What patterns of wealth creation can be considered endogenous, and which patterns have strong exogenous tendencies? Tradable sector activity has the exogenous features of global networks and product mobility, even as it contributes to revenue streams for non tradable sector domestic activity - much of which is endogenous to wealth creation. Tradable sector wealth can disperse well beyond income levels tracked in individual nations, hence the nature of global wealth partially obscures revenue dependencies. What's more, some aspects of non tradable sector activity have lately taken on exogenous features as well - in particular, product which is not time or place dependent, hence capable of traditional output scale.
Given the growing prevalence of MMT rationale; as a (market) monetarist I find it increasingly important to note recent general equilibrium shifts in endogenous and exogenous relationships, especially since these changes have begun to negatively impact aggregate output. For that matter, some even find monetarist beliefs to be "folk tales" which central bankers supposedly should be rid of! Does anyone imagine that doing so could actually improve productivity, long term growth and standards of living?
And even though prominent economists have seemingly become less concerned about budgets and national debt levels, the idea that budgetary constraints don't matter, feels to me as though a non tradable sector variant of short termism. Put another way: Let's just maintain high levels of monetary compensation for all critical knowledge use until the revenue dwindles, and then spend the next century debating who to blame for the shortfall! The quantity theory of money is important for similar general equilibrium reasons. If we don't choose to quantify money in relation to output aggregates, how would it be possible to even respond, when the variance between input and output becomes too extreme?
Possibly the best option for new economic growth, would be to quantify sets of time use preferences for participating groups on formal economic terms. Doing so, could ultimately help protect the use of knowledge, as it becomes more difficult to compensate personal skills via high income levels - regardless of one's formal investments in human capital.
Presently, the endogenous wealth which is directly connected to time and place, does not exist in a steady state, due in part to its dependence on other points of wealth origination. This post title is what I would hope that endogenous or (time and place specific) domestic activity might eventually be able to contribute to general equilibrium patterns, via the formal economic quantification of time value. While some non tradable sector activity can be expansionary in that it is capable of scale, much of our most important non tradable sector activity does not scale. Given this reality, non tradable sector activity will ultimately detract from long term growth potential in mature economies, if it remains completely dependent on other sources of wealth origination. Symmetric use of time value might counter the dilemma, by creating a steady state for time based services which could gradually reduce the extent of competing governmental debt obligations.
Why is this such an important concern? In recent decades, non tradable sector activity expanded considerably in relation to tradable sector activity. However, that expansion came with some organizational problems: Excessive constraints in both high skill time based services and housing, are making it difficult to maintain normal levels of supply and demand across the income spectrum. These basic marketplace deficiencies consequently reduce the market potential of tradable sector activity, as well. One way to think about this process, is that non tradable sector activity carries non discretionary requirements which crowd discretionary income, in effect reducing aggregate demand.
Even though MMT can seem valid in certain respects, dependent forms of endogenous activity have the greatest capacity to expand, so long as tradable sector activity continues to dominate economies which are still in the process of maturing. However, once revenue dependent forms of non tradable sector activity start to dominate in general equilibrium, they lose the ability to provide adequate economic access to diverse levels of income. Without that access, government programs ultimately face their own limitations as well.
It may be that we now need to create endogenous activity which creates wealth at the outset (no debt required) to bring new growth potential to mature economies. Indeed, a services sector steady state in small communities could also encourage advanced economies to be less dependent on mercantilism as a source of revenue and economic dynamism.
Credit creation, important though it is for some purposes, will always remain a subset of true wealth creation. No one can afford to rely on fiscal policy, credit based activity, or even money printing for that matter, as more important than the ways in which people actually build wealth and long term growth potential in the real economy. In an era when knowledge has become so important to society, the quantification of our time could provide a much needed mutual building block for human capital. We can't expect all non tradable sector activity to be capable of expansion indefinitely. But we can transform vital aspects of knowledge use into a steady economic state.
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