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.