a par with other forms of building which contributes to growth.

Today, any calls for additional revenue to support maintenance activity, are suppressed by previous value claims for time based product in general equilibrium conditions. Most important, is the fact this fiscal policy "wish" is but a small part of the maintenance product, that civilizations greatly benefit from. Maintenance has become the promulgation of all existing useful knowledge and skill, through means that are only occasionally linked to formal education.

Consider innovation as the third level or discipline, which is actually the process of creating. Yet today, much of what is referred to as creative endeavor is actually time/knowledge based maintenance activity which is the result of understanding. Today, prosperous regions serve as sources of patronage for knowledge workers, through the asymmetric compensation that fiat monetary formation makes possible.

Also consider the placement of building on this economic pyramid. While the idea of building (whether physical, or the mental "building" component of understanding) arises first, maintenance results from the originating idea. More maintenance is needed than building, in that the original idea is economically replicated and/or preserved through time based product. Again this is true with innovation, as the (new take on the original) idea is replicated through repeated patterns of building.

Understanding matters in this context, because it is particularly a social process of combining the various elements by which people agree to the coordination of economic activity. Understanding can be thought of as the building of mental infrastructure. Once a point of understanding is reached, disciplines can be replicated together. That said, it may be obvious now, what the role of healing represents in this process - particularly when economic and social understanding begins to falter.

Whereas creativity is often associated with the innovation of the physical realm, healing is closely associated with the innovation of the realm of the mind. One might say that the process of (arriving at) understanding or healing does not need to occur often, in order to be be replicated, as is also represented by the small space they require at the top of the pyramid. However, when the moment arrives these attributes are needed, should the moment pass and they are not gained, the entire economic edifice can be affected.

As nations move from the production of physical product to that of knowledge based product, they have attempted to do so on asymmetric terms. Unfortunately, asymmetric compensation has little choice but to seek out the highest level of skill and ability, in a marketplace of time value which includes a wide range of ability. The result? Economies gradually become more fragile, as alpha participants leave (the more numerous) beta participants stranded along the margins. Presently, both public and private entities have vested interests in seeking out the "best" skills and knowledge sets, i.e. the most popular, healthy, and in line with expected orthodoxy. Even social workers are beginning to advocate for those with chronic illness, who consequently face the danger of expulsion from today's workplaces, before they feel able to safely retire or work on a part time basis.

However, betas need to remain economically viable. Time arbitrage would not only provides means for them to do so, but also fulfill broader maintenance roles in the marketplace. Beta groups would have new opportunities for stable participation, through their combined time value potential. Further, new work can be generated along the entire continuum of human challenge. Instead of having to represent a single facet of economic value through external assignments, these individuals would have the freedom - through mutual employment - to move across the disciplines through the course of their lifetimes.

Access Restructuring, Not Debt Restructuring

Debt isn't quite the point, when it comes to arguments about economic stagnation. Furthermore, this is true for both publicly and privately held debt. Instead of struggling to get debt levels and structures "right", why not go to the heart of the problem, for which debt is mostly a symptom: basic forms of economic access now claim a disproportionate degree, of what was once discretionary income for many income groups. Sometimes, what appears as though excessive debt is excessive barriers to living a good life, in disguise. And no government can expect to gain sufficient revenue from expanding basic consumption requirements, indefinitely.

In part this post is a response for Scott Sumner, who recently asked, "Does debt slow growth?" Even though debt loads sometimes appear to slow growth, they are hardly the root cause of economic stagnation. Just the same, debt is often approached as though it were the main problem. In a recent Project Syndicate post, Carmen Reinhart notes:

...nearly eight years after the global financial crisis, burdened by high and rising levels of public and private debt, it is baffling that comprehensive restructuring does not figure prominently among the menu of policy options. Indeed, for the global economy, debt restructuring is the proverbial elephant in the room.

While I share Carmen Reinhardt's concern about debt levels, my response takes a different turn, regarding the possible effects of debt on long term growth. It is doubtful that economic access would significantly improve, were debt restructuring to take place. Also, government debt is more burdensome than private debt, in part due to time based services that governments still hope to fund indefinitely from existing revenue. Just the same, government revenue access will likely face more restraints in the near future, than what existed prior to the Great Recession.

Too many knowledge based services - important as they are - don't readily translate into primary (initial) growth capacity because they still rely on preexisting wealth. Hence the private sector needs to openly acknowledge that some government commitments cannot continue, i.e. some private sector "protection" will decline. Asymmetric compensation alone, on the part of those with enough disposable income to pay for knowledge based services such as healthcare, would ultimately mean a radically diminished marketplace for services formation. The knowledge based marketplace which governments have valiantly sought to represent, now needs stronger commitments and greater societal inclusion, from the private sector. Until this occurs, some aspects of ongoing government budget losses would be suffered greatly.

Meanwhile, private debt concerns are overstated - especially given the fact no one should have to rely on loans for living and working needs as the primary economic option. What purpose would be served, to "wait" for already existing debt obligations to "wind down", only for consumers to be faced with the same debt necessities in the future just to gain economic access? These private debt "overloads" need structural remedies, for the lower income levels which could contribute to potential growth and output levels, if given the chance to do so. Government budgets, however, reflect a complicated dynamic in terms of both marketplace fragility and opportunity. Long term, much more is at stake for public debt, than the need to generate broader housing access which could ease private debt.

National governments began to stray from basic responsibilities and functions, as fiat monetary formation became associated with the worldwide wealth of tradable sectors in the twentieth century. More recently, as they assumed greater roles in domestic economic activity, both citizens and the private sector began to rebel at the revenue now associated with daily government operations.

Thus far however, the main political responses are either threats to cut off existing revenue options (the "good riddance" strategy), or to pretend the problem doesn't even exist. Both responses are non starters. This is why it is so important to distinguish between the kinds of knowledge use which are especially needed at local levels, versus the knowledge use and dialogue most helpful for coordination between nations. Public budgets will still need to account for national and international coordination, while private budgets need to assume greater roles in local coordination.

Even though consumers have been called irresponsible, the ultimate responsibility for debt formation is with the governments which agreed (with private interests) to make consumption requirements intractable in the first place. Some would like to see government budgets whittled away by cutting the economic activity that is associated with them. But cutting out the good with the bad, is only an approach that would lead to tremendous economic losses. Through access restructuring, it may become possible to regain much of the lost ground, that has occurred since the Great Recession.

Some Benefits of Knowledge Use Systems

Chris Dillow asks:

Could it be that the main obstacle to full employment policies is not so much one of technical economics so much as ideology and politics?

Ideology and politics do exacerbate structural problems in the marketplace. For instance, progressives (and sometimes conservatives) inadvertently make it more difficult for individuals to utilize the skills that are necessary for knowledge based work. Just one example in this regard: day care becomes more expensive for all involved, when these service providers are sometimes expected to invest more time and resources for the formal education of math requirements. Just to be able to assist preschoolers. How many four year old children really need to know algebra? Why make life more difficult than it has to be?

On the other hand, when jobs and services face heavy competition, conservatives are more inclined to remove certain groups from the marketplace based on character defects and other "flaws". These efforts are taking some pretty outlandish forms of late. One argument on the part of conservatives is that "losers just don't try hard enough". But when faced with unexpected levels of perseverance from losers, they are also reluctant to back down. In any event, progressive and conservatives both resort to stricter rules and regulations which solidify their prejudices. The results of course include more fragile economic conditions, and more blame to go around.

Another way of stating the problem, fortunately implies a positive response: employment is insufficient in the marketplace, because we don't have enough ways to present our time value to others on economic terms. Too much time investment ends up as barriers to access, rather than means for better access. Knowledge use systems would link education to the work that local groups share in the course of a lifetime, instead of using educational requirements as access barriers. New forms of local corporate structure, would create a marketplace for time value which includes education as part of the same compensated network.

Because of existing budget obligations: as things stand now, the heavy requirements for knowledge based work end up subtracting much of the good along with the bad, when those requirements manifest as cuts in social assistance. How to determine which time based product is of value, and which is not? Budgets only have so much room, for the asymmetric one way street that is non reciprocal economic relationships. Also, the efficacy of time based product can be difficult to decipher, when people lack an arena to voice either their own preferences, or opinions regarding (already received) time based product.

Symmetric compensation and mutual reciprocity between individuals is a two way street, much as earlier forms of production once were. Economic freedom is the result of mutual participants - in this instance service entrepreneurs - having say in defining the service product which works for them. As Jerry Muller wrote about Adam Smith in "The Mind and the Market":

In commercial society based upon exchange, every man becomes in some measure a merchant...The pursuit of self interest in the market, with its division of labor and his resulting dependence on others, leads him to adapt his behavior to the expectations of others. The market itself is therefore a disciplining institution.

However, this argument raises an important question. Why does it seem that fewer individuals are now willing to adapt to the expectations of others? In all likelihood, this is due to the fact too much of the process of exchange has been removed from the level of individual activity. Even though production efficiency was the result for tradable sectors, the process of time based services exchange needs to be returned to individuals, in the form of time based product. Some portion of non tradable sector activity will always need to remain anchored to time value, and a new form of corporate structure makes the process viable.

Best, symmetrically compensated time based product would not have to be paid for twice, but only once in a private institution which supports full employment on monetary terms. And through group coordination - as organized over a continuous time frame - each time match represents a step forward as new wealth. When it is possible to match resource potential for product formation at the outset (through symmetrical time use) specific forms of time value do not have to face the harsh scrutiny so often necessary with asymmetrical compensation.

Even though recent centuries have seen tremendous free market gains in physical forms of product, there have not actually been free markets for time value. Thus far, time value has only been economically accounted for to the degree it is possible for those with discretionary income to hire others, or for governments to redistribute taxation so as to employ others. As a result, knowledge use is mostly limited to what the government or private participants with discretionary income, call for. By far these are the most significant limits of asymmetric compensation. As a method for knowledge dispersal, asymmetric compensation is not only incomplete, but the external approach to skills capacity, means that skill potential in some groups will decrease over time, for the ones which experience less hiring in aggregate.

The local corporate activity of knowledge use systems would support a community's economic efforts by providing a connecting network for them which is not always available, outside of today's institutions. Further, it would be able to do so without depending on already existing wealth, given the fact that time value can be matched as a point of economic origin. In each new community, the knowledge and skill that could be tapped is as varied as the community itself.

Some asymmetries are actually highly desirable for civilization and social formation. Not only does the asymmetry of tradable sector (global) resource capacity make a broad degree of social coordination possible, it leads to organizational patterns that make it possible for nations and states to achieve common goals. However, the problem for hierarchical structure is the fact these patterns can only utilize and compensate a fraction of knowledge use potential. Symmetrical organizational patterns would incorporate more choice in knowledge and skill by making the most of time value. The personal benefit, is that of providing a choice for working on equal terms with others.

One important aspect of knowledge use systems is the need to reformulate work options on terms that - so long as individuals are committed to the process - can provide more than casual and fleeting work options in a changing economy. Even though monetary compensation for time value is not equivalent to that of general equilibrium, it would be equivalent to the forms of resource capacity that can be locally tapped in relation to time value. For those who struggle with the requirements of general equilibrium, the time to resource value of alternative equilibrium, could be a good option.

To sum up: what would new forms of local corporate structure seek to accomplish? Among the suggestions in this post are a thoughtful (i.e. respectable) construction of "small" wage environments, and a full range of economic options (mutual employment) for time value. Indeed, time value also serves as a new point of wealth formation, for communities which otherwise often need a beginning point as a "bedroom" community or tradable sector activity.

Public or Private: Who Can Make the First Step?

How to respond, to recent assertions that monetarism is dead? Granted, monetarism as a discipline is changing. Where it was once approached from a somewhat quantitative stance, this viewpoint has shifted towards a supply and demand approach in terms of aggregate spending capacity. Both economic time and resource capacity are represented by money, and their relation to one another is constantly changing. Indeed, market monetarism opens up additional ways of conceptualizing money in terms of economic freedom, which have yet to be explored.

For purposes of this post, imagine the output of aggregate supply as a "race for growth potential" between public and private interests. How to think about these efforts, in real economy terms? Many assume that government is now capable of growth capacity to a greater extent than private interests. While this is viewpoint is understandable, given government involvement across the economy - alongside a growing private sector reticence - few realize what's at stake for growth and economic stability. This issue is all the more confusing for the public, when discussions between opposing economists mostly involve technical complexities or political oversimplification.

Much of it really boils down to this. In a temporarily stalled economic environment, which "side" is best equipped to address a lack of economic dynamism: fiscal policy or monetary policy, and why? That is, who is prepared to make the first meaningful step forward? After the Great Depression in the twentieth century, some government "first steps" for renewed growth had measurable impact, even though monetary assistance was quite uneven. What had become new infrastructure patterns in those decades, also meant a broader economic framework in several respects. Even the expansion of square footage for housing played a role, in that it provided "storage" for the additional supply side capacity of mass manufacture.

However in the present, it is no longer possible for government funded infrastructure - or related strategies - to have the same dramatic effect. Neither Washington - or Main Street for that matter - had sufficient response to the fact the 21st century would not/could not be a redo of the 20th. Today, the digital realm means far less physical space is needed for living and working, even though non tradable sectors have yet to adjust. And while millions of individuals desire to produce and partake of experiential product, again, organizational patterns still need to take this important shift into account.

Today, fiscal revenue for physical infrastructure - while it is needed for maintenance - is a vastly different component, than the multiplier effect of infrastructure which previously contributed to supply side dynamics across the spectrum. And while new forms of infrastructure are needed to generate more closely spaced living/working patterns, national infrastructure dialogue is mostly that of increased competition with already existing infrastructure patterns of general equilibrium - many of which are far from being fully utilized to begin with.

So called government multipliers lose their effectiveness, as government debt comes to include more economic roles that include high levels of ongoing obligation. Today, government debt includes continuous budget responsibilities which make it all but impossible, for policy makers to respond to changing economic circumstance. Again, think about the "race for growth" in which governments have to take two half steps (debt funded activity) to account for each single monetary step on the part of private industry. Until the Great Recession, government was able to access sufficient revenue that it could take enough half steps to stay ahead in the race, if need be.

Private industry has long since lost confidence in government, as capable of providing meaningful assistance for economic prosperity. But by the same token, private interests are also not inclined to make the first move, or - if they are - remain blocked by other players. Just the same, it's Main Street's turn to make the first step in a race towards stronger growth. Even though some will insist they can't, or possibly even insist it's not their responsibility to do so.

In an important sense, the Great Recession was a "contained" depression - a fact which underlies the paradox of those "return to normal" scenarios the Fed continues to speak of, only years later. Perhaps "normalization" reflected the fact that government was no longer well positioned to contribute to a broader growth pattern. There was just one problem. Too many private interests had become content with a protected and limited marketplace which left too little room for economic access.

Fortunately, there are still ways to move forward which do not require the "half step" matched revenue of fiscal policy. Matched time value can renew non tradable sector activity, through coordinated settings which combine public/private efforts into a single monetary framework. Matched time value would represent wealth which requires no debt, public or private. With enough "whole" steps, output would finally return to a level capable of accommodating all who wish to take part.

Why Distinguish Wages from Income?

Income and wages represent different aspects of economic conditions. While wages are more closely tied to localized resource coordination, income reflects resources as connected to broader resource use patterns. Wages are what people and institutions provide, in more or less isolated circumstance which generally don't capture other marketplace gains in the process. Whereas income may include wages plus additional resource capacity that a given institution is associated with.

At the broader level of aggregates for instance, nominal wages are different from nominal income, because the latter is more closely aligned with total (national) spending capacity and a nation's degree of economic complexity. Unfortunately when income and wage expectations become confused, they can overwhelm existing organizational patterns, due to somewhat random claims on resource capacity. Even though many of these claims are associated with fiscal income, by no means is this simply a problem for government budgets.

Potential "needs" on the part of wages and income, are best understood in relation to existing resource capacity, in order to reduce the existing pressures of general equilibrium conditions. Even though it would be difficult to separate wage capacity from income capacity in general equilibrium terms, knowledge use systems could provide means to do so in alternative equilibrium settings. It is difficult to change income expectations in general equilibrium, in part because operating costs and asset values have been structured around these expectations for a long time.

Populations have increasingly relied on income gains, to compensate for the fact that in recent decades, consumption "necessities" require larger portions of what was previously disposable income. Still, these income adjustments cannot account for a decades long lack of innovation in non tradable sectors, which only leads to further imbalances in both aggregate supply and demand.

Non tradable sectors particularly rely on the revenue of standard corporate income for their organizational capacity, instead of the wages associated with economic activity beyond prosperous regions. Standard corporate structure maintains a relative income producing advantage (as opposed to base wages) depending on what is sometimes a worldwide market position. Whereas the nature of market connections for local municipalities tends to shift over time - a fact which can negatively affect previously established local income demands.

When municipalities rely on legalized income requirements (including pensions, etc.), they can eventually run into difficulties re long term infrastructure maintenance. Local governments often struggle with budgetary frameworks for salaries and benefits that were designed during periods of prosperity which contributed to local economic conditions. New forms of local corporate structure (that combine private and public efforts) need greater flexibility in this regard. A stable (internal) base wage would provide for both local asset formation and maintenance costs. By separating income potential from wage potential, new communities need not be caught in unrealistic scenarios for infrastructure maintenance over the long run.

However, wage compensation for time arbitrage would be understood as a starting point for economic activity. Otherwise, non tradable sector egalitarian wages with no discretionary income potential (from tradable sectors), would quickly devolve into a no growth environment. Consider the primary difference between symmetric wages and asymmetric income in this instance. Coordinated time value exists as a steady state, while income remains representative of potential for expanding resource capacity. Distinguishing wages from income allows growth to evolve without creating false expectations as to income capacity, which relies on events that go well beyond local conditions. The time resource value which people know they have, is that which involves the least commitment risk for asset and services formation.

In all of this, capitalism as present day organizational capacity, is the income potential which holds the greatest promise for personal freedom. Knowledge use systems would embrace the discretionary income potential of tradable sectors which serve to bind small local economies with their surrounding neighbors. The primary purpose for separating wage capacity from income capacity, is to prevent the dilution of time value in relation to the lower rungs of a hierarchy of needs. Whereas income and wages combined represent total resource capacity, an internal wage structure provides greater certainty for life's basics, which in turn means courage for life's greater challenges.

Notes on Democracy and Production Rights

When is direct democracy possible? Direct democracy is an option for services creation in small decentralized settings, when production (property) rights are extended to the creation of personalized time based product. Where time aggregates are approached as the resource capacity people are granted by nature, production rights would allow time to serve as "votes" for time based services production and consumption.

Consider the vast differences in time value, that exist in present day general equilibrium. Indeed, representative democracy is sometimes compelled to diminish the voting impact of "bad voters" who hold insufficient time value in the marketplace. And yet the "good" voter who holds "outstanding" time value, also gains from the fact that important forms of knowledge use were limited by design. Even though one hears of "makers" and "takers" who contribute to society or (supposedly) diminish it, many "makers" are no longer so much the producers of things, as simply the recipients of knowledge use privilege.

Today's democracies are caught up in an increasing struggle to coordinate what have become vast differences in the economic value of time. The broader the population represented, the more difficult it becomes to manage existing resource capacity alongside depressed aggregate time value. While wide variance in time use would be problematic enough at local levels, it is even more difficult, when knowledge use restrictions are imposed at national levels and involve millions of people. Too many public private associations for economic patterns have gotten in the way of production rights.

In some respects, representative democracy ultimately needs a different approach to resource capacity. National governments are well suited for the circumstance of tradable sectors which are responsible for product formation at international levels. Even though government budgets could readily manage basic functions well into the foreseeable future, redistribution for production and consumption of time based product, imposes too many burdens on revenue capacity.

Ultimately, governments become more fragile when they assume the power to assign production rights to anyone, because they cannot extract enough revenue from those with production rights, to compensate for those who don't. As too many special interests have assumed rights of production, governments are now in the odd position of demanding further revenue from those without production rights, who were often subsisting on already recycled forms of government redistribution. At some point, individuals will need the production rights which allow everyone the chance to assume maker roles. Only then will less redistribution become necessary, so that more growth can finally take place through monetary means.

Even though knowledge use systems would seek to highlight production rights for knowledge use, some production rights for tradable goods have also faced arbitrary limits in general equilibrium. Only consider the multitude of homeowner restrictions when home production appears to impede property values.  And it doesn't seem four years already, since a series of articles when homeowners faced fines and possible jail time for planting gardens in the wrong place in their yards. Indeed, as losses in production rights are increasingly taken for granted, basic income arguments become a default fallback point across ideological lines. According to Scott Sumner:

I'm starting to see a trend in the comment section that I never thought I'd live to see. Progressives write in complaining that it's cruel to have an economic system where low productivity people need to work (even with wage subsidies). Instead we should have a guaranteed annual income, so they can pursue other activities, such as hobbies or volunteer work.

Imagine receiving a "low productivity" label at a young age, and never gaining the chance to overcome it! While hobbies and volunteer work are desirable, they often do not provide the means for personal interaction with others that some imagine. Even volunteer work now requires such a high level of trust, that individuals who have been deemed "insufficiently productive" might not be chosen to assist in volunteer activity.

Granted, it requires more effort to create a future which includes work for everyone, than to simply pay off those who are not wanted or "needed". Fortunately, we have the means to return to a more normal world, which includes allowing people the full use of their own humanity on economic terms.  Should governments choose instead to leave production rights in limited quarters, representative democracy would become increasingly difficult to maintain.

Hopes, Dreams and More, Re Economic Access

As it becomes clearer that some areas in the U.S. still face poor economic conditions, greater clarity is needed, in terms of what is ultimately at stake. Yet economic access is about more than just having a job, or even a relative degree of financial security. How does economic access contribute to prosperity and well being?

Broadly speaking, economic access can be thought of as having reliable means to tend to the basics of life, as well as one's obligations to others. What's more, the beginning point of fulfilling basic needs is necessity, before it really becomes possible to pursue life aspirations and the most challenging forms of work. And meaningful work is not necessarily the same thing as a stable job, with the usual perks and benefits.

However, since many products deemed as life's necessities haven't benefited from innovation, populations are held hostage on the lowest rungs of the hierarchy of needs for no good reason at all. Too little room remains in the marketplace, for knowledge use options that many were better suited for, and had hoped to be able to pursue. Broader forms of knowledge use capacity and experiential product have been limited by design.

Other problems with economic access revolve around population densities, which make it difficult to effectively organize for services creation where it is needed most. Even though the digital realm makes it possible to reconfigure organizational densities, this process has not yet begun. Limitations of primary knowledge use to prosperous regions, is also expressed in growing divisions for real estate values.

Why hasn't a proactive response to arbitrary marketplace limitations already taken place? Where limits exist, so too opportunities for economic access. Many in academic settings steer clear of the economic arena in terms of direct action, which is understandable given the possibility of exacerbating problems even further. Unfortunately, however, other groups are also not well positioned to generate better marketplace outcomes. When knowledge use is mostly limited to student or "interested observer" roles, negative externalities continue to multiply. And as those externalities worsen, policy makers resort to reactive responses, instead of those that could be helpful or proactive.

Despite these problems, economic access as societal dialogue is difficult. Those who remain connected have busy and involved lives, which are far removed from family, neighbors and citizens which do not. They cannot afford to give much consideration to those who are marginalized, just as many who lack economic access, no longer have sufficient confidence to remain in dialogue about the situation.

Indeed, these circumstance help to explain why I'm so grateful to have this blog, as an outlet to be heard. Blogging means being able to air my concerns at a personal level which is often not possible in daily life - or other forms of social media for that matter. Still, it was late in life before I finally gained the courage to write with intent to publish. Among the things I have to be grateful for, are thousands of dedicated authors (and more recently bloggers), whose arguments I considered for many a decade, before daring to voice my own.

In fairness to today's institutions: how could anyone have known, how important it would ultimately become, to link knowledge based specialization more closely with local economic patterns. Even though time based services production could continue solely from the vantage point of prosperous regions, it's a process which would only make economic access more difficult as time goes on. People are habits of ritual and routine, and meaningful work needs to be generated where individuals are able to live out their lives. In many ways, work is the center of one's life. Yet communication with others tends to be lost, when individuals are deemed incapable of providing work that matters.

Meaningful activity - especially that which occurs on economic terms - keeps us grounded in the present. It provides means to not become lost in reminisce about the past, or needless worry about the future. The ability to stay connected to work, is a constant reminder as to the value of respect, for oneself and others. However, organization for work capacity has changed. Whereas separately existing product often demanded work in teams or groups, the best forms of time based product tend to take place on more personal terms.

Work also contributes to a dynamic and civilized society, per the arguments of Adam Smith. Recently I've begun rereading a book I much enjoyed before, "The Mind and The Market" by Jerry Z. Muller. However, due to much uncertainty which existed in my daily life at the time, a lot of the book's contents were forgotten, and I expect this read to be more rewarding. Some of Smith's reasoning could also apply, to a time based marketplace and the vast economic potential such a marketplace would make possible. From page 61:

The division of labor was made possible by the ability of men to exchange their labor or the products of their labor, Smith explained, and the greater the extent of exchange, the more labor could be divided. The systemic exchange of labor and the products of their labor Smith termed "the market". Thus the greater the extent of the market, the greater the possible gains in production...The principle that set the market into motion and kept it going was the inclination to satisfy self-interest through exchange.

Say what one will about skills capacity or any (supposed) lack of it, mutual coordination for skills capacity at local levels would maximize the time based product that is actually possible. Doing so is all the more important, when other forms of resource capacity have often been been arbitraged to take full advantage of scale. The even scale of time use (as symmetrically provided) not only provides a steady means of economic activity, but also a greater dispersal of knowledge use over time.

Those civilizing tendencies which Adam Smith emphasized, could be regained through the direct interaction which is time based product. Knowledge use as economically reinforced at the level of individuals, could reduce much of today's group separation and polarization. When more work prospects become available for economic activity, fewer individuals resort to taking advantage of others, simply because they reason that they don't have to.

Even though Adam Smith wrote for a world somewhat different from our own, his arguments for economic trade as capable of improving humanity, are just as relevant today. I only wish I could argue for free trade with a fraction of the eloquence which he was able to employ. Sometimes, perhaps it is necessary to lose a measure of economic freedom, to once again understand how important it really is.

Some Alternate Equilibrium Considerations

Is it possible to generate a source of new economic growth, which is not dependent on preexisting growth? The reason this matters, is that direct forms of wealth creation are occasionally undermined, when policy makers and others lose faith in system dynamism. Even though governments seek to compensate with fiscal activity, losses in monetary activity also mean losses in fiscal revenue. When structural factors of general equilibrium get in the way of growth potential, alternatives to the strict economic requirements of general equilibrium, could help maintain economic access and long term growth .

Alternate equilibrium would connect locally generated knowledge based services with local asset formation, without making more demands on already existing budget obligations. Those who take part would no longer need to make claims on the time based product of general equilibrium - much of which is now caught in the crossfire of political struggle. By coordinating time and local asset value through internal means, greater clarification would be brought to wage potential in relation to resource use. Further, symmetric wage compensation need not be a limiting factor, given the potential of additional income for those who participate.

How might one explain alternate equilibrium, in relation to general equilibrium? Imagine a complete resource continuum as represented by money, alongside the wealth capacity that is the GDP of nations. Three kinds of arbitrage are possible along this continuum: resource arbitrage (in general), time arbitrage and skills arbitrage. While a complete continuum of resource arbitrage includes the value of both time and skill, skill arbitrage came to dominate over time arbitrage, often through staked claims on compensated value. Since little room exists for time arbitrage within general equilibrium conditions, alternative equilibrium can provide much needed space to monetarily compensate time arbitrage. Best, time arbitrage can contribute to economic activity, without subtracting time value from the skills arbitrage associated with general equilibrium.

New forms of corporate structure could provide assistance, for areas which have become marginalized "backwaters" in general equilibrium. Too many regions have insufficient means to generate wealth directly, and they often subsist on recycled government redistribution. In the U.S. this government provided income is also "recycled" through property taxation, so as to provide revenue for local schools. Some populations have gained enough from redistribution that they look normal in composition, which can lull onlookers into believing that all is well. But it leaves regions and governments alike too fragile, when so many places rely on essentially a backbone of social security and disability income, for a majority of local economic activity.

There's another way to think about the benefits that alternate equilibrium would provide. Why do governments limit the supply of important goods in the first place? As Arnold Kling noted in a recent post, these limitations include food, healthcare, education and housing. Of course, it helps to remember that arbitrary supply side limitations benefit more interested parties than government alone. Public choice is also private choice, in the marketplace. Just the same, there's no point in fighting a thousand supply side "battles" on general equilibrium terms, when it's possible to create supply side gains in a non threatening environment. This is the environment, that alternative equilibrium could provide.

Musings on a Marketplace for Time Value

Almost three years of blogging (as of April 21st), has gradually led me to promote a marketplace for time value, as a work priority. Initially I spoke about time based coordination processes as skills arbitrage. However, skills arbitrage is emblematic of asymmetric compensation in today's workplace. In this capacity, skills arbitrage is externally driven, which affects labor distribution and aggregate output unevenly when time based product is involved.

Whereas time arbitrage for time based product, could provide symmetric means to generate more knowledge based services growth than is presently possible. Instead of externally defining the skills capacity that is sought, time arbitrage would internally develop skills capacity, through locally coordinated settings. Individuals would gain the chance to play a greater role in the definitions of time based product, than is possible in asymmetrically compensated settings.

How do we know time value needs broader economic representation, in formal terms? One of the best indicators by far, is the amount of debt the U.S. citizen now "owes". Even though some believe that 13.9 trillion (nearly $43,000 per person) is nothing to be concerned about, it is. However, the point is not to insist we need "more" debt or "less", as is now occurring. The main reason everyone appears to owe this outrageous figure, is that governments have far more representation in today's economic realities, than most people. And today's political environment appears as though headed off the deep end, since hardly anyone agrees about strategies for long term budget management - regardless of educational level or point of view.

This debt figure also reflects tremendous resource capacity, that extends along a seemingly infinite path which has left aggregate time value far behind. As contrast with finite quantities of time aggregates even in the best economic circumstance, resource aggregates have a natural tendency to continually expand in general equilibrium conditions. What I suggest is generating balance between time value and resource capacity along equilibrium margins (through locally defined asset and services transmission), instead of attempting to impose a static relationship for time value in relation to resource capacity in general equilibrium.

All populations need to remain linked to the formal economy, in terms of both participation and responsibility. Economic life is the most human life that is possible in today's world, and not just in one's prime years. In fiat monetary systems, with a little luck, government borrowing should continue to be a reasonable proposition. Just the same, this form of borrowing could eventually become a fragile and uncertain process, if policy makers remain unconvinced that citizens are vitally important as economic participants. When government monopolizes time based product, the consequences are no less dangerous than the insistence of some on the far right that time based product is not important.

A marketplace for time value is not a straightforward proposition, in that a leap of faith in humanity is also involved. Time aligned local markets would span multiple concepts regarding marketplace structure and knowledge use, some of which would be in variance with current versions. The free markets which could open the door for human potential and aspiration, are not the ones which everyone is actually comfortable with. What, precisely, is our lack of freedom? An insufficient ability to present (as product) one's own time based perspective, for others on economic terms.

One part of the process, would be to overcome the notion of jobs as externally defined manna from heaven - benefits and all. Instead, these groups can create both freedom and opportunity through symmetric mutual employment, for the time based services and social security that are sought in the course of a lifetime. Symmetric time value would also exist as a backup option for new groupings, when other forms of economic access are subjected to pressures that decrease total marketplace output.

Defining Circles of Sustainability, and Some Examples

I've used this term infrequently, in part because some concepts associated with it are being discussed in related contexts. Still, it's a phrase I relied on prior to beginning this blog, hence the designation deserves a spot in the glossary page notes I hope to have ready, later in the year.

Circles of sustainability can be thought of as special attention, to internal design patterns which affect the economic outcomes of free market potantial. In turn, this process corresponds to realistic assessments of local group capacity for total economic output, given the resource commitments involved. Complex economies benefit from multiple patterns of resource use that are both recognizable and accessible.

It also helps to differentiate local circles of sustainability, from patterns of sustainable specialization and trade (PSST)  as advocated by Arnold Kling. While the adaptations Kling notes may be deemed spontaneous market conditions, they still result from intentional design on the part of both public and private interests, for the broad settings of general equilibrium conditions. Think of digital tech entrepreneurs which contribute to traffic flows for information and knowledge use, for instance. Kling's general equilibrium approach would also reflect the economic patterns that eventually gain historical perspective.

What happens when equilibrium conditions are not enough, to support economic inclusion? When individuals have little ability to contribute to local definitions of production and consumption, one result is frequent calls for wage increases. However, this approach can mean further imbalance in general equilibrium conditions. Another important example are the calls for less taxation, which - if and when heeded - sometimes lead to negative aggregate supply outcomes. Some economic activities were previously generated on fiscal terms that don't easily gain supply side replacement in the marketplace, when less tax revenue is available.

Current struggles in general equilibrium conditions, also include attempts to provide greater housing density in prosperous areas, so as to bring lower income levels to closer existing work proximity. One cannot help but wonder, how prosperous cities once had ample room for multiple income levels. Might the problem be the fact today's municipalities "need" citizens who can pay higher local taxes? If so, that means zoning "keeps out" the ones who cannot. One could reason that municipal obligations weren't so burdensome, when heavy backlogs of pensions didn't have to be paid and infrastructure was relatively new - meaning less costly maintenance was involved. In any event, sustainability requires local citizen resource capacity, hence sustainability in new communities includes arbitrage time value when wages fall short of the mark.

As a result, some who would benefit from better economic access, will need to start over with different infrastructure obligations, in new settings for mutual employment and service possibilities. Part of this process will include greater economic complexity for groups which only number in the hundreds. Getting started, means local participants will lend their own personal thought processes for infrastructure design and revenue capacity.

Presently, when national or state level governments fulfill infrastructure roles, results tend to be one size fits all infrastructure. These initial requirements can leave lower income levels compromised, in terms of participation and the capacity for bearing responsibility. Consider a recent infrastructure request from "the fortunate" in an article at the Atlantic, by Robert Frank. He asks, shouldn't the rich contribute more? In promoting his new book "Success and Luck" (which sounds like a good read) Frank emphasized how luck is more of an important factor for success in life than many are inclined to think. He was the guest of this week's Econtalk with Russ Roberts, where they also touched on some of the infrastructure arguments included in the Atlantic article.

One reason it's difficult to argue for the rich to commit further taxes for purposes of infrastructure, is the fact (also noted by Russ Roberts) this request is quickly diluted in a barrage of competing government obligations. And again, even in the best of circumstances: when outside parties are expected to do the heavy lifting, the result is externally defined infrastructure which meets the needs of general equilibrium, instead of the income levels which need alternatives to general equilibrium conditions. It is better to redefine alternative equilibrium in which all income levels can contribute to the desired results.

Another consideration: today's infrastructure requirements reflect the additional resource capacity of "home advantage" periods. In other words, overhead costs and (legal) pension requirements tend to be established when trade advantages make these costs reasonable for many citizens. While infrastructure costs aren't such a burden for prosperous regions where local residents have access to international wealth flows, it is more difficult to maintain the same forms of infrastructure, in areas where income levels face limits. Indeed, the example of many a struggling municipality serves as a warning, to consider infrastructure options which prioritize walking over auto for daily work/life needs, alongside innovative choices in electric and water systems.

Fortunately, reducing overhead for living and working needs is not as difficult as it may seem. Many forms of mass production for infrastructure and building components can be assembled on site by local citizens. Best of all, digital networks have greatly reduced overhead costs for business formation, and are gradually becoming capable of reducing costs for learning as well. The next logical step, is to use digital means to coordinate diverse economic settings at close range.

For sustainable infrastructure and living/working environments, it is best to create ways for participants to contribute to the infrastructure which is most capable of addressing their needs. Instead of counting on the lucky and fortunate (yet again) to "make up" for the ones not so fortunate, design environments for greater economic freedom. This way, the potential for luck could draw a bit closer, to many who didn't appear quite so fortunate in the demanding conditions of general equilibrium.

Thankfully, Trade Doesn't Have To Be A Zero Sum Game

That said, societies could be making efforts to make certain trade remains open to all, so that economies don't become a zero sum game. Too much rigidity in non tradable sector formation, now contributes to a general impression that it's all zero sum! It certainly doesn't help, that central bankers have been reluctant to provide accurate monetary representation, for those who hold economic commitments to one another. Hence it's not difficult to understand why some are becoming convinced trade is a zero sum game, in spite of arguments to the contrary - such as my own.

Perhaps the fact I recently wrote a post defending neoliberalism, accounts for a scolding I received from a commenter in that post - one seldom knows for certain. When I looked up John L. Davidson, I found a Miles Kimball post from 2013 which highlighted an article from this attorney. Never mind any discrepancies he may hold in terms of economic viewpoints, as contrast with market monetarists such as myself. That's not what's important in this context. What I am concerned with, is clearing up some misconceptions he apparently held of me - indeed one could say misconceptions as to my entire purpose for blogging. From Davidson's comment:

You seem to think deflation has a place in economics. Not when 85% of your economy are services for which deflation is not a choice or option. Medicine, law, and haircuts have too large a labor component to get cheaper w/o reducing the incomes of those providing the services.

First, if I have come across in my blogging as a deflationist, then I have done a poor job of communicating to my readers. So first, for the record, I am most certainly not in favor of deflation, especially given today's structural circumstance and the need to further include many who still lack economic access. All the more true, when the good deflationary potential of tradable sectors remains swamped by the bad deflationary potential of non tradable sectors (and tradable sectors by extension). Even bloggers such as George Selgin who have highlighted good deflation over the years, would acknowledge this unfortunate fact. Regardless, central bankers need to maintain present day income levels in aggregate - both to make it possible for individuals to maintain their financial obligations to one another, and to protect central components of asset value in general equilibrium conditions.

Also, it may have my neoliberal arguments in the above linked post, which led Davidson to assume I don't believe in progressive taxation. In terms of the fiat monetary structure of governments and nations, taxation has been and will always will be important, for the kinds of activity which are difficult to carry out otherwise. That said, taxation needs to be implemented far more effectively than is now the case. Taxation has been abused in entirely too many instances, to support forms of activity which otherwise could be more directly and broadly generated. However, devolving economic activity to state or local control with no intent to build a broader marketplace for time value, would be an unmitigated disaster. Still, much of today's taxation is not effective for its intended purpose. Among other problems in this regard, much of the economy is structured on terms which don't allow growth to overcome debt based fiscal requirements, at aggregate levels of output.

How to think about this problem? Anything that is fiscally backed, has to be paid for again, with already existing revenue. Further, fiscal multipliers often don't apply, for what is little more than ongoing fiscal obligations. Once developed economies evolved towards fiscally supported services as relatively more important than monetarily driven tradable sectors, governments initially had means to make up revenue shortfalls. In particular, government held direct involvement in the wealth creation of asset formation, through the international monetary flows of fiat monetary formation. So long as worldwide economic growth remained strong, this connection served as a substantial government multiplier, which tended to "cancel" the debt issues of ongoing economic obligation such as subsidies and (certain aspects of) entitlements.

Indeed, worldwide growth made government asset management a fallback position, for more than half a century. However, with the recent pause in worldwide tradable sector activity, more than asset management is needed for long term budget considerations. A broader marketplace is now necessary, for continued worldwide growth. Plus, the adoption of more direct forms of wealth creation would offset growing burdens in fiscal obligations and requirements.

One approach to this long term growth dilemma is a marketplace for time value. A marketplace for time value would provide means to stabilize general equilibrium, by restoring internal trade at local levels. By opening trade options to the potential of time value, nations would not need to worry, what their unique mix of tradable and non tradable sector activity actually consists of.

Fiscal policy, like monetary policy, is not "out of ammo". However, fiscal obligations have not been closely considered, as to where they could provide the most support to populations as a whole. As a result, present day fiscal restraints represent problems for aggregate growth potential. And without full employment, adherence to an inflation target (instead of NGDPLT) could lead to gradual deflationary effects. Fiscal policy cannot provide an indefinite stand in for aggregate time value. Today's time value in aggregate has to "wait in line", for time which is deemed to have value. The effect is low economic velocity, both in terms of time coordination and monetary flows. This pattern impedes both monetary and fiscal efforts for stimulation.

Plus, today's high fiscal levels of economic activity are largely responsible for the "full" equilibrium conditions which now limit economic access to a minimum. The structural change that is particularly needed for lower income levels, is economic activity which need not be backed by debt - either at the level of individuals or nations. Why? Today's debt requirements are immediate barriers to both economic access and growth, at microeconomic and macroeconomic levels. By integrating time value into the fabric of non tradable sector activity, alternative equilibrium conditions can be built which don't rely on government or private sector debt, to take place.

Doing so, would also make it obvious that trade need not be a zero sum game. Indeed, the fact that service sectors are a major economic component, makes it mind boggling to expect so much non tradable sector activity to occur on fiscal terms. Likewise, for tradable sector wealth to be supposedly somehow responsible for backing the vast majority of knowledge and time based product! And yet this is the reasoning that policy makers have inexplicably made, instead of looking closer to home to reformulate 21st century time and services based product.

Granted, the asymmetric compensation that progressive taxation and government redistribution provides, is still vital for the forms of knowledge use that have important applications beyond local spheres of economic activity. Eventually, with closer attention given to non tradable and tradable sector flows, one can hope that government budgets ultimately do a better job of moving budgetary obligations towards the forms of knowledge use that matter most in this capacity.

Sometimes I am called to task for what I appear to say, instead of what I've tried to express. Those are the times when I wish my early education included a better grasp of mathematical concepts. If only my mind worked so that I knew how to provide visual representation of the economic concerns which worry me most! Suffice to say that much of what appears as austerity, really is not. Instead, it is indiscriminate political handouts with little rationale for the economic ends they serve. If budgets are not carefully addressed in the years ahead, much of the very good could be lost with the needlessly included. Governments have maintained such a large stake in economic outcomes, that fiscal policy as handouts for all comers is finally getting in the way of growth.

In order for future governments to thrive, they need to discover what government budgets best serve, and then leave ample room to respond in changing economic times. Government provided asymmetric compensation should tend to knowledge based functions which are truly state and nation centered by nature. Instead, governments have compensated local knowledge sets in ways that resulted in the extreme loss of aggregate time value. As a result, too many individuals found their level of skill capacity deemed insufficient, to contribute to the greater whole.

Economic activity that is backed by mutual time value, would give fiscal policy a chance to stabilize general equilibrium conditions and the role of fiat monetary formation. General equilibrium conditions cannot always provide full integration, during periods of low worldwide growth. This is the time when knowledge use systems are most needed, to make certain that entire generations are not lost, and valuable knowledge preserved, as well. Trade does not have to be a zero sum game. Don't let that happen.

Economic Self Sufficiency: Time Value, Density and Mobility

Noah Smith provided the initial impetus for this post, in his musings about a potentially isolated UK and the Tiebout model, "Growing a Nation Won't Always Grow Its Economy". How might one think about free standing economic units of the future - large or small?

It will be increasingly important to consider how tradable and non tradable sector activity is approached, whether they are structured on monetary or fiscal terms, and the degree to which each are capable of contributing to long term growth. However, something else is pertinent in regard to Noah's post title. General equilibrium conditions are sufficiently "full" in some instances, that alternative equilibrium conditions are also needed, to create the greater economic complexity that's missing at the margins.

Free standing economic communities would also respond to differences in scale approach, depending on whether tradable or non tradable sector activity is at stake. Even though tradable sectors are also local in nature to some degree, they lend themselves to the national (external) form of scale which still holds real potential for worldwide growth. This is the tradable sector scale that built nations and fiat monetary formation, and built globalism on terms which gave such hope to the world's poor. However, internal scale is now needed to generate a new form of non tradable sector base, which can focus on the dilemma of low income groups which have been left behind in developed nations. This form of scale (for time based product) would benefit from closer time based coordination, greater work/life densities, and local mobility.

Not only are time coordination, density and mobility important for economic vitality, but also for longevity in general. For instance, consider the long term benefits that initial planning for mobility and density needs, still provides at municipal levels. In a recent Raj Chetty study, as Tyler Cowen noted, "Place plays a role in helping the poor live longer". This was certainly true in New York where lower income individuals realized longevity gains, due to their proximity to ongoing activity and services structures.

While it is standard to think about closer distances for services needs as people age, design for lifetime mobility is also important, to bring populations closer to the forms of economic activity so often missing outside of major economic centers. In particular, environments that can be reached within walking distance, would allow individuals to coordinate among a wide range of service activities during the course of a day.

Another self sufficiency issue is that of basic income experiments. Nick Rowe expresses his concerns in a recent post:

What we want is a self-funding or revenue-neutral experiment...The subjects would have to give up all other forms of support that the basic income is designed to replace, and pay the extra taxes that would be needed to make up the difference.

Knowledge use systems could provide a similar form of experiment, through the time coordination base that would serve as a beginning point for a basic wage and tax fulfillment. The above detailed instances of environment planning would make this form of wage structure possible. Symmetric time value is the component which - by generating newly backed wealth on time based instead of debt based terms, can make wage creation self supporting. Better, more discretionary income opportunities are possible, due to the proximity of economic complexity through local design.

The reason discretionary income (beyond a basic wage) is so important, is that no should have to be limited throughout an entire lifetime, to a single basic wage for living needs, wants and aspirations. For instance, housing and services represent external unknowns that can create problems for basic income experiments, especially in terms of longevity outcomes. In knowledge use systems, participants would contribute to both asset and services structures in ways that would also make it easier, to build upon further discretionary income options. This particularly matters, when the costs of both day care and healthcare (on today's government terms) make it difficult for lower income levels to maintain discretionary income in general equilibrium.

Knowledge use systems would include services, asset formation and related infrastructure in the (mutual) time coordination base. This would place housing and services needs within the reach of those with small wage sets. Again, such coordination would be easier, due to design elements which provide close densities so mobility doesn't require extensive transportation costs and infrastructure. One could say that time based coordination serves as the "raw" commodity good in the process, which is "processed" into the services and asset formation that would allow non tradable sectors to serve as an initial point of wealth origination.

Neoliberalism is a Codependent Relationship

In spite of possible appearances to the contrary, neoliberalism has done much to provide means by which today's wealth becomes potential revenue, for redistribution through government in the form of infrastructure, knowledge use and services. How to account, then, for growing frustration re how wealth creation takes place thus far?

Besides...what are the alternatives being proposed to neoliberalism, from its naysayers? Neither neoliberalism or codependency are intended as derogatory terms in this post. Should "codependency" seem offputting, I would simply suggest that much has been taken for granted, in this mutual economic relationship, by all parties concerned. Interestingly enough, codependency as concept has its detractors and supporters, much as does neoliberalism. If need be, think of codependency as "interdependence".

Just the same, there is insufficient consideration how economic processes play out, in the realities of the present. Not everyone is on board with the conditions that are required for general equilibrium, and economic access remains a problem. Scott Sumner recently voiced his own frustration that neoliberalism receives the blame for problems it does not really deserve, and added:

Not all the problems in the world are caused by neoliberal economic theories for the simple reason that not all economic policies reflect neoliberal economic theories. Even if everything people say about income inequality is true, there's nothing wrong with the neoliberal model, which allows for the EITC, progressive consumption taxes, and sensitive reforms of intellectual property rights, occupational licensing, and zoning laws.

Note the utilitarian specificity in Scott's argument, as contrast with a lack of specificity in the majority of neoliberalism complaints. Indeed, this reaction from the left to policy makers and business interests alike, is akin to far right political reactions to government, as the supposed bogeyman for every problem imaginable. What is worrisome about this growing reaction from the left? Like so many on the far right, the intent appears more an urge to destroy what is "unloved", rather than promote means to improve economic realities for all concerned.

If destruction appears irrational - and of course it does - people have nonetheless been losing patience. In particular, there are two basic problems elites have refused to address in recent decades, which contribute to this quandary. Indeed, Washington and others waited so long, that many would still remain skeptical, should policy makers and business interests have a "change of heart", and begin to consider productive reforms.

What has been ignored? First, no one has been willing to grant the kinds of production options that would broaden consumption choices for all income levels. The result? Plenty of unnecessary confusion, as to the resultant inequality and how to go about addressing it. Second, the fact too much innovation has been disallowed, only makes new business formation and employment potential even more difficult. Today's income and asset levels particularly exemplify the benefits for today's non tradable sectors, in a codependent relationship of public and private interests alike.

Even though free trade and globalization has received much of the blame for society's ills, the reality of what is holding back progress, is decidedly unfree. Without a marketplace for time value, people remain held hostage to the dictates of knowledge use as decided by public and private interests alike. Without broader definitions and marketplace conditions for housing, millions of individuals are compromised in the lives they would like to create for themselves and for others.

Don't make free trade and globalization pay the price, for what populations have yet to accomplish for progress closer to home. It is far better to allow today's incomplete marketplace to further evolve, than to destroy multiple aspects of the global marketplace in the mistaken belief that globalization causes more harm than good.

Time Versus Skills Arbitrage: Some Comparisons

Personal time options and skills capacity are equally important, as sources of arbitrage value. However, personal time options may be sidelined or even disregarded, in today's demanding work environments. Fortunately, knowledge use systems can give time arbitrage priority over skills arbitrage, since symmetric group coordination makes it possible to consider time value based on its own merits. This choice is important, since many have forgotten what it feels like to manage time effectively.

When our skills capacity is asymmetrically compensated, we become part of a process which is externalized in organizational patterns beyond our own. This removes elements of choice from our time use decisions - especially for job positions requiring minimal skill. On the other hand, when individuals are considered the "best" for certain skills capacity, one's time value is in high demand, and it may be possible to gain more negotiation power for personal time considerations.

What about the "best" skills on offer, in knowledge use systems? Skills capacity would remain an important element (alongside time preferences) for many group interactions. However, in these close working environments, high demand skills capacity would elicit more direct responses and adaptations, than what are possible in general equilibrium conditions. In particular, others would become more inclined, to commit to local educational skill options that are shown to be in high demand.

Skills arbitrage gradually took precedence over time arbitrage in the 20th century workplace, as time use was shaped by the organizational patterns of existing institutions. Even though many forms of work benefit when sorted for skill, the misrepresentation of time management can distort work patterns for both individuals and groups, over time. This has particularly occurred for time based service product: a fact which knowledge use systems would seek to address.

Time arbitrage is also important for personal autonomy, and the degree of autonomy in one's work impacts how skills value is perceived by others. Consider what happens for instance, when task repetition is required that extends beyond an optimal threshold - a problem no matter one's skill level. It is always easier to do a better job, when we are responsible for making the choices how to go about doing so. An apt example in this regard is how we apportion non economic time, in response to the wants and needs of family and friends.

An important consideration for time arbitrage, is the fact it contributes to a form of product many individuals have all but given up on: the focused attention of others. In a time when repetition and standardization are sought, personal attention from someone appears as though a luxury which is increasingly out of reach. Even though this is relatively true in terms of asymmetric compensation, it need not be true, for the symmetric compensation which is possible at the level of individual economic activity.

The time based product that we can create in relation to one another, is not an abstraction in the sense of work that contributes to product other than ourselves. What has been missed thus far in today's economy, is that virtually everyone has time value which can contribute to the well being of others. And many preferences in this regard, can be recreated on economic terms.

Notes on the Right to Heal

Think of the right to heal, as one among a set of (potential) rights to participate in knowledge based services production. Why might a closer understanding of production rights, be important? As a species, our capacity for survival is gradually moving from goods production, to production of time value. Much about the future depends on the degree to which individuals are allowed to take part, in what are now among the most sought after forms of product in the 21st century.

When governments restrict rights (such as freedom of speech) in knowledge use and/or product, the result is extensive limits for total output and productive capacity. Long term growth potential now hangs in the balance. As governments have reduced production rights to subsets of the population, policy makers end up compelled to somehow make up the difference. Instead, fiscal budgets become greater burdens - even as expectations for knowledge use provision become more difficult to realize. In the process, fewer people find themselves working harder and longer, to somehow provide for those whose time value was deemed unworthy for system inclusion.

Hence production rights are needed in what has become today's most important resource: the knowledge capacity of time based product. Economic freedom and economic vitality are inextricably connected. No one can afford to let growth slow around the world, for too long. A marketplace for time value is needed, in order to restore wealth creation. And due to the way that general equilibrium is presently structured, it has become difficult to provide more knowledge based product on fiscal terms.

In a (new) local corporate structure, the right to heal would help to generate constructive time based service product, between individuals. The relationship between two individuals is not so separate from libertarian thought or free markets as one might expect. However, one's education needs to become directly linked with local work potential, before this relationship can contribute to a free marketplace of ideas and concepts. Restoring economic activity at the level of individuals, would help to build a stronger social net than what now exists.

The same right to heal in terms of time based product, would also extend to the product which individuals generate beyond personal time capacity. Goods which incorporate knowledge and skill can provide discretionary income in knowledge use systems - income which is not otherwise accessible through the time based product which creates an internal wage/asset structure.

Coordinated time value would also contribute to time backed forms of social security. These internal structures help to preserve the integrity of knowledge use systems, so they do not directly compete with the knowledge specialists of general equilibrium. Where competition does exist, it exists in terms of one's time capacity in relation to the time capacity of others who take part in the system.

Insofar as the right to heal is connected to a more general right to produce, both stem from the importance of right to life as stressed by populations as a whole. It will become increasingly important - in a time when educational and time based investment are paramount - to guard the citizen's ability to use personal skills capacity as a primary means of survival.

How might these issues matter for physicians and healthcare providers as a whole? The right to heal is equally as important for them, as it would be for all members of populations in a time when formal education and budgetary realities limit the marketplace capacity of present day healthcare. Without such rights, similar marketplace constraints apply to today's healthcare providers, as would exist for participants who generate healthcare procedures in knowledge use systems.

Also, consider the central position which healthcare holds in a fiscally supported knowledge use continuum. Why is this important? Today, knowledge use in multiple capacities, faces further fiscal limits as budget needs are subjected to further cuts. Even as healthcare is a primary component of the knowledge use continuum, budget needs for healthcare are also making it more difficult for governments to provide ongoing support for diverse knowledge use as a whole. Knowledge use systems would not only seek to generate more healthcare than what fiscal budgets can provide, but do so alongside other vital aspects of knowledge capacity which have been on the back burner too long.

New forms of local corporate structure would not make (i.e. stake) claims on existing supply or demand of healthcare in general equilibrium conditions. Those who participate in the knowledge use systems of the near future, recognize that today's physician network and educational system, are a backbone for today's general equilibrium setting - particularly in the U.S. Still, knowledge use needs to be more directly associated with the ideas of both personal freedom and free markets in the future. Otherwise, capitalism and democracy alike will continue to be questioned, despite the fact free markets continue to work efficiently in tradable sectors.

When given the chance, economies proceed in stages. Over time, agricultural economies gave way to manufacturing based economies. Gradually, the latter made way for complexity in service formation, alongside the educational investment this transformation required. Now, the latter phase of investment could proceed to knowledge use, in the broad terms that would restore economic growth and dynamism. Regaining the right to heal is an important part of the process, to regain knowledge use for continued prosperity well into the future.