Might Good Deflation Counter Excess Monetary Demand?

What makes good deflation so desirable? It all starts when increased output is possible with fewer resources overall. Once price reductions per unit come into play, they in turn lead to real wage gains and higher productivity levels. I believe that good deflation could become a services sector response to counteract high inflation and rising interest rates. Given the many positives of good deflation, what accounts for such resistance to its potential in housing and time based services?

Even though both areas must deal with the natural scarcities of time and place, much of the bias against good deflation potential is inadvertent and political in nature. Not only are such biases protectionist, they discourage adaptive evolution in time and place based product - evolution which could otherwise augment their capacity despite their natural limitations. While time based skill and land as real estate are certainly not exponential in nature, they could still add additional output through flexible coordination of knowledge and land use potential.

Bias characteristics also differ depending on the markets and sectors in question. For instance, progressives and conservatives increasingly prefer a restoration of local manufacturing over global free trade. Fortunately - even though this anti free market bias will increase manufacturing costs to some degree - globalized manufacture should continue benefiting nations in the foreseeable future. At the very least, it's reasonable to expect good deflation to ultimately be restored in global markets. Once tradable sector resource access is more stable and predictable, it should become more cost effective as well.  

Societies are fortunate indeed, that tradable sector activity is often managed for full production efficiencies. Still, during times of high inflation, we're reminded of the dangers of taking good deflation in tradable sectors for granted. Indeed, relying on the serendipity of long term good deflation (along with the more recent low inflation pattern) made it easy to disregard the long term inefficiencies of non tradable sectors. These inefficiencies remain in place due to countless quality requirements, many of which have been exacerbated by government subsidies. 

Recall however, that these requirements end up as ever more inputs in relation to aggregate output. Even when quality gains are worth additional costs for some, other groups suffer efficiency losses which in turn require additional personal labour for non discretionary needs. Consequently when it comes to quality of life, some income groups are actually moving backwards. Again, constant calls for higher wages occur because lower income groups need to work more hours than is sometimes feasible to meet their financial responsibilities.

Fortunately there are already better production methods which could establish disinflation in housing - methods which could eventually lead to good deflation as well. Just the same, a considerable amount of social and political bias has prevented the majority of flexible housing options. In this restrictive environment, progressives tend to focus on time based constraints for meeting financial obligations. Whereas conservatives are more concerned about place based constraints, such as immigrants who are seen as competing for already scarce housing. 

Despite the protectionism that stands in the way of production reform, housing is still a simpler issue to solve than markets based on time and personal skill. Hence countering excess monetary demand could begin with more flexible interpretations of housing for all income levels. Otherwise, many individuals will remain subject to the first mover problem of providing valuable services for others by more accessible means, only to be locked out of the housing necessary for this to happen. For that matter, one of the main reasons wages recently increased for the lowest income levels, is that employers were faced with the fact no housing existed nearby which their employees could afford. 

Societies need to focus on non tradable sector production issues, since they are at the heart of recent inflation which is proving difficult to eradicate. However, there's something else important about productivity expectations which needs to be noted here. When productivity involves final product which is independent of personal labour, these areas do have capacity for exponential output. Since our economic time is not exponential, it often demands a higher price as a fixed quantity. In these instances, people rely on investments in knowledge and skill to increase their time value. Alas, institutions then tend to respond by substituting away from time based input, in order to meet their financial obligations! Despite the obvious drawbacks of this effect, our current understanding of productivity gains makes it a rational approach, especially if institutional budgets are already in jeopardy. 

How, then, could good deflation be achieved in skills use without having to substitute away from time based input? One way is to make mutual time commitments, or time arbitrage, a valid and measurable economic unit. Skill sets would be voluntarily chosen and independent of monetary value. However, group effort would also utilize monetary compensation as a base to keep the process in motion. Time arbitrage might help societies maintain and preserve what they build and create, plus the knowledge and skills involved would be simultaneously measured as cumulative gains. Time as an economic unit of value is also one way to overcome the Baumol effect and ultimately, achieve good deflation in time based services. Again, production gains would transpire on completely different terms in these settings. Once housing production reform begins in earnest, economic validity for mutual time commitments would be the logical next step.

Are Charter Cities a Possibility for Migrants?

What if nations sought to create new cities instead of camps for the ever growing numbers of migrant refugees? A recent article for Brookings suggests this policy option, and the authors explain:

Charter cities are new urban developments that have been granted special jurisdiction to create their own governance systems. Clearly defined legal frameworks, good governance, efficient distribution of public goods, and modern infrastructure could support well-functioning markets and attract investments to generate higher rates of economic growth in charter cities. Based on these principles, we propose to establish sustainable charter cities-in-exile (SCCEs) as a policy framework for host countries and international development organizations to promote refugees' self-reliance and facilitate their integration. The proposal supplements existing migration policies, especially in areas of identified procedural and logistical bottlenecks, and supports refugees in their freedom of choice of migration destinations.

In some ways I find this proposal impractical, given the difficulties involved. One can only imagine the political battles that would ensue in the U.S. were policy makers to suggest something similar. Yet some nations may prove more willing to address these issues, which accounts for a response from The Global Eye.

It is clear that we all want legal and regulated immigration but the issue is highly complex and is characterized by growing complexity.

Still, their response to the Brookings article considers the possibilities:

It seems to us a viable prospect for a phenomenon that, politically, has been reduced to an invasion and a threat. Without changing perspective, politics will continue to deny the structural nature of the phenomenon and only aggravates its consequences.

My biggest concern in all this, is the extent to which economic complexity is starting to limit what traditional institutions can successfully coordinate for services and infrastructure, especially in areas which lack wealth sources. Granted, a century earlier, even individual private companies (as one example) could still manage the services and infrastructure involved for company towns, but larger versions today would be no easy feat. Alas, only consider the difficulties private companies in the U.S. encounter today, if they attempt to provide affordable healthcare for their employees.

Indeed, the serendipitous interaction between primary and secondary markets in the most prosperous regions, largely accounts for the economic dynamism of our present. However many knowledge providers are reluctant to settle in regions which come up short in this regard. Considered in this light, what these charter cities need to generate could be difficult. More specifically, "sustainable cities-in-exile" (SCCE's) would 

seek to provide refugees with a place of safety, an immediately available assistance network, and an accelerated path towards professional and income opportunities. A guarantor country or group of countries would enforce the SCCE's charter while guaranteeing the safety of private sector investments and firms, including those from the country of origin with temporary headquarters-in-exile. A proper institutional architecture guaranteed and monitored by national governments and international guarantors, with direct involvement of the refugees and local communities, would help to reduce the risks of crime, human rights abuses, and sexual exploitation.

While these are worthy goals, who would fund the traditional institutions required to make it all happen? It's this same lack of funding for vital traditional institutions here, which leaves many citizens without basic amenities in rural and underdeveloped areas. For that matter, a recent Washington Post article highlights how American territories are losing population in similar ways. 

At stake in all this, are distributional scarcities and limitations in some of our most important institutions, particularly those representative of secondary markets for applied knowledge. I believe that in order for new cities to happen, people will need stronger connections with direct forms of wealth creation and applied knowledge systems. Otherwise, many newcomers would remain dependent on the assistance of institutions already unable to meet the needs of local citizens. Chances are, the problems of immigration won't be so severe, once applied knowledge institutions evolve to allow skills participation for all individuals. After all, many nations would be more open to immigration, if their own citizens could participate in applied knowledge networks as well. 

Experiential Markets Versus Personal Management in Healthcare

Healthcare in the U.S. is a prime example of missing markets for lower income groups. Nevertheless, more than costs are at stake, since other income groups with greater access to healthcare are still dubious about its actual value. Texas ranks highest in limited healthcare access, where in recent years the uninsured are approximately 17 to 18 percent of its population. I am among them since Medicare in the U.S. (which is gradually transitioning to private insurance) is becoming more costly and less predictable for retirees - regardless of income. However, once I retired, I started setting aside money every six months in the event of future healthcare emergencies, rather than paying Medicare premiums.

For many healthcare consumers, careful budgetary responsibility means a high level of frugality regarding any kind of professional assistance. People still believe that healthcare is important, but some of what is missing now, is a matter of regretful consumer choice. How is any of this rational? Two issues in particular stand out: What have people come to expect in terms of healthcare, and how have those expectations fallen so short of the mark? Even though much healthcare dialogue is framed in terms of costs, the very nature of personal interchange in healthcare activity is crucial as well. 

Meanwhile, many individuals increasingly take a personal management approach to healthcare, in hopes of successfully addressing whatever problems might arise. While this approach can be successful, it does has good and bad aspects. The good - of course - is increased personal responsibility for one's own health prospects. The bad? Alas, there are moments in life when it's not feasible to arrive at a clear diagnosis. Worse, there are emergency situations when we are in no position to tend to ourselves without assistance from others. Yet not all nations are fully committed to this elusive ideal of mutual assistance, or even the importance of community in general. Unfortunately, both happen to be the case in the U.S. Hence we are approaching the point where there is insufficient monetary support for healthcare's existing institutions. As the reality of this starts to sink in for healthcare professionals, perhaps they will eventually try new approaches for the preservation and use of vital knowledge - at least one can hope. 

Personal healthcare management is an unalloyed plus. For one thing, consumers and patients have far more time to dedicate to preventative maintenance than do physicians. Also, there's no "one size fits all" for decision making in applied knowledge. Each individual is unique in their personal makeup and approach. Likewise, consumers can maintain personal healthcare histories, and at the very least, AI might be able to do so in the near future. After all, AI is not subject to the same time scarcity constraints as are healthcare professionals. Also, as patients age, they tend to devote much more time to healthcare self management than is generally necessary in one's younger years. In all of this however, traditional media can feel insulting when reporters and journalists stress the dangers of self diagnosis and personal care outside the attention of professional physicians.

If only personal management were enough to take care of healthcare issues. Instead, sometimes our survival depends on the help of others, even if we cannot afford it or worse, end up belittled by the processes involved. For instance, several years ago, an ambulance crew convinced my father to ride to the hospital after a bleeding episode to make sure everything was okay, only for my father to be berated by the physician who complained his time had been wasted. Instances such as this are why people think twice about help in dangerous situations, since one seldom knows whether mutual respect is feasible. People would likely feel better about mutual assistance as taxpayer obligation, had societal skill levels not become so extremely unbalanced. There will be no institutional reform, if possibilities for mutual respect aren't somehow restored. 

Finding better balance in skills levels between individuals, means finding ways to make our time value economic in markets for time based services. How do we create mutual interdependence which is also economic in nature? I get that physicians and other healthcare providers no longer have sufficient time for their patients. In all fairness to healthcare providers, healthcare today shares similar time product scarcities with other secondary markets for applied knowledge. The biggest problem in this regard, are situations which call for mutual time based interaction, yet too few groups in society are able to effectively coordinate the skills involved. Further, additional layers of management in too many instances, cannot make up for time scarcities in crucial skills. Instead, excess management often adds needless complexities and costs, not to mention lowered ability for providers and recipients to find reciprocity in their interactions.

Without direct relationships in time based assistance, societies are losing their ability to effectively manage the demand and supply of time based product in the marketplace. These losses could explain much of society's current dissatisfaction with its existing institutions. Despite this disillusionment, getting down to specifics regarding how to move forward in common purpose, is proving to be the hardest part. Neither experts or laypeople are in a suitable position to implement institutional evolution in the 21st century. 

Though this is one time when solutions are not about "appropriate" credentials, even professionals tend to be criticized when they step out of their immediate domain of expertise. In this environment, how is it even possible for outsiders to be taken seriously? As it turns out, social media gives plenty of permissions for wide ranging complaints regarding why things go wrong, whatever that may be. What social media hasn't been willing to do, and what particularly disappoints me, is its lack of online promotion for suggestions as to how problems can be addressed. We simply can't can't afford to hide anymore from the specific hows of institutional change, despite the fact they are unbelievably difficult and frustrating to confront. For a while, I'd also become reluctant to write about how. But I can't hide my head in the sand any longer.

Incentives Matter for Continuous Procedural Maintenance

As economies gradually become more complex, basic structural maintenance grows more complicated also. Yet the maintenance of our lives, physical environments and knowledge structures is perceived as economic burden, and societies now lack sustainable market structure in crucial areas. During cycles of primary market dominance, societies come to rely on continuous procedural maintenance through monetary and non monetary means. Now however, some of what we've relied on for full maintenance capacity, has been lost. This is particularly true for the use of knowledge in society. 

Just the same, maintenance needs don't go away, and we need new thought processes which can recreate reliable continuance. Doing so means the transformation of our dependent (or secondary) markets, as these areas especially lack incentive to maintain societal stability through monetary compensation alone. In all this, governments are increasingly pressured to minimize fiscal burdens in the use of applied knowledge and skill. We have already seen how procedural maintenance is perceived as taxpayer burden, as political groups now seek to undo the institutions of knowledge and action with nothing sustainable to take their place.

Private enterprise also lacks incentive to make full use of applied knowledge, especially if doing so is perceived as a problem for profit maximization. This isn't good news for societies in the years ahead, since more effective use of knowledge is needed to overcome numerous obstacles to continued progress. These are just some of the reasons I've advocated for time arbitrage commitment as an economic unit of value, to supplement crucial maintenance where monetary compensation so often falls short.

Nevertheless, some reluctance on the part of governments and private enterprise, is understandable. After all, various interest groups have been notorious for creating maintenance "requirements" which are basically about profit making opportunities, instead of true systemic support. Despite the fact faux maintenance isn't often immediately obvious, it occurs routinely in the knowledge based demands of healthcare, education, finance and legal professions. As these additional costs accrue across the spectrum, it only gets more difficult for people, governments and businesses alike to preserve their efforts in society. 

Unproductive forms of economic complexity increasingly dominate our redistribution flows. If this weren't enough, the recent cultural battles leave more productive forms of economic complexity on shaky ground. Clearly, too many economic incentives haven't been well aligned for basic maintenance needs. Indeed, a major part of what makes it difficult to maintain productive economic complexity over long periods, is that societies tend to downplay the very activities which conserve valuable patterns of production. How might this be changed?

Ownership and Output in Excess Nominal Claims

Excess nominal income claims are too common in local service markets which are not discretionary. Governments and special interests alike tend to limit these options, thereby reducing effective management for both our personal obligations and physical environments. If this unfortunate circumstance weren't enough, excess claims in these areas are starting to impact monetary policy as well.

Our potential for ownership and personal responsibility are sorely compromised, when too many markets for basic life needs are narrowly defined. The markets most affected are those involving human capital, skill potential and housing. Alas, these are now mostly intended for the use of higher income groups. What's left for ownership potential, includes traditional housing (with its legal benefits of family inheritance), financial markets for the traditional capital of wealth building, and the formal institutions which now link human capital to status and monetary gain. All of these are associated with equilibrium imbalance and excess nominal claims. 

How might one think about this? What's most affected includes the framing of artificial scarcity. Recently a gap has opened between aggregate nominal income and the output of GDP. Might this gap have been induced by purposeful reduced output (artificial scarcity), while maintaining similar levels of income expectations? And how does artificial scarcity contrast with natural scarcity for such correlations? After all, when income is derived from production via natural scarcities, existing output is more likely close to what is feasible and consistent with equilibrium or GDP potential. Perhaps due in part to the contributions of production via natural scarcities, nominal income has closely mirrored aggregate output for quite some time.

I'd like to think that production reform for non traditional housing and applied human capital, could help diminish the unexpected gap between aggregate income and GDP output. Non traditional housing options and horizontal alignment for services coordination, could lead to good deflation. Eventually such reform could lead to better equilibrium balance with other sources of wealth.

Indeed we've been fortunate that equilibrium imbalance can take centuries to become a macroeconomic problem. It's interesting how Adam Smith worried about equilibrium imbalance in his framing of"productive" and "unproductive" workers (Wealth of Nations), before the closely related Baumol effect became a legitimate concern. Perhaps the fact this process took so long to evolve, is what makes it difficult to relate to in the present.

Just the same, much is at stake. We need to recognize and respond to the burdens imposed by the expectations of our domestic services markets. Should we instead elect not to change anything, even the best NGDP monetary policy scenario would eventually lead to less applied knowledge for societies in the decades to come. Excess nominal claims with no other market options, would mean a gradual loss of our capacity to fulfill the challenges of a modern economy. It's time to consider building a future on more viable and sustainable terms.

Upstream Nominal Claims Matter for Equilibrium Balance

Will the Fed successfully curtail inflation in the near future? Fortunately there have been encouraging signs of disinflation, even if the causes aren't obvious yet. However, while the Fed uses monetary policy to tame inflation, in certain respects this is a technical result. In other words, "pulling back" won't address supply side shortcomings such as the perennial inflation contributors in our secondary markets. Unfortunately, these local markets are woefully incomplete in basic respects, with housing and skilled services as the most egregious examples. Consequently, were the Fed were to pursue nominal stability and a stable growth level (as a market monetarist "best case" scenario), this would only be a partial answer - albeit the monetary one - for optimal equilibrium balance. 

Indeed, the Fed has often emphasized how its hands are tied in terms of supply side reform possibilities. Despite the recent pullback on traditional housing loan activity, Fed members must be wondering now, who in a decision making capacity is really paying attention and ready to take action? After all, we need incremental ownership options for flexible housing and land use, before many citizens can lead more productive lives. Without such options, millions still function in their own "recessionary" economy, even as others move on. For that matter, tiny homes, manufactured homes, and modular homes are already available, but few communities remain willing to make room for lower income options. Alas, there's a relative few sad exceptions for flood prone areas which are often long distances from employment opportunities. 

While there's a growing understanding of supply side issues, supply side reform means different things to different people. Consequently we aren't ready to address how local secondary market deficiencies contribute to equilibrium imbalance. In all this, upstream nominal claims tend to define production and consumption landscapes, plus such claims are more locally supported than it appears at first glance. Upstream nominal claims come not only from profit and non profit decision makers, for the Nimby impulses of local citizens lead to surging property taxes as well - taxes for rising asset values rather than local service gains! How can the Fed keep a decent reputation indefinitely, if the constraints of artificial housing scarcity remain enforced? Yet since these claims matter for skilled services, communities often refuse newcomers who lack discretionary income for additional service costs.

In a recent post I noted the structural shift of additional nominal claims from originating wealth sources. Fortunately, some of these pressures are starting to let up, which should make the Fed's job a little easier. That said, problems of excessive expectations will remain with us. Only consider how some of those expectations might have come about in the first place. Part of the high inflation of the sixties and seventies was due to the introduction of higher costs for healthcare in general across the board - costs which could have been rationalized by increased fossil fuel wealth in the U.S. during that period. Now, imagine what might happen to those expectations should that fossil fuel wealth shift into reverse! For that matter, once the Fed finally reduced those earlier high inflation levels, recall how our healthcare institutions enforced hard limits on physician supply. Chances are this nominal structural shift was more than a coincidence. 

It's hard to imagine secondary markets giving up much ground to primary markets in terms of monetary representation, or for that matter acknowledging their dependence on originating wealth sources. But that doesn't mean new market institutions aren't possible - markets that are more free yet don't present direct challenges to the old. New sets of expectations would not include the same excessive nominal demands as the old. Instead, new institutions would make room for flexible ownership and time value as wealth. Good deflation and skilled knowledge use in local markets, could be our best chance for greater market freedom and equilibrium balance in the near future.

Our Meritocratic Knowledge Systems Are Quite Fragile

War can create many problems, and this time it includes difficulties for supply side circumstance, central bankers, and monetary policy. Some are also debating (although they are divided) how Putin's actions will ultimately affect global currency patterns. I'd suggest that while no one knows how long global dollar dominance could last, this is still an opportune moment for special interest groups to dial back on their dependence of global financial flows for monetary compensation. Especially since this decades long global positioning has added to income inequalities, many of which stem from administrative privilege. In particular, inequality in the U.S. is largely due to tax dependent secondary markets (and their associated housing valuations) where knowledge and skill are essential. 

Meritocratic organizational patterns in dependent markets have become like an endangered species, by aligning too closely with other aspects of elite tendencies (both left and right leaning) in advanced economies. Consider how this matters, for political opponents are now so opposed to each another that both sides are losing the ability to effectively function. This really matters for merit based organization, once profit becomes defined as the strongest limits possible to total applied knowledge participation. Even though the patterns we observe are more often knowledge use losses in rural areas, this is nevertheless symptomatic of continued losses for valuable skills in general, in all of society.

For decades we have taken administrative dominance for granted in the compensation of meritocratic time based knowledge. But unfortunately, administrative capture of monetary value for time based skill sets, creates extensive participation limits in terms of both supply and demand. When price making is used in excess of price taking in equilibrium conditions, the result is inevitably reduced societal coordination patterns (hence loss of mutual trust) for knowledge use. Indeed, our housing asset markets closely represent the pinnacle of what people hope to achieve in monetary compensation for knowledge and skill, instead of the compensation many citizens actually receive. 

The supply side conditions which allowed this circumstance have only been exacerbated since the turn of the 21st century. Small wonder that our educational and healthcare institutions now experience problems at systemic levels with few solutions on offer. Yet applied skill losses tend to occur in ways that aren't necessarily evident, such as in U.S. justice scenarios which greatly impact both lower and middle income levels. For that matter, much of the cultural resistance to vaccines took place in "red" states where rural areas have already long since lost their hospitals and other local healthcare settings.

Should we finally reform knowledge centered citizen participation, recall as well, how closely linked these time based services are with housing. States such as Texas (where I live) have been heavily dependent on property taxes to fund the services citizens rely on, for instance. There are other important economic connections between housing and services as well. A prime example is how the Fed frames housing as a transmission mechanism for monetary policy, which in turn affects the money available for services in given time periods. 

Hence when we highlight possibilities for greater housing affordability, it helps to remember that services access and participation would be closely connected to these efforts. Since services values are reflective of housing, only recall that good deflation in housing would require good deflation in time based services costs. This time based adaptation of local property taxes would only work for citizens if they can actually count on lower mutual time costs for group coordination. In many earlier posts I advocated for time as a formal economic unit. Fortunately, we could design means to connect economic time value to originating wealth or monetary value, via local building patterns for participating groups. I continue to hope that production and ownership reform efforts such as these, might be considered in the near future.

The Baumol Effect: Benefit, or Problem?

Is the Baumol effect a positive contributor to economic activity, or is its frequent description as the "Baumol Disease" more realistic?  Perhaps much depends on who and what is involved in the discussion. Timothy Lee (in a January post) explains how a negative framing can be unfortunate:  

From my perspective as a parent, it might be a bummer that child costs are rising. But my daughter's nanny probably doesn't see it that way - the Baumol effect means her income goes up.

Lee explains how productivity gains in some industries may mean higher wages in areas with a more personal focus, via time based activity. He sees this as beneficial, for humans are social beings who often value personal experiences with others over robot encounters to get things done. Indeed, time based product is subjective, which is why it can be more highly valued than products requiring more technology than labour. Personal instruction is a good example, particularly when a given subject is actively and voluntarily sought out by avid students. 

Nevertheless, a concerning issue re the Baumol effect, is its uneven equilibrium dispersion which impacts both short and long term outcomes. As it turns out, well paid and fully functioning service markets are generally limited to places where originating wealth plays a dominant role. Despite the fact many scenarios lack this level of economic complexity, it's easy to assume the societal coordination of the Baumol effect is more widespread than is actually the case. Yet anyone who spends much time outside the more prosperous regions, will notice a dearth of markets for many important skills sets and services. Since applied knowledge and its related maintenance are necessary for modern economies, places where the Baumol effect is largely missing, tend to lack social cohesion and community purpose.

Hence we need to come to terms with the Baumol effect as an incomplete societal coordinator, not really capable of generating the level of applied knowledge which is crucial for modern day economies. Granted, the Baumol effect functions as a positive where it does contribute to economic dynamism. However, time based services run the gamut from the mundane to what are far more aspirational goals. Fortunately, many people remain willing to pursue their higher aspirations on non pecuniary and even solitary terms. That said, not all that is necessary and mundane in our lives is accomplished this way, particularly when recognizable markets for time value remain missing. We need to recognize where personal freedoms are too often lost to cultural expectations - expectations where many are pressed to sacrifice the whole of their lives for mundane and necessary tasks, while others remain free to pursue broader goals or perhaps higher callings.

Consider again the fortunate nature of free market framing, which at least has created partial equilibrium compensation via the Baumol effect in today's secondary markets. Since Timothy Lee could afford to pay his daughter's nanny (who accepted this work voluntarily), that created tangible benefits not only for the nanny, but Lee's family also in terms of their own expanded time use options at home. 

Alas, it's a shame the Baumol effect is often missing in places where it is needed most. Which is why we are challenged to bring stronger economic value to a wide range of time use options. Let's face up to the fact we can't always achieve interpersonal goals through money alone. Without a broader range of economic options, societies stand to lose even more voluntary societal coordination, to what are often outdated and rigid cultural "norms".

To sum up, the Baumol effect is problematic due to what it can't readily accomplish for a majority of citizens, despite what people hoped for via monetary and fiscal policy potential. This is one of the main reasons I've promoted time arbitrage as an economic option, especially whenever the Baumol effect falls short. Let's make certain that free markets can be preserved in the meaningful use of our time, and that voluntary economic coordination remains a real possibility for the foreseeable future.

Polarization is a Problem for Progress in General

Today's lack of political good will is worrying enough, but it also comes with plenty of economic ramifications. For that matter, both NIMBYism and culture wars tend to reduce economic dynamism. Just as the "not in my backyard" mentality turned housing markets into major headaches, it even affects technological change such as transitioning to electric vehicular transportation. Many aspects of our lives and environments come down to what people of all political stripes don't want us to successfully engage in, as opposed to what could be accomplished.

In all of this, whatever happened to the hopes and dreams of centrist politicians and citizens? After all - even a decade earlier - moderates were still a meaningful part of public dialogue. While centrists occasionally held alternative views, they were often able to bring opposing parties to the table to get things done. 

Indeed, moderates have been important for societal progress up until recently. A relative few remain who still highlight economic progress and the benefits of growth. Unfortunately however, the majority of such gains became associated with prosperous citizens and regions rather than average citizens - let alone those with limited incomes.

If polarized landscapes weren't already dangerous enough, what might that mean for younger generations? Indeed, will they eventually become receptive to the idea of civil war? Don't forget also that younger generations aren't convinced of the future viability of Social Security in the U.S. Even though I hope Social Security continues to function as a glue for economic stability and common purpose, one can't be too certain. Should Social Security benefits be reduced in the near future, that might further destabilize political desires to remain united.

Polarization also represents a loss of what was once known as Third Way political thought. For instance, when I was much younger, Bill Clinton's presidency was associated with this line of reasoning. Alas, other than environmental protection, who still believes such rationale is relevant? From Wikipedia:

The Third Way supports the pursuit of greater egalitarianism in society through action to increase the distribution of skills, capabilities and productive endowments while rejecting income redistribution as the means to achieve this. It emphasises commitment to balanced budgets, providing equal opportunity which is combined with an emphasis on personal responsibility, the decentralisation of government power to the lowest level possible, encouragement and promotion of public-private partnerships, improving labour supply, investment in human development, preservation of social capital and protection of the environment.

Why was much of this abandoned? Part of the problem is how advanced education became a place for elite dialogue at the expense of economic dynamism. Meanwhile, active knowledge use - since it lacks any grassroots equivalency - is being confused with information and flawed logic mostly meant to circumvent action. Formal education is certainly not the place for increased distribution of skills and capabilities! Instead, the "gateway to the good life" hoards its limited slots according to what monetary compensation might amply reward. Worse, few policymakers remain willing to balance budgets, since abandoning financial restraint means squeezing a few more lucky participants onto the gravy train of human relevance. And decentralisation? The only decentralisation my state government is interested in, is the powers it can remove from both Washington and cities which might otherwise function better if they were allowed rights to do so. 

I continue to believe the best way to overcome polarization, is to create a knowledge based economy that can bypass the culture wars of educational access. However, while I remain guardedly optimistic, my hopes have radically diverged from what many once considered optimal paths for abundance and success. Is it still possible to use knowledge in more practical ways, instead of wielding it as the ultimate weapon for income divisions and urban rural divides? Perhaps we will find out soon enough. 

Is Time Arbitrage Feasible For Post Covid Economies?

Even though time arbitrage would be a complex undertaking (particularly for large scale versions), today's time based services are nevertheless being called into question, as post Covid realities gradually emerge. Plus there's plenty of unknowns in time based service markets which represent a wide range of knowledge, skill, and yes, physical activities as well. How will societies ultimately respond?

While problems were already evident in secondary markets such as healthcare before the pandemic, there's also recent troubles for time based services that are directly linked to originating (primary market) wealth. For instance, both manufacturers and home improvement retailers have limited incentive to compensate the time based labour involved in installations and repairs at private residences. Worse, these resulting service labour shortages are amplified by resistance among service workers who were never really keen on commuting to outlying areas in the first place! Indeed, a CEO for Whirlpool expressed concern that labour shortages may in fact be structural. Likewise, Zillow, recently had to stop purchasing homes when it struggled to secure sufficient timely labour in order to resell at a profit.

More specifically, what can be done at local levels, should time centered services become increasingly difficult to procure from a distance? Just as time arbitrage could function as a primary market substitute for some of today's secondary markets in knowledge and skill, it could also shore up missing services associated with traditional primary markets. In many instances, time arbitrage could benefit coordination patterns in local services where strength and physical stamina may be just as important as knowledge and skill. Since many manufacturers and retailers have become compromised in terms of services employment potential, they could shift towards establishing commodity and goods specific educational support for their product to local community levels. Doing so would also allow local citizens to more meaningfully incorporate home renovation and appliance maintenance needs in their (time symmetric) educational settings Even though local citizens would not be employed by home improvement manufacturers and retailers, they still have incentive to work with these firms for an outcome that would help both groups. Best, a hub and spoke (or city to country) educational approach could help recreate formal services economies where they are most needed. 

Better use of coordinated time symmetry could eventually help restore structural balance to economic conditions in general. Chances are, efforts to bring time value to the table for market outcomes, would result in greater general equilibrium representation for direct forms of wealth creation than is presently the case. After all, there's a good chance that 80 percent monetary representation for services was too much to begin with, to maintain long term economic stability. Only consider the prominent example of structural imbalance in our healthcare knowledge use patterns. Even Noah Smith recently challenged "shoveling money at overpriced service industries", hence has become one of many who wonder why governments continue to subsidize vital services purposely made scarce in the twentieth century.

Long term economic stability may well depend on whether societies are able to make time value a more important component of formal economic activity. All the more so, since many communities already struggle to provide the kinds of local services which are so beneficial for citizen outcomes. When it comes to general equilibrium dynamics, time arbitrage might at least be able to reduce the discrepancy between monetary representation for services versus traditional wealth sources, to 70 percent versus 30 percent. 

A more reasonable sectoral balance could improve the long term odds of good economic complexity in our formal activities. One way to think about the processes involved, is how such efforts might ensure reliable forms of societal coordination to transfer knowledge and skill which can be understood by most citizens. Otherwise - if and when service markets become distorted - people understandably react with DIY measures instead of - for example - benefiting from healthcare services provided by others. Granted, DIY is often the most practical strategy. But done in excess, extreme self reliance might put the long term preservation and transfer of knowledge use through society, in doubt. And should too many of us end up resorting to DIY, when might the process eventually evolve into a tipping point of informal economic activity, even in places where it was never expected? Alas, informal economies have their problems (such as oppressive amounts of gang activity) and often prove difficult to change once entrenched. If we can avoid it, let's just not go there. Hopefully, societies will learn to better coordinate services so that knowledge and skill can be preserved, hence remain part of our formal economies in the foreseeable future.

The Role of Formal Education in Cultural Divides

What makes our formal educational institutions such a problem when it comes to long term economic stability? Unfortunately, they contribute to our cultural battles by dividing people into haves and have nots, when it comes to skill sets and access to vital information. While this is obviously a problem for citizens in mature economies, these educational divides impact lesser developed nations as well. 

For instance, when emerging economies lack sufficient wealth sources to fund high level human skill, formal education can become associated with "brain drains" or possibly even the need to escape one's country to achieve success. Hence such circumstance pose a threat to many in underdeveloped countries (alas, such as Afghanistan), where knowledge based skills are not yet a dominant factor for local economic activity. Indeed, how could "nation building" ever substitute for the economic pursuits which local citizens need to generate for themselves?

In advanced economies, cultural divides play out differently. All too often, the asymmetrical financial obligations of today's human capital, can crowd more direct wealth sources. Not surprisingly, battles over who even "deserves" access to high skill human capital, lead to social instability and polarization. This lack of long term monetary sustainability for high skill human capital, is already undermining national economies regardless of their level of economic complexity. Hopefully it is not too late to embrace a wide range of valuable human capital formation which doesn't require college degrees, familial wealth, or extensive monetary compensation for that matter. I believe it is still possible to make time use an integral source of wealth in its own right. With a little luck, our formal educational institutions may eventually recognize the need for such an approach as well. 

At the very least, nations now sense that nation building is not a reasonable option. What's more, top down "solutions" leave little room for the true potential of local knowledge and skill alongside tradable sector wealth sources. In order to bridge our cultural divides, new communities are needed, where local participants can generate sustainable sources for human capital formation. Such communities could actually function as knowledge priors, since participating group time could be coordinated symmetrically. Reciprocal time value would in turn allow new wealth to be built via knowledge and skill, without need of compensation from other forms of wealth. 

The monetary flows which exist between primary and secondary markets, affect our structural economic realities in ways that aren't always easy to understood. Let's observe more closely, the nature of existing originating wealth sources. Why do they already exist, and how might they be further augmented? Applied knowledge via coordinated time could serve as a more direct form of wealth creation, so that primary markets eventually come into better balance with dependent or secondary markets. Best, more efficient patterns for human capital formation, would make it possible to address the limitations of formal education which exacerbate our cultural divides.

Quality Product Isn't the Same as Rising Standards of Living

Often it appears that quality product gains and productivity gains are one and the same. However, might quality product occasionally detract from rising standards of living? Confusion about quality product as an aspect of productivity, deserves more attention than it receives. For example, recently Timothy Taylor opened a post re the productivity slowdown after 2005 with this observation: 

In the long run, a rising standard of living is all about productivity growth. When the average person in a country produces more per hour worked, then it becomes possible for the average person to consume more per hour worked.

But, how do we know when this desirable process actually occurs?  When might organizational processes to generate product quality, diminish aggregate consumer potential instead? Societies need better measuring indicators to determine how aggregate input/output requirements affect basic levels of consumption potential. Only recall how presently, many of the costs of excessive inputs for quality services are being shifted to future generations, via deferred debt and budgetary burdens. Indeed, much about our future economy, depends on the extent to which human capital contributes to exponential output gains, symmetric time coordination, or else the excessive time scarcities that today's knowledge providers have generated.

The differences in time versus exponential product designations, are vitally important for how we frame organizational capacity and the productivity which contributes to GDP representation. Nevertheless, these sectoral differences are difficult to conceptualize, because productivity is not often described in such terms. Consequently, the highly valuable yet costly product of time based services, poses undue financial societal burdens. Our lack of understanding as to the actual inputs and outputs that time scarce services involve, might consequently leave some of this future organizational capacity in doubt. 

Oddly, much of the present confusion, actually comes down to a one size fits all productivity perspective. Given the lack of more precise tradable sector and non tradable sector measures, the present combination is statistically confused as what an "average person in a country produces". Since this perspective doesn't distinguish between time centered output versus exponential forms of output, many forms of applied knowledge lack economic clarity. In particular, we still don't know approximate time increments that are expected of the average individual for the most basic aspects of non discretionary consumption. Before anyone gets sidelined by productivity factors such as leisure time or seemingly "free" consumption gains, basic non discretionary requirements are really the starting point for other productivity considerations. Plus, knowing a base level of expected consumption costs in relation to multiple income levels, provide clues how production input/output ratios matter most for consumers and producers. 

Should tradable and non tradable sectors gain more accurate forms of input/output representation, it would become simpler to think about the differences in approach these groups really need for purposes of long term productivity gains. All the more so, since when non tradable sectors focus on quality product, thus far they've inadvertently done so in ways which detract from further consumption options in the marketplace. 

Ultimately, even though quality product isn't the same as rising standards of living, that doesn't mean time based forms of product aren't important. Not only are many forms of time based product desirable, the time scarcities of production and consumption are among the most important considerations for total or multi factor productivity. Even though organizations logically seek to "save" time (via traditional productivity reductions of time/hours in relation to other inputs), there's still our personal motivation to "use" our economic time in the most significant ways possible. 

Occasionally, the best choices in this regard turn out to be experiential time spent with others. For the most part, we seek to balance the economic time we hope to gain from others, with the economic time we hope to share with them. Rather than leaving such decisions to a relative few professionals or possibly artificial intelligence, the best approach really comes down to the kinds of economic time that all citizens hope to take part in.

Time Based Product and the Profit/Productivity Conundrum

When it comes to service organizations, an investment approach such as private equity can sometimes lead to problems, if personal time is an important component of final product. All the more so in healthcare, should patients need individualized attention for successful outcomes. How might we respond, if and when profit gains result in less personal time with patients in particular? 

For example, a recent NBER working paper, "Does private equity investment in healthcare benefit patients?" highlights the issue of patient neglect. In the abstract, the researchers note how

Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period. This is accompanied by declines in other areas of patient well-being, such as lower mobility, while taxpayer spending per patient episode increases by 11%. 

An article from Vox further elaborates:

The researchers studied patients who stayed at a skilled nursing facility after an acute episode at a hospital, looking at deaths that fell within the 90-day period after they left the nursing home. They found that going to a private equity-owned nursing home increased mortality for patients by 10 percent against the overall average.

As it turns out, the result was more pronounced for patients who were relatively healthier, since sicker patients benefited from time based regiments deemed too necessary for targeted reductions. Whereas other services appeared more amenable to time adjustments. So private equity changes

include a reduction in staffing, which prior research has found is the most important factor in quality of care. Overall staffing shrinks by 1.4 percent, the study found, but more directly, private equity acquisitions lead to cuts in the number of hours that front-line nurses spend per day providing basic services to patients. Those services, such as bed turning or infection prevention aren't medically intrusive, but they can be critical to health outcomes.

The researchers noted an increase in the use of psychotics which could have substituted for personalized care as well. This study is certainly getting attention, for instance Matthew Yglesias referenced it as an example of meritocracy issues in a recent post. He stresses how smart people may be inclined to do "bad things":

Why do private equity takeovers kill so many people? It's not because the Wall Street boys are dimwitted. Their job is to look for companies that, for whatever reason, are not managed in a way that maximizes shareholder value...There's a lot more you could say about this story looking specifically at the lens of nursing home operations. But I'm interested in meritocracy. And the point here is that things can go awry not despite, but because smart people are in charge.

Indeed, it is easy to frame the unfortunate circumstance of nursing homes as a morality play, and there are countless other time relevant service examples which can be told in similar fashion. However, getting caught in these stories, instead of finding positive ways to respond, ultimately depresses us all. 

Why not try a more dispassionate view in the form of a total equilibrium perspective? Money cannot be expected to accomplish all things equally well, for everyone involved. More specifically, unsettling things will occur when money occasionally fails in its coordination tasks for time based services generation. Again, I can't stress enough that money is problematic when it is expected to remain the sole representation of economic value. For that matter, should we elect to create valid service markets for a full range of personal time potential, people would gain more opportunities to meet the needs of their loved ones, when existing organizational capacity does prove inadequate. And family members would not have to shoulder the entire load of caring for loved ones (outside the time limits of today's services institutions), once community members can freely participate in local platforms for services generation.

By no means would time arbitrage supplant existing meritocracies and their associative hierarchies. Rather, horizontally aligned communities would work alongside meritocratic organizations, meanwhile reinforcing the positives which merit based hierarchies do hold.

Reimbursed Mutual Assistance > UBI or Guaranteed Job Programs

What if some form of universal basic income were to become a reality? Alas, should traditional employment decline in the near future, UBI is not a practical long term solution, especially given the nature of present day fiscal obligations. At most, UBI might serve as a stopgap measure, should a wide array of employment sources dry up simultaneously due to technological change. 

Chances are, UBI would also prove somewhat demoralizing, since many recipients would lose valuable opportunities for economic and social connections with others. Not only is a UBI approach likely to reduce our chances of greater economic integration, it could further polarize an already divided society - especially in terms of knowledge use and meaningful participation. 

Small communities in particular need proactive solutions for economic dynamism and long term potential, instead of compensation for basically being forgotten or left behind. Toward this end, compensation in the form of monetary reimbursement for voluntary mutual assistance, would be more practical than policy choices that don't address widespread social isolation. What's more, mutual assistance could be symmetrically aligned (via matched or reciprocal time) so as to create new wealth instead of additional demands on fiscal policy. Indeed, what could be better than creating internal rewards for our natural inclination as humans, to come together in order to get things done? 

Compensated or reimbursed mutual assistance at local levels, is also a better solution for many than guaranteed job programs. Unlike government generated work which often requires participants to relocate, compensated mutual assistance would allow local communities to create new job opportunities and workplace responsibilities in their own midst. And rather than attempting to fulfill the wants and needs of governments, the time arbitrage of mutual assistance would allow people to create entirely new local markets - markets which are responsive to shared individual wants and needs. 

Reimbursed mutual assistance contains other advantages as well. For instance, it could lead to the local creation of knowledge based services - services which otherwise tend to be difficult to access via hourly wages alone. Fortunately, the supply side approach of reimbursed mutual assistance would bring additional value to our collective time, so as to make it capable of meeting a full range of basic needs. Eventually, better coordination of time value could lead to greater community trust as well. This is especially needed in the U.S. where a substantial degree of trust has been eroded away.

New patterns of mutual assistance could lead to more voluntary and spontaneous forms of association than are now common in many time based service activities. As individual groups structure their combined efforts to build a shared continuum of activity, they gradually create new wealth which approximates what is often possible through more traditional forms of employment. In a time when advancing technology makes near future work potential less certain, people can breathe easier once viable replacements create new sources of normalcy and stability for all concerned.

Extensive Price Making is an Equilibrium Outlier

Even though many of us take extensive price making for granted in time based services, this set of circumstance is actually an equilibrium outlier among many nations. For instance, history provides ample evidence that systems of knowledge centered agglomeration which depend on other sources of wealth, can be quite fragile in the long run. All too often, when citizens can't utilize knowledge via non hierarchical means, they end up missing basic or critical steps which could help them achieve daily goals. Worse, they lack any viable patterns of participation in the institutions which bear responsibility for continued knowledge preservation. 

Since direct reciprocity has only become more difficult for services generation - especially during the 20th century - societies increasingly rely on asymmetric participation, production and consumption for a wide array of knowledge based activity. Alas, this approach has led to sectoral imbalances and accumulating debt loads. Much in the way of applied knowledge is publicly supported. However, this means that much of today's day high skill activities are financial obligations for future citizens, rather than market based production and consumption options for people who need them now. Despite the fact this set of affairs can't continue indefinitely, we still lack any Plan B which could stabilize and lessen budgetary burdens many nations face for knowledge based needs. Perhaps it's the fact no Plan B is being actively discussed, which encourages major political parties to completely ignore the possibility of imposed austerity and hardship in the near future.

A major challenge in all this, is to once again relearn how to use knowledge and skill through more directly reciprocated patterns. Not only would symmetric time use mean greater market participation for all citizens, reciprocal time matching can create more immediate wealth, thereby lessening the perceived need for governmental redistribution of all kinds. Time arbitrage is a viable Plan B which would build a more complete framework for time use potential in local community groupings. The local adaptation of production and consumption settings for knowledge, could ultimately transform communities which otherwise find themselves left out of knowledge production and consumption in urban markets.

The group time of local mutual assistance would function as a form of internalized market pricing. Since the majority of time use potential becomes accounted for in a market context, time begins to function as a valid price taking mechanism for participating groups. Likewise, being able to price take makes good deflation possible for services generation, such as extensive price taking in tradable sector activity has led to good deflation in countless forms of resource capacity.  

Consider how defined equilibrium settings can gradually restore sectoral balance by allowing participants to coordinate time more fully. Importantly, this market option makes time based services more sustainable over the long run. Meanwhile, however, the U.S. may be experiencing even more political polarization than other nations, since healthcare price making is more extensive than what generally occurs in most nations. Indeed, our healthcare organizational capacity actually makes U.S. healthcare more of an outlier, in relation to other mature economies. This extreme dependence on national support also helps to explain why it is often so difficult for both the production and consumption of healthcare in the U.S. to remain in a sustainable position, possibly even for the medium term. While price making is always an understandable urge, fortunately we can recreate market options which make room for the more sustainable practice of price taking, in the use of highly valued skill and knowledge.

The Decentralization Which Matters Most

How might decentralized options contribute to long term growth and economic sustainability? Granted, there are certain periods when centralized power structures hold certain advantages in this regard. But once governmental budgets start to extend well beyond revenue sources, centralized power gradually wanes in the long run. Indeed, we may have already entered a period when centralized power holdings actually detract from our economic potential. 

If so, what can be done? The structural framing of decentralization potential has yet to be fully explored. Meanwhile, current dialogue re decentralized options tends to be in reference to specific circumstance and factors, rather than multi system alignments. Yet the latter holds substantial possibilities for future dynamism, not to mention more sustainable economic outcomes. 

One way to think about such alignments, is how general or national equilibrium also translates into the resource potential of knowledge production. While the cumulative effects of this circulatory (primary to secondary market) environment are complex and vast, they still contain basic elements which could respond to systems design. Ultimately, local microcosms of defined equilibrium would feature complex services generation alongside local tradable sector activity. 

Presently, mature economies continue to benefit from highly complex financial systems for many important knowledge production activities. However, the extent to which these systems can further develop along similar lines, is increasingly in doubt. As it turns out, extensive price making in high skill time based product, limits entry into these vital markets not just in terms of production, but also consumption. While price making is certainly an understandable impulse, when most participants elect this route, others are left unable to coordinate more closely for the resource capacity which is actually at their disposal. And in this instance, the relevant resource is of course our aggregate time use potential.

Fortunately, defined local equilibrium could pick up where the possibilities of national general equilibrium for knowledge production, tend to leave off. Time as a valid economic unit, would lessen the need for full monetary reimbursement of a wide range of activities which people find particularly worthy of their own efforts. One reason it is so important to develop local environments which nurture knowledge production, is that extensive price making in high skill time value, has also led to political unrest and polarization. Not only would new institutions for knowledge production make it feasible for citizens of limited means to reengage with others, the rural urban divide could also be meaningfully addressed as well. 

Excess Regulation Reduces Diversity and Inclusion

How might we respond to excessive regulation - much of which stands in the way of personal potential and greater inclusiveness? Clearly, there are regulations on the books which not only reduce our most basic life options, but are also detrimental to long term economic growth and dynamism. Once regulatory environments begin to overwhelm and economic stagnation sets in, societies pay the price in lost market opportunities and a generalized loss of willingness to continue sharing in commonly held goals.

Some of the worst offenders in regulatory excess, are those which impose arbitrary limits on our own growth potential. In a services dominant economy, that translates into tangible losses of mutual assistance and support. If we can't help one another economically, what options are really left? Or how could we possibly know, the extent to which output loss in valuable skills instead stems from a supposed lack of personal ambition? Consider the many hurdles that people are expected to overcome, before they can make a concerted effort to reach out to others on meaningful yet economic terms. Not all those regulatory hurdles in particular, were put there in good faith.

We have yet to begin the crucial task of making it simpler, for people to create real value from their own personal attributes. Meanwhile, societies are seemingly caught in fruitless and demoralizing arguments, where some insist various groups lack the fortitude or ability to do what is "necessary" to achieve success in life. 

Yet much of our inability to transition to a better functioning knowledge based economy, is due to regulatory hurdles. These complicated rules of engagement make it exceedingly difficult for many people to fully engage with others in meaningful ways. Is this the best we can hope to achieve as a society? How many burdens could we be rid of, if we sought to eliminate regulations which get in the way of active and meaningful participation with others? What if we could be of use to others, without the small fortunes so often needed for full time work in a knowledge based economy? 

Chances are, our collective human capital has been limited by arbitrary regulations to a greater extent than is realized. If we continue allowing only the "best and brightest" in basic workplace responsibilities, we might be doomed to a future where diversity and inclusion are all but impossible. Let's do our best to ensure this doesn't happen. It's time to get rid of the arbitrary regulations which not only create immense holes in our social fabric, but leave many citizens unable to fulfill their own personal aspirations.

What We Can Do, What We Can't Do

New years are a good time to reflect on life's possibilities, especially when it comes to societal progress. Nevertheless, how do we distinguish between realistic potential, versus what is essentially wishful thinking? For example, even though the world needs a lot more mutual respect and civility, desired outcomes such as these cannot be coerced. 

And while Adam Smith and many others celebrated the free markets which so contributed to civility in recent centuries, much of this fortuitous societal coordination takes place in tradable sector activity. Still, it's not unreasonable to ask: Could our non tradable sector markets also contribute to greater civility? How might they gain their own newfound freedoms? In particular, is it feasible for the resource of our scarce time, to garner more economic and societal value in the near future? Or will vital markets for time value, remain outside our realm of direct influence?

In the twentieth century, housing and time based services were regulated in ways which reduced the degree of autonomy and control individuals held over their own destinies - particularly those with substantial income limits. If millions were to regain control via new production and consumption potential, how much civility might we all regain in the process? At the very least, we still benefit from the civility which goes hand in hand with high levels of tradable sector resource coordination. And while we will never put a stop to what's bad in the world, we could still create more good, by allowing symmetrical (hence reciprocal) coordination of time via market tested means. Time arbitrage is one entry to this realm of possibility. It is a broad spectrum approach for improving personal autonomy and self worth, with potential to bring new hope to people from all walks of life.

With additional economic value for mutually coordinated time, millions more citizens would derive a greater sense of self worth. Consider one important reason why this matters. So much in the world which is unfortunate and destructive, includes the reality of poorly defined self worth. How can we expect people to be trustworthy or unfailingly good to others, when their time use potential lacks sufficient economic value to build a normal life? Granted, not everyone would personally benefit from stronger markets for time value. Just the same, millions more would finally learn to effectively negotiate with others for their wants and needs. I believe that gaining the chance to do so, would result in fortuitous circumstance whereby people are more inclined to be kind and civil. 

Even though the passing years have given me cause to excessively dwell on what can't be done, I still believe we are not helpless to act in positive ways. Clearly, we have reason to do so, when the evening news also dwells on what we seemingly cannot remedy. While there will always be instances when no one can decipher personal motivations for violence and hatred, there will still be positive ways to respond. Sure, some market efforts are going to fail, sometimes even miserably. But I continue to believe that viable and carefully representative market platforms are the best means we have, to build a better, more inclusive future. Plus, as Ricardo Hausmann recently noted in "The Missing Link in Economic Development":

If someone is not doing something that we as a society value it might be because they can't, not because they don't want to. This weakness in economics has far-reaching implications for our understanding of economic growth and development, which is fundamentally about the social accumulation of productive capabilities.

Markets should not be so willing to devolve, into a twisted rational of what societies supposedly can't do. When they become rigid and inflexible, does anyone really wonder why capitalism gets disparaged? Why not work to ensure greater freedom for our vital domestic markets, so they might better contribute to human civility and hope for the future? Why not 2021 as the perfect place to begin? Lets turn our non tradable sectors into realms where we regain hope for what we can do as a society, instead of remaining hopelessly divided over what we can't do.

Economic Considerations are Vital for Sustainability

Even though the sustainability of our planet is often debated - and rightly so - economic sustainability deserves a more central role in these dialogues than it has received thus far. Broader and even holistic considerations need to be taken into account, when it comes to general equilibrium stability and long term economic prospects. One significant problem in this regard, is how many of today's institutions no longer function well for lower income levels. When societies neglect the structural circumstance which affect these groups - such as recently noted by Nicholas Eberstadt for AEI - economic conditions will eventually suffer the consequence.  

In the U.S., neither Democrats or Republicans have thought seriously about vital aspects of economic sustainability. Not only have long term budgetary possibilities been sacrificed to entitlement requirements, but short term policy actions fail to take broader market dynamics into consideration. For instance, what good can be expected of fiscal austerity measures that primarily result in arbitrary limits on knowledge based social interactions? 

Alas, there will soon be many inevitable fiscal limitations, whether anyone desires such budgetary restrictions or not. Given this reality, the least we can do is ensure they don't stand in the way of sustainable economic outcomes, by building more inclusive market conditions to benefit all income levels. And - in the meantime - we could encourage policy makers to loosen the regulatory restrictions of our domestic non tradable sectors. 

It's a shame we have experienced various forms of fiscal austerity which were poorly thought through and scarcely benefited anyone. In a knowledge based economy, if fiscal limitations are due to government spending on less worthy causes, the outcomes aren't necessarily as benign as the budgetary restraints of earlier times during tradable sector dominance. Only recall that preference for monetary stimulus during tradable sector dominance was also closely associated with economic stability and positive outcomes. Nevertheless, it is ironic that today, when discussions regarding budgetary restraint still arise, it's usually when one political party wishes to impose fiscal austerity on the party currently in power. 

Any discussion about long term debt and budgetary obligations is incomplete, if it fails to consider market dynamics as a whole. When policy makers lack this broader perspective, they may attempt to either avoid or impose fiscal austerity, without understanding the potential ramifications of their intentions. Further: While fiscal policy losses aren't necessarily problematic for governments during long stretches of tradable sector dominance, there are altogether different factors to consider, once a substantial portion of GDP is derived through fiscal redistribution for applied knowledge. Since this has in fact occurred, knowledge based non tradable sectors can be less responsive to monetary stimulus (in lieu of fiscal stimulus) than one might expect. What's more, much governmental redistribution - at least in the U.S. - is intended for higher income levels. Hence while economic growth is of course needed to continue responsible stewardship for planet Earth, more is involved. It's time to ensure that aggregate growth potential includes output and production gains for all income levels, not just those at the top. 

Ultimately, the greatest potential for economic sustainability occurs when new market possibilities are extended to all income levels and groups. Achieving this, means creating new market use patterns which go well beyond the limits some firms and organizations might otherwise impose on others.  Granted, profits will always be a necessary component of economic sustainability, both for profit based firms and non profit organizations. Just the same, the greatest profits are possible, when the greatest number of participants can actively pursue their own dreams and aspirations as well.

Are There Really Too Many PhD's?

Some have come to believe the talent pool for PhDs is diluted in ways that result in diminishing returns to the marketplace. Might this actually be true? Even though the argument carries a certain logic, it hardly means that societies should shift toward workplaces where knowledge is deemed less important! In particular, a majority of citizens now rely extensively on knowledge and skill, to lead meaningful and successful lives. How might society respond to a perception of "too many" advanced college graduates, given this reality? 

Alas, the "too many PhDs" argument also presents thorny issues for many who seek well compensated workplace opportunities. Recall that much of the rationale for seeking advanced degrees, is due to non tradable sector expectations of degree enhanced incomes. Even though high income levels should not be a prerequisite for basic non discretionary spending, this structural circumstance has yet to be addressed. Consequently, it's not a good idea to argue that millions shouldn't even pursue advanced degrees, so long as there are inadequate supply side mechanisms in place making it feasible to maintain financial responsibilities with anything less than advanced degrees. 

Nevertheless, I have to admit that present day general equilibrium revenue is woefully insufficient, for millions who still seek to enter well compensated workplaces. So much of this revenue is already claimed by price making in secondary markets, that the wealth creation of primary markets has also been compromised to some extent. However, what frustrated me to the point of writing this post, are group identity arguments which question intellectual aptitude and even the supposed cultural limitations of various groups. How exactly are millions of citizens expected to bear financial responsibility, if they are deemed incapable of full participation at the outset? What this essentially boils down to, is the suppression of human capital (with general equilibrium limits as excuse), in a historical moment when human capital is vital for getting things done. And too much valuable human capital output is essentially time based in nature, for anyone to logically deny entry which boosts aggregate time based output.

If there is any supposed "excessive dilution" in the provision of ideas or intellectual strategies, it is only due to the inefficiencies of a general equilibrium structure - one which never accounted for the possibility of full citizen participation in the first place. For this and of course other reasons, I continue to promote time value as a more inclusive source of wealth building, so that all citizens gain a chance to contribute to positive economic outcomes. Time arbitrage could create a durable free market context, so that personal ability and aspiration can be more fully represented. 

Again, the 21st century - in order to have real meaning - is about raising the value of all human capital - not just the opportunities of the best and the brightest. If we neglect to create time based wealth options for left behind communities, these recent rounds of anti-intellectualism and political division are likely to worsen. And anti-intellectualism is a poor substitute, for the kinds of useful and experiential knowledge which may not continue to flourish, should it remain mostly the province of experts and prosperous regions. We can make knowledge valuable in the eyes of all citizens once again, if we allow it to become part of the economic potential of all communities.

Until now, part of what has made it difficult to take definitive action, is the understandable frustration surrounding near future income limitations. While the fact we cannot raise all incomes is of course bad news, the good news is we can innovate our way to good deflation in non tradable sector activity, so that high income levels aren't necessary to live a good life. Fortunately it is within our ability as a society, to create the non tradable sector innovation which brings new spending power to small incomes. In the future, whenever money falls short of hopes and expectations, time value could be tapped as well, for the creation of durable economic outcomes. And best, we can ultimately change our perceptions, as to who is eligible for full participation in a knowledge based society.