Needed: Flexible Investment for Impermanence

One reason why people in the U.S. don't save enough, is that investment in the form of personal housing tends to be an all or nothing affair. But is that really necessary? And what if better ownership options could take the actual impermanence of many building materials into account? Incremental investment would also mean flexible building components which owners easily combine or dissemble. Owners could keep using components still in good condition, should a single component fail.

Ideally, many components could be simple enough to be maintained by owners, especially since many frugal individuals balk at the cost of hiring specialists to do repair work for them. What would matter most for some mass produced components, is ensuring that plumbing and electrical circuitry are simple enough to no longer need professional attention once they leave the factory. When it comes to living arrangements, in this instance an inexpensive product which is easily disposed of, could prove to be quite a relief.

Nothing about our lives is truly permanent. The paradox however, is that our physical environments tend to be built with an illusion of permanence, even as cost cutting takes place in ways which ultimately require excessive maintenance and renovation. Plumbing and electrical wiring are still being run through buildings, as if there were little worry of pulling the whole mess apart for major repairs at some point. Since many building materials get connected in ways difficult to amend, doing so is not necessarily worthwhile, unless a property is sufficiently valuable to qualify for gentrification. Consequently, communities end up with many dilapidated buildings which have outlived their purpose, yet there is often little incentive to tear them down and start over.

Flexible building components would make it simpler not only to start anew as needed, but also for the simplest possible forms of instant remodels. Such options would make it much easier for aging individuals to retire without excessive home ownership burdens. In particular, flexible components built with plumbing and electrical circuitry as detachable units, could help even lower income levels to better manage financial responsibilities while aging in place.

Many building components could be mass produced in ways which are far more amenable to decentralized ownership options than is currently the case. Given our present lack of ownership flexibility, consider for example what can occur when "temporary" solutions end up as permanent outcomes. Johnny of the blog "Granola Shotgun", explains a style of Russian apartments, and how basic elements of their construction are now common elsewhere, for oddly similar reasons:

These ubiquitous buildings were mass produced from standardized parts by centralized authorities and were duplicated by millions across the Soviet sphere. This was in response to a housing crisis in the mid twentieth century. They were meant to be a temporary stop-gap solution that would last for twenty five years until permanent replacements were formed, but many are still occupied decades later. As is so often the case everywhere, there is nothing more permanent than a temporary solution.

In all this, Johnny notes that he is less bothered by the aesthetics of bulk housing, than by a dependence on either governments or corporations to maintain them over the long run. Indeed, excess regulations regarding how residents might keep these dwellings fully functional, only makes such dependence worse. He adds:

If an aging apartment is in a desirable location and is occupied by a small number of people who are reasonably prosperous, the situation can be quite livable...If too many budget conscious people are packed tight in an identical poorly maintained flat in a crappy part of the metroplex, life can be unbearable. In other words, it's like any place else in the world.

Importantly, public and private entities sometimes arrive at similar destinations, particularly when it comes to mass construction of today's inflexible housing units. The result?

...institutions driven by vertical integration, economies of scale, regulatory compliance, and the demands of physics and engineering. So hold off on touchy feely assumptions about the left or the right. We're observing convergent evolution and constrained maximization at work here.

Johnny's post is an apt reminder, how twentieth century housing can put anyone with limited resource capacity at a real disadvantage when it comes to managing one's life. Just as more flexibility is needed in housing regulation, flexible options are also needed for the physical components of housing and infrastructure in general. Incremental ownership patterns could make it simpler for millions of individuals to build better lives for themselves. Flexible building options could provide more opportunities for low income groups, and also reduce their long term investment risks.

However, there's much more at stake regarding mobility, given uncertainties such as climate change and the evolving nature of our workplaces. By way of example, a productive response to impermanence with flexible building components, could allow people to regain normal functioning much sooner after natural disasters.

Again, mass production isn't the problem. It's when mass production only creates investment in which personal risk assumes an all or nothing dimension. Why not create mass produced components which can be added, subtracted, or reconfigured without need of massive renovation costs? And why not amend them locally with 3D manufacture? Even better for local community dynamism, would be 3D manufacture which puts local plastics to good (additional) use.

Plus, incremental ownership would be a decentralized option which groups could set into motion as needed after natural disasters, instead of waiting for governments to come to their assistance. Fortunately, it is within our power to make peace with impermanence. Doing so would give societies a chance to use many resources more efficiently, as well.

Transportation is Both Basic and Discretionary

How do we categorize the importance of transportation in the context of everyday life? More specifically, what do we need to utilize transportation for, in any given moment? By clarifying differences between basic and discretionary transportation options, we could better determine, how the physical layouts and transportation grids of new communities could reflect such roles as well.

As it turns out, commutes for daily routines vary considerably, from the transportation networks we now rely on for longer road trips. Alas, 20th century transportation networks - designed with automobiles in mind - created spatial settings which don't really distinguish between the two! Consequently, the same highway systems that can be so advantageous for discretionary and occasional travel, tend to be commuting headaches wherever people routinely come together to get things done. Some basic rethinking is needed, to retrieve commuting options which take less time than what is now frequently necessary.

What are some differences in transportation needs? One might imagine a spectrum which on one end contains daily non discretionary travel commitments, versus a totally discretionary "vacation of a lifetime" on the other. Points along the middle of our transportation spectrum could be occasional visits to friends and family at a distance, plus similar excursions of limited duration and expense.

Fortunately, the more discretionary aspects of this transportation spectrum are still served reasonably well by state and national highways, here in the U.S. Even so, some disparage today's interstate systems, and reason we would have been better off had they never been built. While I'm convinced many highways are practical and useful, they've still muddled how we once went about getting from point A to point B on a daily basis. Since roads for automobiles went through so many cities and towns instead of around them, the physical proximity people need for many daily interactions has long since been compromised. Yet for now, what's done is done. Many local commutes will remain lengthy in the foreseeable future, and millions will bear responsibility for high transportation costs, since so much private property fronts the thinly spread densities where people expect to get things done.

Ultimately, greater efficiencies in local commutes would involve a rethink for private property coordination, so that closely spaced population densities will once again prove feasible in small towns. What many new communities would want to achieve, is greater accessibility for services workplace densities in particular. It will be interesting, to observe whether some settings might eventually prove similar to walkable communities before the automotive era. How might neighbors shift what were earlier coordination patterns for physical production, towards new combinations for time based services production?

One major challenge is the need for more flexibility in private property ownership, so that optimal densities for current life goals and responsibilities are feasible in a community core.  How so? Consider that in many private property arrangements, getting from point A to point B takes more time due to the need to commute around residents who reside between those points, but aren't part of the coordination factor therein. Indeed, some residents who aren't locally engaged during normal work hours where they live, lose valuable time commuting elsewhere as well! If short commutes to get things done (by all concerned) is understood as an important community goal, flexible ownership patterns toward this end, could prove easier to achieve. Property ownership deserves commute considerations such as these.

Granted, millions of individuals will continue to prefer the spread out densities made possible by automotive transportation, and understandably so. Still, many others could benefit tremendously from walkable communities which don't require automobile ownership. Desirable though it is, automotive transportation should no longer have to be necessary for individuals to maintain their autonomy and personal connections with others. Recall as well, that while public transportation, taxis and new companies such as Uber are viable options to auto ownership in cities, they simply aren't practical in many small places where it can be difficult to make a profit.

Walkable communities would make life more affordable for those with limited sources of income. Plus a simpler infrastructure approach would lessen the burdens of many a municipal budget. Doubtless, plenty of exploration will be needed, before new communities can transition to walkable core settings which restore economic engagement at all levels of society. In time, however, closer densities for living and working could lead to newfound vitality and more sustainable small towns.

Implicit Land Rent as Potential Real Wage Gain

Why would land rent value be important, in terms of defined equilibrium settings which could contribute to the spending power of real wages? Today, productive agglomeration is in short supply, because much of it is limited to high income locales. What, then, could help implicit rent become a more affordable fixed component of the production function for knowledge based endeavour? Both questions matter for communities which seek to generate productive agglomeration for a wide range of ability and income. How would one define "affordable" specific land value which doesn't run counter to the wealth of local income realities, for instance?

Since the two most important factors for those with small wages are generally housing and services needs, it helps to consider how these two could also be interconnected, via implicit land rents. In a defined equilibrium for example, time based services would provide much of the initial aggregate economic value of a start up community. Nevertheless, in general equilibrium, the services to land rental value link is merely a starting point - given the many aspects of production which also contribute to local aggregate income. The more productive complexity that exists in any given setting, the more it is represented in local income and real estate values. However, not only has this process raised the costs of economic access for local landowners (and renters), by necessity it excludes many more who wish to participate on similar terms. Again, the Baumol effect has its natural equilibrium limits.

Defined equilibrium would approach land values in ways that allow applied knowledge to function as an accessible starting point for economic community. To this end, local land value would particularly reflect the maturity, or lack thereof, of local services generation. Management of implicit land rents as a local consumption standard, could provide an institutional response to the present day lack of productive agglomeration. Presently, productive agglomeration mostly exists where both salaries and implicit land rent are already high.

The core of such an equilibrium would consist of flexible infrastructure and building components, and an applied knowledge continuum for a full range of services generation. In order for a defined equilibrium to maintain access to lower income levels, much of what otherwise would be represented by monetary value, becomes correlated with aggregate time value as measured by gains in local skill and and economic diversity in services. Not only would this value in use process help preserve services complexity in the event of severe economic downturn, it makes possible a free market approach for time value in general.

However, in conceptualizing these possibilities, it helps to reflect on what is normally the starting point for monetary economic value in local settings. How does rent factor into the costs of production? What does implicit rent mean for one's opportunity costs as a landlord, especially given what has been necessary for home ownership in a knowledge based economy? How does local aggregate income level correspond with local production (what local property generates), or the real estate which also reflects local aggregate income value? Indeed, which comes first? Paul Samuelson offers ways to think about this in Economics (page 527 and 528):

Since rent is the return to an inelastically supplied factor that would still be supplied to the community even at much lower prices, the direction of causation is as follows: The prices of goods really determine land rent - rather than having land rent determine the prices of goods.

Okay, for us this would mean the aggregate value of services helps to determine land rent, right?

But at this point we must avoid our old enemy "the fallacy of composition". What appears as a cost of production to each and every small firm using a particular kind of land may, as we have seen, be to the whole community merely a derived, price-determined rent expense rather than a price-determining one. More than that, suppose the land is specialized and can be used only for the production of one industry. If a grade of land is inelastically supplied to one industry and has no place else to go, it will always work for whatever it can earn there; then its return will appear to every small firm as a cost like any other.

It turns out that relativity of viewpoint matters as well, because even though land is inelastic, to any one firm or industry the supply is elastic:

To conclude: Whether rent is or is not a price-determining cost depends on the viewpoint: that of a small firm, small industry, large and even exclusive-user industry, or whole economy. What is a price-determined rent return to a factor which is inelastic in supply to the whole community or dominant industry may, to each firm and to any small industry that is only one of many potential users, appear as a price-determining cost.

In normal circumstance land values accrue gradually, especially as communities build up permanent forms of infrastructure. Much of their success depends on the degree to which infrastructure of all kinds can be maintained. The better they become at the process, the more limited their access may in fact become, especially if the land contains special natural attributes.

Cost "containment" or management in defined equilibrium, would depend on many things. Even though land can be kept "affordable" by generating similarly accessible services, each part of the process depends on the other. And while such communities would generate economic activity which goes well beyond time based services, flexible infrastructure makes it reasonable to pursue short term economic strategies which need not require extensive monetary investment.

Since - in a defined equilibrium - much of the local economic value would reside in the time continuum, the best way to reflect this is to ensure that local ownership remains flexible and incremental. This way, local system infrastructure would not bear such high access costs that lower income levels become barred from participating in a knowledge based economy. Recently it has been difficult for those who struggle to invest in human capital or access highly productive regions, to contribute to productive agglomeration. Fortunately, this could be changed with a defined equilibrium which aligns implicit land rents with real wage potential.

Resource Flexibility Requires Investment Flexibility

When does private ownership actually hinder allocative efficiency? Generally, ownership makes it possible for individuals to put resources to good use. Even so, ownership of property in particular, remains legally designated in ways that sometime make it a blunt instrument for personal intentions versus actual outcomes. In other words, present day legal property constructs aren't quite as optimal as one might expect.

For instance: Over the years I've observed too many properties sitting in limbo indefinitely, once ownership is cut short through death or other forms of separation. Even though surviving heirs can sometimes reach agreement re property settlement without discord and hard feelings, often the process is difficult for all concerned - including the communities which contain these properties within their boundaries.

Among the reasons I've sought flexible and incremental ownership means, is the fact legal property disputes can sometimes make the difference between personal success and failure, in the course of one's lifetime. Today's inflexible ownership patterns also encourage people to assume others aren't capable of committing to ownership and responsibility. But often, many individuals could live more meaningful lives, if ownership options were constructed so as to allow people to build wealth gradually - thereby creating stamina for potentially broader personal commitments at the same time.

These market design priors on my part, encouraged me to take note of property arguments in a recent publication, "Radical Markets: Uprooting Capitalism and Democracy for a Just Society" by Eric Posner and Glen Weyl. Since I've not yet had the chance to read the first chapter (which is included with the above link), I plan to read some of the book reviews whenever possible. For instance, Diane Coyle wrote:

It's extremely thought provoking and clearly brilliant - yet also barking mad. This is the territory of thought experiment rather than policy proposal.

At the very least, some thought experiments could be tried in local decentralized market settings - they just don't need to overturn general equilibrium scenarios and fully functioning municipal frameworks. Vitalik Buterin's review of the book has some particularly useful perspective about the investment problem of market efficiency and allocation:

As it turns out, it is absolutely possible to have a system that contains markets but not property rights; at the end of the year, collect every piece of property, and at the start of the next year have the government auction every piece out to the highest bidder. This kind of system is intuitively quite unrealistic and impractical, but it has the benefit that it achieves perfect allocative efficiency: every year, every object goes to the person who can derive the most value from it (i.e. the highest bidder). It also gives the government a large amount of revenue that could be used to completely substitute income and sales tax or fund a basic income.

However:

Re-auctioning everything once a year completely solves this problem of allocative efficiency, but at a very high cost to investment efficiency: there's no point in building a house in the first place if six months later it will get taken away from you and re-sold in an auction.

Even though it's not reasonable to subject traditional private property to yearly auctions, some aspects of yearly auctioning could apply, should people use building components to spatially organize for mutual workplace patterns. While spatial organizational patterns for resource flexibility have long been part of business organization, we've yet to apply these organizational options to the broader coordination of time based service activities.

How to envision a starting point? Any planning for walkable densities needs careful consideration for those whose could especially benefit by closer proximity to core economic activity. New communities might structure around a double core - one with more traditional forms of zoning options, alongside a service based core where young and old alike would be able to purchase and manage their own areas for daily interaction with others. Instead of being institutionally segmented off elsewhere, away from the general public, many who are now arbitrarily marginalized, could finally take part in life on more spontaneous terms. In core settings for services generation, perhaps a yearly auction for property arrangements would come in handy, so that participants could use the process to pay for the yearly operational costs for the relevant properties.

Again, what would make the auctioning process possible for yearly operational costs, would be the ownership of flexible building components which could be moved about across the utility grids which these communities already have in place. While the latter would also be a form of incremental shared ownership, as far as I can presently discern, this form of ownership has a continual aspect which would need to be constructed quite differently.

Granted, the forms of investment suggested in this post, may not have the path breaking quality associated with "cutting edge" investment opportunities since they're intended for individuals who are less concerned with monetary reward than gains in lifestyle options. These groups wouldn't be investing for "more of everything", but using resources already at their disposal to create something which might otherwise not have been possible. While it's not feasible to preserve investment flexibility for some resource capacity, fortunately, alternatives are possible. As Ian Hathaway wrote:

So before continuing down The More of Everything path, consider an alternative. Sometimes the answer is more of something. But often, a more relevant question is how well something is being done. Are you getting the most out of what you already have? What can be done to improve community cohesion today? To what extent are the existing pieces integrating in a productive way?

In my experience the answer to these questions comes not from adding, but from activating and transforming...It's not always the big moves that get you where you need to go.

Educational Supply Chains: A Decentralized Role for AI

First, consider the potential for learning processes as self supporting supply chains, which in turn allow educational investments to directly disperse wealth and knowledge. Why education as a supply chain for growth? Since today's institutions mostly "random mine" skills and knowledge, the benefits of human capital are somewhat lacking in growth statistics. In "The Importance of Education and Skill Development for Economic Growth in the Information Era", Charles Hulten argues that the BLS assigns a "relatively small role to education", which he (understandably) believes is insufficient. How might we create a better organizational platform for human capital, in which education becomes a stronger component of economic dynamism?

Presently, as institutions randomly mine the investments of human capital, many aspects of knowledge use have to "wait in line" for tradable sector wealth origin - even to the extent that advanced economy workers "wait" for resource origin flows from emerging economies. Granted, these original wealth sources are supplemented via the monetary flows of physical assets (housing) and a wide array of debt backed instruments. Nevertheless, too much non tradable sector activity remains on the negative side of the ledger, in terms of a general equilibrium growth base. Possibly the non tradable sector activity of new housing (not its loan activity), is the major non tradable sector contributor, to the positive side of the wealth creation ledger.

Meanwhile, too much educational investment in general, has come up short in terms of providing directly to economic dynamism. Another way to think about this: When labour and human capital serve primarily as residuals (for both primary and secondary market activity), the potential for a knowledge continuum is broken or at least disrupted, at numerous junctures. Is it possible to provide stronger connection points - even a recognizable supply side chain - for knowledge use in general?

One way to approach this problem, is via the use of coordinated time arbitrage in knowledge use systems. Time arbitrage as a single price commodity unit, would allow individuals and groups to immediately cancel time debt, as it occurs in daily activity. Individuals would also be able to "buy" time insurance from others in the event they can't work, via voluntary service hours. This approach would allow purposeful matched time (and its accompanying knowledge use) to function as an ongoing continuum. Personal time value, along with skill and knowledge, would function as a supply chain model, making human capital a central component of growth and wealth creation.

Among the reasons people fear artificial intelligence, is the fact that human capital - despite its importance -  is still organizationally structured as a production residual. Whenever individuals need to specify their time as containing higher monetarily value than that of others, their time use becomes dependent on general equilibrium system flows. In other words, the costs of skills differentiation will frequently remove any first mover position for knowledge use we might hold, since one must enter their knowledge and skill into organizational processes which are also aligned to "wait" for the total compensation of the system.

So long as an excessive amount of labour remains in either secondary markets or residual production positioning, even professional groups end up in defensive positions, arguing for humans to remain "embedded in the loop". Calls for continued management via human judgement, have a more emotional element than the technical maintenance which AI will (more naturally) require, in the form of human assistance. In all of this: Since human capital is still organized as peripheral or "as needed", high and low skill levels are becoming default positions - even though average skill is more representative of human populations in general. Consequently, average intelligence would likely be an important characteristic, for the time based and educational supply chains of the future.

It is the central role of our time in knowledge based supply chains, that makes it possible for deep learning AI to assist us - meaning not inevitably the other way around. How so? For instance: One of the primary advantages of time based services in desirable regions, has been their ability to replicate specific and desirable skill sets - think brain surgery as an example. The deep learning of AI makes it possible to disperse specific skill replication functions as well, so that many skills sets can eventually be applied in environments which otherwise may lack "cutting edge" human skills capacity.

Decentralized services generation would mean an altogether different approach for deep learning AI is possible: One that includes helping locals assist one another with important service functions, especially during their primary educational years. It's the wealth generating capacity of equal time coordination, which allows these groups to make their dependency break with general equilibrium monetary flows for time use. By decentralizing service capacity, each group can build a continuum for progress which holds a reasonable chance of permanence, insofar as time use functions are recorded and preserved.

In knowledge use systems, humans would often seek the assistance of deep learning AI. However, this approach accentuates personal autonomy, and is quite different from that of human assistance for technology as part of a centralized system. Time arbitrage can allow for greater dispersal of knowledge use. It's the use of knowledge - not just its acquisition as investment - which drives economic dynamism and moves society forward.

When human capital functions primarily as a production residual, there's good reason to be concerned about educational investment roles, once general equilibrium capacity becomes constrained. Yet it is precisely the ability to build time based local wealth, which could allow human capital to fully function as a central part of knowledge based processes. When purposeful time serves as an economic core, deep learning AI - important though it is - would often provide a supportive role for the experiential product that people wish to share on more personal terms.

Some Thoughts on Dynamic Property Ownership

Part of the decline in economic velocity over time, can be attributed to difficulties in making the most of property ownership, especially for properties which are mutually owned by family members. Even though housing has mostly become associated with consumption in the present, some still rely on mutually owned personal (family) property as primary production means for goods or services.

However, it can be especially difficult for lower income levels, to successfully work out disputes regarding the use and/or control of mutually owned personal property. Due to the inflexibility of legal ownership guidelines, family owned resource capacity can end up utilized at a fraction of its true potential. Too many people have lost everything - time and again - for no better reason than family members could not, or would not, agree among themselves regarding common usage for mutually owned property.

In recent years I've suggested a flexible institutional structure for property use, which could make more dynamic forms of property ownership possible - especially for physical assets as utilized by individuals. Property ownership of participants within an equilibrium corporate structure, would function like the pieces of a dynamic jigsaw puzzle, which allows property holdings to adjust for group and individual work/life patterns, as they change and evolve. The ownership process begins with each participant's basic level of property acquisition, which corresponds with entry into time arbitrage via peer to peer educational assistance.

These base property holdings would function as a form of group insurance, via replacement base building components in the event of natural disasters and the like. Basic levels of services access in the course of one's lifetime, would coexist alongside this (time value backed) property insurance pool.* While specific locations are sometimes important in their own right, often the specific geographic location is a second consideration. This way, each group is able to retain its ability to shift holdings for life and work patterns so that families and individuals who have shared time based obligations, can remain in reasonable walking and/or commuting distance from one another.

Often, ownership is not so much about a specific building component or property, but one's ability to utilize buildings and property so that their personal efforts and risks in relation to others, aren't unduly compromised. If specific properties in this setting function as dynamic jigsaw puzzle pieces, one might imagine building components in this context, as similar to Lego pieces. While many properties would closely correspond to changing life/work settings, other more permanent property designations would provide ample room as well, for the personal expressions which personal ownership can beautifully impart to the landscape.

Dynamic property ownership would reduce the legal problems which arise when physical property ownership is subject to the inevitable risks of life. While divorce is among the greatest risk for lower income levels, these groups are at greater risk from the vicissitudes of nature as well - particularly floods. With more viable options for individual ownership, it would become a simpler matter for many individuals with small incomes, to remain economically engaged for the full duration of a lifetime.


*Additional ownership beyond the base insurance levels agreed upon by individual communities, would function as more normal aspects of property ownership.

Time Centric Economic Development

Economic time value as a parallel component (alongside money) for societal coordination, could make it simpler for economies to remain in dynamic patterns. For instance, the incremental ownership aspect of time arbitrage, in which one "owns" knowledge to the extent they incrementally use it, could also add much needed velocity to GDP. Time centric economic development, would generate new knowledge use patterns which provide institutional options to the knowledge which inadvertently ends up caught in the passive revenue flows of domestic assets.

Time centric economic development could eventually help us break out of what have become static roles for knowledge use. Limits to knowledge use now contribute to economic stagnation, since productive agglomeration has become closely tied to specific geographic locations. The potential of the digital realm to bring dynamic knowledge use to all corners of the globe, only highlights the current breakdown in knowledge use patterns which has instead taken place.

Since there are hard limits on the groups which can work in areas where knowledge wealth accumulates (via valuable real estate), the potential of long term economic growth remains at stake. It would be far better for all concerned, if knowledge benefits could also accrue to the purposeful activity of informally defined groups. Personal time value as a wealth building commodity, would allow knowledge to function - once again - as ongoing informal activity. Indeed, knowledge wealth accumulated for millennia on similar terms, before knowledge use processes were circumvented by extensive 20th century limitations for economic participation.

Meanwhile, the combined efforts of many groups for the coordination of knowledge, are accumulating like so much sediment at the end of today's major knowledge use arteries. As different groups continue to separate from one another by skill level, it only becomes more difficult to coordinate for total skill capacity across groups. Kevin Bryan explains how path stickiness has occurred, in today's major cities:

Much of the developed world has, over the past forty years, pursued development policies that are very favorable to existing landowners. This has led to stickiness which makes path dependence more important, and reallocation toward more productive uses less likely, both because cities cannot shift their geographic nature and because people can't move to cities that become more productive.

By way of example, the recent concern that society may be "running out of ideas" goes back to the fact that too much resource capacity is caught in institutional formats which are no longer able to make room for the knowledge based aspirations and challenges of individuals who lack advanced degrees. When knowledge use becomes mostly professional activity made possible by graduate level degrees, the results tend to be either skill access struggles (healthcare), or constantly debated professional opinions (formal education), much of which resembles a Winchester Mystery House, in which knowledge fills halls, stairways and rooms, but otherwise has few viable places to go in which it is capable of benefiting anyone.

Knowledge use now faces these unexpected limits, in large part because of its external dependence on other existing revenue. Unfortunately, when money becomes the only means by which a society can coordinate economic patterns, too much revenue eventually pools into the passive asset holdings of location bound real estate. Time centric economic development, in which time becomes a unit of commodity wealth alongside money, could help to prevent these losses in economic velocity. Since time arbitrage would also be asset backed (via flexible building components and infrastructure), new productive agglomeration could occur with a mere fraction of the infrastructure that is presently necessary.

Time centric economic development could allow groups to maintain the use of knowledge via the coordination of multiple skill levels across group participants. This process would allow knowledge to continue dispersing so as to activate further activity, through the "vehicle" of time as commodity based wealth.

We need better institutional means by which cumulative knowledge has a chance to remain accessible to all who find it useful, practical, and beneficial. Knowledge use systems could be designed in ways that should one group become unable to maintain the use of knowledge in certain specific settings, the knowledge at stake could readily be absorbed by other groups which operate within the same systemic design.

Nirvana Fallacies and the "Enemy of the Good"

As NIMBY preferences make inclusive communities less likely, nirvana fallacies also lessen the chances of new productive agglomeration, due to "one size fits all" infrastructure requirements. Stated another way: not only is it difficult to make room for more of us in the productive agglomeration we already have. It is costly and cumbersome, to establish new settings where additional productive agglomeration could occur.

Among other problems, nirvana fallacies don't consider the decades old reality of wage stagnation. Yet how much stagnation was truly necessary? Non tradable sector production reform, would have meant substantial real wage gains for all concerned. What's more, many aspects of production reform, should not have to be complicated - especially those which make it simpler for individuals to coordinate their lives in closer proximity to one another.

With production reform, millions would be able to embrace simple transportation options that could be designed for local community levels. Meanwhile, too much transportation dialogue centers around "perfect solutions" such as autonomous vehicles. Such a reality might also be imposed on communities which don't particularly want them. Worse, it might become difficult to build new, wage responsive communities, should all regions be expected to bear the infrastructure costs of autonomous transportation as the "perfect" solution.

Why are non tradable sectors so reluctant, to respond to the shifting wage distributions and lifestyle preferences of the present? Had these sectors been open to technological innovation all along, worries about wage stagnation would never have been necessary. Proactive measures would have resulted in real wage gains, which reduced the need for government revenue at the same time. Of the nirvana fallacy, Wikipedia wrote:

The nirvana fallacy is the informal fallacy of comparing actual things with unrealistic idealized alternatives...It can also refer to the tendency to assume that there is a perfect solution to a particular problem...By creating a false dichotomy that presents one option which is obviously advantageous - which at the same time being completely implausible - a person using the nirvana fallacy can attack any opposing idea because it is imperfect.

Doesn't the reality of real wage losses, especially given the consequent effects on city budgets, deserve a more practical approach? Nevertheless, cities become flummoxed when citizens take matters into their own hands. For example, Toronto residents had already experienced mishaps on a steep trail in a community park, before a citizen went ahead and built a $550 stairway. Since a stairway which met city standards would cost approximately $65,000, the privately provided stairway may be torn down.

In this instance, the city should have little difficulty funding a stairway built to bureaucracy code. But what happens when existing regulations make it difficult for populations whose income levels are better suited for less costly options? Also consider how Wikipedia describes perfect, as the enemy of the good:

A widely accepted interpretation of "The perfect is the enemy of the good" is that one might never complete a task if one has decided not to stop until it is perfect. Completing the project well is made impossible by striving to complete it perfectly. Closely related is the nirvana fallacy, in which people never even begin an important task because they feel reaching perfection is too hard.

Non tradable sectors are particularly exposed to both of these problems. While the human capital investment requirements for time based services of healthcare and education are affected by the "enemy of the good", physical infrastructure suffers from the nirvana fallacy. The "perfect as the enemy of the good" has also become a problem, for matching potential between employees and employers. When jobs dialogue is caught in the polarization of employee obligations versus employee costs, much of the underlying rationale for high reservation wage requirements - on the part of the potential employee - is missed. To what degree does the nirvana fallacy in present day infrastructure, contribute to one's personal high reservation wage?

The one size fits all "perfect" solutions of many a rule and regulation, leave little room for the incremental growth and ownership that would strengthen the hand of those with limited income. I have suggested time arbitrage as a form of incremental growth, which could make good use of skills as they are being developed.

Likewise, incremental ownership would be possible in time arbitrage settings, through the flexible arrangements of building components which can be reconfigured as lifestyle needs change. No one's "perfect" dream would have to be shattered, every time a personal commitment or investment doesn't work according to plan. At the very least, we can make room for flexibility at the margins, where millions await their own chance for full economic participation and productive lives.

"Equal" Income Presupposes Abundance. Equal Time Value, Scarcity

Time arbitrage is a form of equal time value, which could provide means for groups and individuals to better manage and coordinate mutual responsibilities, by using the actual time at their disposal. Such options are becoming all the more important, given the present day struggles of budget obligations. Only consider that when economic time value doesn't have an equivalent for money's medium of account function, policy makers end up "hiding" extensive time based requirements in default policy positions.

However, it's important not to confuse the equal resource management capacity of time value, with redistribution arguments such as "more" equal pay. Income based approaches to inequality, are a never ending chase to meet what are essentially self imposed consumption requirements. Whereas equal time value is a supply side response to adjust consumption requirements, through better managed (time based) production.

Arguments for more "equal" income distribution at the lower end, include an implicit assumption there is sufficient wealth in aggregate to continue shifting income downward, for existing consumption needs. Yet this approach is becoming more problematic, as nations begin to follow the lead of the U.S. for further monetary tightening. Income adjustment arguments, tend to assume the rewards of material abundance have not already been assigned to functions involving high value skill and merit. Whereas time arbitrage, with its recognition of time scarcity, reorients the focus on time as a central scarcity which needs to be acknowledged in relation to other existing resource capacity.

A rationale of existing abundance, as though held back by lack of will, was also reiterated in a recent Project Syndicate Post, "Should We Be Worried About Productivity Trends?" The authors begin:

Economists trying to explain the apparent structural slowdown in productivity growth have been asking the following question. Where is the missing increase?

One mentioned possibility was "a paucity of investment opportunities". However, there's a flood of extensive human capital investment in the marketplace, which has yet to be recognized for what it actually suggests in terms of production potential. Education for time based product, is production input. Today's educational losses are quite similar to other investment losses. It would be as though a factory were expected to invest (purchase capital) for up to two decades  - such as today's formal educational processes - before it could begin to even sell its product in the marketplace.

This circumstance is all the more problematic, given the scarcity of our time use potential in relation to other forms of resource capacity. Michael Spence and Sandile Hlatshwayo continue:

But it may also be useful to consider a more fundamental question. How much productivity growth do we really want, and at what cost?

Perhaps what's being missed in this argument, is the still dependent state of non tradable sector activity, on strong output levels via tradable sector activity. A self sufficient marketplace for non tradable sector activity, could add to wealth creation and possibly increase the long term growth trajectory, without leaving lower income levels behind - as is currently the case. Again, from the Project Syndicate article:

All of this suggests that a substantial share of the decline in productivity growth may not be the result of some deep problem with resource allocation...governments should devote resources to reducing inequality, regardless of the shifting preferences of the average citizen.

Apparently, according to their argument, I've been suggesting there is a "deep problem" with resource allocation. Plus, I believe the "shifting preferences of the average citizen" are of utmost importance for time based service product outcomes. Who doesn't want - and deserve - a say in their service accommodations when they experience failing health, for instance?

We have to be careful in assuming structural income coordination issues can be solved away, by shifting resource flows between skills sets which presently hold wide variations in marketplace value. Even if it were possible to do so, this wouldn't increase access to high skill time based product, for those who are presently left with low marketable skill. Aggregate resource abundance is not the same thing as potential availability for time based product. It's best to acknowledge existing time scarcities for what they really are, in order to achieve a better result.

At first glance, one might confuse arguments for "more" income compensation, with the equal time value of time arbitrage, given their emphasis on a common value. Nevertheless, these two resource constructs are completely different in nature. Coordinated time value is subject not only to the limits of what an individual can provide for others in the course of a day, week, month or year, but also the fact that individual's time is already being coordinated with a limited set of individuals. One only need imagine the rural doctor (where they do exist) who can accept a mere fraction of potential local patients.

Last but not least: Some assume that you can't expect much productivity out of a service economy if people perform those services. Fortunately, this does not have to be true. Productivity is currently being lost, because too many human capital inputs are not being accounted for, as the first phase of a services production process. Economic time value needs a position in which it can incrementally proceed, or generate new marketplace output, via the purchase of other time value. Without economic options to pay for human capital as it is acquired, time scarcity issues will continue to weigh  heavily, on those whose time value is insufficient, to purchase the high skill time value that requires decades of inputs before output is possible.

Healthcare: Societal Burden, or Wealth Potential?

According to Reuters, "Most Americans Say Republican Healthcare Plan Will Be Harmful":

When U.S. Senate Republicans unveil their plan to overhaul America's healthcare system, they will face a skeptical public that already does not buy the justification for an earlier version that passed the House of Representatives...a majority of the country thinks the American Health Care Act would be harmful for low-income Americans, people with pre-existing health conditions and Medicaid recipients.

Among those polled, even a Trump supporter said, "It'll make people's deductibles skyrocket. So I'm not for this healthcare act. I'm for insurance for everyone." And Joseph Antos, a healthcare expert for AEI, said of the still rising costs, "It would be great if a politician had the nerve to be brutally honest. None of them seem to."

How to think about the fact, so many are "giving up" on healthcare as even having the potential of positive outcomes? Whichever way one slices it, the news does not appear good. While policy makers will likely reduce healthcare access wherever possible in the foreseeable future, these reductions still don't get at the root circumstance today's healthcare has generated, regarding long term federal budget obligations. Indeed, that would still hold true, even without the added consideration of aging demographics.

As healthcare (in its present organizational capacity) continues to become a larger part of GDP, relatively less revenue from other sources remains available, to fund its growing costs. As a dependent equilibirum component, healthcare's present requirements for (excessive) input in relation to total output of time based product, contribute to the present low productivity patterns of economic stagnation. This unfortunate reality leaves policy makers on both sides of the aisle, with few choices or long term solutions.

Plus: Even as more healthcare cuts inevitably take place, more senior citizens will seek access to healthcare in the years ahead. Since today's healthcare is still equilibrium dependent rather than capable of providing equilibrium growth, it slowly - but surely - reduces the same economic growth which so many had hoped would be able to reverse its growing burdens. Paradoxically, the way healthcare is currently organized, contributes to its dependent equilibrium status. What is needed, are ways that healthcare could actually contribute to wealth creation, instead of detracting from wealth creation.

In the meantime, the crowding out effects of healthcare are also exacerbated by monetary policy. The Keynesian 20th century approach to inflation, was an approach which had little means to respond to the crowding effects of relative inflation or deflation, depending on sector. Healthcare has become a major source of supply side inflation. Yet when central bankers attempt to compensate, they inadvertently make the situation much worse, by leaving less money for the representation of other vitally important marketplace obligations.

There are ways out of this dilemma, but they include thinking about today's healthcare burdens somewhat differently. Ultimately, populations could internally coordinate healthcare alongside other important time based services. There are wide swathes of knowledge which could can be tapped, that have been available for centuries and are not subject to the same knowledge use protections, as present day "cutting edge" procedures. New wealth could be incrementally built by focusing on everyone's skills capacity, and healthcare could function with other knowledge as components of tangible, time based product. This increased quantification could do much to restore productivity.

Eventually, healthcare would become part of a broader marketplace where - until now - productive agglomeration has largely been missing. These new service generated marketplaces would relieve considerable pressure on policy makers, not to mention the pressures for services which have been borne by taxpayers, governments and employers alike. Human capital investment would be compensated as a continuous part of educational processes. This is all the more important, since the normal investment burdens of today's physicians make it difficult for them to practice in rural areas of the U.S. By making organizational capacity for healthcare less equilibrium dependent, the healthcare of the future would no longer have to present such a societal burden.

Potential Productivity: Much More Than One-Off Gains

Our personal productivity (time management) isn't functioning very smoothly, with the productivity of our institutions. Is it possible to bring these different approaches into a better alignment?

Granted: in many instances, we can problem solve and experience life without resorting to marketplace solutions. Nevertheless, when we do prefer to seek out assistance, second opinions, inspiration and the like, we often lack an institutional context which is well suited to our natural inclinations. Economically speaking, we could often benefit from the human capital of others not just as a product input, but as an intended product outcome.

Presently, however, productivity is framed quite differently. Since human capital as output is not considered integral to production processes, it tends to be removed when institutions find suitable means to do so. Further, the time based product that remains, tends to capture already existing wealth. Which means essential services involving even moderate levels of skill, are approaching luxury good status.

Yet it's been difficult to question this process, because production gains are associated with higher wages, regardless of how those gains originate. However, the source of sustainable higher wages over time has been greater output - in particular what is associated with tradable sector production. Whereas much of today's time based services income is not associated with greater output, and is actually indeterminate in nature.

As a result, when personal time increments become output or final product, the higher wages which are traditionally thought of as production gains, instead translate into someone else's higher costs. This effectively short circuits part of the processes by which productivity would otherwise bring more goods and services within reach. Given this circumstance, wage gains don't necessarily make us collectively better off, regardless of where they occur along a given income spectrum. Productivity assumptions deserve closer examination, in a services dominated economy.

The indeterminacy of time based services product, has important implications for economic stagnation and productivity. In a recent post, Tim Harford asks, if this is a time of change and disruption, then why is (typical) job tenure longer today, than it was when he entered the UK labour market in the late 1990s? Some of the same features of a services dominated economy which create problems for costs, also contribute to lost dynamism in overall marketplace conditions. Given this circumstance, today's organizational patterns for time based product, will continue to draw down overall productivity.

What can be done? Time based product as a determinate quantity of time value, would help to realign the indeterminate skills capture of non tradable sector activity. Services generation can be made determinate, by structuring mutual coordination options so that ongoing services "debts" are cancelled in real time. Eventually, this process would help to reduce the adverse selection of today's health insurance environment, for instance. Through the transfer of knowledge use for today's low income groups, knowledge providers would play a vital role in the reduction of adverse selection. Beginning this process is all the more important, as populations are increasingly refusing to administer safety nets over a wide income range. Otherwise, budgets may become problematic to such an extent that well paid time value may become indiscriminately removed from the marketplace, through automation and technology.

Debt cancelling in real time is an incremental form of services and asset generation, which would scale differently from the patterns which propelled tradable sector growth in recent centuries. Instead of placing yet more high stakes bets on access to existing services, time arbitrage would gradually bring productive agglomeration to places which now lack economic complexity. How might its growth trajectory be different, as a result?

Initial wealth gains accrue from the additions of new entrants to the system, as they begin their contributions to time measure and quantification. The second incremental gains, stem from system quality improvements that accrue over time. However, where the first incremental gain (fixed time quantities) have monetary and asset based equivalency, the quality gains of the process are a result of ongoing time management in a protected continuum. Here is where the "magic" also occurs, in the form of services generation at lower costs than what are possible in general equilibrium conditions.

Until now, it hasn't been possible to achieve substantial gains for time based productivity, unless the time factor was actually removed as an input component. By making time value a determinate output, and not just an indeterminate input, time value as output becomes a wealth component instead of a system cost. The lower costs of determinate time value, could make the balance of indeterminate time value in general equilibrium, easier to maintain, for the income levels which are capable of sustaining indeterminate income for time based product.

Time Equity as a Core for Growth Potential

Human capital is the unrealized wealth potential of the present, and a marketplace for time value could provide excellent opportunities for human capital. Time equity is a good way to create mutual employment, well into the foreseeable future, on verifiable and quantifiable terms. A new institutional framework, which I have previously described as an equilibrium corporation, could take part in generating the workplace required, among other vital tasks. Should I live long enough to assist in these efforts, building the equilibrium corporation would be part of my "bucket list"!

Equilibrium corporations would generate reliable sets of records for time equity. While ongoing records of our activities do exist in a number of institutions, these records aren't generally intended to assist in societal coordination, as an ongoing life process. In the future, equilibrium corporations would seek to synchronize time equity records across groups, so that all concerned are better able to meet personal goals and challenges.

The product of time value can be categorized more specifically, once time value is tapped to provide equity which otherwise mostly serves monetary functions. By providing a corollary role for time as money, individual units of time can "grow" both individual and group wealth, on incremental terms.

Time equity would gradually accrue to societal gain in three ways: monetarily, socially, and materially. For each matched hour of activity, the time equity involved would contain a monetary equivalent and physical component. This wealth generation can help to create welfare systems which include (but are not limited to) preventative community maintenance, preventative personal maintenance, research and development, and participation in knowledge as experiential product.

In all of this, it helps to maintain simple notions for societal need, which are not continually confused with the expectations of progress. Indeed, economists left governments and special interests free to define societal "need" at a level so as to play havoc with low income groups, through the assumption that need was not a valid part of economics. Forced consumption of life's "necessities" on strict terms, just means excuses to leave life's economic basics untouched by the promise of innovation and free competition. Through time arbitrage, communities can establish basic need settings which don't compromise the finite nature of time arbitrage for life's necessities. This would leave citizens free to establish further discretionary income, through the tradable sector activity which is utilized to expand the core framework.

Even though the finite nature of one's time does not "grow the pie", it helps to remember that time value in this instance, would be effectively utilized as a starting point for further growth. Nevertheless, time equity would gradually build the quality of services, as a given alternative equilibrium begins to mature. Meanwhile the pie can continue to grow - as always - by encouraging citizens to take part in tradable sector activity, on both local and global terms.

Time value as equity, would make the relationship of human capital to other resource capacity, easier to understand, through incremental maintenance of skills and assets. This is especially important, since intermediaries for human capital formation, have increased input costs to a degree that now negatively impacts total factor productivity.

Those input costs also affect the amount of productive agglomeration that is presently possible. Fortunately, better management of aggregate time value, can eventually make the use of human capital a more viable marketplace component. Time equity could provide a way forward for long term growth, through addressing the relationship of input vs output for services generation.

Innovation Potential: More Abundant Than It May Seem

The good news? Innovation is not composed solely of major economic events. Nor is it simply the latest high tech advances. Likewise, wealth creation need not be limited to what occurs along the frontiers of knowledge in major universities or corporations. Fortunately, much of the "outside the box" thinking which could lead to eventual progress, is so incremental in nature, as to scarcely be noticed at first. Still: whether or not incremental gains can translate into larger economic gains, depends on whether innovation is believed to an economic option for all of society, and not just the few.

In recent years, I've been learning to describe the incremental patterns of time arbitrage as a potential template for economic interaction. Time arbitrage is a representational tool which would allow individuals to explore more meaningful contexts for services formation, one incremental matched hour at a time.

Presently, economic progress is mostly pursued in ways which leave little room for the contributions of average citizens. Yet policy makers are hardly alone, in believing innovation is mostly a matter of cutting edge technology and efforts from the most skilled members of society. However, this approach ensures that most of the innovation which takes place, is compensated and intended for specific purposes and outcomes.

Indeed, many earlier innovators whose contributions benefited all members of society, were not necessarily compensated by either governments or firms. Instead, innovators were similar to other individuals who were pursuing personal challenges and journeys of discovery, through their own means. It's time to reclaim the average citizen, as a part of the networks which include personal challenges and journeys of discovery.

A new book from Kevin Laland, "Darwin's Unfinished Symphony", appears to provide some interesting context for the role of innovation as well. As Arnold Kling notes, "The book is focused on the co-evolution of brain capabilities and culture in humans". Laland's description of culture is apt: "The extensive accumulation of shared, learned knowledge, and iterative improvements in technology over time".

His book also highlights a social learning strategies tournament. The three moves available to players in this game, are reminiscent of the ways we choose to respond to our environments: exploitation, observation, or innovation. When a given environment is stable, exploitation is often a reasonable option, for one can simply take advantage of available opportunities. Observation, on the other hand, includes the additional effort of verifying existing economic patterns, before taking action. Whereas innovation may become necessary to some extent, if the normal adaptations of exploitation or observation have become less well suited for replication.

Nevertheless: some readers are aware, that I hesitate to attribute cultural patterns to major differences in economic outcomes. The danger lies in assuming it is impossible - or at least not worth the effort - to encourage some groups to overcome ingrained habits and patterns which lead to negative economic consequence. Likewise, Hernando de Soto was skeptical, regarding the importance of culture as essential to economic progress. In "The Mystery of Capital", he wrote:

Throughout history people have confused the efficiency of the representational tools they have inherited to create surplus value with the inherent values of their culture. They forget that often what gives an edge to a particular group of people is the innovative use they make of a representational system developed by other cultures.

Regarding the three environment options described above: consider de Soto's emphasis of the importance of observation. He implored governments to closely observe the activities of their own citizens, to discover where the clues of economic dynamism were already in abundance. If governments wanted better economic representation for all their citizens, much depended on acknowledging how citizens were already adapting, and reinforcing those ongoing efforts through legal validity.

Since developing nations also imply developing general equilibrium conditions, the observation role has added importance for equilibrium outcome. But what of developed nations which consist of more mature equilibrium formation? Exploitation or observation may not be enough, which suggests a larger role for innovation than a society is sometime inclined to allow. But when innovation remains disallowed, the fact the "low hanging fruit" has mostly been picked, comes to mind.

If only the "high hanging fruit" were being discussed more often! I have no qualms suggesting time arbitrage as a "high hanging fruit" available for the "picking", in terms of innovation potential. Time arbitrage is a representational system which could augment human capital, and allow people to participate more fully in the daily functions, habits and patterns of knowledge use.

And the groups which implement time arbitrage would not have to resort to extensive funding or compensation from outside sources. They would not have to rely on other institutions which already have extensive commitments elsewhere. Instead, research and development would be a natural outcome of the ways these environments are internally structured, so as to leave ample room for the challenges of innovation and discovery.

Knowledge Wealth and Open Economies

Knowledge has the same capacity as any product, to function as a component of wealth creation. However, it may be easier to maintain growth and today's (still) open economies, if time value can be verified as a unit of measure for knowledge use. This form of services creation could make populations far less dependent on welfare states, which are quickly becoming an obstacle for open borders.

Economic time value as a point of measure and compensation, would make it possible for people to take their own economic time preferences into account. Even though we may value certain skill sets much as the institutions which hire us, often we have different preferences, regarding the use of those skills in relation to other options.

With applied knowledge use in basic time use functions, people could finally judge the ongoing results less harshly, since less is at stake on such simple terms. Educational processes would serve as incremental building blocks, which in turn means individuals can take part in services as combined investment and application processes. The result? More accessible human capital investment for those with limited resources, and less overall risk in terms of knowledge use outcomes. Importantly, these procedures would allow greater knowledge dispersal, without making further demands on the resource capacity which supports today's vast knowledge infrastructure.

Today's open economies are increasingly threatened by the constraints of primary market formation, which is proving insufficient for extensive welfare states and the costs of services as secondary markets. Given these circumstance, institutions seek productivity gains via more automation and less employment, in part because of the current costs of human capital investment. Employment losses are all the more paradoxical, since individuals still need to make extensive investment commitments, in order to gain economic entry.

Yet these existing knowledge investment burdens play a large role, re limits for knowledge use on present day terms. While digital means could greatly reduce investment costs; inexpensive digital education sends the wrong signals about personal ability in the present environment, in part since many institutions are compelled to seek the "best of the best".

Despite the tremendous potential of the digital realm to spread valuable knowledge, platforms for a higher level of societal participation, are not yet in place. Knowledge use systems could provide a platform not only for more extensive employment potential, but also the preservation of open economies as well. In all of this, a paradox of knowledge is that even though it initially builds open societies alongside welfare states; knowledge as resource redistribution cannot maintain an open society in the long run, via the same means.

Some Thoughts Regarding Economic Uncertainty

Much of general equilibrium is a result of the numerous benefits which accrued from earlier economies of scale. Hence today's expected "standard of living" also includes a high bar for economic access, given the wide array of special interests which have contributed to rigid definitions of equilibrium. Of course this approach has had its costs in terms of public and private economic engagement, along with a substantial backlog of debt structure to make it possible.

Remember when the majority of this structure was built? Only consider those 20th century decades, when inflation was actually a problem for all concerned. The Fed's earlier "party with the punch bowl" (attributed to everyone else? How exactly does that work?) serves as a reminder how opportunistic a credit driven central banking system can be. Some of the central banker overreaction to today's imaginary inflation, comes across a bit self righteous, given the reality of the situation.

Worse, are the excessive complaints about demographics, which are little more than the residual credit driven excuse for economic gridlock. One might call it a "pity party", since there are insufficient high incomes left for credit institutions to "plunder", oh and never mind the plentiful loose change still lying on the sidewalk which seemingly is not worth anyone's time. To put it politely, those excuses for economic stagnation are entirely inappropriate "hand wringing", due to the earlier excessive capture of income by debt creation in the years when it was possible to do so. Today's resulting economic uncertainty, helps to explain why aggregate spending capacity should always be honored with a level target. Instead, citizens are paying the price of imaginary inflation, to a large degree because central bankers and others were unable to resist the bounty of income capture, in the decades of high inflation when Baby Boomers were still young.

It is quite hypocritical to pretend high inflation is even an issue, when younger generations are still struggling for economic access. The fact that today's central bankers are reluctant to acknowledge the importance of nominal income representation, is just one reason why I'd like to see wealth creation which exists independently of the credit function now responsible for economic prosperity, or the lack thereof. I must admit that I dislike wealth creation which is entirely credit driven and discretionary, because it still allows central bankers to throw entire generations under the bus - only to (finally) throw a big party with all the attendant inflation (that of excessive lending capacity) when the "right" generation comes along. When that finally happens, what about today's posturing as to inflation being "just around the corner"? Ah who cares, it will all be forgotten by then.

Particularly problematic, is that political constituents are becoming less willing to honor mutual understandings for both economic and political obligations, as they presently exist. One could say there is an increasingly open challenge to present day equilibrium monetary needs, which also belies a lack of understanding, how important it is to maintain the wealth structures of the present, before societies find new systematic means for the wealth creation of the future.

When political leaders challenge monetary policy, they also do not understand the degree to which central bankers are already holding back, in the representation of already existing mutual economic agreements. No question, central bankers have already been reacting, to what some believe to be an excessive amount of liquidity. How else to explain recent Fed communications about running the economy "hot" for a time, when this would not take place under any circumstance? Hence some confuse the pricing levels of artificially constrained assets, with the monetary flows which are required to maintain business as usual.

Today, it seems many people reserve their anger for the "wrong" candidate or the "wrong" political response. As it turns out, most of my anger is still directed at the structural circumstance that were allowed to continue for far too long.

The Case Against Insufficient Economic Complexity

In "The Case Against Cash", Kenneth Rogoff writes:

I am not advocating a cashless society, which will be neither feasible or desirable anytime soon. But a less-cash society would be a fairer and safer place.

Note that despite the disclaimer, it appears that Rogoff "agitates" for a cashless society just the same. Yet what would such a measure actually provide, in terms of more positive circumstance? There's a chance this reasoning on his part ("a fairer and safer place"), is wishful thinking, in terms of the proposed "solution". I've argued against a cashless society in earlier posts for a number of reasons - not the least of which include the inconvenience factor, for anyone such as myself with limited income.

What I wish to emphasize here, however, is that efforts to massively reduce cash holdings are a backward approach, to the informal economies beyond government's domain. Unfortunately, these conditions thrive, due to a lack of formal economic options for individuals. Plus it's a problem which is only getting worse. Hence instead of a case against cash, why not address the lack of productive economic complexity, in places where it is most needed? How does anyone expect a massive reduction in cash to cripple a vast underground economy - one which primarily exists because too many people have too few options to make a good life for themselves?

And without more positive economic choices, people in the underground economy would quickly find means to circumvent a lack of cash, should governments take this route.The best way to provide incentive for people to participate in formal economies, is to formalize more means of generating economic activity for all concerned. When policy makers spend far too much time going in the opposite direction, the economic underground will remain strong as ever, regardless of restraints on cash formation.

Positive formal economies which provide sufficient economic complexity, are - first and foremost - a result of individual empowerment. David Henderson encourages us to honor the laborer as an individual, in this essay for Labor Day:

To honor laborers, you would have to respect their right to make choices for themselves.

Presently, people lack sufficient economic context by which to do so, and much of the earlier reliance on cultural norms for economic coordination has been outmoded. When individuals and groups alike lack context for mutual organizational patterns, unions and underground economies can be counted on to fill the void. However, in spite of pro/con arguments regarding unions, Timothy Taylor reminds us that unions do not have the presence in today's society which existed only decades earlier:

About 30% of the workforce belonged to a union back in the early 1950s, compared to barely more than 10% today. Union workers do earn more, but at least in part, this is because their employers know how to compete with a mixture of higher-priced labor, fewer jobs, and more capital investment. Are there alternative institutions that might represent the modern needs of US workers?

His concluding question could be considered as a challenge. Indeed, in an earlier post on unions, Taylor noted that when workers don't have a voice in the workplace, they turn to politicians instead. How might institutions respect the right of individuals to make choices for themselves, without giving in to excessive demands?

One possibility for 21st century workers, is an institution which allows individuals to take (economic) credit for the abilities they already have, so that they can continue making progress acquiring new skills, without undue risk. Via mutual employment, individuals would likely not be so inclined to take advantage of one another, because mutual employment would also mean an ability to learn stronger means of negotiation.

Also, mutual employment would more often mean "being okay" with "good enough". How so? Consider what has already occurred, as society has become ever more insistent on creating the best standard which everyone is "supposed" to follow. When societies insist each time on going for the best, the most efficient results, non human algorithms are going to beat us at our own game. Indeed, this is already happening.

Why not respond to encroaching automation, by embracing local "closed loop" services capacity, via the local creation of time based product. This form of hive mind hardly needs to provide the "ultimate" or the "latest and greatest" in knowledge use. Instead, it's a process which would make it possible for individuals who don't live in prosperous regions, to also have a good life. Otherwise, automation and the economic underworld may continue to encroach on the employment of our less prosperous regions, in spite of the cashless society which economists such as Kenneth Rogoff are keen to imagine.

Make Room for Incremental Economic Growth

For as long as anyone can remember, gains accruing from economies of scale, meant ever higher expectations for the terms of economic engagement. Yet as standards of living rose from these gains, so too did the resulting marketplace "designs" of countless rules and regulations. Economic participation gradually became associated with environments which - while well suited for  higher skills levels and income - lost the flexibility that made a wide range of activity possible for all income levels.

Why should it be necessarily for formal economies to be solely defined, according to the wants and needs of higher income levels? Making room for new, more incremental patterns of growth, would allow individuals to switch gears as needed, while going through the course of one's life. After all, this important issue is not strictly associated with any specific class or skill set, but the changing conditions which everyone experiences over time.

Only consider the reality that - should non tradable sector requirements not be subjected to cost reducing innovations - many returns on investment have diminished just the same, over time. Less investment return in aggregate, means less ability overall to support rigid non tradable sector structures. For instance, the return on investments has changed in recent decades, according to Managerial Econ:

If someone today invested $100,000 in a balanced portfolio of stocks and bonds, they could expect a return of $21,800 over the next two decades after costs. Ten years ago, that same investor might have expected to make $60,000, and three decades ago $150,000.

One way to respond to this situation of course is, life goes on. And even without structural change: while most individuals would continue to take care of basic issues, many would drastically reduce the time based services of others along with other forms of experiential product. Yet why should such marketplace losses be necessary, when product formation could be preserved through organizational capacity which requires less initial investment?

Further, no one should expect already existing institutions to directly bear the burdens, of what is already reduced revenue for the requirements of today's budgets. New institutions would be better positioned to respond to resource flows which have dramatically changed. By generating formal economic environments which encourage the participation of lower income levels, public and private financial burdens alike can eventually be eased.

Doubtless there'll be plenty of teeth gnashing in the years ahead as more pension programs come up short, reducing other ongoing resource flows in the process. Even though there's plenty of blame to go around as to inflated expectations, the best response now is to move on, and recognize that earlier organizational patterns for capital and resource flows, need to futher evolve. Let's get beyond the blame and recrimination, and find broader means for economic sustainability than are currently in place.

Aggregate Demand - Some Monetary vs Real Economy Factors

The real economy creates product, while central bankers are responsible for supplying the money that represents said product. It's what aggregate demand is all about. Yet even a basic economic construct such as this can become garbled, when policy makers and supply side factions end up obstructing what should be a straightforward process regarding GDP output.

In spite of occasional appearances to the contrary, accurate monetary representation for aggregate demand is the primary responsibility of central bankers. Their monetary policy role is all the more important, given the fact no other institution is equipped to remedy the problems central bankers can generate - problems which often continue to ripple across the entire economic spectrum.

For instance: aggregate demand as monetarily representative of final goods and services, is not to be confused with changes in specific income sources. Nevertheless, Hillary Clinton and others have reasoned that that wage gains for certain workers, could substitute for the wage gains that would otherwise result from greater labor force participation and output. And from Scott Sumner's response:

This is voodoo economics on steroids. Most economics textbooks are written by left-of-center economists, and I don't recall this sort of argument in any of them. For good reason.

Even if wage growth led to more demand (it doesn't) the Fed would simply raise interest rates enough to prevent demand from rising. I was especially disappointed to see some famous economists endorse her message.

Of course, something similar to this reasoning only exacerbated unemployment, during the Great Depression. John Cochrane also was not happy, about what he calls the federalization of labor.

We are getting a good hint that a centerpiece of economic policy in the Hillary Clinton administration will be an increase in Federal control over labor markets.

All of which reminded Arnold Kling of the earlier "cutting taxes will reduce budget deficit" rationale, hence his retort:

So where we once had supply-side voodoo economics, we now have demand-side voodoo economics. Just what we needed.

Why has so much lousy reasoning surfaced, instead of concerted efforts to regenerate long term growth potential? Regular readers aren't surprised that I blame some of this unfortunate dilemma on supply side intransigence, which has gone on long enough to finally cause real problems for the Republican party. There's too much willingness on the part of special interests all around, to leave blame, inaction and economic gridlock at government's door.

Yet this unwillingness to generate a broader and more inclusive marketplace, only means further problems, as policy makers continue to make completely unrealistic promises to constituents. Why, instead, don't governments give their citizens more means to assist one another on economic terms? Little did I know, in one of those overexcited early posts, how many obstacles stood in the way of "creating our own demand". Indeed, an article from Peter Thiel serves as a reminder, how "old school" I must be, with my (apparently) irrational hope for the future:

Technology means doing more with less. In the absence of technological progress, we end up with a zero-sum world, in which there must be a loser for every winner. It is not clear whether a capitalistic economic system could function without growth; and it is unlikely that a representative democracy, which requires the give-and-take of win-win compromise, would continue to function.

Instead of learning to do "more with less", special interests sometimes prefer to hold already existing incomes hostage, to rigid sets of standard of living expectations. For building construction, product "choices" mean "more with more" building requirements, which mostly view technological innovation as an intrusion on "the way we've always done it" non tradable sector activity. Hence the challenge for production reform in building and construction, is getting innovation to do more with less where doing so isn't a threat to the status quo.

That said, how would "more with less" - in terms of production reform potential, be possible via time based services product - which requires more time input, instead of less? Indeed, "more with less" in this regard requires thinking a bit differently. A common time template (game board) would make it possible to capture personal and group time investment commitments on incremental terms. By generating incremental gain (compensation) for in process personal time investment, fewer knowledge and skill based commitments would be lost from the marketplace, as individuals and groups work together to generate new time based services product.

Symmetric coordination means a restoration of maintenance functions for knowledge use, which have become increasingly threatened by limits to asymmetric compensation. A coordinated base for ongoing knowledge and skill based activity, provides more productive output in terms of both personal value, and the contributions of a given participating group, over time.

By using human capital investment as a stepping stone through the course of a lifetime, it becomes possible to smooth consumption between generations, particular for the product which is most in demand for the 21st century: knowledge use. Potential for aggregate demand growth need not be a mystery, so long as individuals can participate in the forms of aggregate supply which matter the most, on real economy terms.

Notes on Equilibrium Corporation Core Functions

After plenty of consideration, I realized "equilibrium corporation" could be a suitable name for a new form of corporate structure. After all, much of the organizational capacity this framework would involve, exists as alternatives to general equilibrium conditions.

These alternatives are free market in orientation, at a level that would be impractical in today's rigid economic environments. Indeed, the knowledge use systems which equilibrium corporations make possible, could be considered a form of libertarianism for time based services product. Production and consumption of services, land and building components would be locally held, so as to preserve a time value to resource value link for low income levels that is often not available in general equilibrium conditions. Decentralized offerings such as these would provide hope for libertarian "leanings" at the margins, given a present day reality where more citizens are now concerned that their set of values is not simply tolerated, but that it prevails.

Even though the equilibrium corporation would encourage unique (community) characteristics, it would include a broad set of economic patterns as a common "backbone", in each decentralized setting. Think differences in cultural outlook depending on community, versus a unified spectrum approach in terms of economic formation and knowledge use preservation. And while this corporate structure is a response to what has become political/macroeconomic gridlock, it would also simplify the ways in which individuals assist one another as they go through the course of their lives.

What might the common economic "backbone" consist of? Supply and demand for services and asset formation, would become internalized. Citizens would break free of their present (limited) consumer roles, by becoming time based service providers, for starters. Another important aspect is a combined public/private framework in a single setting. Time based functions are coordinated and prioritized as a starting point for organizational capacity, whether "public" or "private" in nature.

One reason this matters, is that fiscal transmission processes are overly complex in today's public and private enterprise, for they have not accounted for what are crucial differences in revenue origination. Since time value is a fixed component in relation to other forms of resource capacity, budget priorities can be readily skewed. A prime example are the legal requirements of pension and entitlement obligations, which have made too many claims on presently existing "prime" time value, in relation to its actual supply in the marketplace.

Consequently, equilibrium corporations would record and maintain the distinctions between resource use and availability which is time related, versus those which are not. By doing so, it is possible to determine what is occasionally available for infrastructure building and maintenance capacity, versus what is generally available on a regular basis. This allows a smoother transmission to take place between services based activity, and the physical constructs which serve as environments for time based coordination. Most important, it becomes possible to measure the time based content of services capacity. The fact this form of product is practically "dark matter" in general equilibrium conditions, makes it difficult to recognize the actual services shortfalls that exist in services - particularly in regions which already experience limited economic complexity.

Since today's time based services marketplace exists in a secondary capacity, no one really knows what is optimal, in terms of mutual assistance as opposed to what one would prefer to do for oneself. One reason knowledge use readily defaults to captured wealth settings, is that reversion to the mean does not naturally occur (via monetary representation) for asymmetrically compensated time based product.

As a result, too much applied time value potential is lost to a non economic status - if and when this form of potential is even recognized in a consumer based culture. While no equilibrium cannot create a reversion to the mean for time based product in relation to general equilibrium (constant time value, random resource value), alternative equilibrium can do so, when time value is utilized as a unit of measure in relation to itself.

Some core functions are also monetary in nature. While I've emphasized a connection between the equilibrium corporation and "time backed" money in a number of posts, there's actually a better way to describe this function, as a suitable point of reference: time linked money. How so? Time backed money is somewhat misleading, in that it implies additions to what are present monetary values for time aggregates in general equilibrium conditions. I don't propose more claims on existing capacity, because 1) already existing time value claims exist in a mature equilibrium construct, and 2) new growth would not make further claims on existing value, and 3) new growth is possible, via making time value equivalent to a raw (starting point) commodity good for further "processing". One could say the equilibrium corporation processes time value.

Granted, there are definite time links with monetary representation in general equilibrium, and regular readers know that I associate nominal income as the intersection between time value (as it is already accounted for) and other forms of resource capacity. This vital intersection is the most stable point in our economic realities. However, it has proven increasingly difficult to account for time value as the wealth contributor it actually is. Hence the equilibrium corporation would provide a stabilizing function for aggregate time value at the margins, through recording its relation to other existing resource capacity as a regular function.

Time linked money would provide means to standardize time value in relation to local resource capacity. Part of the process includes internal asset and service formation, as reliable supplements alongside a monetary base for local time value. Processes such as this are particularly needed for lower income levels, since monetary representation for these groups tends to distort general equilibrium conditions. For instance, a recent Adam Smith Institute post noted what occurs, when money (instead of other support means), becomes the primary component of support for lower income levels. Governments have attempted to provide benefits in lieu of income support for low income levels, via welfare states. However, the external augmentation of time based services, only further undermines their price mechanisms.

There's another important aspect of time linked money, which is also responsible for its potential to generate a higher growth trajectory: mutually backed employment generates new wealth which is not debt dependent in any way. Even though today's wealth has its origins in tradable sectors, economies have gradually became structured so that economic access often requires further debt creation, before more wealth generation is possible. However, the debt as wealth generation process has become too efficient, in that debt generation is mostly extended to high value skill sets and resource utilization. As a result, lower income levels have gradually lost their ability to either produce or consume, given how crucial elements of the marketplace are now defined.

By now some readers probably suspect that I don't find credit restoration to lower income levels to be an apt solution. Especially given their present lack of representation, for either time value or useful and encouraging environment definition for living and working needs. This is why time value needs a chance to serve as a new source of wealth generation. And credit institutions need not remain at the front of the line with their irrational and people defying dictates, for every form of wealth creation imaginable.

Equilibrium corporations would be more than willing to supply new means for wealth creation, in the form of human capital. Among the defining characteristics of this new growth capacity, would be its incremental nature, as groups begin to reimburse one another, simply for their mutual agreement to assist one another. Prototypical units of time and knowledge based service would no longer bear the burdens of harsh judgement, as now occurs when knowledge and time are asymmetrically compensated.

Incremental ownership also provides a nudge factor for individuals to hold fast to basic protections, even as they are encouraged to take greater risks in their own lives. Having basic asset structures as a fallback position, is one of the best means to protect one's health from spiraling downward, when in fact risks turn out to be too much for the circumstance at hand.

And last, but certainly not least, the equilibrium corporation would provide - finally - a free market for the time value which matters most to all of us. Only remember the worth of free markets, according to Milton Friedman:

What most people really object to when they object to a free market, is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.