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.