Our personal productivity (time management) isn't functioning very smoothly, with the productivity of our institutions. Is it possible to bring these different approaches into a better alignment?
Granted: in many instances, we can problem solve and experience life without resorting to marketplace solutions. Nevertheless, when we do prefer to seek out assistance, second opinions, inspiration and the like, we often lack an institutional context which is well suited to our natural inclinations. Economically speaking, we could often benefit from the human capital of others not just as a product input, but as an intended product outcome.
Presently, however, productivity is framed quite differently. Since human capital as output is not considered integral to production processes, it tends to be removed when institutions find suitable means to do so. Further, the time based product that remains, tends to capture already existing wealth. Which means essential services involving even moderate levels of skill, are approaching luxury good status.
Yet it's been difficult to question this process, because production gains are associated with higher wages, regardless of how those gains originate. However, the source of sustainable higher wages over time has been greater output - in particular what is associated with tradable sector production. Whereas much of today's time based services income is not associated with greater output, and is actually indeterminate in nature.
As a result, when personal time increments become output or final product, the higher wages which are traditionally thought of as production gains, instead translate into someone else's higher costs. This effectively short circuits part of the processes by which productivity would otherwise bring more goods and services within reach. Given this circumstance, wage gains don't necessarily make us collectively better off, regardless of where they occur along a given income spectrum. Productivity assumptions deserve closer examination, in a services dominated economy.
The indeterminacy of time based services product, has important implications for economic stagnation and productivity. In a recent post, Tim Harford asks, if this is a time of change and disruption, then why is (typical) job tenure longer today, than it was when he entered the UK labour market in the late 1990s? Some of the same features of a services dominated economy which create problems for costs, also contribute to lost dynamism in overall marketplace conditions. Given this circumstance, today's organizational patterns for time based product, will continue to draw down overall productivity.
What can be done? Time based product as a determinate quantity of time value, would help to realign the indeterminate skills capture of non tradable sector activity. Services generation can be made determinate, by structuring mutual coordination options so that ongoing services "debts" are cancelled in real time. Eventually, this process would help to reduce the adverse selection of today's health insurance environment, for instance. Through the transfer of knowledge use for today's low income groups, knowledge providers would play a vital role in the reduction of adverse selection. Beginning this process is all the more important, as populations are increasingly refusing to administer safety nets over a wide income range. Otherwise, budgets may become problematic to such an extent that well paid time value may become indiscriminately removed from the marketplace, through automation and technology.
Debt cancelling in real time is an incremental form of services and asset generation, which would scale differently from the patterns which propelled tradable sector growth in recent centuries. Instead of placing yet more high stakes bets on access to existing services, time arbitrage would gradually bring productive agglomeration to places which now lack economic complexity. How might its growth trajectory be different, as a result?
Initial wealth gains accrue from the additions of new entrants to the system, as they begin their contributions to time measure and quantification. The second incremental gains, stem from system quality improvements that accrue over time. However, where the first incremental gain (fixed time quantities) have monetary and asset based equivalency, the quality gains of the process are a result of ongoing time management in a protected continuum. Here is where the "magic" also occurs, in the form of services generation at lower costs than what are possible in general equilibrium conditions.
Until now, it hasn't been possible to achieve substantial gains for time based productivity, unless the time factor was actually removed as an input component. By making time value a determinate output, and not just an indeterminate input, time value as output becomes a wealth component instead of a system cost. The lower costs of determinate time value, could make the balance of indeterminate time value in general equilibrium, easier to maintain, for the income levels which are capable of sustaining indeterminate income for time based product.
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