Can General Equilibrium Wealth Become "Overfished"?

Oddly enough, yes. Over time, non tradable sectors which are secondary markets (because of their wealth or revenue dependence), can pose problems at a macroeconomic level in a mature equilibrium. Even though equilibrium imbalance is exacerbated by government subsidies, secondary market dominance can also affect the structural patterns of tradable sector activity, in ways which extend well beyond government debt obligations.

Nevertheless, secondary market dependencies on general equilibrium wealth, are presently believed to be benign, in terms of equilibrium growth capacity. Meanwhile some continue to debate whether a certain amount of government debt is reasonable, but secondary market dominance makes debt stability a moving target. When secondary markets are dominant, they continue to crowd the sectors which generate wealth as points of origination (and function like natural fish stock regeneration in the oceans). This process - in turn - further lowers the amount of government debt which could be sustainable over the long run.

Even though sectoral interdependence contributes to economic strength and complexity during periods of tradable sector dominance, this dynamic can go into reverse, once tradable sectors no longer dominate. So long as general equilibrium continues to recognizably expand output, the "common resource" of its wealth is generally available to those who participate. In these circumstance, more "fish" (points of completed wealth origination or reciprocity) are being born, than are being pulled from the oceans. But once secondary market wealth claims reach a certain point, the common resource of general equilibrium revenue becomes "overfished", and aggregate coordination begins to falter.

High skill providers of (non tradable) time based product in particular, are like "fishermen" who compete to draw from the same "ocean" of general equilibrium, or point of origin wealth. While it's problematic enough when governments become compelled to reduce their "catch", it's even more problematic when central bankers try to do so by arbitrarily reducing the size of the ocean's monetary representation. I found the image of an overfished commons helpful, for it provides clues how sectoral imbalances can affect macroeconomic outcomes. In " Natural Fisheries Overtaken by Aquaculture", Timothy Taylor writes:

Fisheries are a standard example for economists of the "tragedy of the commons". For any individual fisherman, it makes sense to catch as many fish as possible. However, if all fishermen act in this way and if the number of fisherman grows steadily over time, the underlying common resource can become depleted and unable to renew itself. In fact, this scenario has actually taken place with the world's natural fisheries, where production peaked a couple of decades ago and has been stagnant or declining since then...

There are two ways out of this box. One way is to figure out a method of limiting what fishermen catch, which would over time allow natural fishing stocks to rebuild so that the total catch could be greater in the medium- and long-run...The obvious difficulty is while it would be in the broad interest of a fishing industry to have limits on what can be caught, the practical issues of determining who should be allowed to catch how much and enforcing such decisions can be difficult.

The other approach is to have the fish-production migrate away from wild catch, and move toward "aquaculture", in which a certain body of water is no longer a common resource, but instead is owned by a fish producer. Aquaculture appears to be on its way to surpassing natural catch.

When services are generated via redistribution from other sources, for any product that is still directly connected to time value, its providers must still "fish" from the common "ocean". Hence recent healthcare mergers, while they may be able to contain costs to a certain extent, would not be able to expand the marketplace, except for where they do so without labour as a part of final product.

We could also have knowledge use production which preserves labour, yet does so by migrating away from the spontaneous "wild catch" that is increasingly limited to higher income levels and causing many groups to doubt the efficacy of formal education. Time arbitrage, since it would generate new resource capacity from within, could be likened to aquaculture in the above example. Where one's time can purchase the time of others, the process is equivalent to setting up new "pools" from which the use of knowledge and valuable skill can emerge.

Indeed, such a system would be similar to the conceptual gains of aquaculture settings, for knowledge, research and mutually valued employment. With time value as a reciprocal measure, knowledge use could be organized on wealth creating terms. And like the aquaculture example, which (hopefully) replenishes ocean capacity over time, so too, the defined equilibrium which could work to stabilize the greater capacity of general equilibrium.