Supply and Demand is Vital for Economic Time Use

Despite the fact we often try to disassociate our private lives from economic activity in general, much of our identity - not to mention self respect - results from how effectively we manage our time with others. And let's face it: much of this time management tends to occur on market based terms. Equally important, is that we live in an era when economic time factors into countless personal interactions in the circumstance in our lives. 

How might one think about this? Since people routinely seek to take part in supply and demand for mutual time priorities, life becomes difficult for those who essentially find themselves excluded from the process. Nevertheless, many institutions have reduced the degree to which most individuals are able to effectively manage competing time demands. Even though higher income levels can still hire others for time based services, most income groups lack this luxury. What's needed now is innovation which leads to freer markets, for the supply and demand of mutual time based services preferences. 

Markets for time value would benefit from a focus on local time/space coordination, in the provision of services both basic and experiential in nature. For instance, how might greater autonomy be preserved for all participants? Only consider the preferences often expressed by senior citizens who occasionally need personalized attention, but otherwise would benefit from simpler physical environments so as to remain responsible for other aspects of their lives. Indeed, elder citizens sometimes opt to choose assistance from strangers (or even robots) over family, if they are concerned about loss of autonomy and consequently, self respect.

During the twentieth century, many institutions "professionalized" to such a extent that societies could scarcely tap into the potential which all citizens hold for mutual assistance. Alas, formal schooling became the main setting where students deemed to be "responsible" enough for future meaningful employment, were separated from everyone else. How can societies maintain viability for the long term, if a core of 25 percent (core employment with benefits) is expected to somehow "take care" of the near 75 percent who end up on the short end of the social equation? Small wonder that many citizens have taken to daydreaming about somehow returning to a previous "golden age" of manufacturing work with ample pay and benefits.

In all of this, we've also lost perspective as to the kinds of mutual time preferences individuals would prefer, if given the chance. Indeed, the present dearth of settings where personal priorities are expressed and taken into account, has impacted our personal relationships as well. Clearly, people are happiest when they have real choices in the the nature and frequency of their personal interactions. This is true not only for people of normal working age, but also for young and old. Without those choices, many of us gradually forget how to even interact "normally" with others. Perhaps in the near future, we can better adapt market freedoms toward the supply and demand of personal preferences and priorities in our lives. It's certainly not too late to get started.

Notes on Practical and Experiential Wealth

Ultimately, the pandemic may encourage us to think differently, about the activities we associate with either practical or experiential wealth. For instance, it certainly didn't take long to discover - in the initial rush to social distance - that defining "important" versus "unimportant" business activities was no simple task. What further complicates the present crisis, especially in terms of possible wealth loss, is the extent to which the crisis includes both practical and experiential aspects of our economic lives.

For many of us in the past month or so (here in the U.S.), cabin fever set in almost as quickly as the decision to self quarantine. As it turns out, it is the rare person who doesn't crave novel experiences on a routine basis! Many learn - especially in later years - to make up for lack of travel opportunities via the interesting "escapes" of books, movies, music and more. Still, there are moments when nothing really substitutes for getting outside and experiencing the world in the company of friends, extended family and others.

Part of what sets this period apart from earlier pandemics, is how much of our economy has evolved away from practical consumption to many activities that scarcely seem practical at all, whether or not we happen to deem them emotional "necessities". When economic life was largely centered around goods rather than services, that earlier tradable sector dominance must have also made it simpler, to financially manage the economic disturbances brought about by pandemic circumstance.

By way of example, Ian Stewart recently noted how "The impact of this crisis will be as much on intangible capital as physical assets." Alas, it may take a while before we discover whether this crisis impacts how highly invested human capital is monetarily valued. Should considerable wealth be lost, that missing income potential would likely reduce the appetite for risk - especially considering the present requirements of capital risk in our physical environments.

Some wealth losses could be averted, should we elect to structure ownership potential in more incremental and flexible ways. Some of today's regulatory requirements could be amended via settings which allow simpler forms of physical infrastructure, for both living and working needs. Simpler ownership structures would maintain countless delicate webs of valuable human connections, even when those connections can't be as compensated as fully as before. As a society, we could try to ensure that valuable risk taking isn't lost, but instead transformed in easier to manage components than what are often deemed necessary in the present.

Even before the pandemic, we were already questioning the broader societal context of our educational systems. Where are the most meaningful experiences in these learning processes? What is the real difference between practical or experiential education, in an economic sense?

Learning is all the more complex, since it tends to include practical and experiential elements. Already, online learning appears to be more useful in terms of practical settings which can readily be managed by the individual. On the other hand, the most highly motivated learning often occurs when people get the chance to forge strong personal connections with others. If nothing else, temporary mandated closings of schools and colleges alike, might speed up societal incentive to generate more face to face interaction between people, wherever it is possible to do so. After all, the services generation which societies value most, tend to be of this nature.

How might technology lend support to a future capable of preserving experiential wealth? Roger Bootle believes the pandemic will encourage additional automation and use of robots, particularly for tasks which have been interrupted by social distancing. Nevertheless, he continues to hold confidence in new avenues for employment potential:

I draw comfort from human beings' need for other human beings. There's one thing that robots and AI will never be able to be better at than other human beings: being human. I think we are going to want to interact with other human beings in our work life and in our leisure life, and that's going to create demand for all sorts of new jobs.

When thinking about technological gains at a grassroots level, consider how near future tech could augment not just consumption potential for individuals, but production potential. The difference is crucial, and it matters for anyone who would assist others, yet needs additional tech support to augment their own skill and level of applied knowledge potential. Consider how technology could free individuals, it it assumes the practical tasks, while making room for individuals to exercise their own initiative in the experiential wealth they seek to share with others.

Humanities Could Become a Less Risky Investment

Why do humanities studies get such a bad rap as a formal educational goal? After all, humanities studies contain vast representations of what is rightly considered the progress of civilization. However, the fact more individuals seek work in these areas than is actually available, generates plenty of skepticism re present system costs for this form of human capital investment.

How did the pursuit of a wide array of intellectual challenges, became so misaligned with our economic realities? It wasn't always this way. During the centuries when tradable sector activities were the dominant employment opportunities, humanities students - especially in developed nations - could generally find work in areas not related to their studies. For a long time, one could often reconcile their natural tendencies with the kinds of work that were actually on offer.

For instance, my father's bachelor's degree in English (after WWII), which meant far more to him personally than to the marketplace, didn't reduce the practicality of the carpenter's skills he employed in petroleum refining, afterward. Today, however, human capital investment in humanities is far more chancy, especially since most corporations rely on more specific skills than what my father utilized. As much as I wanted to complete a bachelor's degree in music: After the problematic logistics of an hours long campus commute, and a series of financial setbacks, I finally realized degree completion would have meant more to me personally, than what the less signal driven marketplace of the seventies actually required.

Can humanities studies be salvaged as a form of valid human capital investment? These studies not only represent civilizational progress, they impart valued qualities to the (human capital) production and consumption of societal discourse. However, if humanities studies are to be preserved and actively maintained during periods of economic stagnation, they'll need viable economic platforms which address the risks of human capital investment, while simultaneously preserving the tremendous value of personal intellectual challenges. In a chapter on investment in Basic Economics (Fifth Edition) Thomas Sowell writes:

If the return on investment is not enough to make it worthwhile, fewer people will make that particular investment in the future, and future consumers will therefore be denied the use of the goods and services that would otherwise have been produced. No one is under any obligation to make all investments pay off, and to what extent is determined by how many consumers value the benefits of other people's investments, and to what extent.

We are particularly concerned about humanities as a more viable form of human capital, of which Sowell notes:

While human capital can take many forms, there is a tendency of some to equate it with formal education. However, not only may many other valuable forms of human capital be overlooked this way, the value of formal schooling may be exaggerated and its counterproductive consequences not understood...From an economic standpoint, some education has no value and some can even have a negative value.

Yikes. Let's briefly consider why humanities studies nonetheless contributed to broad employment opportunities for decades, in the U.S. After WWII, most regions were experiencing productive economic gains via the widespread dispersal of tradable sector activity. Consequently (until more recently), standards of living rose all across the country. Another aspect of humanities studies as a strong secondary (revenue dependent) marketplace, was the nature of a financial system which worked as a reliable transmission mechanism from points of wealth origin, to the active circulation of strong service sector activity.

Of course, today these circumstance are changing, especially as monetary transmission is becoming more closely aligned with other vital aspects of the economy. Again, it helps to reflect on what's at stake. We know that we assign real value to both humanities production and consumption. What might be done about the fact humanities studies as human capital investment, lack viable economic value?

It's possible to assign formal economic value, to a broader dispersal of informal learning processes. Fortunately, many communities could make the production of humanities a more integral part of their economic activity, via the direct wealth creating processes of time arbitrage. Formal means of mutual engagement in these activities, would generate mutually shared costs which don't pose high risks for the personal time and resources involved. Time arbitrage would provide means to connect humanities studies to wealth creation, thereby greatly reducing the costs of human capital investment.

The direct services input to output relationship of time arbitrage, could transform personal commitments to humanities studies. Like minded individuals would take part in endeavour which - while also experiential in nature - has the imminently pragmatic component of natural personal inclination. Commodification of time, via measured time units, would create a value in use function for human discourse which can be readily distinguished from the uncertainties of humanities value in exchange, given the latter's inevitable "inequality" of globally aligned compensation.

Educationally oriented time units as mutually compensated activity, could greatly reduce the risks involved in a diverse range of human capital investment. Thankfully, it's not necessary to diminish human capital as a formal investment option. By realigning skills acquisition to wealth creation patterns, our time value could ultimately assume a central role, in the organizational processes of knowledge use.

Wealth Makes More Sense When It's Quantifiable

Initially, this post began with thoughts I wanted to explore, re the quantification for time value via a complete and measurable loop of activity. However I was pleasantly surprised when Scott Sumner wrote an Econlog post, "Non Materialistic Millennials and the Great Stagnation", which highlighted the truly quantifiable wealth of (seemingly) "missing stuff". All that stuff made quite a difference in the lives of Baby Boomers! And his post PS was intriguing:

This might be a stretch, but is the Trump phenomenon at some deep level a longing for the old stuff-oriented economy? And is Hillary the "services" candidate?

Why do services register so differently in our minds, as a form of product? Even though we occasionally value experiential components as a part of the package, those qualities don't necessarily hold substantial monetary value or "worldly" worth. Nonetheless, both services production and consumption are closely related to supposed levels of intelligence or skill - not to mention the level of economic access which skills can also impart.

While economic access is more necessary than ever, all those earlier associations with physical stuff not only felt more natural, they were a lot more fun. While I scoffed along with other Baby Boomers when Madonna sang "Material Girl" years earlier, many of us lived some version of that materialistic reality just the same. Even now, a few vestiges of that earlier materialism are part of my environment. There's thousands of books stashed alongside the shelves filled with thrift store collectibles, which my mother happily discovered in the "thrill of the hunt".

Also noted in Scott Sumner's post, was the fact that eating out at a young age was somewhat of a rarity for some Baby Boomers. Apparently Houston must have been an outlier for restaurants and eating out, compared to other parts of the country. Indeed, the biggest part of my restaurant consumption took place when I was young, and Houston had no shortage of great food options - even in the sixties and seventies.

Consider how restaurants have proven an interesting way to bridge the gap between "stuff" and services, in a number of ways. Even though many restaurants include a strong time based service component, these services tend to be quantifiable as simple measures, in part because of a reliance on internal coordination for well defined product sets. For the most part, it's also easy to tell whether this form of organization serves practical or experiential roles, and time considerations are planned accordingly.

If only more time based services capacity could be organized internally on self replicating (hence primary market) terms, instead of having to rely on other forms of redistribution, to take place. Knowing what to expect in terms of competition and market formation, would make it a lot easier to appreciate time based services as a valuable form of product.

 Ryan Avent also noted the shift from "stuff", to what is increasingly a services based economy:

Indeed, it is true of our consumption in general; we once devoted most of our household budgets to physical things: food and drink, clothing and furniture. Now we spend vast amounts on things like education and healthcare, or on housing, the value of which is mostly dependent on the access it provides to social capital rather than the wood in the walls and the plastic in the pipes.

In short, services could benefit from more time based quantification, and less judgement all around as to the levels of skill that are necessary or desirable in every instance. Part of what made free markets so easy to defend in earlier decades is the fact they tended to be a lot more fun, when there was less insistence as to how they were "supposed" to take place.

Rational Markets are Basic Coordinating Functions

One sign that productivity would benefit from redefined organizational capacity, is a growing perception of market "irrationality". This is a problem, because rational markets are necessary for societal stability - not just economically, but psychologically as well. How might one respond to claims of marketplace irrationality? In an Evonomics article, Alan Kirman writes:

As soon as one considers the economy as a complex adaptive system in which the aggregate behavior emerges from the interaction between its components, no simple relation between the individual participant and the aggregate can be established. 

Yet an understanding of aggregate relationships is important, in order for participants to determine reasonable and responsible options in the marketplace. One can only hope this argument on Kirman's part, will be countered on concrete terms in the near future. Even though markets are complex and people sometimes appear as though irrational, basic coordinating functions for personal resource capacity are possible.

Consider for instance: what patterns of activity would specifically contribute to productive complexity and economic dynamism? What - on the other hand - can continue to serve as the "holding" patterns which logically follow primary resource gains? In the meantime, what personal and economic circumstance are responsible, when marketplace participants appear rational or irrational? In particular, I'll highlight two examples of apparent "irrationality": one psychological, and one monetary.

Even though resource aggregate potential tends to be well understood (hence well coordinated via price) in tradable sectors, basic coordination functions are not yet well understood for the time based product of non tradable sectors. As a result, skills capacity is often tapped in isolation, instead of in relation to existing or total aggregate skills capacity. In this environment, one's ability to take rational choice into account, still includes substantial investment risk. Indeed, one's personal time preferences (time value) may come into conflict, with what appears as marketplace rationality in terms of knowledge use. Some individuals will feel compelled to select studies that aren't in line with their natural inclinations or personal challenges.

Consequently, higher education is too often promoted for the economic access it provides, as opposed to the greater reward of experiential gratification and personal challenge. Unfortunately, the practical and the experiential become misaligned, when a majority of knowledge use only exists in secondary marketplace formation. And without a marketplace where personal time based preferences could clear in an aggregate capacity, more students are now inclined to cheat for the ultimate goal of economic access. Cheating is only rational, to the extent that too much of one's life choices have already been severely compromised.

Secondary markets for knowledge use are becoming a problem for monetary policy as well. Much of what appears irrational in terms of monetary policy, could be attributed to a growing political reticence, to support and maintain these secondary knowledge use markets on today's open ended fiat monetary terms. If so, this could partially account for excessive restraint on the part of policy makers and central bankers, in terms of nominal income and aggregate spending capacity since the Great Recession. For instance, the recent decline in healthcare expenditure, in an era of increased healthcare needs, may hold some important clues where the nominal income of time based product continues to be shorted.

It's hard for some of us not to believe that Janet Yellen acted irrationally, in her refusal to acknowledge the need for a new direction, at Jackson Hole this past week. What accounts for such stubbornness? Will not a thousand rational actions on the part of market participants be undone, by the Fed's irrational response to calls for change? Perhaps this quote from Adam Smith in "The Theory of Moral Sentiments" offers a clue, as to the refusal:

The opinion which we entertain of our own character depends entirely on our judgments concerning our past conduct. It is so disagreeable to think ill of ourselves, that we often purposely turn away our view from those circumstances which might render that judgement unfavorable.

The Hidden Value of Discretionary Income

Statistically speaking at least: we've been told that this is the best possible time to be alive, in terms of overall quality of life improvements. Clearly, free markets have greatly contributed to a positive outcome. Why then, is so much societal angst directed towards free markets and globalization alike, in such a fortunate historical moment?  In today's developed economies, a growing lack of discretionary income (due to regulatory non tradable sector crowding out), contributes to much of today's uncertainty. And a lack of discretionary income, also means a lack of possibilities in terms of major life options.

Some of our most significant quality in life gains, have taken place on terms which leave too little room for personal negotiation in the marketplace. Further: important though they are, some of the more significant earlier improvements have been blocked from further innovation. I am particularly concerned about a lack of plumbing and electrical innovation, as contrast with ongoing technological gains elsewhere. Indeed, Robert Gordon's emphasis on plumbing systems and electrification as some of the most beneficial aspects of 20th century innovation, highlights this irony. Instead of collectively throwing up our hands and insisting innovation's best days are past, why not redefine building component functions on more accessible terms, and in ways that allow building technology to respond to changing economic circumstance.

Since building innovation processes have yet to occur  - either in terms of mass manufacture which includes built in tech design or 3D print local adaptations, everyone's freedom in terms of discretionary spending and personal choice, has been compromised. Low tech and resource intensive housing for all, was a realistic response when given population sets had more exposure to international resource capacity than is presently the case. It was that additional exposure across multiple income levels, which accounted for some of the discretionary spending that made the twentieth century a high water mark for a myriad of life options, among lower income levels.

Community design with flexible components would restore discretionary choice for lower income levels. More discretionary income, means more spontaneity and more life challenges become possible. It should go without saying that people simply feel better when their ongoing obligations are balanced with interesting variations in routine. But this fact may not have had adequate consideration, since non tradable sector wealth capture has reduced spontaneous marketplace choice, time and again.

As a baby boomer, I can attest to the nature of greater discretionary income in earlier decades which contributed to the allure of many a Main Street, in communities of all sizes. I suspect it is easier for everyone to feel more positive about free markets, when a sufficient degree of discretionary income can alleviate daily burdens at all income levels.

Another important aspect of discretionary options is in terms of knowledge use. Knowledge has valuable experiential qualities, for individuals from all walks of life. However, when the most "valuable" knowledge is sold purely as a form of economic access, for many this will crowd out the desire to learn, simply for the love of learning. Already, too many aspects of experiential knowledge have lost much of their allure and wealth potential in the marketplace. In order for knowledge acquisition to continue as a vital economic function, societies need to make certain that the primary knowledge use of non tradable sectors, doesn't crowd out the allure of knowledge as discretionary choice and experiential good.

In summary, lack of discretionary income becomes problematic, when loss also translates into fewer life options. Already, political struggles regarding public choice options in particular, have become quite intense. What if less non tradable sector regulation meant more discretionary income and lifestyle options? What if people became less compelled to dictate their beliefs and preferences to one another? Perhaps there is a connection between these two seemingly unrelated circumstance.

Experiential Product as a Structural Component

A marketplace for time value, would make it possible to generate experiential product which need not rely on (asymmetric) prior revenue or disposable income, in order to take place. Eventually, as more groups participate in symmetric compensation to generate time based service product, more economic output - hence a higher growth trajectory than is presently the case - could also result.

More economic output is important, if present day economic stagnation is to be overcome. However, people are confusing wage increases (on the part of some) with increased output overall, which unfortunately is not the case. Wage gains in aggregate, result from an increased degree of economic activity and circulation of marketplace product. By the same token, any increase in the growth trajectory of nominal income and spending also reflect increased output. Yet the ability to generate additional marketplace capacity has proven difficult of late, since doing so requires defining product along broader lines than governments and private interests alike, have been able to do.

At least for purposes of this post (as a glossary term), think of experiential product as non routine focused attention, intended for assistance in the circumstance and environments of others. Non routine focused attention is vitally important for the economic lives of all individuals, and not to be taken for granted from anyone in one's personal life, otherwise. Each individual's attempt to improve resource utilization and decision making, varies to some extent from the general knowledge sets that society expects to assist those processes. In spite of online assistance in multiple areas of life, confirmation or additional reference points on the part of others, can make a crucial difference in one's ultimate approach.

While I emphasize individual to individual activity as an appropriate starting point for economic gain, some forms of individual and group created experiential product don't need to be expressed on economic terms. Why so? Many spontaneously formed social activities would not benefit (economically) from compensated time value, especially if they are sought primarily as entertainment.

Indeed, the experiential product of entertainment which contains economic value, is that which is prepared for sale by individuals or groups for others as separately existing packages from individual time value. However, experiential time value as spent in entertainment with others (or in personal challenge) is not necessarily linked to group based mutual assistance, because many forms of human activity represent what individuals choose to do in any instance. In particular, activity which is family or otherwise tribal oriented, also tends to be less economically oriented. Think of informal local sporting events for instance, and personal preferences for home based activity which come closer to personal hobbies, than clearly existing family needs.

Such preferences are important to delineate, because compensating already existing time based preferences would remove the impetus for more productive forms of economic activity which encourage individuals to seek out strangers (i.e. more participants) to meet real service based needs. The more willing participants are involved, the less coercion is involved on anyone's part, for any single time based activity.

The whole purpose of envisioning experiential product as a structural economic component, is to bring people together who otherwise don't have sufficient social constructs in place, to be able to imagine doing so. Higher income levels understandably don't recognize what's missing in this regard for lower income levels, because time based services are such a part of daily life for the prior group. Even though lower income levels have a minimal degree of time based health and educational services at their disposal, it is not possible for society to apportion these effectively through asymmetric means. Hence education and healthcare provide an essential starting point, for experiential product in knowledge use systems.

Knowledge use systems would insure that people who otherwise remain socially and economically isolated, have a precise coordination platform which is not open ended (such as LinkedIn) for work potential, but generated to structure work within a defined group on a regular basis, in an ongoing time continuum. Put simply: through a reasonable structure which allows people to call on one another to sort life's confusions and aggravations, personal freedom and autonomy once again become possible.

How to think about experiential product in relation to the ways it has previously been discussed? Some readers may notice some dissimilarity to Wikipedia entries, so I'll look at a few contrasts. For experience good, I found:

...an experience good is a product or service where product characteristics such as quality or price are difficult to observe in advance, but these qualities can be ascertained upon consumption.

Experience good as defined by Wikipedia, appeared to be the closest description to defined real time product that was available. This article also stressed the difficulties posed for consumption choices, which in turn leads to lower price elasticity. Another subjective product is referred to as the "experience economy", which may also be thought of as business creating (memorable) customer events. Many knowledge use systems would gain opportunities to pursue this form of product, once they are well established. The prime experiential product I noted was a reference to movies, videos and other mass produced product as generated through time value, prior to sale.

What appears missing from the immediately available online interpretations, is subjective product with a focus on individual assistance. Also - as noted early in this post - contrast non routine personal attention, with the attention required for routine activity or objective service outcomes.

Of course, many time based activities that include specific or standard outcome, are those that are subject to automation - particularly in prosperous regions which include complex economic settings. Presently, individuals are being encouraged to seek work opportunities of a non routine nature, for long term job safety. Even though non routine work is somewhat of a safer bet, asymmetric compensation will continue to face limits due to budget revenue and lack of discretionary income. Hence a symmetric approach could prevent needless unemployment, and allow human capital a more central role as a time based consumption good.

Another way that time based experiential product differs from separately existing product, is the "passive" role of the consumer, in the latter. One of the prime benefits of time based experiential product, is the opportunity it provides for the consumer to take an active role, which translates into a flow of mutual interaction. The blogging format - much as other online formats - can provide an interesting partial time shift, in that some interaction between provider and participant is still possible. Indeed, asymmetric compensation tends to only allow a partial degree of mutual interaction in aggregate, between professionals and consumers.

Even though some knowledge use systems would eventually seek to engage in group based research and development, peer to peer assistance needs to be fully utilized and understood, first. Otherwise, differences in aptitude make it too tempting to divide work patterns in ways which eventually devolve into layers of administration, such as what now exist. By fully integrating peer to peer assistance, automation choices and unemployment would no longer be perceived as threats. Further, the maintenance of a non hierarchical group format, makes symmetric compensation and organization a feasible long term goal.

Services Product in Global and Local Context

When it comes to services product, context matters. This is true not just in terms of how skills, time value and knowledge interact, but also in terms of macroeconomic and employment outcomes. Hence those who attempt to quantify or classify services product in the future, could consider skills product in various contexts, since these categories differ in important ways.

As governments seek relief for long term budget obligations (with universal basic income as the latest "opt-out of the welfare state" wish), it becomes more important to understand the nature of services product that citizens expect - particularly in connection with present day entitlements. Presently, most citizens attempt to access the same forms of high skill services product which organized in response to global discretionary income. This, despite the fact some wage levels were too low, to support the resource capacity required for general equilibrium service formation.

To supplement the revenue that nations dedicate for skills arbitrage, some professionals are adapting with knowledge product which is aimed at a global marketplace. Unless actual travel is involved to access time based (high skill) product, global services product can shift away from present (perishable) time value to prioritize specific forms of knowledge and skills capacity.

Whereas local services product will hopefully continue to have the option of prioritizing time value in knowledge use settings. Not only is it important to maintain time value in an era of increased automation, local services product does not require the highest skill and knowledge levels in all instances of product access. This relative skill to time use context is hardly a negative, since many consumers value the personal time component of service product, just as highly as any knowledge or skill that may be on offer in the package. In particular, time value for services product is all the more important when education is sought as personal challenge; or for healthcare, where knowledge and skill come up short in providing answers for health outcomes.

The global search for specific knowledge and skill, contrasts starkly with knowledge and skill as it is frequently applied at local levels. In many instances, local consumers have little ability to negotiate for the service product they might prefer - whether it be simple or complex. This is especially true, when government provision of services means budget oriented "default" settings, in which limited sets of knowledge and skill options are applied with a broad brush.

These default settings are an unacknowledged problems in today's welfare systems. They also result from a lack of interest on the part of private parties, to broaden overall marketplace representation. There is too little cooperation and competition, for the kinds of services product which consumers find increasingly important.

Oddly, time based services are still viewed as economically unproductive, since their present formation means a need to siphon resources from other existing forms of wealth. Yet who could have imagined a world which would ultimately move towards automation for tradable goods, only to lose understanding, how best to approach non tradable sector activity in the 21st century?

What's more, money has become such an important part of daily life, that personal assistance on voluntary (non monetary) terms has continued to decline. Even the time banks of more prosperous regions, suffer from the fact many members seek asymmetrically compensated services product, which is too limited by design, to substitute for symmetrically coordinated time value. Today's marketplace has yet to structure for time value as local group priority. As a result, many individuals perform countless service tasks for themselves, much as they once had to build their own crude products centuries earlier with little societal coordination. And yet this self-imposed frugality - desirable though it may appear - scarcely translates into societal gain.

In recent centuries, asymmetric compensation (originating from disposable income and existing revenue) for time based services became more extensive, as tradable sectors continued to expand. Unfortunately, the recent worldwide slowdown in growth, puts asymmetric compensation for high level knowledge and skill in jeopardy, to some degree. When William Baumol indicated the relative lack of services productivity (in contrast with tradable sectors), he echoed Adam Smith in "The Wealth of Nations". Adam Smith referred to the revenue required for public servant and menial servant alike as "unproductive", since individuals being paid solely for the value of their time, weren't perceived as capable of contributing directly to wealth formation.

Nonetheless: since Smith wrote, there's been a growing number of instances when purveyors of time based services have found means to "pay their own way", or create services associated product. It was only with the broad expansion of published print, that more individuals associated with "unproductive" labor, gained the option of generating product value which existed separately of their time. Further - in recent decades - this services transformation has been amplified by the digital realm. Timothy Taylor writes of the services product that has now become international in scope and - somewhat unnoticed - even contributes to a trade surplus:

The US has been running a trade surplus in services for the last few decades and its getting larger...I wonder how many of those who think that trade deficits are a result of unfair trade practices by other countries are willing to stick to the logic of their position when it comes to US trade surpluses in services.

Many of the digital services Taylor highlights, are also of an ongoing nature. Before the use of computers became ubiquitous, an international sharing of knowledge and skill sets was already beginning to take place. However, it was more closely oriented toward start up efforts in developing nations, for expanding tradable goods production. In other words, those additional expenses for personal transport and the actual element of time value, were deemed worthwhile since they were necessary for the start up process. In the present, the lower costs made possible through digital transaction, make services product a part of ongoing international communication as well.

However, there can be downsides to "paying one's way" as a knowledge and skill provider in this capacity. When knowledge as product is sold separately from time value, there is danger that the knowledge in question is forced into competition with other knowledge which may also have useful applications. Once economies begin to stagnate, populations become more inclined to insist that some knowledge is useful, while other forms of knowledge are consequently deemed useless or unnecessary. Sometimes, knowledge can be withheld and even lost from the marketplace. This unfortunate circumstance contributes to my rationale, to create a marketplace for time value. Time arbitrage - for everything from the mundane to research and development - could eventually make knowledge use less dependent on gaining support from disposable income or revenue.

This is already an overlong post, hence I did not have the chance to delve into the post which inspired me to write it, before coming across Timothy Taylor's discussion regarding international service formation. Recently, Dietrich Vollrath asked, "Is productivity the victim of its own success?" His post is definitely worth perusing, for those readers who have time. I was particularly happy that Vollrath noted the importance of time value in services product, and how that component might potentially affect a given growth trajectory.

Time Value: It's No Sacrifice, At All

An old song from Elton John provided some inspiration for this post. It's no sacrifice, for those who would be willing to coordinate for time constraints (market scarcities) in group settings. And doing so would provide a valid beginning point, for a marketplace in time value. Indeed, much would be gained through this process which otherwise isn't possible to achieve in terms of services formation. By honoring the actual possibilities of local time availability, populations would gain means to contrast resource preferences between time based resources versus other resource options.

Too many time based services aspects of life, are experienced through settings which lack means for mutual reciprocity. And life makes more sense for all concerned, when more of it can be experienced through quantifiable, replicable economic means. Those who have freedom of economic choice, also have the freedom to be more fully human. If a broader range of services activity were recognized as viable product, fewer individuals would experience the frustrations which often result when services are sought on non economic terms.

In particular, knowledge use has become a central theme of services processes and the ways they are actively experienced. While broadcast means of knowledge and information will always be important, knowledge still needs the element of personal experience. Groups and individuals alike, will take all the time needed - the "bother" so to speak - to make certain that communication goes beyond the tentative assumptions of first appearances.

What examples do we have of time "sacrifices" in the present? Consider one of the better examples: ongoing trip expenses which allow people to meet in person around the world, to more effectively get things done. Might it be rationalized that these trip expenses are unnecessary, for agreements which could perhaps be arrived at digitally? Ricardo Hausmann addresses this issue, in "Should Business Travel Be Obsolete?" It's an article I probably would have missed this week, were it not for an appreciative post from Tyler Cowen. Here's Hausmann:

But why do we need to move the brain, not just the bytes? I can think of at least two reasons. First, the brain has a capacity to absorb information, identify patterns and solve problems without us being aware of how it does it...Second, the brain is designed to work in parallel with other brains. Many problem-solving tasks require parallel computing with brains that possess different software and information but that can coordinate their thoughts. 

Hausmann continues:

The amount of travel should then be related to the amount of know-how that needs to be moved around. Countries differ in the amount of know-how they possess, and industries differ in the amount of know-how they require...The fact that firms incur the cost of business travel suggests that, for some key tasks, it is easier to move brains than it is to move the relevant information to the brains. Moreover, the fact that business travel is growing faster than the global economy suggests that output is becoming more intensive in know-how and that know-how is diffusing through brain mobility.

While much travel is of course associated with the internal mechanisms of tradable sectors, the same approach to one on one time value would yield benefits in the local group settings that (could) comprise non tradable sector activity. In both, the principle remains the same: knowledge is to some degree dormant, if dispersal is expected to take place solely through broadcast means (print and/or digital capacity). It is the capacity of minds working together, which makes time value count all the more. A marketplace for time value, could gradually bring more knowledge based services to those who need them the most.

Getting to Tradable

Among the first, basic questions a local corporation would ask: how can a given set of non tradable components become more tradable, so as to provide more producer/consumer options for all involved? In spite of wide variance between tradable and non tradable sectors, they intersect in ways which hold broader production potential than is sometimes realized. Non tradable sectors can become much more flexible and accessible, by incorporating elements that are normally associated with an innovative tradable sector.

Often, local corporations would not choose to directly compete with tradable sector institutions which already exist for traditional manufacture. The better part of tradable goods production doesn't need many (international) locations to provide sufficient product, for consumers as a whole. In recent decades, developing nations are also coming to terms with this circumstance. Indeed, a reassessment is needed, for populations to proceed in an increasingly knowledge based economy.

By no means does this imply that local corporations wouldn't have good production options. Rather, mass production would need to be utilized differently - particularly for building components and infrastructure. Even now, a wide array of tradable goods remain in the wholesale and retail environments of non tradable sectors. How might local corporations take advantage of future mass production potential, only as an integral part of local settings? Which communities would be well positioned to take on the challenge? These areas represent a starting point for investment and income generation, beyond the initial wealth generation of knowledge based services.

Local corporations could eventually compete with other regions to create experiential product, as well. The difference between this form of experiential good versus the directed efforts of - say - Disney, is that results would be gradual, from the spontaneous efforts of individuals acting in concert for common visions. Over time, the cumulative results of group endeavor would generate interest on the part of others. Knowledge use systems would maintain regular ties with other communities utilizing this structure. One benefit of this growing network is that local participants would gain broader travel options, than what now exists for those with small wages - particularly in the U.S.

An important aspect of getting to tradable, is the ability for groups (who are actively considering living/working in a given community), to define consumption patterns for the physical environment at the outset. Local corporations would have the advantage of combining tradable and non tradable sectors under one "roof", which means the benefits of lower overhead and costs accrue to the whole group. One benefit to this set up, is the fact these groups would not have to rely on taxation of assets in order to create services. As a result, greater flexibility in zoning, regulation, and consumption definition is possible.

However: in a long term sense, greater flexibility exists for services based options than for building component options. Once a given community adopts a formula for asset formation and infrastructure which works well, it would basically want to stick with that format. Fortunately, shifts in services provisions (with changing population demand), are easier than changing infrastructure and asset patterns - flexible though their physical layout may be. Hence a broader (more tradable) marketplace for lifestyle options would exist across a given network of local corporations (or knowledge use systems), while a broad services marketplace would exist within each node of the network.

One of the best immediate options for production potential, is more local food production than often exists outside of homes in small communities. Many regions remain hamstrung by present day regulations, which can restrict competition to a mere handful of restaurants in small towns. As a result, many will cook at home when they might have preferred to eat out. How many individuals do my readers know, who wanted to cook for the public, but were stymied by what was required? Restaurants and food service in general, are an excellent hybrid example of tradable/non tradable economic activity, which would immediately benefit from lower overhead in organizational patterns.

A marketplace for time value, would lend a tradable quality to services organization which otherwise hasn't been possible. Even before employment became threatened in services formation, both producers and consumers faced limited choice sets, in part because of the ways organizational capacity needed to be met. In knowledge use systems, time value does not need to conform to a single realm of possibility. Individuals and groups alike would be able to work at a pace which more closely reflects their capabilities and time availability.

For instance, those labeled as handicapped, disabled or otherwise, would gain opportunities for matching services based time with one another, when others don't have sufficient time to match services with them. One could think of this process as including multiple racetracks for ongoing economic endeavor, for tortoise and hare alike. Local education in particular, would make certain that more than one track remains open, so that one's personal time remains fully tradable through the course of a lifetime.