Arbitrage Potential Includes Time, Resources and Systems

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.

Musings on Food Deserts, Company Stores, and More

Where retail is concerned, often cities and communities may appear to have either too many or too few local options. What makes it so difficult to coordinate supply and demand that everyone can be happy with? In particular, the U.S. supposedly has too much retail, hence the ongoing death of numerous apparently unneeded malls. But what if the real problem isn't actually too much retail?  Chances are, much comes down to how proprietors are expected to offer their goods. Perhaps the bigger issue is retail offerings in communities lacking sufficient density (during working hours especially) for extensive infrastructure investment. Why do cities and towns make such investments necessary anyway? Especially since we're only human, and consumer tastes can change before brick and mortar stores outlive their intrinsic usefulness.

Many a community has questionable "build it and they will come" examples. Some of these enterprises even manage to remain open despite mostly empty parking lots, as potential customers continue to drive where more shopping amenities can be readily found in one place. Some of the biggest business risks in fixed locations with traditional overhead costs, are for perishable commodities. Often, the only way to stay profitable is to eliminate perishable inventory altogether.

Of course, following this limited waste rule to maintain profits and stay in business, has plenty of detractors in the media. By way of example, one hears complaints about "food deserts", especially when the "wrong stores" come to town, such as Dollar Generals which are reputed to prevent regular grocery stores from opening in the same vicinity.

There's a Dollar General in close walking distance from where I live, yet the fact it sits adjacent to the local grocery isn't unusual. I made my peace with the fact Dollar General couldn't make special orders, several years ago. The fact they don't, probably helps to explain how they can stay open in towns with a limited customer base. I'm just glad for the merchandise they do carry, which saves so many trips out of my small hometown. Meanwhile, the local grocery does its level best to stock as much fresh produce as possible, in spite of the fact many potential customers make the drive elsewhere to larger towns. It's discouraging to think how much fresh produce must go to waste! As a former business owner, I remember all too well, wanting to carry more perishables than could realistically be sold locally. If only the individuals who complain about Dollar Generals and food deserts could know what is actually at stake.

What about produce markets and flea markets for fresh products? For a long time this was a viable option for self employment. Decades earlier, one could find flea markets wherever they happened to travel. Indeed I would have gone back to flea market selling were it possible, once rising rents got to a point brick and mortar locations were finally out of reach. Some of what is involved for the future financial security of millions, is simply overcoming the lifestyle illusion which tries to mandate everyone living as though they can afford a standard middle class lifestyle.

One historical consumer complaint could hardly seem more different than food deserts: Mandated local shopping! Many of us of a certain age recall Tennessee Ford singing "Saint Peter don't you call me cause I can't go. I owe my soul to the company store." The company towns of a century or so earlier, often ruled over their citizens like small authoritarian governments. At the very least, these were small decentralized versions of authoritarianism not overly difficult to exit. Many a restless or otherwise "fed up" local could vote with their feet to leave, and frequently did. The ones who willingly stayed, were often happy with the local abundance of the company store.

Nameless Towns is a historical sketch of Texas sawmill communities as company towns, from 1880 to 1942. I really enjoyed this book, in part because it took me back in time to places my family came from. Two grandparents lived and worked in Nacogdoches, near the edge of what was once a vast and ancient longleaf pine forest. Company towns finally cut down the last of these majestic trees in the early forties and then disbanded. Another of my grandparents worked as a sharecropper in these thinly settled regions, and I have little doubt he would have been too independent minded for the hierarchical demands of company towns! Although that likely didn't stop him from selling a little moonshine (along with fresh garden produce) to their inhabitants from time to time, even during Prohibition.

What determined the extent of company operations in these deep woods? Thad Sitton and James Conrad explain:

The number and importance of private businesses in company sawmill towns seem quite variable, and this matter probably relates to critical decisions companies made at the origins of their towns. Very occasionally, companies like Lufkin-Land (later Long-Bell), Angelina County Lumber, and Thompson-Tucker chose to set up operations immediately adjacent to major market towns, such as Lufkin and Trinity. In these cases, private businesses lay just beyond the sawmill-town perimeters from the beginning, and there was nothing the companies could do about them except offer full-service towns, including commissaries, drugstores, schools, and boardinghouses, and pay only in merchandise checks. However, the merchandise check and company social pressure to trade at the commissary often did a remarkable job of keeping employees on the reservation, especially in the early days. Around 1910, for example, a Lufkin resident recalled that downtown merchants in the county-seat town catered mainly to the cotton-farming trade despite the presence of two 100,000-board-feet-a-day mill operations immediately adjacent to the municipality. Company economic policies effectively insulated workers from the nearby "cotton town". 

Much more commonly, however, companies bought land and set up new towns in the remote countryside close to their timber holdings, and in this case they had the option of keeping all land in company ownership and leasing it out to private businesses on a case-by-case basis, or of selling off big blocks of property in their towns to whomever paid the price. 

By the time the petroleum company town of my youth set up camp for its resident workers, the work of logging company towns was almost done. Newer versions of company towns, once many families purchased automobiles and traveled more widely, were certainly far less hierarchical. For instance my mother recalled that while engineers did live in a separate row of houses, they were built the same as any other camp houses. There was one commonality with the earlier company towns, however. These neighbors still spent their days socializing with one another, and like the children of the sawmill towns, children in the latter version had the same freedom as well, to roam about the entire neighborhood as they desired.

Once most families gained access to reliable transportation, company towns and their associated stores became a thing of the past. Initially in the fifties and sixties, local Main Street retail was prosperous in towns of all sizes. But by the time families were able to purchase two vehicles, consequently working too far from home to shop locally during the day, these Main Streets began to decline. In a sense, Main Street became the first retail deserts of our time. What might we expect in the near future, as the process reverses and families own fewer vehicles, in particular outside today's prosperous regions? How far in a different direction, might small communities go from the well to do cities of the present? Right now it is anyone's guess.

The Visceral Nature of Economic Freedom

What is economic freedom? How is it different, from the political freedoms which have long been more widely discussed? For one, economic freedom is closely linked with psychological health and well being. Yet this connection has often been misunderstood, despite the millions who risk everything to build a meaningful life through self employment and entrepreneurship. Are the potential economic patterns which might help preserve freedom at its most basic level, simply too boring to discuss? Or are they actually misconstrued as a form of undesirable economic planning?

Unlike the intellectual arenas of political freedom, much about economic freedom is instinctive and personal in nature, hence not always as easy to put into words. Yet much that comprises the foundations of economic dynamism, results from countless individual struggles to preserve one's dignity and self respect in society.

Economic freedoms are also about the circumstance and resources which people have to work with in the here and now. Since freedom is generally discussed at an abstract level, more mundane aspects of economic freedom can easily get lost in translation. Consequently we are more often reminded what freedom is not, than given clear scenarios what personal freedoms might actually consist of. I recall a similar lack of understanding nearly a decade earlier, after reading Hayek's The Road to Serfdom. As it turns out I wasn't the only one. In their recent conversation for Medium, Tyler Cowen asks Russ Roberts which Hayek book influenced him the most:

That would be Fatal Conceit. It's certainly not The Road to Serfdom, which is the book everyone tells me they've read or that they plan to read. I say, "Don't read it. It's really slow going...The style is even more turgid than some of Hayek's other work."

For those who are fortunate, economic freedom helps to preserve social connections later in life when it otherwise might not be possible  to do so. Paul Samuelson detailed some of the incentives and difficulties of the self employed in the 11th edition of Economics, noting how many small scale efforts are doomed from the start, "When the owners' initial capital is used up, they are finished":

Who, on a Sunday jaunt to the shore or mountains, has not pitied some self-employed drudge, whose own efforts and those of the entire family hardly suffice to let them break even? 

Still, people will always want to start out on their own. Theirs may be the successful venture. Even if they never do succeed in earning more than $15,000 a year, there is something attractive about being able to make your own plans and do the variety of tasks that a small enterprise or franchise operation calls for. 

In the almost four decades which have passed since those words were written, how many still recall, just how basic is our desire for social inclusion in a viable economic context. Especially those of us who strongly relied on such framing, to help make up for our own social inadequacies! Recently I came across a study suggesting small business ownership could contribute to happiness and well being, and found myself wondering, isn't that already obvious?

Perhaps these differences between the mundane reality of personal freedoms, versus society's more lofty versions, is part of what stands in the way of a small government approach on the part of today's political parties. If so, it might help explain why those who have been left behind, remain neglected. It's easy to assume the poor consist of people who either haven't tried, or aren't willing to. But among these, are also plenty who have tried, and also started anew, many times. Millions of us embraced and thrilled to those fleeting moments of business success for all they were worth. There's many a fading photograph and local news story of once dynamic Main Streets to tell those stories, and some of them are our own. Have the earlier personal benefits of economic freedom simply become too mundane for a 21st century economy? Once again, Russ Roberts:

But most people who are poor are poor because they do not have the tools, the skills to contribute to the modern economy. They have circumstances that keep them from rising. I've been deeply saddened by the failure of people on so-called our side - the people who believe in smaller government - to think at all about that, to think at all about human flourishing by the people who are struggling. I think that has been a terrible mistake.

At the same time, we've failed to make the case for freedom, and to the extent that even saying that seems foolish...It's not literally true, but the last prominent politician, I think, who made the case for liberty and freedom in and of itself was Maggie Thatcher. Reagan, to some extent, also, but Maggie Thatcher did it relentlessly. That's so out of fashion in our times. We've become so consequentialist. The idea that liberty is a principle worth defending in and of itself is really, really difficult. 

I find it strange that people tie small government to the Republican party. The Republican party doesn't make the case for liberty...We don't have a political home for our ideas and I think the intellectual home has failed badly for our inability to make the case, either for liberty in and of itself, and to understand how and why people who are being left behind by our economy, and what policies might help them. I think that's an utter failure of our side, and it's a tragedy. 

Nostalgia for the Past? It's Not the First Round.

Have people the world over been "seized" with irrational nostalgia? In "The Global Nostalgia Epidemic", Edoardo Campanella writes:

Surveying today's world, one might well conclude that it is increasingly trapped in the past. Many people across Europe and North America believe that life was better 50 years ago...Whether the problem is rising inequality, economic stagnation, or technological disruption, nostalgia offers relief from socioeconomic angst. But far from being innocuous, infatuation with a mythicized past is shaping our politics in dangerous ways, not least by creating fertile ground for jingoistic leaders who are happy to exploit nostalgia for their own ends.

I'd like to suggest that this is only the latest round of sentimentalism, for a time when one's personal efforts in the economic domain were generally more likely to generate rewards. Hence for baby boomers such as myself who ended up leaving the workplace too soon, cultural battles can seem as though a belated national reaction, to the hollowing out of economic dynamism in far too many local communities.

However I disagree with much of the polarized political response which has emerged. Thus far, political posturing offers no real solutions for the fact the center can't hold, given its excessive reliance on the institutions which no longer have room for all comers. Nevertheless, that doesn't mean that capitalism or governments have "failed", only that their present organizational capacity is insufficient to move forward into a more dynamic future.

My own nostalgic attempts for retail based self employment began in the early nineties. That's when baby boomers such as myself, discovered that office work with benefits was a declining option, for many without college degrees. In retrospect, those baby boomer hopes for Main Street retail locations, were ill fated from the start. So what, them, prompted too many of us to make losing bets with our capital investments, knowing full well the extent of mom and pop businesses already facing displacement by chain stores?

Put simply, there were too few other economic options, for individuals who wished to continue engaging with others locally. Imagine for a moment, former office workers abandoning "ships", but the most obvious local option (without a college degree, for work that wouldn't be too physically demanding as one aged) was one's own Main Street business. In other words, with a little luck on one's side, retail opportunities appeared as though nearby "ships" which could still be boarded successfully.

That initial round of nostalgia, was also part of what capitalism had provided for so long, via the earlier dynamism of tradable sector activity. Barring other business opportunities, one might instead recapture the sentimental Main Street memories of a baby boomer childhood. Despite the extensive investment losses many of us ultimately endured, this seemingly "dumb" response to unemployment, was a lot more benign than what is playing out in the present.

For anyone who was "shipwrecked" after the loss of once reliable office work, the hope of course was that other nearby ships weren't "taking on too much water" to stay afloat. Even though many local Main Streets were under threat, where were the other additional ships (local institutions) designed so as to lend certainty to local commitment and investment? Indeed, some structural problems which contributed to the Great Recession were probably temporarily delayed, as many baby boomers continued as long as possible - often a decade or more - investing in small business capital, which could hopefully allow one to coast to retirement.

One reason this societal struggle has finally moved to a cultural level (where little good can be expected to occur) is that no new institutional frameworks were explored at local levels - decades earlier - when it mattered most. Indeed, nostalgia for the past is rational, when societies don't create new organizational patterns that provide possibilities for a better way forward. What's not rational, is the impulse to destroy previous still functioning institutions just because they can't be all things to all people. Hopefully we can bring down the cultural battles a few notches, so as to explore the possibility of new institutions that prove worthy of the risk and commitment of those with the courage to believe in them.

Notes On High Skill Transaction Costs Versus the Baumol Effect

What forms of transaction costs have become most problematic? Often, they involve time based product which requires a great deal of knowledge use preparation and investment beforehand, as these costs ultimately need to be shared throughout a broad range of systems. Even though one hears complaints of Baumol's disease in terms of, say, medium skill work which adjusts income levels via coordination alongside higher skills and more productive work; often it is high skill work, which requires a higher level of compensation for individuals wherever they may live, which poses the more substantial societal costs.

How might one think about these productivity differences, in terms of time based product? For instance: even though citizens of prosperous regions pay more for a wide range of skill levels in their vicinity (some of which cost far less elsewhere such as hairdressers), most citizens are expected to travel to prosperous regions to gain the expertise of professionals, and pay the same costs to those professionals as other local citizens - regardless of existing wide variance in the income levels of their own regions.

Again, think about the difference in aggregate. Medium skill levels which are subject to Baumol's disease, can appear unproductive in relation to nearby high skill and other productive work. Yet since local high income levels can still directly coordinate for many of these skills costs via their own means, medium skill levels don't carry the same (societal) cost burdens as the costs of high skill time based product. Nevertheless: even though medium skill levels tend to command less income in less prosperous areas, most high skill work is presently subject to higher costs (income compensation at a multi institutional level) regardless of where or how social coordination takes place.

These transaction costs, which in the U.S. are shared by consumers, governments, municipal budgets and businesses alike, need to at least be addressed at the margins, in order to maintain system viability in the foreseeable future. Might it be possible for regions which are beginning to falter under these circumstance (bankruptcy, etc.), to adopt a new institutional structure which is capable of reducing these otherwise built in transaction costs?

Firms in recent centuries were able to reduce transaction costs, in part because many divisions of labour were more flexible and required less extensive investment, beforehand. In "Theory of the Firm", Wikipedia notes:

According to Ronald Coase, people begin to organize their production in firms when the transaction cost of coordinating production through the market exchange, given imperfect information, is greater than within the firm.

In the present, the more important concern is not one of further divisions of labour for a non market environment to generate separately existing product, but divisions of labour which would allow individuals to coordinate their time via direct free market terms. Hence the equilibrium corporation would be different from the traditional firm, for it would restore local market platforms to make more complex forms of economic activity possible.

Rather than removing divisions of labour functions from the marketplace, the equilibrium corporation would seek to bring multiple time based functions back to the marketplace - albeit in a somewhat changed form. Whereas the single entrepreneur in the Coase model was responsible for the coordinated activity of large groups - so as to facilitate the complicated production processes of tradable sectors, participants in an equilibrium corporate construct would assume entrepreneurial responsibility for their own time value. What makes it possible to take this approach, is the fact these non tradable service sector settings don't involve the numerous level of production processes that have often been required by tradable sector activity.

There's another important factor for the transaction costs which comprise local coordination of time based services. Once a region becomes more prosperous, it often seeks to control local entry and access, so that only a certain amount of medium skill participation remains possible. Indeed, some economists have recently noted this self limiting Baumol effect. Prosperous municipalities can achieve these limits via control over local real estate values.

Whereas lower income regions don't necessarily have the same ability to control local factors for the skills levels they may seek. Since many professional skill sets include considerable sacrifice and investment, individuals who seek these opportunities, may not have the option of locating where lower income levels are hard pressed to compensate them. Areas with lower incomes could especially benefit from a new institutional structure, which would also build new markets for high skill levels which otherwise might not be locally possible.

Arbitrage: The Good Fortune of Creating Value

How to think about arbitrage potential? Those who have owned businesses, experienced self employment or engaged in financial activity, already understand the broad scope of arbitrage potential on a conscious level. Arbitrage - like innovation - can serve as a beginning point, for new organizational patterns which contribute to greater resource utilization. This post is particularly for those who may not closely follow economic discourse. Recently, it came to my attention that inquiring minds want to know: what specifically do I mean, by arbitrage?

First, a few standard interpretations. Investopedia focuses on some financial aspects:

Arbitrage...is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms. Arbitrage exists as a result of market inefficiencies.

However, "market inefficiencies" may be considered relative, since arbitrage can also be a more open ended process in which "inefficiencies" are hardly obvious to the average observer. Wikipedia further broadens the idea of arbitrage, via an explanation of markets:

A market is one of many varieties of systems, institutions, procedures, social relations, and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers.

This latter description could be helpful for readers who are uncertain about my framing, regarding the need for greater personal freedom of choice, via a marketplace for time value. Many workplaces are in a process of social transition - one which is less about labor, and more about time based social options. However, this change is so recent, that society has yet to develop meaningful and relevant context, by which time based services could more closely match personal challenges and inclinations. Time arbitrage would allow individuals to discover time value in relation to that of others, so that our institutions would not have to constantly do all the negotiating in our stead.

Some time based services are practical, while others are experiential. Yet both need to occur so as to feel freely chosen by the participants. In many respects, the idea of product is in the eye of the beholder, which is why formal structure for services formation at an individual level could prove so useful. Whether or not one finds value in the sets of resources that individuals offer, depends on the broader context of those resources. How has this context been represented by the entrepreneur, business person or professional who brings the product environment to our attention?

Arbitrage can prove successful enough, to bring new social patterns and economic activities into play. However, it helps to remember that arbitrage can't be forced. No arbitrage process is as simple as anyone might imagine. By way of example, only consider the wide range of skills and talents that individuals gain over the course of a lifetime, and the time investment involved. Often, too few of these investments and challenges have proven viable in the marketplace. The challenge is to make more of the things we enjoy, a dynamic and vital part of our economic lives.

Even though society more often thinks of entrepreneurship in terms of national or global opportunities for creating value, the fact remains that far too little economic value has been created of late in our own environments. Yet local entrepreneurs are in the best position to contribute to our life experiences in an immediate sense. The arbitrage which is possible in our immediate environments, is just as important as the arbitrage of nations. Both hold equal value.

Freedom to Choose, Means More Freedom to Trust

Betsey Stevenson recently challenged her readers in this Bloomberg article, "Want to Help The Economy? Learn to Trust". Yes, more trust would certainly help. But just the same, the article reminded me of a "feel good" Sunday morning sermon, in which the pastor exhorts everyone to be "better" people. Who remembers that impulse by Monday morning?

Unfortunately, there are good reasons for a growing lack of trust in the present. Stevenson is right that people are losing faith in one another, and she noted that when we find it difficult to trust others, others find it difficult to trust us as well. Economically speaking of course, less trust equates to less economic output in aggregate. However, something was missing from her reasoning: the same economic forces which leave us more vulnerable or less able to choose for ourselves and others, make us less trustworthy, by default. As someone who remained (formally) unemployed for too long, I get that such a perception on the part of others is understandable.

It's not enough to persuade, cajole or reason one's way to a stronger economy, especially in a time frame when representatives of more prosperous regions are becoming more intent on closing the door to new entrants. In particular, people need new means for discovering economic interaction with one another, which are also capable of contributing to long term growth. More reliable economic patterns would make mutual trust a rational choice - one less likely to end up as excessive risk taking in terms of either one's health or personal belongings.

Just the same, whatever the label that society places on the marginalized, and there are plenty of relatively arbitrary labels: those who try to assist the ones who have fallen, have too few economic means at their disposal to help them in the ways that count most. Sometimes, when social workers are new to their work, and the light of day dawns on them as to what is really going on, it can be a cruel dawning. I remember a few years earlier, a young woman who was working with the homeless ended up screaming at a crowd: Jobs! They need jobs!

Freedom to choose on economic terms, also includes the freedom to construct one's own unique business environment, by which to interact with others. I cannot stress enough, how important this function can sometimes be, for those who may otherwise lack the social graces to thrive in the large corporate environments of the present - whether they be public or private.

Consider what freedom to choose could potentially mean, given a meritocracy which rewards people so as to encourage excessive repetition in terms of chosen skill sets. Those who are deemed less skillful, are too often expected to perform repetitious patterns continuously which others have already opted out of. Yet time value - in terms of workplace options - should also exist as a form of marketplace choice. Physiologically, our bodies constantly ask us for variety in both movement and thought processes. Our bodies naturally use the "down time" of low skill processes to prepare for the next step we want to utilize in high skill processes. When work is performed according to externally determined time frames, it is not always possible to optimize this natural process.

Also, work environments can be thought of as a form of experiential product which is paid for through time investment. While the reality of job as desirable product is now recognized in terms of happiness and self esteem, the reverse effect has not been adequately considered for remaining low skill positions. When individuals have sufficient options to coordinate high and low skill work patterns among one another, self respect - hence mutual trust - can be much easier to come by.

A marketplace for time value, would provide more freedom to choose, which in turn could lead to more respect for a wider array of work functions than presently exists. Even though broader sharing of repetitious low skill work may seem as though a small matter, it's not for the ones who are expected to fulfill these societal roles to a degree they have little remaining time for more challenging work. Trust is not a matter of wishful thinking. But I would also suggest for Betsey Stevenson that trust issues are not something that governments can work out for their citizens. These are the kinds of issues which need to be faced openly and honestly, on the Main Streets which have increasingly been left behind.

Some Benefits of Knowledge Use Systems

Chris Dillow asks:

Could it be that the main obstacle to full employment policies is not so much one of technical economics so much as ideology and politics?

Ideology and politics do exacerbate structural problems in the marketplace. For instance, progressives (and sometimes conservatives) inadvertently make it more difficult for individuals to utilize the skills that are necessary for knowledge based work. Just one example in this regard: day care becomes more expensive for all involved, when these service providers are sometimes expected to invest more time and resources for the formal education of math requirements. Just to be able to assist preschoolers. How many four year old children really need to know algebra? Why make life more difficult than it has to be?

On the other hand, when jobs and services face heavy competition, conservatives are more inclined to remove certain groups from the marketplace based on character defects and other "flaws". These efforts are taking some pretty outlandish forms of late. One argument on the part of conservatives is that "losers just don't try hard enough". But when faced with unexpected levels of perseverance from losers, they are also reluctant to back down. In any event, progressive and conservatives both resort to stricter rules and regulations which solidify their prejudices. The results of course include more fragile economic conditions, and more blame to go around.

Another way of stating the problem, fortunately implies a positive response: employment is insufficient in the marketplace, because we don't have enough ways to present our time value to others on economic terms. Too much time investment ends up as barriers to access, rather than means for better access. Knowledge use systems would link education to the work that local groups share in the course of a lifetime, instead of using educational requirements as access barriers. New forms of local corporate structure, would create a marketplace for time value which includes education as part of the same compensated network.

Because of existing budget obligations: as things stand now, the heavy requirements for knowledge based work end up subtracting much of the good along with the bad, when those requirements manifest as cuts in social assistance. How to determine which time based product is of value, and which is not? Budgets only have so much room, for the asymmetric one way street that is non reciprocal economic relationships. Also, the efficacy of time based product can be difficult to decipher, when people lack an arena to voice either their own preferences, or opinions regarding (already received) time based product.

Symmetric compensation and mutual reciprocity between individuals is a two way street, much as earlier forms of production once were. Economic freedom is the result of mutual participants - in this instance service entrepreneurs - having say in defining the service product which works for them. As Jerry Muller wrote about Adam Smith in "The Mind and the Market":

In commercial society based upon exchange, every man becomes in some measure a merchant...The pursuit of self interest in the market, with its division of labor and his resulting dependence on others, leads him to adapt his behavior to the expectations of others. The market itself is therefore a disciplining institution.

However, this argument raises an important question. Why does it seem that fewer individuals are now willing to adapt to the expectations of others? In all likelihood, this is due to the fact too much of the process of exchange has been removed from the level of individual activity. Even though production efficiency was the result for tradable sectors, the process of time based services exchange needs to be returned to individuals, in the form of time based product. Some portion of non tradable sector activity will always need to remain anchored to time value, and a new form of corporate structure makes the process viable.

Best, symmetrically compensated time based product would not have to be paid for twice, but only once in a private institution which supports full employment on monetary terms. And through group coordination - as organized over a continuous time frame - each time match represents a step forward as new wealth. When it is possible to match resource potential for product formation at the outset (through symmetrical time use) specific forms of time value do not have to face the harsh scrutiny so often necessary with asymmetrical compensation.

Even though recent centuries have seen tremendous free market gains in physical forms of product, there have not actually been free markets for time value. Thus far, time value has only been economically accounted for to the degree it is possible for those with discretionary income to hire others, or for governments to redistribute taxation so as to employ others. As a result, knowledge use is mostly limited to what the government or private participants with discretionary income, call for. By far these are the most significant limits of asymmetric compensation. As a method for knowledge dispersal, asymmetric compensation is not only incomplete, but the external approach to skills capacity, means that skill potential in some groups will decrease over time, for the ones which experience less hiring in aggregate.

The local corporate activity of knowledge use systems would support a community's economic efforts by providing a connecting network for them which is not always available, outside of today's institutions. Further, it would be able to do so without depending on already existing wealth, given the fact that time value can be matched as a point of economic origin. In each new community, the knowledge and skill that could be tapped is as varied as the community itself.

Some asymmetries are actually highly desirable for civilization and social formation. Not only does the asymmetry of tradable sector (global) resource capacity make a broad degree of social coordination possible, it leads to organizational patterns that make it possible for nations and states to achieve common goals. However, the problem for hierarchical structure is the fact these patterns can only utilize and compensate a fraction of knowledge use potential. Symmetrical organizational patterns would incorporate more choice in knowledge and skill by making the most of time value. The personal benefit, is that of providing a choice for working on equal terms with others.

One important aspect of knowledge use systems is the need to reformulate work options on terms that - so long as individuals are committed to the process - can provide more than casual and fleeting work options in a changing economy. Even though monetary compensation for time value is not equivalent to that of general equilibrium, it would be equivalent to the forms of resource capacity that can be locally tapped in relation to time value. For those who struggle with the requirements of general equilibrium, the time to resource value of alternative equilibrium, could be a good option.

To sum up: what would new forms of local corporate structure seek to accomplish? Among the suggestions in this post are a thoughtful (i.e. respectable) construction of "small" wage environments, and a full range of economic options (mutual employment) for time value. Indeed, time value also serves as a new point of wealth formation, for communities which otherwise often need a beginning point as a "bedroom" community or tradable sector activity.

Comparative Advantage and the Marketplace for Time Value

In a recent article from The Freeman, Michael Munger suggests that comparative advantage should be downgraded as a primary concept, and that trade has evolved in ways which appear to make other factors more important. Here's Munger:

Comparative advantage is not a separate concept at all. It is simply an explanation of the implications of the division of labor and opportunity cost.

For tradable goods sectors, Munger's arguments are reasonably solid - in terms of untapped potential in these areas. As to non tradable sectors, however, comparative advantage has scarcely been utilized in the immediate or personal sense, where time based services particularly count. Not only would comparative advantage in service formation allow for a freer market in services, this concept also suggests organizational shifts in time utilization which have yet to be explored. Until now, comparative advantage in services has often been replaced with hierarchical expectations which have also substituted for knowledge use options.

There are other market considerations where comparative advantage will continue to hold importance as well. The most obvious example of comparative advantage in tradable sectors, is agricultural product which often needs specific geographic circumstance. Geography is also important for comparative advantage, in locally managed (non tradable sector) wealth endowments such as natural beauty, historical tourism and multiple forms of group coordinated experiential product.

How to think about comparative advantage in terms of time use, when time value is an important part of the final product? Unlike product which essentially exists separately from time use, service product not only includes how we feel about the production or consumption process, that impression becomes an actual component of the economic interaction.

This is why comparative advantages between providers, consumers and their mutually associated time/place agreements are so important. Whereas coordinated time and place for tradable goods is often not a central component of these forms of exchange, because tradable goods are mostly utilized - or otherwise experienced - separately, after the point of purchase.

Internally (group) coordinated time based product, would include comparative advantage of one's "basket" of time use options, in the decision to produce or consume. Personal concerns for production and consumption of time based product, would not be about "best bargains" or the like, but rather meaningfulness and effectiveness for mutually shared time. Even so, comparative advantage would benefit from a marketplace for time value (alongside money), for these elements of personal choice to be possible.

A marketplace for time value, would generate local conditions for time to serve (alongside money) as a medium of account, a medium of exchange and also a store of value - albeit in far simpler terms than these associations carry through monetary exchange. Granted, a time based marketplace would be neither possible or desirable, in the normal value in exchange conditions of general equilibrium. Just the same, the spontaneous nature of external coordination also carries asymmetrical costs which automatically limit the services that are possible in general equilibrum.

Time arbitrage would provide the option of symmetrical costs for time value, which could both simplify and increase the availability of services production. To be an entrepreneur of one's own time production, is to add real value. Indeed, it is fair to suggest that - in the eye of the beholder - possibly as much value as any new tradable good in the marketplace.

Shifting Organizational Patterns: How To Adapt?

In the broadest sense of the term, organizational patterns don't really shift all that often. Only consider how long societies organized much of their daily work around the seasons. Indeed, the shift away from seasonality was a gradual one, as people came to organize (their most) time consuming activities around common institutional patterns. However, something important about these more recent forms of organization, is beginning to change as well. Perhaps in the new century, remaining seasonal patterns will hold to a greater extent, than the twentieth century routine of arriving to and from work at essentially the same time.

Part of what is driving organizational shifts, are the ways in which product generation are changing. Even before the Great Recession, corporate voices were voicing not so subtle hints, that organizational patterns would need to once again converge with individual resource capacity. Often, it was stressed that people would need to become entrepreneurs of their own abilities. However, one problem regarding this need, was the fact that many forms of arbitrage had already organized for centralized economic activity, which had also generated an incomplete form of marketplace.

Prior to the Great Recession, the idea of entrepreneurial adaptation wasn't quite so unsettling. Indeed, younger individuals were looking forward to the challenge, hence were beginning to orient their education towards this goal. Only as it became apparent that business start ups had been on a gradual decline, did those expectations wane. And where full time employment had otherwise once been the norm, gig economies sprang up in prosperous regions, to fill in some of the missing employment gaps.

Is it possible to generate new forms of relative permanency, out of today's changed economic circumstance? Hopefully, yes. But in some instances, not on terms that are recognizable as present day benefits or entitlements. Entrepreneurial activity is needed at local levels - particularly for knowledge based services - but everyone still needs a recognizable group context in which this could occur.

Further, time value needs recognition as product in its own right - a process which would also require a certain degree of psychological adjustment. For decades, individuals have been given the message that product definition for time value, was something which mostly existed outside of their own personal domain. Not only would knowledge use systems represent exploration in a monetary sense, but also in a social and psychological sense.

Local corporations could generate a different balance between flexibility and permanency, part of which would mean less need for alarm clocks in the morning. In place of 9 to 5 commitments, the services formation of knowledge use systems, would take place in spontaneous organizational patterns. By making working environments multi purpose and - in many instances - suitable for walkability, local living and working densities would not contain the traffic jams, that are associated with transportation in spread out densities.

In all likelihood, a compensated thirty hour work week would be the best strategy for all concerned. Individuals would enter this "full time" work setting, once they become sufficiently comfortable with basic studies and are ready to branch out into more personal forms of educational endeavor. Set aside time for vacation and personal needs would occur at the outset of a given year's work schedule, with a certain degree of time allowed each week for the spontaneous work needs which arise on an ongoing basis.

What happens when individuals are not able to match 30 hours in a given week, and they want to be able to do so, in order to smooth time availability at a later point in their year schedule? These would be the moments when individuals could "donate" time (both would still be compensated) to those who are currently unable - for whatever reason - to provide matched time to the person who initiates the interaction. For the most part these would likely be circumstance of illness and related forms of incapacity. Even those who suffer ongoing conditions, nonetheless have many time frames that they are able to economically participate.

Through knowledge use systems, individuals would be able to keep organizational capacity in balance with the desire to explore their world. This form of desire is of course stronger at various points in one's lifetime, which don't necessarily correspond with twentieth century expected patterns of work and retirement.

Environment, Economy and Property Rights: All are Important

Do environmental concerns outweigh economic concerns? Granted, there are important environmental considerations to be dealt with in the years ahead. Just the same, environmental factors are more closely connected to economic circumstance, than some are willing to consider.

In response to the Paris Climate Change Conference, Lars Christensen also makes an important point about Ronald Coase. When property rights are clearly delineated, individuals ultimately gain the ability to tend to the ecosystem in sustainable ways. Much of the damage to the environment, results from those whose economic access has otherwise been limited in some capacity. When survival is at stake, some groups end up wasting resources in part because they may have been denied more productive means, for economic and social interaction.

Contrary to what some now reason, property rights in the 21st century need more careful definition and clarification. Too many aspects of knowledge use, as the most important resource (or property) of the 21st century, were previously "staked out" by special interests. In turn, organizational capacity is forced to compete through technology and "dictates" in service product duplication, with ever smaller degrees of compensated time value. As a result, many are beginning to reason that countless numbers of individuals will not even be needed for future economic activity.

But nothing could be further from the truth, and over time this rationale slowly becomes a recipe for disaster in the real economy. The fact that knowledge use rights were granted to special interests, makes everyone else less certain, whether time based knowledge can still be utilized for social and economic purposes in normal circumstance. This has generated extensive negative externalities, and created a services market void which is impossible to accurately gauge. As to the importance of property rights, Ben Southwood recently wrote:

And in a society where property rights are clear and extensive, most substantial externalities will be priced in.

Few other measures have been so psychologically detrimental, as unnecessary limits to knowledge use in today's world. Individuals need knowledge use in property rights context, so as to manage and create value for personal and entrepreneurial time use. Until now, asymmetric compensation for time value, has made it difficult for anyone to thrive in an entrepreneurial capacity, in terms of knowledge based services potential. This is why a marketplace for (finite) time value is also needed, alongside the marketplace which represents infinite resource capacity.

Physical aspects of property rights are important as well. Citizens need better delineation of property rights in terms of lifestyle context, to create the physical environments they seek. For instance: instead of nations trying to force one another to reduce their greenhouse emissions, they could be encouraging their own citizens to build new locales for walkable communities. There are many means to do so, which include new infrastructure options for energy use, transportation, and more.

Instead, at least in the U.S., there have been multiple accounts of local governments attempting to stop citizens from living "off grid". Why would nations discourage their own citizens, in their personal efforts for voluntary cutbacks in energy use? Even as world leaders considered a "bottom up" approach for environmental issues of late, the real bottom up approach is that of giving citizens a greater role in the knowledge use and environmental delineation they choose.

Gig Economies, Local Corporations and Social Contracts

Could gig economies contribute to long term growth patterns? It's important to note, that this form of digital coordination is mostly a business response at the margins of prosperous regions. These recent efforts - disruptive though they appear - are a logical extension for resource use in the complex economies of general equilibrium. Whereas insufficient diversity exists in less developed areas, for gig economies to sufficiently contribute to wealth formation.

Gig economies have also been associated with personal vulnerability, despite the fact (too) few recognize that earlier benefit patterns aren't sustainable in aggregate. Even so, requests for the usual worker protections (on emerging digital platforms), could short circuit what are still emerging patterns of organization. Laura Tyson and Lenny Mendonca are concerned about "Worker Protection in the Gig Economy" in a Project Syndicate article:

The trouble is that even as these sites provide new opportunities for workers and companies, they are bypassing the traditional channels through which the US and many countries deliver benefits and protections to their workforces. In the US in particular, the "social contract" has long relied on employers to deliver unemployment insurance, disability insurance, pensions and retirement plans, workers' compensation for job-related injuries, paid time off, and protections under the Fair Labor Standards Act. Although the Affordable Care Act has made it easier for workers to acquire health insurance on their own, most workers continue to receive health insurance through their employers.

For many small businesses - especially in less than prosperous areas - these requirements for hiring employees can be quite daunting. However - much as the perspective of the Project Syndicate authors - policy makers tend to legislate with mostly prosperous regions and businesses in mind. This common mindset only sets up even more difficult circumstance for business formation, overall. It's too easy to forget that when small businesses suffer, individuals just like the rest of us lose their personal means of support - and security - in the process.

A new form of corporate structure is needed, to assist workers and business owners alike who are willing to pursue new entrepreneurial strategies. While local corporations would protect owners, they would also provide mutual support systems for those who actively participate, both as consumers and producers. However, means of support would be internally based on local resources, rather than driven by expectations of external wealth which exists elsewhere.

Local business formation would be structured to take into account, that alternative equilibrium formation lacks access to international monetary flows. Those additional flows determine many of the patterns, by which physical and intellectual environments are shaped in general equilibrium. While local corporations would share some functions of today's gig economies, the digital and coordinating aspects of the latter nonetheless serve mostly as a starting point.

Consider these features for local corporate structure, which could approach social contracts more directly:

Ownership as a soft tangible asset. In other words, ownership is structured through simpler means - so as to foster the greatest degree of local economic diversity possible. Each community would define a simple but effective production/consumption base, which participants can fall back on whenever personal efforts fall short of success. Communities would generate a unique environment, through a set of base preferences which are determined by citizens at the outset. These are in turn backed with monetary and time based commitments. Participants would hold flexible ownership options in all phases of the resulting operation. Ownership would be a gradual and incremental process, so that loans (now difficult for lower income levels in the US) would not be necessary.

Services coordination as a memory creating system. Even though digital platforms can assist local coordination patterns for skills/time in an immediate sense, the system is also structured for medium and long term educational considerations in this regard. Knowledge use in alternative equilibrium would be applicable across time, based on both earlier contributions and that of society at large, in a commonly held pool. Even though common knowledge functionality exists in general equilibrium, much of it lies buried in institutional structures, which are not able to give many valuable options sufficient consideration. Without a marketplace for time value, there's not enough economic "room" to do so.

Services coordination as time backed social security. One reason that service obligations present such a financial burden for today's corporations, is the fact that these markets have been generated inefficiently. Internally generated services structures are at the heart of long term security needs, and knowledge use systems could eventually help to relieve some of the larger societal imbalance. Only consider how many of the requirements in the above mentioned "social contract", have hindered small business formation in general equilibrium. Small wonder that the gig economy first emerged without them.

Local Economic Diversity: Worth Preserving

Often, one thinks of entrepreneurship in a broad context of national - or international enterprise. However, if there are few local opportunities for small scale arbitrage, what happens to economic and social conditions at local levels? Does any real marketplace exist, in many places where voters nonetheless go to the polls? How - in turn - does that affect the ways people choose to vote, given their levels of dependence on government provided services? These are questions which deserve some consideration.

Centralized "efficiencies" play a role, in what has been inadvertently left out of the equation. Many organizational patterns respond well, to the global arbitrage which generates high incomes and profits. However, this holds true for tradable goods to a greater degree, than for non tradable sectors. Not only are non tradable sectors best suited for local production and consumption, they either do not benefit from economies of scale (time based services) or else the economies of scale which would provide real benefit have not yet been applied (housing).

Too often, the services sectors mimicked the efficiencies of tradable sectors, but without the same marketplace results, unless the intended product existed separately from time value (restaurants). While a lean workforce generally means broad product representation for tradable goods, broad workforce representation is needed for the services goods which deserve to be a part of everyday and local life. Even though it is not possible to generate a full range services marketplace in any traditional sense, symmetric coordination could assist the process when the redistribution of arbitraged profit is not enough.

Plus, the desire of many individuals to generate unique product settings has scarcely been tapped. These possibilities go well beyond the services product which is possible in prosperous regions and the international stage. With local corporations to assist the process, individual platforms would also mean income potential beyond a compensated wage base.

Even though few gave it much consideration when local business people largely disappeared (particularly in retail), their creativity and drive to generate unique environments has been missed. Local corporations would experiment with infrastructure which allows entrepreneurs to operate with less overhead than cities generally require. Finding ways for this to happen, would mean greater economic diversity, as well. Consider how the voluntary nature of economic interaction matters at a personal level. Even those who do not flourish in unstructured social settings, are able to become more social when they have economically definitive means to do so. People need the freedom locally, to work with commodities, goods, ideas and resources which could transform what has been real limitations in the non tradable sectors.

Local corporations - instead of existing in competition with other corporations - would represent places where individuals and groups alike would be "in competition" with their own previous achievements and efforts. This is an attribute which symmetric time coordination makes possible. These corporations would assist participants in their attempts to generate the voluntary associations which individuals are most comfortable with. The ability to personally negotiate for time based product, would allow individuals to discover forms of reciprocity which are not always possible in present day institutional environments. Any ability to be a part of active negotiation in one's work environment, also translates into better relationships with family as well.

Participants would eventually create personal "platforms" which consist of a mix of time based services, and product which may exist in relation to service offerings. This involves a gradual "processing" of life lessons, practical knowledge, specific skills sets, organizational capacity, ideas, and other resources. Such platforms would often be experiential in nature. Each individual would contribute a certain amount of personal time and attention to others, in regard to the challenges they seek out on their own.

The problem now is that society expects to find platforms for services production in highly specific configurations. Often, it is assumed that recipients can't contribute - even though most time based activities are multi dimensional forms of interaction. Hence existing services rigidities have stood in the way of optimal knowledge use and adaptation for relevant circumstance.

One task for the local corporation, would be to assist in the coordination of configurations which work for local citizens. By combining a full range of economic activity, it becomes easier to maintain the links between personal expression and workplace presentation. This process would create a template for entrepreneurial services formation, as well. A combination of geographic issues and workplace rigidities, has been partly responsible for the fact that individuals of normal working age have been less inclined to remain in the workplace. By providing more workplace options and eliminating the need for long commutes, there's a good chance that many who abandoned the workplace prematurely (or never took part) would be tempted to try again.

Time Value as Defined Product

Even though time value remains a sought after (defined) product in many instances, much of the time value which represents broad income aggregates, is presently undefined. In the twentieth century, time value became somewhat murky in terms of contribution to product definition and compensation patterns. While divisions of labor meant productivity gains for non tradable goods, labor divisions for services formation did not always benefit from the same dynamic.

Services product which relies on time value, is radically different from the product of traditional manufacture. The experiential good of time based product, is easier to capture through horizontal (direct or person to person) alignment. Just the same, the services organizations which represent time based product, have utilized the hierarchical patterns of traditional manufacture - in spite of the productivity and marketplace losses which have resulted. Instead of a thriving knowledge use marketplace for entrepreneurs (particularly healthcare and education), today's services formations are now caught in a painful scaling back process.

As Arnold Kling and others have noted, time value as undefined product also exists in the form of organizational capital. This form of time value particularly reflects organization - or coordination - from a top down perspective. In many firms, one's time value ultimately contributes to product definition which exists well beyond one's input. According to Arnold Kling:

In an Alchian-Demsetz firm, marginal product is not defined. Think of a business that has exactly one full-time tax accountant (TA). In a sense, the marginal product of the TA is zero, since the TA contributes zero output. On the other hand, the tasks performed by the TA have tremendous value...We do not produce output. We produce organizational capital. So most of us have undefined marginal product.

How might one's time value consist of defined product, instead? It depends on whether given knowledge or skills sets are capable of meeting the consumer's request, without intermediary assistance. As intermediaries, many firms arbitrage time value on behalf of employees who accept partial compensation. While time value still directly contributes to output in some instances, hierarchical structures can have high transaction costs for both employers and employees, when services are the output. Corporate structures are needed which make it easier for individuals to contribute to output - both as providers and recipients.

New corporate structures could do so by creating a local marketplace for services entrepreneurs. In hierarchical services structures, compensation for hours worked represents an expense to the firm. Monetary compensation would proceed differently, in the time arbitrage of knowledge use systems. When service product is defined and reciprocated in the same time/group setting, time value becomes a new resource, made available for mutual gain on the part of everyone involved. Coordinated services formation can allow the rediscovery, of time value as defined product.

How Does Diversity Matter?

"Desirable" circumstance in terms of diversity, can be confusing. For instance, consider how diversity exists in nature. In natural landscapes, one often finds groupings of flora and fauna in symbiotic relation with other groupings, rather than different kinds of plant life totally interspersed with one another. Integration efforts mostly attempt the latter. How can recognizable diversity even continue to exist, if one's goal is to completely mix "contents" so that few remaining characteristics stand out? When governments and special interests reach for homogenized sameness in the marketplace, that sameness can either lull the mind into unthinking oblivion, or create needless struggle over defined outcomes.

Wouldn't it be better to encourage symbiotic economic relationships between diverse groupings, instead of struggling over differences? If regulations were envisioned as subsets - meant to generate gateways for multiple group options and capacities - life would be more interesting, and meaningful as well. Why not allow a thousand life options to bloom? One size fits all laws and regulations are turning much of what was supposed to be representative democracy, into forced compromise which feels appropriate to no one.

Decades earlier, I took part in library programs which also sought to assist local minority groups. Fortunately for those of us who were involved, many individuals who benefited from these programs provided helpful feedback. While participants voiced their appreciation for our help, something else gradually became apparent. They wanted to maintain a unique status as individual groups, without complete assimilation into organizational patterns which were not quite their own.

Plus, these individuals wanted to be able to reach out to other groups based on positions of strength. Doing so would mean maintaining both a distinct identity, as well as personal integrity. How might such perfectly natural desires be honored on a wider scale? I've been reluctant to write about diversity, and have already tossed out several related posts in recent months. However, due to a discouraging take on diversity in a recent Atlantic article, I decided to try again with this one. In "The Weakening Definition of Diversity", Gillian White begins:

What qualifies as a "diverse" workplace? Does it mean that employees are of a variety of different races and genders? Or does it mean they've had a variety of life experiences? Millennials seem to be tilting toward that latter, more easily attainable vision.

What's wrong with that millennial "version", for Pete's sake? In terms of personal and economic potential, I would certainly hope this evolving definition of diversity could be the stronger one, in spite of the author's reservations. More economic inclusion is certainly needed. But the way to greater inclusion is to make certain that real economic growth and economic access remain possible for everyone.

How to think about diversity from a knowledge use system perspective? The use of local time aggregates would allow individuals to coordinate for basic work and study needs, while gradually progressing towards discretionary preferences. At a young age, basic education provides a "trunk" or grounding point. From there, students can choose among the "branches" which local educational entrepreneurs (from all walks of life) would be able to offer.

The entrepreneurial assisting/learning method would also mean no more struggles as to what "should" be taught in school settings, and no more needing to be in the "right" schools to gain a good education. Local citizens would be able to make new educational choices on a regular basis, and also have the option of seeking out entrepreneurs from other knowledge use system settings.

Services options in particular, have been seriously hampered by differences in cultural interpretation. Some laws now coming on the books, are of a nature that the lives of millions should no longer be subjected to the opinions of special interests. By internalizing services formation and knowledge use, it would be possible for local groups to exercise more direct forms of democracy, by providing and voting for the services which matter most to them. Again, the use of coordinated time aggregates can go a long way, to provide the kinds of services which different groups find most important.

Something to remember: when services can be arbitraged internally alongside local production, there would not be a remaining budget burden for local groupings in relation to the larger (national) whole. The services coordination of local knowledge use systems would not make additional fiscal demands on the larger system, and these local arrangements would be created through monetary means. As a result, even highly diverse outcomes in terms of services formation, would not present fiscal problems for governments at any level. A thousand different visions for diversity, could overcome limited definitions which do little justice to diversity in the present.

Zero Marginal Productivity? Not So Fast

Tyler Cowen recently linked to a post from Arnold Kling on self-control and unemployment, with the phrase "Evidence for ZMP labor". But how true is that, really? Even though zero marginal productivity discussions have mostly run their course at Marginal Revolution, commenters at Kling's blog were willing to consider a number of interesting aspects regarding self control in the workplace. As one observer noted, truly successful people aren't easily "bossed" by others. I would add that individuals who have otherwise "made a difference" can easily be categorized thus. Another commenter, who appreciated the access to some basic services from the self employed, said "It takes all kinds".

Indeed, individuals who sometimes have difficulty following orders, also tend to be more willing to accept risks in general. Sometimes risk taking pays well, other times...not so much. As a result, people with "overly strong wills" can easily fall on opposite ends of the income spectrum. Does this mean that more willing middle class "followers" automatically exercise more restraint? Not necessarily. For one thing, are they being asked to do so? Much depends on the trust, that employers have regarding the degree of autonomy they are willing to assign to specific individuals.

Employees of middle class status may also chafe at workplace expectations, but are more willing to follow the lead of others when the reward includes financial stability. In spite of all this, think about the expectations of the workplace. The real problem expressing what is "desired" on the part of employees, is precisely the kind of workplace which is slowly becoming more difficult to sustain in the 21st century. In other words, "strong" wills and ability to lead have more potential to provide economic stability in the near future, than is now realized. Yet this reasoning is counterintuitive, to social expectations that continue to reflect the realities of 20th century institutional needs.

Hence it's time to give the reasoning for so called ZMP designations a second look. How does it make sense to imply that many do not fit the needs of today's institutions, when today's institutions are no longer capable of meeting the needs of individuals? If anyone needs proof that populations are not convinced as to economic stability in the near future, one need look no further than the implications of movies such as The Hunger Games. If these kinds of extremely negative visions are to be overcome, individuals will need the chance to become entrepreneurs - entrepreneurs who are firmly in charge of their own potential time use capacity.

Much about the near future, depends on how product comes to be defined, in terms of time use and time value. Arbitrage structures as a whole are rapidly changing, and one indication of this process are the increasingly intangible components of capital. The meaning of capital will need to be reconsidered in the years ahead. What's more, active - as opposed to passive - components of economic activity, will need better representation in GDP measures.

Individuals will also need a chance to be able to relate to one another on more meaningful and civil terms, if the positive economic complexity of the present is to remain stable. With a marketplace for time value, zero marginal productivity will no longer be a valid concept. That single fact could go a long way, to assist other social issues which now appear to be insurmountable. With a little luck, many of the social and economic uncertainties of the present could still be overcome.

Needed: A Vital and Inclusive Marketplace

When it comes to work flows, income streams and investment - everything about the surrounding environment matters. But how can time use and resource options generate anything resembling a "reliable" salary? Today, dependable salaries tend to be the result of either government favors or perhaps the "right" location for private interests. Are market participants generating reliable income streams simply because others have been excluded? Are there ways to generate reliable income that does not depend on special favors or legislative willpower? The marketplace needs to find out.

Arbitrage possibilities in one's environment are not as easy or "automatic" as they might appear - especially now. Even so, arbitrarily imposed wages continue to reduce marketplace potential. There needs to be fewer judgement calls and morality plays, and more serious inquiry which allows everyone to thrive by purposeful economic activity.

Difficult though it sometimes was, I am grateful for the experience of self employment - particularly the years as a bookseller which taught me how fragile income streams could be. My last bookstore location closed in the year that the above linked Borderlands Books opened. Even though I hated giving up the perks of professional healthcare and vacations, self employment was very empowering. But it didn't take many years to realize that populations as a whole, need to work together more closely for the marketplace formations which hold personal meaning. How many such as myself finally "let go", when they want nothing more than to remain economically connected with others in their own midst?

Many small business owners attempt to keep their doors open as long as possible, whether or not profit is even part of the equation. After closing that door for the last time, one's identity is often not quite the same. The fact that many businesses can't even afford to pay employees enough to maintain a reliable car should give lawmakers pause...but does it??

Instead of seeking out ever more business income from the pockets where it still exists, governments need to make certain that as much business income exists in aggregate as possible. National government is starting to look like many Main Streets where a couple of business thrive while others die on the vine. Neither governments or populations benefit in the long run, from allowing business and services formations to refuse access and participation to others. The actual monetary and resource needs of local workplaces deserve a lot more research and attention than they are getting. Why haven't economics departments already paired up with local communities to make certain Main Streets do not die? Why haven't economics departments stressed the importance to the public of making certain they are monetarily represented in the marketplace?

Even if I had an economics degree, or the kind of job many economists gain, neither would address these concerns in the ways they need to be dealt with. How can economics aspire to the level of real science with meaningful models if it is not willing to work with real life applications in developed nations? If today's economics departments were already reaching out to the public to make certain long term growth is not lost, I probably would not have allowed these concerns to take over my daily existence. As it is, those who have personally known me, remained befuddled by what has become my life's challenge.

Granted, some funding efforts now seek to address these issues, particularly monetary concerns. But how much funding exists for local economic stability? Some private funding sources perpetuate surface level arguments which are intended to sway public opinion. Unfortunately, this process doesn't capture what is actually at stake. Nor is leaving economic outcomes to political parties, a strategy for long term growth.

It's far too easy to highlight prosperous businesses as somehow representative of the whole, especially when political leaders are anxious to emphasize economic gains. But not all monetary flows are the same, and most are but a trickle of the ones which the media generally covers. As a result, stringent rules and guidelines end up applied to the "winners", which only makes it more difficult for anyone else to approach the game board. Instead of concern for the marginalized, either "glory" or wrath is expounded on the winners. One ends up with a partial marketplace which is either exonerated or smugly dismissed. As to the latter, here's Hyman Minsky, on page 101 of "Stabilizing an Unstable Economy" (1986):

A fundamental question that economic policy analysis must confront is whether, and over what domain, market processes can be relied upon to achieve a satisfactory economic performance. The general view sustained by the following analysis is that while the market mechanism is a good enough device for making social decisions about unimportant matters such as the mix of colors in the production of frocks, the length of skirts, or the flavors of ice cream, it cannot and should not be relied upon for important, big matters such as the distribution of income, the maintenance of economic stability, the capital development of the economy, and the education and training of the young.

At the end of the day, the real battles for life and work are not about the false choices of capitalism or government, even though it seems that way to many in major cities who have known stable incomes through adult life. Rather, economic battles are about individuals, who not only want but need to manage and arbitrage the resources in their own environments, if they are to survive and remain responsible. Too few in power at any level realize this. Consequently, doors are still being slammed shut to economic access, in every way imaginable. Anyone who lives in small towns, rural areas, city and suburban areas in decline, knows that good government and special (private) interest jobs are reserved for the fortunate and lucky few. What is everyone else expected to do??

There's a lot of hubris in governments which rely on the marketplace for their own wealth, but skew the workplace so that those with limited means no longer have a chance to prosper. Then policy makers turn around and claim that problems are simply the fault of the marketplace! If Mister Minsky had to spend a day in the life of someone happy to pay the months' bills from the arbitrage of self employment, one would hope he might have realized just how arrogant his quote sounds, even thirty years after the fact. I hope I can get through the rest of his book without too many more rants like this one.

Economies become stable when struggling businesses have a chance at success. Economies become stable when money is allowed to represent the people who are trying their level best to carve out some form of economic access. Financial concerns need to recognize that they exist purely because of the efforts of a striving public, not the other way around. Financial concerns need to be responsive to real life economic scenarios, not the other way around.

Competition in Two Dimensions

There is asymmetric competition which defines infrastructure formation, alongside the vital (more) symmetric competition which is needed to fill in patterns at local levels. When local economies provide symmetric competition, this "branching out" readily supplants social and familial dysfunction, which would otherwise fill in the gaps. Entrepreneurs across these dimensions are not always as dissimilar as it may first appear. Both need a chance to create producer and consumer choice in multiple settings, but all too often this does not happen.

Presently, a lot of unnecessary confusion exists, as to how competition plays out and even whether competition is desirable. In particular, it is misleading and unhelpful to argue against competition as a given fact of life. Doing so also generates further competition gridlock. After all, this most basic human function serves multiple purposes for all concerned, which also greatly depend on context.

What matters is whether pathways remain open, so that all individuals - with a little luck - can hope to find means to thrive. Even though the best means present real challenge; at the same time, survival needs to remain a doable option. Today, too many pathways for both survival and challenge remain blocked. What's more, it is not well understood how those missing pathways are affecting other activity formations. Should competitive patterns become recognized for their potential contributions in both dimensions, both tradable and non tradable goods production could find better balance, as a result.

Symmetric competition - given the right conditions - can be relatively benign. Much of what would be classified this way, simply wants to exist alongside other local competition. Think food trucks in a city with restaurants, for instance. Even though food truck overhead is less than restaurant overhead, their presence encourages locals to step out and sample more food environments away from home. Everyone benefits from greater product availability. Benign competition particularly represents greater strength through local economic diversity.

However, dynamic competition can sometimes disrupt multiple access patterns. Often, dynamic competition occurs with at least some degree of new infrastructure definition, both in social and environmental terms. Displacement is partly a result of operational differences in both costs and resource use, which result in substantial asymmetric shifts. Many productivity gains can also be found here, for this is the competition which often makes a broader marketplace possible. Of course, these are qualities which local economies discourage, in that some infrastructure or product formation cannot readily coexist in the same environment. For one thing, earlier product formation may include sunk costs which are held across multiple generations and investment strategies.

For example, even though the concept of time arbitrage is benign in terms of local symmetry (equal time use settings), it is dynamic (disruptive) in terms of presenting a fuller marketplace for services than is otherwise possible. To a degree, this presents a threat to services which are based on limiting knowledge use to a fraction of aggregate skills potential. Also, there is the paradox of increased productivity by increasing time use aggregates, instead of the compensated skills use limitations which services now rely upon.

Granted, time arbitrage is capable of increasing compensated labor force participation aggregates in association with product. This is a better approach than compensating individuals who are supposedly not "needed" in the marketplace, so that skills atrophy need not occur. Time arbitrage also provides gains through greater productivity definition, because time coordination increases measurement capacity and provides a complete marketplace for services product. In particular, time arbitrage would utilize building component innovation (strong and light materials, multiple use environment) so as to reduce overhead, particularly for local services formation.

Disruptive competition (as presently exists) represents not only a threat to existing equilibrium, but is often a source of tremendous profit to innovators when disruption succeeds. Progressives and conservatives alike have been increasingly skeptical about these forms of competitive growth, as compared to the status quo. Their reluctance has contributed to a growing shift by central bankers towards already existing assets and capital holdings, rather than dynamic time aggregate representation.

Perhaps most important is that - other than information technology - system wide innovation has almost been completely quashed in non tradable local sectors of education, healthcare and housing. Even the innovative gains of healthcare - limited as they are to institutional settings - hardly seem to gain more than a mention in conferences on economic growth. And that, in spite of widespread prominence for Wall Street profits! Even though education has hints of disruptive IT elements on the horizon, there is no general equilibrium circumstance which would (yet, anyway) allow that disruption to take place.

One could argue: that is okay for the meantime...at least. Why? Only look at the marginal disruption an IT sharing economy poses to local transportation and hospitality systems, to glimpse what is at stake. In other words, the far more disruptive innovations of production reform in services and building components, need small scale experimentation as a starting point. Here, relatively complete forms of wealth generation and services dispersal, could gradually be discovered.

Hence some forms of disruptive (i.e. innovative) competition could be reserved for new communities that are not tied to preexisting zoning and regulatory environments. In a larger sense, local disruptive innovation could gradually be allowed to spread across regions, so long as these local economies are not in any way dependent on today's already maxed out services systems.

As such, some of these local economies might also provide points of entry for immigrants, who are willing to play active roles regarding inclusive services provision. The U.S. in particular has an incredible amount of land which remains open to this possibility. The fact that a broad innovation dynamic remains difficult in primary equilibrium, is hinted at in a recent post from Tyler Cowen, "How Technology Might Someday Fight Income Inequality".

What about communities which desire and need growth, but remain tied to primary equilibrium in ways that are difficult to disrupt through primary innovation? Here, competition and inclusion (in the meantime) could focus on broader Main Street offerings in tradable goods. Where social and physical infrastructure can't be changed, a stronger focus on benign or symmetrical marketplace elements would still do a world of good. Even though it may not be possible to extend permanent circumstance for lower overhead costs, ongoing offerings in this regard could still improve the overall economic environment.

Notes on Economic Platform Potential

Since Jean Tirole took the recent Nobel prize for economics, I've been musing over unexplored possibilities for platform concepts. As Vox noted (Yglesias), one of the more important papers for Tirole is in regard to the two sided marketplace of platform competition. Much of today's platforms exist for digital and far flung markets. But what about sparse economic activity in general, at too many local levels? One way to think about platform potential, is in terms of knowledge use systems and time use aggregates. To what degree could multi-use platforms improve - and transform - local government, citizen and marketplace functions?

Done right, platforms could increase production and competition along a wider scale They would allow more precise frameworks for resource capacities, which would also increase the velocity of transactions that occur among populations. One could also think of this as microeconomic attention to aggregates which further leads to macroeconomic gains - a link which could be encouraged by monetary policy. One reason local knowledge use platforms are needed to assist governments and central banks: all too often, it is difficult for either monetary or fiscal policy to adequately reach economic conditions in underdeveloped areas*.

Multi use platforms (which include both production and services) could provide greater labor force participation, particularly in regions where complexity in economic environments is lacking. Domestic summits would provide means for exploring underutilized resources which would benefit from new adaptations. Local economic platforms are also needed to break up some of the polarities which are increasing between urban and rural populations: polarities which only serve to make political conditions more problematic than they already are.

Not every present day platform is helpful or "complete" in the sense of transaction potential. When do platforms limit economic participation? To a degree this is true of the Amazon platform for books, which because of the marketplace it serves, generates scale factors which can sometimes discourage authors and economic activity (particularly dispersed bookstores) at the margins. This may not be so much Amazon's fault, as it is a paucity of local platforms for diverse low risk competition.

While transaction limitations re Amazon may seem counterintuitive in that one can order books from wherever they are, one problem is a lack of sufficient incentive. That is particularly the case in areas which already have limited economic activity. Many books - particularly those with high value - serve highly specific purposes. Yet one may not be inspired to buy books that would personally matter, unless friends speak of them, or they are discovered on bookstore shelves.

Some centrally designed platforms do not always come into contact with the ongoing patterns of our lives. As such, they may tend to capture already existing markets, rather than expand market growth. There are many competing interests for one's time (and purposes), which don't link up well to other time commitments. Still, the obligations one already has are not always optimal. Only consider the platform of LinkedIn, which has more social than economic value. A good economic platform is one in which - because of the correlated resource paths it delineates, makes it worthwhile to commit to time use which adds further depth.

In fairness I want to note that bookstore loss (or author market share in general) isn't just problematic in the sense of present day Amazon dominance. Knowledge use environments had begun to centralize, long before their platform came along. As to the "helpfulness" of good non fiction, individuals had knowledge use limitations in local settings, unless they were employed in high skill occupations.

What's more, even gainful employment could still mean "bare bones" knowledge use applicability. It is in the context of (hopeful) wider knowledge use at local levels that I hope for a resurgence of the bookstores which once dotted the landscape. Despite a present day lack of belief in books, they were the best representation of full scale entrepreneurial knowledge product the world has even known. Most schools are but a bare whisper of this wealth. Only consider that a resurgence in bookstores would assist real transaction gains in time use - i.e. the growing "manufacture" of human capital.

One aspect of platforms is the degree to which they are able to connect disparate elements to central infrastructure components. A good example involves decision making processes on the part of domestic summits for walkable communities. The walkable transportation component would be central. Hence other resource options would factor for it, in terms of time use coordination aggregates and density considerations.

Preexisting economies of scale need to be considered. Are economic platforms set up to enable a region or area to generate more transaction potential? If so, the proposed infrastructure seeks to make it easier for local competition which would like to remain in competition with one another. What's more, this is a kind of competition which provides tremendous benefit for consumers and locals. This is not the negative "bicycle with training wheels" interpretation of entrepreneurship that some imagine. After all, this form of business longevity comes not by government's bequest ("beneficial" regulation that excludes others) but instead exists on everyone's behalf - i.e. beneficial regulation patterns that include others.

The distinction matters, in that many larger platform formats end up as monopoly defaults by which all players are then expected to comply with. The monotony of monopoly! Whereas some participants wish to compete on terms in which creative destruction is not just about knocking down competition levels. While this involves settings of - say - either business people or teachers who appear to desire low risk environments, that doesn't mean these individuals don't want to explore or take chances. They just don't want to fail every time they try to do so. Fortunately, entrepreneurs are not the only ones who create platforms, by any means. And sometimes, platforms need to be built for entrepreneurs to generate economic growth.

After years in both employed and self employed settings, a few words about the desire for risk. Much of this comes down to factors which include the desire for challenge in one's workplace, whether that challenge is already being met, and the degree to which one might be compelled to shift from an inadequate setting. How those factors interact has considerable bearing on the risk any individual may take over the course of a lifetime. Some of us still desire to take on risk when life suggests we slow down, just the same! Suffice to say that thinking about platforms is interesting.


*Regarding underdeveloped areas of the U.S., I don't mean in the sense of rural areas not being "rural" anymore. Rather, they could further evolve greater (lifelong) economic depth which would embrace local knowledge use and services. That would provide balance for local tax burdens and obligations - particularly in today's local school environments. Graduation often means being cut off from daily routines and local activities, with little else meaningful to take their place. Even as school cultures dominate many of these small town environments (education monopoly), too many of the resources they demand never effectively benefit the student's life, afterward. That can be a long term problem not just for individuals but also the sustainability of communities in general.