How does arbitrage function as a component of economic dynamism and long term growth? While many associate arbitrage potential with monetary gains, this feature is only a fraction of what arbitrage is capable of. Indeed, one might envision monetary arbitrage as a residual effect of aggregate efforts and time based priorities. After all, the nominal representation of general equilibrium depends on the extent to which all resource capacity gets defined. What matters most for monetary provision is its continuous accurate representation as a level nominal target, so that all arbitrage potential might remain stable as well.
As humans, we are naturally inclined to make improvements on whatever resources happen to be at our disposal. Three arbitrage possibilities are especially important: physical resources, time arbitrage (human capital potential), and systems arbitrage. In particular, time arbitrage could benefit from stronger market patterns and commodification. Only recall that when service offerings become highly specialized, by definition this limits access and commodification, as is currently the case with many high skill services.
Today, wealth creation as systems arbitrage has become mostly associated with movers and shakers in prosperous regions. Yet only a century earlier, individuals in millions of small communities were also direct contributors to wealth creation processes. Much of the earlier participation in physical resource arbitrage was decentralized. Even though it offered sustenance for local individuals and communities, these production patterns did not always generate sufficient additional output to be readily captured for broader economic activity. Time arbitrage existed alongside resource arbitrage in these settings, often on even more limited terms of monetary representation. As time arbitrage becomes more important in the near future (once again), it needs to return with a formal baseline monetary representation, to create additional incentive for local community trust and mutual reliance.
The physical resource arbitrage of yesteryear, gradually transitioned into immense wealth that negated the need for local production in countless communities. Unfortunately, even though small town populations gained in terms of tradable sector consumption, they still lack the ability to fully participate in high skilled time based services. That said, the need for decentralized services generation in the present, is vastly different from the production patterns societies once utilized locally. And since time based product is naturally limited, it is the logical employment replacement for tradable sector production - given the latter's centuries long history of exponential output. Even though time arbitrage would include microeconomic characteristics, it still offers a macroeconomic solution set to help solve long term employment issues.
Time arbitrage in the form of new markets for human capital, could also expand general equilibrium in ways that money has only been able to partially represent. Consider why this matters. Skills arbitrage, though certainly a reasonable approach to human capital investment, becomes unable to fully maintain a strong growth trajectory once tradable sector dominance gives way to non tradable sector dominance. Hence the need for further systems arbitrage, which instead of replacing prior systems, would function alongside them. Economic time reciprocity would give applied knowledge the conceptual space to function as a more direct means of wealth creation.
Many communities struggle to take part in time based services production today, since high skill services tend to rely on the redistribution of residual wealth. More often than not, this limits the most important facets of useful knowledge to prosperous regions. New forms of systems arbitrage, would allow time reciprocity to expand human capital roles beyond their present reliance on wealth redistribution. Once applied knowledge takes place via direct means, it can also serve as a valid source of community building. Systems design for new communities would establish knowledge priors as prime reasons for community origin. Flexible building components and infrastructure, would give these communities added mobility which is similar to what private firms are capable of. These components could be reconfigured according to the knowledge priors which are most readily coordinated during any given time period.
Since time based services markets lack the ability to grow exponentially in terms of output, we need ways to regain time arbitrage as output defined in quality gains for all human capital potential. Time arbitrage has the capacity to directly coordinate mutual time priorities. Indeed, systems of time arbitrage make it possible to utilize human capital as a lever in the production equation, so that less intense human capital investment is necessary in the first place.
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