Friday, June 30, 2017

"Equal" Income Presupposes Abundance. Equal Time Value, Scarcity

Time arbitrage is a form of equal time value, which could provide means for groups and individuals to better manage and coordinate mutual responsibilities, by using the actual time at their disposal. Such options are becoming all the more important, given the present day struggles of budget obligations. Only consider that when economic time value doesn't have an equivalent for money's medium of account function, policy makers end up "hiding" extensive time based requirements in default policy positions.

However, it's important not to confuse the equal resource management capacity of time value, with redistribution arguments such as "more" equal pay. Income based approaches to inequality, are a never ending chase to meet what are essentially self imposed consumption requirements. Whereas equal time value is a supply side response to adjust consumption requirements, through better managed (time based) production.

Arguments for more "equal" income distribution at the lower end, include an implicit assumption there is sufficient wealth in aggregate to continue shifting income downward, for existing consumption needs. Yet this approach is becoming more problematic, as nations begin to follow the lead of the U.S. for further monetary tightening. Income adjustment arguments, tend to assume the rewards of material abundance have not already been assigned to functions involving high value skill and merit. Whereas time arbitrage, with its recognition of time scarcity, reorients the focus on time as a central scarcity which needs to be acknowledged in relation to other existing resource capacity.

A rationale of existing abundance, as though held back by lack of will, was also reiterated in a recent Project Syndicate Post, "Should We Be Worried About Productivity Trends?" The authors begin:
Economists trying to explain the apparent structural slowdown in productivity growth have been asking the following question. Where is the missing increase?
One mentioned possibility was "a paucity of investment opportunities". However, there's a flood of extensive human capital investment in the marketplace, which has yet to be recognized for what it actually suggests in terms of production potential. Education for time based product, is production input. Today's educational losses are quite similar to other investment losses. It would be as though a factory were expected to invest (purchase capital) for up to two decades  - such as today's formal educational processes - before it could begin to even sell its product in the marketplace.

This circumstance is all the more problematic, given the scarcity of our time use potential in relation to other forms of resource capacity. Michael Spence and Sandile Hlatshwayo continue:
But it may also be useful to consider a more fundamental question. How much productivity growth do we really want, and at what cost?
Perhaps what's being missed in this argument, is the still dependent state of non tradable sector activity, on strong output levels via tradable sector activity. A self sufficient marketplace for non tradable sector activity, could add to wealth creation and possibly increase the long term growth trajectory, without leaving lower income levels behind - as is currently the case. Again, from the Project Syndicate article:
All of this suggests that a substantial share of the decline in productivity growth may not be the result of some deep problem with resource allocation...governments should devote resources to reducing inequality, regardless of the shifting preferences of the average citizen.
Apparently, according to their argument, I've been suggesting there is a "deep problem" with resource allocation. Plus, I believe the "shifting preferences of the average citizen" are of utmost importance for time based service product outcomes. Who doesn't want - and deserve - a say in their service accommodations when they experience failing health, for instance?

We have to be careful in assuming structural income coordination issues can be solved away, by shifting resource flows between skills sets which presently hold wide variations in marketplace value. Even if it were possible to do so, this wouldn't increase access to high skill time based product, for those who are presently left with low marketable skill. Aggregate resource abundance is not the same thing as potential availability for time based product. It's best to acknowledge existing time scarcities for what they really are, in order to achieve a better result.

At first glance, one might confuse arguments for "more" income compensation, with the equal time value of time arbitrage, given their emphasis on a common value. Nevertheless, these two resource constructs are completely different in nature. Coordinated time value is subject not only to the limits of what an individual can provide for others in the course of a day, week, month or year, but also the fact that individual's time is already being coordinated with a limited set of individuals. One only need imagine the rural doctor (where they do exist) who can accept a mere fraction of potential local patients.

Last but not least: Some assume that you can't expect much productivity out of a service economy if people perform those services. Fortunately, this does not have to be true. Productivity is currently being lost, because too many human capital inputs are not being accounted for, as the first phase of a services production process. Economic time value needs a position in which it can incrementally proceed, or generate new marketplace output, via the purchase of other time value. Without economic options to pay for human capital as it is acquired, time scarcity issues will continue to weigh  heavily, on those whose time value is insufficient, to purchase the high skill time value that requires decades of inputs before output is possible.

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