Arbitrage Potential Includes Time, Resources and Systems

How does arbitrage function as a component of economic dynamism and long term growth? While many associate arbitrage potential with monetary gains, this feature is only a fraction of what arbitrage is capable of. Indeed, one might envision monetary arbitrage as a residual effect of aggregate efforts and time based priorities. After all, the nominal representation of general equilibrium depends on the extent to which all resource capacity gets defined. What matters most for monetary provision is its continuous accurate representation as a level nominal target, so that all arbitrage potential might remain stable as well.

As humans, we are naturally inclined to make improvements on whatever resources happen to be at our disposal. Three arbitrage possibilities are especially important: physical resources, time arbitrage (human capital potential), and systems arbitrage. In particular, time arbitrage could benefit from stronger market patterns and commodification. Only recall that when service offerings become highly specialized, by definition this limits access and commodification, as is currently the case with many high skill services.

Today, wealth creation as systems arbitrage has become mostly associated with movers and shakers in prosperous regions. Yet only a century earlier, individuals in millions of small communities were also direct contributors to wealth creation processes. Much of the earlier participation in physical resource arbitrage was decentralized. Even though it offered sustenance for local individuals and communities, these production patterns did not always generate sufficient additional output to be readily captured for broader economic activity. Time arbitrage existed alongside resource arbitrage in these settings, often on even more limited terms of monetary representation. As time arbitrage becomes more important in the near future (once again), it needs to return with a formal baseline monetary representation, to create additional incentive for local community trust and mutual reliance.

The physical resource arbitrage of yesteryear, gradually transitioned into immense wealth that negated the need for local production in countless communities. Unfortunately, even though small town populations gained in terms of tradable sector consumption, they still lack the ability to fully participate in high skilled time based services. That said, the need for decentralized services generation in the present, is vastly different from the production patterns societies once utilized locally. And since time based product is naturally limited, it is the logical employment replacement for tradable sector production - given the latter's centuries long history of exponential output. Even though time arbitrage would include microeconomic characteristics, it still offers a macroeconomic solution set to help solve long term employment issues.

Time arbitrage in the form of new markets for human capital, could also expand general equilibrium in ways that money has only been able to partially represent. Consider why this matters. Skills arbitrage, though certainly a reasonable approach to human capital investment, becomes unable to fully maintain a strong growth trajectory once tradable sector dominance gives way to non tradable sector dominance. Hence the need for further systems arbitrage, which instead of replacing prior systems, would function alongside them. Economic time reciprocity would give applied knowledge the conceptual space to function as a more direct means of wealth creation.

Many communities struggle to take part in time based services production today, since high skill services tend to rely on the redistribution of residual wealth. More often than not, this limits the most important facets of useful knowledge to prosperous regions. New forms of systems arbitrage, would allow time reciprocity to expand human capital roles beyond their present reliance on wealth redistribution. Once applied knowledge takes place via direct means, it can also serve as a valid source of community building. Systems design for new communities would establish knowledge priors as prime reasons for community origin. Flexible building components and infrastructure, would give these communities added mobility which is similar to what private firms are capable of. These components could be reconfigured according to the knowledge priors which are most readily coordinated during any given time period.

Since time based services markets lack the ability to grow exponentially in terms of output, we need ways to regain time arbitrage as output defined in quality gains for all human capital potential. Time arbitrage has the capacity to directly coordinate mutual time priorities. Indeed, systems of time arbitrage make it possible to utilize human capital as a lever in the production equation, so that less intense human capital investment is necessary in the first place.

The Solow Residual is on a Cultural Collision Course

Perhaps there are broader implications of mature economies which we have yet to fully explore. For instance, skills arbitrage which includes highly sought human capital, is distributed (for knowledge providers) in ways which leave little room for further inclusion. But what about intellectual activities which are sometimes more desirable for participants in work settings, than their actual (or potential) consumers? Is is logical to think of participants in the latter example as the "moochers" of economic systems? Even though others who also rely on general equilibrium redistribution are more likely to benefit from the fact their skills include high consumer demand? Or, if "moochers" were somehow disallowed in a time of stretched budgets, what would this suggest about the value - or lack thereof - for experiential services in general?

What's more, how does the Solow residual factor into these considerations? For one, redistribution for the secondary markets of knowledge provision, is also dependent on total factor productivity. Much of TFP is expressed by the Solow residual which Investopedia defines as:

The Solow residual is the portion of an economy's output growth that cannot be attributed to the accumulation of capital and labor, the factors of production. It is a measure of productivity growth that is usually referred to as total factor productivity.

Alas, progress and long term growth as defined by the Solow residual, were more reliable before the dominance of non tradable activity in services generation. Previously, when tradable sector activity comprised a greater portion of general equilibrium, societies were naturally more inclined to make room for intellectual activity - regardless of how it was applied in the marketplace.

As it turns out, more than the Solow model will be needed for wealth creation, before societies regain confidence in full market application for intellect and knowledge. Meanwhile, aggregate productivity is compromised, as high demand human capital gradually crowds out other desirable economic activities. If this weren't enough, "moocher" arguments question redistribution patterns in their entirety, on identity based terms. Arnold Kling, in "Maybe we *are* in an Atlas Shrugged" moment", responds to the recent take down of Scott Alexander's blog, and notes:

Scott Alexander, Less Wrong, and the Intellectual Dark Web occupy a sort of Galt's Gulch. They see the moochers as intellectually deficient. They are trying to uphold an old-fashioned value of scientific objectivity against the moochers' assault of oppressor-oppressed framing. 

Kling further explains his perspective:

I think of the conflict in Randian terms, as industrialists vs. moochers. The industrialists (not in the Rand sense of heavy industry but in the sense of software eating everything) take pride in having shown an ability to build something. It might be something as humble as a section of computer code that gets used. Or it might be as grand as a successful company, or two. The moochers have never built anything, and they are looking for other ways to assuage their egos and fight the zero sum game of status. The moochers have found that social justice activism is a useful weapon for lowering the status of the industrialists.

One problem with the "moocher" categorization, is that until recently, direct sources of originating wealth were easier to come by. Indeed, only a century earlier, most anyone in the U.S. could still take part! Unfortunately, as traditional forms of Solow model productivity have become ever more efficient, the places where wealth origination still takes place, continue to retreat from our personal view as a society. How many local economies are still included? Not near enough! In the aftermath of tremendous Solow model efficiency (on tradable sector terms), is it really reasonable to define millions of individuals and communities as "moocher" status? Doing so is demoralizing for average people with average intelligence, who may desire to build their lives up through physical means. It is also demoralizing for people who - on the other hand - could be happy with life as a series of meaningful experiences.

These are just a few reasons, why we need to redefine what wealth origination actually consists of, in the time based terms which all of society could still utilize for productive and meaningful lives. Until we do, we may end up pointing fingers at society's supposed "losers", while investing in "special" human capital which only continues its collision course with the global redistribution patterns of today's wealth.

Fiat Money as a Framework for Human Capital

Why hasn't fiat money turned out to be a better suited tool for complete levels of economic coordination?

Much of the problem in this regard, is that skills arbitrage emerged in the 20th century as a partial equilibrium component of human capital potential. As circular economic activity became more closely aligned with time based services generation, intangible forms of wealth created additional demands on money, which had previously had been associated with originating sources of wealth. Once fiat money expanded the range of monetary representation possibilities, sectoral imbalances became more prominent. A wide range of knowledge providers used skills arbitrage for extensive price making in markets, which gradually reduced general equilibrium revenues for additional coordination in these vital areas. Alas, this process has finally reduced the aspirations of millions who once hoped to participate in the economy on similar terms. For reasons such as this, I continue to advocate for time arbitrage as means to further promote a fuller use of knowledge and skill, for all citizens.

Nevertheless, there are fairly obvious and pragmatic reasons, why social coordination patterns for the use of knowledge emerged through such limited terms of engagement. How else might societies have readily brought together widely divergent market participants, so as to live among one another and combine revenues for common public goods? By way of example, commonalities in local real estate value made it simpler for high skill service providers to maintain integrated economic relationships, with those who were directly involved in wealth generation.

Only now is it apparent these earlier processes are not enough, to fully sustain a modern day knowledge based economy. How might we address the fact that fiat monetary systems - in and of themselves - aren't sufficient to maintain widespread integration of skills and services for all concerned? Even though skills arbitrage never was a long term solution for complete economic integration, it could still function far more effectively if time arbitrage could function alongside it, without unduly expanding what general equilibrium revenue is capable of. Time arbitrage could create a new measure of economic value which in turn would lead to more horizontally aligned workplaces. New patterns such as these could effectively disperse applied knowledge beyond what price making and skills arbitrage has achieved in a system where money is the sole determinant of economic value.

Also, time arbitrage as a horizontally aligned system, would not demand so much monetarily as to further compromise what central bankers can reasonably accomplish. Time as a valid unit of measure, could compel us to more closely examine how intangible wealth sometimes distorts monetary roles, particularly when money is expected to function as the sole source of economic value.

Time value as directly generated wealth, could allow a majority of human capital to eventually flourish. Economic time options are all the more important, now that fiat monetary systems face too many competing demands for citizens to fully take part in the economy. By allowing time to function as a more precise form of economic value, fiat systems might eventually benefit from greater economic stability, as well. Ultimately, we can have higher hopes for a brighter future, by defining wealth creation in economic terms which go beyond what money can buy.

Knowledge Preservation In a Time of Pandemic

Many are understandably focused on the short term effects of COVID-19, and what needs to be done in the here and now. However, even though it's not easy to pause and reflect on broader concerns, there are possible long term effects of the pandemic which likewise deserve a careful response.

In particular, this pandemic exposes the fragile nature of how societies currently manage and reimburse their most important knowledge providers. History has made evident, how some pandemics culminate in events which undermine such systems. Skills arbitrage as the sole means of knowledge provision and application, is less sustainable over the long run than it may appear. All the more so, since compensation for these skills is compromised through over reliance on debt arrangements. Too many currently provided services, include vague expectations of reimbursement later in time from future generations. But what if something about this arrangement, should radically change? For instance, suppose future generations lack a sufficient level of income to fulfill yesterday's promises?

Whenever substantial levels of societal wealth are lost, pandemics tend to impact how people organize their lives at basic levels of operational capacity. These losses are only exacerbated whenever applied knowledge is too closely held in high density populations, as is currently the case in our productive regions. If the economic patterns of major cities are disrupted, productive capacity becomes all the more important elsewhere, to ensure that vital threads of current information and applied knowledge can continue. We need to ensure that knowledge and skill can be encouraged and maintained via a full range of population densities and intellectual abilities. The more places and settings where skills capacity is fully tapped, the better prepared civilizations could become, to face moments of crisis and uncertainty.

Clearly, we should no longer rationalize that it is somehow reasonable, to limit the use of valued knowledge and skill to areas of high population densities. But how to begin the vital task of reinvigorating small communities? Even though I've long argued for time arbitrage as a way to do so, admittedly a part of me is now overwhelmed by current events. I find myself wishing "if only" such processes had been put into motion earlier, so the preservation of already existing human capital, might also be a simpler matter.

Alas, I did not realize how the need for new knowledge use patterns, would become particularly relevant during my own lifetime. Like many others, I feel as though being swept along in a vast tide of change - one which makes me question my own ability to return safely to shore this time. And like many, I'm not certain whether it is still feasible to craft a fully effective response, or to safely bypass the political battles now occurring. If only new patterns of wealth creation had already been pursued in earnest! Dare we still hope that much of our wealth is not lost in the years to come? Can our most productive areas still reach out to other regions, in hopes of lifting them up?

Meanwhile, society continues moving in the opposite direction, as exemplified by additional closings of rural hospitals. As it turns out, hospitals - despite their institutional importance - are exceedingly fragile in economic terms. If we are to deal successfully with the present crisis, we also need for healthcare to transition from the fragility of skills arbitrage, to the open ended and simpler nature of time arbitrage. Time arbitrage would not attempt to offer "perfect" solutions. Rather, it would seek to remain present for all concerned. In time arbitrage, patients could hopefully express what they need from others, and perhaps gain a real chance of being taken seriously. Sometimes, when illness strikes, it's not so much survival which is at stake, but rather finding the most peaceful way possible to overcome one's fear of the unknown. Each of us as patients deserves in moments of fear, not to have to face those moments completely alone.

Healthcare could be envisioned as a most basic element of organizational potential, for all citizens of community. Healthcare provision in all its countless variations, deserves to be part of the reciprocity of mutual assistance. Such assistance could eventually be paid in the real time of people who are alive today, instead of future generations which deserve better than to be saddled with debt obligations of a past which never really belonged to them. We can build meaningful ways to be with others in their moments of greatest need, and yet do so without bankrupting anyone or anything. It's time to build anew, starting with more flexible versions of rural hospital organizational patterns.

As Marc Andreessen recently noted, "We're all necessary, and we can all contribute to building." Should we embrace the mindset of crafting stronger realities, we also gain the ability to create long term solutions which can benefit governments as well. We might finally be able to offer our governments a viable path to address the debt burdens they have already accumulated. Living with one another on reciprocal terms in the here and now, is no small matter. Let's get started. Again, we are all in this together.

Notes on Personal Reciprocity vs Social Reciprocity

Between keeping up with developments re COVID-19, and efforts to clarify my own perceptions in regard to reciprocity, I deleted more material in the last post than was actually kept. So today I'll try again, to explore relevant differences between (what could be considered) personal and social reciprocity.

Free markets are often described as voluntary forms of exchange. Even so, too many time based economic interactions, are not as spontaneous and voluntary as they could be. When it comes to other forms of product, prices can usually do a good job of representing and coordinating the voluntary actions of individuals and groups. It's when final product contains substantial time based and experiential components, that people face too many obstacles in what they might otherwise create or provide for one another. Money is a tremendous price and signal, but it could perform even better, if mutual time preferences could also function as prices, signals, and stores of economic value.

Many activities take place either through the personal reciprocity of individuals, or the social reciprocity of groups. While personal exchange allows individuals to negotiate for common purposes, social reciprocity seeks to build bridges and common "middle ground", as well. Since beginning this project, I've tended to focus more on personal reciprocity, than social reciprocity. However the reality is they are equally important, for they often need to function simultaneously in many social circumstance. Even as personal reciprocity creates starting points between individuals, it's the larger group context of social reciprocity which encourages a cohesive and constructive whole. In other words: When minds "think alike" in terms of aspirations and personal commitments, individual daily contributions in this context, are more likely to create circles of social sustainability.

Both social and personal reciprocity require understandable social patterns which are voluntary and not forced. People are far more likely to continue reaching out to other individuals, once it becomes obvious their efforts will generally not be in vain. What's more, societies and their institutions cannot expect immediate family members to assume too much personal reciprocity in the form of internal family roles. When this occurs, human capital potential is limited, as is also the potential of group interactions as a whole.

Plus, when individual family members have plenty of options in group settings for time based services provision, each family member stands a better chance of maintaining their personal autonomy and self respect. Indeed, family relationships tend to be more positive and supportive, so long as all family members have ample opportunity to benefit from the personal reciprocity and social reciprocity of group settings. We often observe this now in the services generation of high income communities, for instance. The more possibilities each individual holds for time arbitrage, the less the chance that everyday interactions will be of a forced nature.

How might we create reliable patterns for mutual reciprocity which are more voluntary in nature than present day institutions?  Skills arbitrage - for all its monetary value - has proven insufficient for the generation of services, knowledge, and personal autonomy which societies aspire to, particularly during times of economic uncertainty. Time arbitrage could ultimately tap into more sources of human capital, than skills arbitrage is capable of. Eventually, time arbitrage could lead to sustainable forms of services generation, which take place via common and easy to understand frameworks.

In order to function effectively, time arbitrage would include recognizable elements of both personal and social reciprocity. As to the latter, new communities could be established, where common interests could be pursued as a long term continuum for the maintenance and care of applied knowledge. Best, these new sources of human capital could rely on internal organizational patterns to generate new wealth. Indeed, one might dare hope, that when societies falter for any reason, such communities would serve as repositories of human potential, economic integration, and long term economic stability. In these settings, personal reciprocity could become the base which is strong enough for the larger goals of social reciprocity.

Time Arbitrage Would Include Utilitarian Benefits

Are utilitarian outcomes a helpful way to think about time arbitrage potential? After all, it's no simple matter to decipher what might generate the greatest good for the greatest number, given the complex circumstance of modern day economies. Not only have individual interests diverged even in (relatively) single cultures, income levels are now subject to extreme variance as well. These societal differences make representative democracies difficult to maintain, when different groups end up competing for the limited options of government revenue. This is especially a concern, when it comes to already existing supply side limits for time based product.

Time arbitrage could ultimately reduce some of the pressure, by created decentralized markets for services which would not have to rely on government revenue. In local markets for time value, better alignment of common interests could also encourage a greater degree of services coordination. The result? More market induced supply and demand for all participants, would generate the greatest amount of mutually desired activity for the greatest number. In other words, a utilitarian outcome which is otherwise difficult to achieve, especially in centralized economies such as the U.S. with populations in the hundreds of millions.

Mutual time management - that which creates space for individual priorities - could gradually help reduce the market losses which accrue to aggregate time value in centralized settings. When merit requires costly human capital investments just to get things done, the resulting skills arbitrage tends to cancel out the service market potential which millions of individuals could otherwise contribute. Indeed, when the time of individuals is mostly perceived as a cost, instead of a component of wealth building potential, people who inadvertently end up on the sidelines are often perceived as having zero marginal productivity potential. This is hardly an optimal result!

Skills arbitrage also became a problem from a utilitarian standpoint, by positioning "advantaged" human capital for time based product so as to create tyrannies of minorities over majorities. In the process, the resulting supply side limits has led to employment uncertainties which have proven difficult for both monetary policy or fiscal policy to address.

One of the most positive aspects of free markets, is when they can provide what also translates into the greatest good for the greatest number. This extensive contribution to utilitarian outcomes, should be ample proof, how non tradable sector activity could also benefit from a similar free market approach - one which allows time value a more complete economic role. All the more so, since free markets have often proven a simpler utilitarian approach, than countless policy efforts which tend to miss the mark in terms of utilitarian policy outcomes.

There is no reason, why the market potential of aggregate time value should have to remain so compromised. By creating reciprocal wealth at the outset, individuals can increase the dynamism of service markets which in turn could extend to millions more citizens than is presently feasible. Even though the greatest good for the greatest number is important as ever, it is no longer a simple matter for governments to achieve utilitarian outcomes on their own. By creating the greatest economic activity possible for the greatest number, time arbitrage could embrace utilitarian principles without necessitating additional taxation burdens.

Wealth Can't Be Built On Merit Alone

What makes meritocracy such a long term problem for societal organization? If merit remains the primary workplace option, skills differences among citizens will eventually be magnified in ways which make democracies more fragile than is already the case. I've promoted time arbitrage in part because it could contribute to workplace participation without the present political impulse to sort groups differently, based on prior privilege or the lack thereof.

Granted: To a certain extent, merit based organizational patterns - despite their exclusivity - are logical for getting things done. If institutions can fully compensate employees for their expertise, problem solving on these terms can be quite efficient. When national wealth benefits from extensive use of scale, public and private interests will abundantly reward specialists who - in turn - pay dearly for their human capital investment requirements.

The problem? Dependent markets not only get lots of things done via already existing wealth, extensive price making is also part of the equation. For instance, the Baumol effect includes large percentages of non tradable sector activity at high skill levels. However, this largely rival form of knowledge dispersion can only generate economic dynamism up to a point. Indeed, the barriers to modern economy access are already apparent, for the productive agglomeration of today's knowledge based economy is centered in a relative few prosperous regions. Are we really ready as a society, to impose drastic limits to wealth on these terms?

In the past, "special" locations for skill sorting and applied knowledge weren't so problematic, since millions remained actively engaged in activities where extensive amounts of price taking were also important for social cooperation and economic cohesion. In many of these settings, competition tended to be more pure and transparent. Communities and cities didn't need total integration with high skill knowledge in order to generate prosperity. Now they do. All the same, those who were left behind, will need stronger organizational patterns that utilize the skills capacity which is already in their midst. Fortunately, this also means rediscovering the wealth creation potential of price taking, instead of trying for yet another share of the price making pie - given the claims it has already endured.

Productive agglomeration will need to be conceptualized differently, so that more skills potential might be tapped in time arbitrage context. Since considerable revenue potential has already been apportioned to price making, groups will need to start anew, with price taking mechanisms that allow time value to function as wealth, alongside money. Otherwise, the long term dangers of sorting for skill on price making terms, will only become more evident in the near future.

Time and Fiscal Revenue as Scarce Commons

Our economic time is similar to the revenues which accrue to government, in that both are commons where the relevant groups need to effectively manage resource scarcity. Just the same, one often hears how government budgets aren't constrained like family budgets. This is true but only up to a point. Since governmental budgets are in reality a resource commons, competing demands often create substantial problems eventually. Especially if the actual nature of the commons capacity and its already existing claims, is not well understood.

Yet perversely, both progressives and conservatives have become less inclined in recent years to take deficits seriously. Perhaps this unfortunate circumstance explains the recent appearance of budgetary strategies such as MMT in national public debates. Even though some MMT adherents acknowledge the reality of fiscal limits, these natural constraints are mostly downplayed when MMT is explained for citizens who don't follow the dialogue closely.

Despite the financial and monetary tools made possible by the transition to fiat money in the 20th century; at the end of the day, government revenue still relies on taxation. And taxation is everyone's responsibility, however it may be structured. We do future generations a disservice if we ignore this, because taxation is closely linked with the realities of our own time scarcities for getting things done. No one can afford to forget that each of us has the same time available, whether to accomplish personal objectives or fulfill responsibilities to others. While taxes may increase, our time availability simply cannot.

Plus: When our institutions make more time demands than we actually have to give, our collectively held time commons starts to become overfished. It becomes more difficult for citizens to coordinate their activities, and represents even greater problems for individuals who lack the resources to pay someone else to carry out a portion of their responsibilities. Once too many societal demands accrue to our aggregate time potential, the process creates substantial problems across the entire spectrum.

An apt way to envision excess time demands in aggregate, are national budgetary debt levels which are not only substantial for every citizen, but often extend beyond their actual income generating capacity. While we benefit greatly from ongoing per capita productivity gains of recent centuries, national debt obligations still cancel out some of these gains. In order for total factor productivity to improve, we need to gradually decrease the amount of national debt which accrues to all citizens. It has been difficult to visualize this process occurring, yet debt loads continue to shift into the future where they pose additional burdens and obligations for future generations.

Imagine collective or aggregate time potential as a fixed commons, and another relationship becomes evident. When individuals and firms in non tradable sectors engage in price making, their reliance on fiscal revenue allows price making to overfish the resource capacity, or fiscal revenue, which these groups hold in common. Conversely, price making in tradable sector activity is more marginal in its effects. Not only does tradable sector product tend to be of a discretionary nature, it is part of a much larger commons which accounts for the vast majority of global resource capacity.

There is also a skills arbitrage factor which affects the dynamics of time as a fixed commons. When specific skills sets that are basic in nature are claimed by certain groups, thereby increasingly their value, this process can gradually result in a loss of relative time value by groups which are restricted from the use of those skills sets. This is in fact what has occurred in our own time, as twentieth century skills arbitrage claims in the practice of healthcare, have gradually diminished the aggregate time value of millions of citizens by comparison. In fact, these losses are partially reflected in the levels of government budgetary debt as represented by every citizen.

Until recently, societies have done reasonably well in smoothing many aspects of time deficiencies via debt formation and insurance pools. However, both of these strategies are coming under increasing strain. For instance, health insurance is having to shift more of its prior responsibilities onto customers in the form of out of pocket expenses. And just as families are now making difficult choices to find alternative means to a wide array of healthcare expenditures, governments are increasingly having to make hard choices about budgetary particulars as well. In all of this, the U.S. will especially need to be careful to preserve its own fortunate monetary status, by just saying no to excess debt formation wherever possible.

No one expects quick exits from excessive use of debt and fiscal policy, after all these structural circumstance have taken a long time to develop. Still, nations could begin to experiment with debt free approaches to knowledge use and wealth creation, via alternate routes which better reflect the nature of our time scarcity and the constraints of our commonly held resources. Economic reciprocity in the form of symmetric time value is especially needed, to create new wealth and counter the effects of excessive debt and budgetary burdens. It's time to get started, so that no one need mandate debt jubilees in the near future, for debt which simply could have been avoided in the first place.

Austrian/Niskanen Debates: What's Missing?

It's not easy in the U.S. to take what is now a political "road less traveled". Plus, the road of the moderate has become so ill defined as to resemble a disappearing path in the landscape. Are moderate policy efforts little more than a "sell out" to the political enemy? For some it seems that way. Of course, trying to legislate rigid rules of any kind for a diverse population of more than three hundred million, is no walk in the park. Since a political middle is mostly MIA, groups such as Niskanen face an uphill struggle, in their efforts to contribute to the national conversation.

Nevertheless, they deserve credit for trying, given the present dialogue of partisan outrage. Last year, Samuel Hammond penned an essay for Niskanen titled "The Free-Market Welfare State: Preserving Dynamism in a Volatile World". Interestingly enough, Hammond referenced Arnold Kling in the footnotes, prompting Kling to ask recently, "Am I a Welfare State Advocate?" Kling's post also highlighted a response to Samuel Hammond from Kai Weiss: "No Such Thing as a Free-Market Welfare State"

Instead, advocates of the free market should look to a strengthening of civil society, combined with a job-rich economy, to help those left behind. In the end, responding to skepticism about the role of free markets by arguing for more statism might be an oxymoron after all.

In fairness to Niskanen voices, their arguments are more nuanced than Weiss implies. And the "strengthening of civil society", a volunteerism which Weiss understandably promotes, is - alas - not so simple anymore. Yes, once the U.S. had a civil society which contributed greatly to the bottom line in terms of well being and a social safety net. However, that earlier reality also included citizens who could freely practice what were the medium and even high skill activities of their time. Yet much that contributed to well being which involved interchange with others, has since been made either illegal, or at the very least, limited to those who undertake extensive formal education.

This loss of production rights included economic factors to some degree (such as alternative healthcare practitioners), alongside the voluntary level of what citizens once freely provided for one another. How does one argue for a restoration of civil society, knowing that many earlier knowledge and skill production rights which were beneficial for social interaction, have long since been withdrawn?

Some Austrians come across a bit flippant as well, in reminding us how healthcare is not a right. This makes me want to pull my hair out, of course healthcare is not a right! However, it's a crying shame this fact of life didn't get stressed in the historical moments that really mattered for U.S. citizens. If everyone basically understood they wouldn't have healthcare rights, how would governments and private associations have gotten the chance to sway citizens to give up their own rights of healing, which contributed so to mutual assistance and a natural form of safety net? What was really gained for that extensive loss of freedom?

Worse, those now exclusive production rights went to limited sets of healthcare practitioners with extensive time scarcities and severe geographic constraints. Basically we're talking about what eventually became the loss of millions of practical, sometimes necessary aspects of healing, in everyday life. Why was a mere fraction of the population given the keys to such basic forms of knowledge production, to the detriment of everyone else? Are not Austrians major supporters of human freedom? If we all believe civil society needs strengthening, why can't we find ways to prove it?

Meanwhile, extensive supply side limits in healthcare practice, have also translated into overhead institutional costs which make it impossible for any level of taxation and redistribution to get to the heart of what matters for a public safety net. If and when governments become subject to austerity, much of our public or private non tradable sector activity is hardly positioned to take up the slack.

From time to time, people across the political spectrum (including individuals at Niskanen) have in fact attempted to deal with pressing supply side structural limitations. One reason this process has borne little fruit, is the fact a full frontal assault on general equilibrium settings for applied knowledge - especially in a large nation - is impractical. It can't work in part because high income skills arbitrage value is indirectly responsible for extensive valuations throughout the economy.

Yet high powered skills arbitrage in aggregate, also accounts for the extensive loss of time value on the part of millions, which is expressed in the trillions of debt we collectively owe in terms of national budget obligations. And why have governments still not realized that time based product, regardless of its marketplace value, can only scale up through increased supply side participation? Non tradable sector private interests know it, even if it isn't in their best interest to share this crucial understanding with their government benefactors.

Nevertheless, a structural approach for production reform, needs to occur in ways which won't undermine the overall wealth framing of general equilibrium. Most long term solutions actually lie outside of today's existing systems of structural organization. And the costs of living today, are such that citizens can't be expected to resume earlier societal safety net obligations on non economic terms.

To sum up, it's really misleading to argue that if government would only get out of the way, private markets would get along just fine. Today's private sectors include extensive non tradable sector organizational patterns which are compromised so as to inhibit dynamism and long term growth. These markets are so distorted that no amount of taxation or redistribution could provide sufficient remedy, regardless of the tax burdens that will soon fall on the shoulders of citizens. Let's face our structural problems for what they actually are. Publicly despising "wrong" political viewpoints as an institutional main course of action, is simply the wrong approach.

What Really Preserves the Labour Theory of Value?

Who still believes in the labour theory of value, rather than the more recent subjective version? Or, perhaps there's actually a more relevant consideration: How much personal belief in a labour theory of value manifests unconsciously, instead of at an ideological level? Chances are, unconscious attributions for labour value are a stronger contributor to economic outcomes than what is often debated. One might envision the general equilibrium result as power relationships in skills arbitrage, for that matter.

Indeed, underlying assumptions regarding labour value, greatly affect how high skill human capital has been conceptualized, especially since the workplace transitions of the twentieth century. Professional groups often rely on a non tradable sector structural framework which allows human capital inputs to take precedence over the aggregate outputs of time based product.

In this instance, it turns out that subjectivity cuts both ways. Consider how a subjective theory of value in terms of product, previously benefited from direct correlation with good deflation and recognizable gains in standards of living. It made sense to emphasize the subjective reality of product value regardless of labour contribution, when progress could be largely attributed to tradable sector productivity gains. But more recently, subjectivity has become associated with societal expectations as to what quality product represents. The consequent emphasis away from baseline utility, has muddied the waters for product subjectivity, especially for potential labour value contributions. Alas, quality time based product often includes excessive inputs at multiple institutional stages, before the product output intended for consumers actually takes place.

While my impressions re subjectivity dovetail somewhat with those of the Austrian school, many such discussions feel more relevant for historical periods of tradable sector dominace. Madson Pirie reflects on Carl Menger's many contributions to subjective value, and notes:

He founded what is now called the Austrian school. His crucial insight was to recognize that price is not based on what it costs to produce goods, as traditional economists had supposed, giving rise to the labour theory of value on which the edifice of Marxism is built, but on what the demand is for them.

He adds:

...value does not reside in the object, deriving from its input, but resides instead in the mind of the observer, representing his or her estimation of its worth. 

Even if arbitrary definitions for quality standards reduced the impact of good deflation for tradable product, at the very least many forms of tradable sector product provide standard utility which can be readily discerned. Alas this hasn't proven the case in non tradable sectors, where a reasonable baseline for product utility has long been abandoned in favor of requirements which - among other things - have muddied the waters of true productivity gains.

Given the subjectivity of economic outcomes, a better utility baseline is needed for non tradable sector product in general. A better definition of basic non tradable sector utility - especially for housing and time based product options - could clear some of the present fog as to how aggregate productivity, hence potential economic gains, might once again be measured with confidence.

Good Deflation and the Monetary Human Capital Role

Why does the form of deflation we call "good" (since it translates into more affordable product and more output), not function as the same clear positive, for the economic value of human capital as time based product? After all, if the cost of high skill services could be gradually reduced and made more widely available, much as tradable goods have become, "small" wages would hold more real economic value. Likewise, smaller aggregate wage levels would gradually allow the productive agglomeration costs of real estate to be modified in many areas as well.

There's a problem however, for good deflation in terms of time based service product. Alas: What tends towards cumulative inflation rather than good deflation, is how many individuals meet their ongoing expenses and asset costs as those costs currently exist. Unlike forms of product separate from time (which of course aren't human), time based product costs are attached to our human responsibilities to pay bills on an ongoing basis. While we are appreciative if we can access someone else's time, good deflation for time product may nonetheless feel like the bad deflation which impacts labour value during depressions, if that time value happens to be our own.

Our time is also scarce in relation to most goods. Consequently, in order to meet the human capital costs others posses, many seek to raise their own time value. This sets up a chain reaction, whereby others still need to increase the value of their time, so as to access important forms of time based product. This extensive internal inflation process runs exactly counter, to the good deflation which tradable sector activity has contributed to prosperity in recent centuries.

All this holds, regardless of one's monetary compensation for their time units in the form of labour or skills arbitrage. It certainly matters for the time arbitrage I've suggested as an alternative, which would need to be crafted so as to directly address the internal inflation problem. That's why it would be necessary to define new organizational settings for services, learning patterns, infrastructure, housing and other building components so as to make good deflation for time value a reasonable possibility.

Consider how infrastructure and real estate costs have proven relatively amenable to good deflation in tradable sectors. While limited aspects of tradable sector activity needs locations in areas with high real estate costs, much tradable sector production has far more flexibility and mobility. However, in order to accomplish this, many aspects of organizational capacity are integrated into single sustainable settings which have at least a relative degree of independence from place and geography.

Conversely, too many aspects of high skill services have been excessively place dependent for productive agglomeration, which only contributes to the difficulty of achieving good deflation in non tradable sectors. This coordination problem helps to explain why the high skill work of our most prosperous areas is no longer a simple matching process in terms of employment, given the relative few who now manage wealth in lieu of others. Since non tradable sector high skill knowledge does not scale as does tradable sector activity, it needs a horizontal organizational approach which encourages greater marketplace capacity and productive agglomeration which goes well beyond our most prosperous areas.

A new institution is needed which could place productive agglomeration for non tradable sector knowledge use into a combined organizational framework. In these defined equilibrium settings, individuals would not suffer the extreme losses in purchasing power, that would otherwise accompany good deflation in time based services in a completely open equilibrium. Of course, open equilibrium would still apply for tradable sector activitiy, since most individuals can still access and contribute to the good deflation of tradable sectors. However, the closed non tradable sector equilibrium would make it realistic to pursue good deflation as an important time based services goal.

Valuable though good deflation would be for time based product, there are other reasons to utilize symmetrical time value as a mass produced services commodity. Time arbitrage would allow time based product to function as a basic human capital building block, instead of simply another societal cost which places uncertain demands on the earth's resource capacity. One of the main problems of inflationary time value, is the fact there is no time based services steady state to rely upon, when time value exists solely in a dependent relationship with earth's other resource capacity. By bringing good deflation to time value, we could create a steady state for applied knowledge which allows us to more precisely determine the productivity of our own efforts, in relation to the productivity relationships of our other institutions.

Money Price is Most Relevant for Traditional Scale

If product can readily be duplicated, it is amenable to traditional scale potential, and its monetary price tends to serve as a relatively accurate coordination point. However, if and when a product's essential characteristics are directly related to time units (time based product doesn't scale), the money price may lack coordination potential. How so? Most resources remain part of price systems which regularly adjust to market variations, whatever their current level of use may be. But when the resource of potential labour isn't currently active in the marketplace, a certain amount of aggregate time value is also not being regularly priced, hence negatively impacts mutually held time priorities more than one might expect.

Regular readers are familiar with my suggestions for time as an economic measure or price, for units of time based product which aren't capable of traditional scale. Time arbitrage would allow knowledge and skill to scale in lieu of time, as a useful continuum in circumstance where knowledge and skill may lack sufficient institutional context. Today's skills arbitrage pricing has limited pricing relevance in the open market, since these labour prices don't represent a coordination point for aggregate time value. While time arbitrage would also carry monetary representation (as a general price mass produced commodity), time would function as the price clearing point for the aggregates involved. Even though time arbitrage would not likely impact labour pricing in general equilibrium conditions, it could bring much needed additional time priority value to defined equilibrium settings.

I've reiterated these points in part as a response to a Project Syndicate article from Mariana Mazzucato, "Let's Get Real About Purpose". She questioned why economic activity should be purely a matter of price, and continued:

To get real about purpose, we need to recognize that value is created collectively and build more symbiotic partnerships between public and private institutions and civil society. In doing so, we must address three questions: what value to create, how to evaluate the impact, and how to share the rewards.

Certainly I agree with Mazzucato that value is quite often a collective endeavour, and deserves to be more so. Plus I would also agree with her (in a specific sense) that monetary price is often inadequate for time based product. Nevertheless, I feel her arguments for strengthening "symbiotic partnerships" fall short, for these relationships have long prominently featured in the economic landscape with mixed results. As to creating recognizable value beyond a monetary price, I believe time value is the best approach to bring a new dimension to economic exchange. Indeed, time value as economic measure would also make it simpler for individuals to personally manage for important considerations such as health and happiness.

Economic time value would give us more concrete means to evaluate the impact of what we do. Regarding "how to share the rewards", what's important here, is determining how to make certain that all citizens not only take part in important daily activities which don't scale, but also have production and workplace access to economic activity which does scale. Without such access, we tend to find ourselves limited to demanding more for our skills and knowledge, than many individuals - and governments for that matter - are actually able to support.

To maintain productivity gains in the near future, we will also need a better understanding, how to respond to the fact much of the market is already being given over to product which does not readily scale. Our lack of understanding means this process is occurring at high cost and with low levels of economic participation, for too many citizens. Not only has the percentage of non scale time product been growing in recent decades, it is a major factor in declining total factor productivity and losses in quality of life. We will always need to work with one another in ways that do not readily scale, but we need to do so without the high level of debt and supply side limitation which now accompany this endeavour.

The prices which are functional and integral to our tradable sector activity, will always be important. After all, they are the best indicators where traditional output gains continue to occur. However, if we are to maintain long term growth well into the foreseeable future, we will need to be less dependent on price making from the largess of tradable sector activity, for the many diverse areas of work we engage in that don't readily scale. If we can create real value for our time priorities as economic units, it would ultimately become easier to break our dependency on price inflation and supply side limits as our primary means to create quality time based product.

Human Capital Potential as Infinite Growth

Could the economy - given the chance - expand indefinitely? Of course, not everyone imagines continued expansion as a desirable outcome. For that matter, given the recent worldwide economic slowdown, might the possibility of infinite expansion already be lost? Hopefully the recent slowdown will prove to be only temporary.

Nevertheless, we could also envision infinite growth capacity which assumes a somewhat different form. By building directly on the possibilities of the human mind, it's not necessary to "use up" other aspects of earth's resources in order to perpetuate the process. The symmetric alignment of time value would make it possible for of the human mind to be tapped, without having to wait for other aspects of earth's other resource capacity to be utilized first.

Recent progress has taken place in ways which are not always encouraging for the long term potential of human capital. Skills arbitrage in particular, is only a fraction of the human capital potential which exists. Skills arbitrage is asymmetrically compensated, hence dependent on other originating sources of wealth before assuming economic validity. This process often requires extensive use of earth's resources, before the larger potential of human capital can be brought into the equation. Knowledge use as a secondary or dependent economic construct, also means that certain aspects of skills demand takes precedence over personal priorities.

Symmetric compensation for time value, would create a more inclusive form of human capital potential, in which time units form a long term continuum with infinite growth possibilities for knowledge use. However, this growth would be measured somewhat differently, since it derives per capita knowledge and skill use as a more important measure of economic gain than actual changes in income. The advantage to such a setting, is that it would give all human capital potential a chance to take part in formal economic processes.

Consider how this process would provide benefits for the long term growth of non tradable sector activity. Skills arbitrage creates a specific human capital harvest in non tradable sector settings, yet if one were to contrast the relevant human capital to a tradable sector apple harvest, it would become clear that only a small portion of human capital is being measured for total growth capacity and marketplace potential. On the other hand, time arbitrage could encourage the measure of all human capital possibilities, and like the tradable sector apple harvest, measure how all human capital might be made relevant to long term growth potential. By far the most important reason to encourage economic expansion indefinitely, is to pursue the potential of the human mind on the same terms.

Oddly, the efficiency of seeking the best skills in the marketplace, creates its own limits on full human participation. The creation of a economic continuum for time value, could make amends for those limits, by allowing the time value of all individuals to become an active part of indefinite economic expansion. Importantly, this could create a more sustainable form of economic expansion, since time arbitrage would not make the same demands on earth's resources that are often necessary for the asymmetric compensation of knowledge.

Update on a Busy Writing Schedule

Regular readers have probably noticed I've not had much time for blogging recently. However it's mostly due to a good reason: I'm in the process of finalizing material, for the first book of a series which will also eventually become part of the blog sidebar. This past August, I'd begun settling into a schedule of wrapping up chapter material each month, before continuing to the next chapter. Of course as it turned out, the third chapter ran three weeks longer than expected - given my self imposed deadline! Hopefully that won't happen too often, so I'll still have time for blogging, and particularly so the initial part of this extended writing project will be complete (finally!) by summer's end of 2019.

There'll be eight chapters in the first book and they should be ready for their last edit (prior to this initial publication) by late spring. Once Time as Wealth is complete, I'll be able to set my sights on some pressing macroeconomic concerns which are the main focus for the second book. Afterward, the third book will describe a potential institution which - alongside for profit endeavour (physical building and infrastructure components) - would support a time/generational continuum for mutual employment and knowledge preservation. In particular, an institutional structure is needed which can address the widespread structural dilemma which is also a result of the Baumol effect. Meanwhile, here's a few highlights from Time as Wealth.

1) The Untapped Potential of Time Value
Many discussions re time as wealth, understandably focus on the reality of personal time scarcities in relation to institutions which already exist. But what if it were possible to position our economic time value within a context of institutional adaptation? Importantly, a marketplace for time value, would mean greater monetary equivalence for all time use potential. This approach would help compensate for the fact nominal wages may be slow to adjust upward, during historical periods of service sector dominance. Indeed: The tradable sector dominance of our recent past, was likely a greater contributor to relative income equality than is generally recognized. That relative loss in tradable sector output - hence relative wage loss - is a recipe for political fragility. Gains in aggregate time value could  help restore a rising standard of living, and bring a new dimension to productivity as well.

2) Imagine and Create the Markets We Want
How might a well defined marketplace for time value, actually benefit society? For one, there is a growing zero sum mentality in the political arena, which has been exacerbated by the exclusivity and polarization of today's non tradable sectors. By taking all time use potential into account, more inclusive and less polarized workplaces would eventually take shape. What makes greater inclusion feasible, is that mutual reciprocity creates wealth at the outset, instead of having to demand resource capacity from elsewhere. Reciprocal wealth building, means new economic options that go well beyond the skills exclusivity of many present day workplaces.

3) From Skills Arbitrage to Time Arbitrage
Is it possible to differentiate how we value the overall use of our time, from how we came to define the value of skills investments in 20th century workplaces? All too often, the commitments of our skills priorities have meant giving short shrift to other time priorities and responsibilities. In some respects, time arbitrage could prove a more flexible means of services coordination, than skills arbitrage. Time arbitrage could tap the use of knowledge in non rival ways which help to preserve the spread of knowledge throughout society. Not only could time arbitrage restore our capacity to manage the time necessary for personal commitments, it could allow local groups to coordinate a broader range of skill sets than is presently possible.

4) Autonomy, Personal Agency and Economic Freedom
Governments and private industry alike, have long been complicit in mutual agreements which reduce our economic freedoms. How can a society expect to preserve political freedom, without economic freedom? Nevertheless, the freedom to produce is not as prominent among supporters of free markets as one might expect. Much of the usurpation of knowledge production rights in particular, took place well before wealth came to be strongly associated with knowledge. Indeed, the dialogue of victimization likely emerged in part due to a lack of understanding, how production rights have slowly but surely been lost. Production rights are an important part of our potential happiness and satisfaction in life, in that they make autonomy and personal agency a viable option for society as a whole.

5) From Divisions of Labour to Mutual Time Priorities
Not only do we need to closely examine future possibilities for time management, we also need to take a broader perspective regarding the rationality of mutually held time commitments. While tradable sector activity continued to dominate, time management was often a secondary concern, given the obvious demands of these kinds of organizational activity. However, non tradable sector organization has not been near as efficient, or as complete in terms of production potential. Possibly the best way to think about regaining efficiency for time based services product, is to envision the process as one of mutual employment for mutually held time priorities.

6) A Place in the Sun for Students of Life
How did our personal enjoyment of experiential and practical knowledge, become so lost in the demands of formal education? If that weren't enough: Formalized education has made it exceedingly difficult for average citizens without college degrees, to participate in some of the most important issues of our times. It is said we need to vote if we want a good societal outcome. Nevertheless, there's little in the political area which actually addresses the most pressing issues of the day. And many vital issues - instead of being worked out at a societal level - are inexplicably "roped off" for educational papers and high level discussions. Let's create more meaningful roles which include economic context, for students of life with an avid interest in lifelong learning, yet little means by which to share that passion in productive ways with others.

7) Building a Continuum for Knowledge Preservation
Even though generational wisdom may appear irrelevant or outdated, there is hidden fragility in the systems of our times. Knowledge tends to utilized in ways which don't necessarily carry a reliable continuum or momentum. Important information may actually be lost at times, in part due to how its use is organizationally structured. How might societies reduce this risk? An important aspect of this conundrum, is a wall of separation between schools and workplaces which prevent students from taking active roles in the economic and civic lives of their communities. Even though social and economic mobility will always be important, more communities need the economic option of being able to play direct roles in the knowledge preservation and utilization processes they have supported for so long, via formal education.

8) An Overview for a New Institutional Role
A new institution is needed, which can productively respond to the fact that time value scales differently from other forms of value. Time based product is vitally important in multiple aspects of our lives, especially since it contains an experiential nature which cannot be replicated in any other way. Nevertheless, the only way to make time based product truly efficient, is to provide an economic dimension in which time can directly function in relation to itself. Knowledge and human value would be able to scale up in this arrangement, so as to compensate for the fact this system wouldn't directly capture full monetary representation. Participants would generate the monetary equivalence of real wage value, through their creation of service options which otherwise would not be possible.

There's another important aspect of monetary equivalence in this arrangement. Each participant would build lifetime ownership in both local building components and physical infrastructure, and have ownership options as well in the manufacture of these components which are sold globally. This active citizen shareholding position, would make it possible for central banks to indirectly represent the labour of these groups (which otherwise couldn't function as a liquid asset), via their share of ownership in the for profit role of the equilibrium corporation.

Empathy, AI and the Knowledge Factor

Might artificial intelligence ultimately replace physicians? Bertalan Mesko argues that the medical community shouldn't be too concerned re a spate of recent dire predictions, and adds:

They're just plain wrong. All of them. Although many signs are pointing to the fact that A.I. will completely move the world of medicine, and many other technologies will have a transformative effect on the industry, stating that the majority of medical professionals will disappear, is fearmongering and irresponsible. 

Mesko offers five reasons why artificial intelligence won't replace physicians. However, I'd like to take a closer look at the first one where he asserts:

1) We cannot replace empathy.

Even if the array of technologies will offer brilliant solutions, it would be difficult for them to mimic empathy. Why? Because at the core of empathy, there is the process of building trust: listening to the other person, paying attention to their needs, expressing the feeling of compassion and responding in a manner that the other person knows they were understood.

Having come of age in an era when physicians weren't expected to be so considerate of their patients, I can appreciate the current emphasis on compassion. When it comes to patient/doctor relationships, one might say that expression of empathy has become the "right thing to do".

Hence until recently, I was convinced by arguments such as the above. Surely no robot could take the place of human empathy! But what really takes place? Most successful people face societal demands which greatly reduce how they can be expected to assist (mere) individuals. The higher one's level of compensated skill, the less time one generally has left, for one-on-one economic engagement. Yet empathy includes taking the time to stop and listen to pesky or even "troublesome" complaints, a chore which may occasionally include walking a mile in another's shoes. Otherwise, how to become less disagreeable, as to the "unreasonable" assessments others tend to hold re their circumstance? We may find snap judgments a bit distasteful, but they sure "save" a lot of time and bother, don't they. Yet physicians are hardly alone, in their inability to assume a level of basic observation that can only be likened to beginner's mind.

What's more, the present institutions responsible for our time based services, are separated from one another in ways which break up knowledge continuity and practical application, at the outset. In other words, people lose the ability to preserve the usefulness of hard won understandings concerning patients and clients, once individuals are handed off to the next institutional setting. Knowledge workers are now expected to juggle such an extensive array of information alongside administrative circumstance, that they can only tap a fraction of potential solution sets. Sometimes that's not enough, especially when patients or clients need informational continuity for any reason.

Could AI contribute to the knowledge preservation and continuity, that today's professionals are hard pressed to provide? Or, what if AI could even take into consideration, more of those pesky patient/client complaints and observations, should such information become part of the computer's knowledge landscape? In other words, might AI have the "time" to (respectfully?) "listen", if patients could actually report to them directly, particularly if they get little respect from professionals or workers entrusted with their care? What if AI could even be programmed so that it wouldn't react with human anger, when patients lash out in desperation or frustration at a society that has seemingly become too burdened to help them anymore? Yes, I hope that time arbitrage can eventually make a difference in terms of personal civility and mutual assistance, but we aren't there yet...

Granted: The examples in my barely controlled rant aren't normally how most people envision what supposedly constitutes empathy. Nevertheless, the impartial observation of beginner's mind, and continuity of knowledge application, are both important. Let's don't assume too quickly, that deep learning AI couldn't be programmed to "remember" things that might otherwise be disregarded or even discarded. Or, for that matter, that AI can't be expected to exhibit "empathy" towards patients - especially since it's often beyond the scarce time given means of professional providers, to be able to do so.

Needed: "Come as You Are" Economic Options

How does one explain workplace skills shortages, when there are low levels of labour force participation at the same time? For that matter, labour force participation in the U.S. now lags behind other developed nations. It's a circumstance which highlights how employer/employee relationship expectations have diverged in ways which - thus far - are only becoming more difficult to reconcile.

To put this structural reality into a broader perspective: Diverging workplace expectations could lead to further economic and social instability, since both groups are gradually becoming less willing to accept what the other has to offer, over time. Left unaddressed, that's a recipe for slow but sure institutional breakdown. Already, there's more jobs available than individuals who are actually seeking work. Might a different institutional approach prove more amenable, to broader labour force participation in the future? What if there were economic options that could make it more tempting - not to mention more feasible - to maintain lifetime economic commitments?

While some may view gig work as a "come as you are" option, these digital platform opportunities are somewhat limited to the coordination patterns of today's already prosperous regions. Informal commitments such as these are certainly helpful, but they need more viability in broader formal patterns which can align temporary commitments with lifetime production and consumption opportunities. Otherwise, it could prove difficult to regain the productive agglomeration that so many regions now lack.

Alas, there's good reason why one seemingly needs "near perfection" to land jobs which include ample compensation and benefits. In recent centuries, tradable sectors have increased productivity by decreasing the amount of labour required in relation to total output. As some of our institutions continued down paths toward ever greater productivity, the employment they still required, meant higher levels of skill would be necessary in more instances.

Nevertheless, other institutions took a high skills approach for entirely different sets of reasons. The result? Today's requirements for non tradable sector human capital investment, have partially offset total factor productivity gains. Were it not for the strong emphasis on quality product, and the extensive human capital that seemed necessary, the societal burden of excess input in relation to output, might have been more obvious. For that matter, as things currently stand, the concept of "come as you are" time based service options, runs completely counter to a wide range of societal expectations. Even so, national budget obligations for quality product costs are continuing to expand, and governments have yet to discover long term solutions. Worse, labour force participation is likely to decline further in the years ahead, if knowledge production is not approached differently.

Fortunately, total factor productivity could be regained, by reducing the amount of skill arbitrage which takes place as production residuals or debt dependent secondary markets. Should time based services become organized as internally derived markets, time units would in turn become wealth, via product which simultaneously carries elements of knowledge and skill. Once labour is reconfigured as mutually held time priorities, we can create "come as you are" workplaces which treat learning as part of wealth creation process. As a point of marketplace origin, time based services would help to maintain tradable sector productivity levels in general equilibirum, since they don't need to siphon away tradable sector revenue.

An apt way to think about the possibilities of time value, is to imagine a single time unit as a single apple. Then, envision any possible health concerns as a "blemished" apple, but one which still holds plenty of economic value. Indeed, individuals could potentially match time and skill priorities, based on forms of personal "imperfections" which hold particular meaning for them. The matched priorities are still time unit wealth in every instance, meaning there's no loss of institutional productivity on sick days, such as occurs when one's skill is arbitraged as workplace production residuals!

"Come as you are" economic options, would mean a chance to seek out the valued time of others, one negotiated share at a time. With a little luck, regular exposure to what others expect, would in turn help to temper and fine tune what we expect. And - of course - likewise for everyone else as well. Here, I'll dream a little and say perhaps we wouldn't be so impelled to run away when it all goes awry, because we would finally start to believe it is possible to negotiate with others through the course of our lives, for our wants and needs. I can't help but believe that if we had the ability to directly negotiate with others in our workplaces and learning spaces, our home lives would benefit as well. With a little luck, economic platforms for processes such as this, might even encourage us to become a civil, considerate society, once more.

Skills Arbitrage is Linear, Time Arbitrage, Non Linear

As skills arbitrage became increasingly important for reliable employment, employment possibilities in turn, were more driven by linear relationships. These realities affect societal decision making for skills use patterns, and also aggregate income expectations. For that matter, 20th century transportation systems made many of these linear divisions of labour expectations feasible - not just in terms of highly defined work roles, but also the broadly spread population densities which these institutional workplaces came to rely on.

While linear organizational patterns have contributed greatly to the productive agglomeration of the present, they are no longer sufficient to maintain either long term growth or economic stability. This is slowly becoming evident, since productive agglomeration and its associated economic complexity, is no longer well dispersed across diverse regions. Even though linear workplace organization can be simpler to control and manage, its extensive use now constrains not only aggregate growth capacity, but also the dispersal of productive knowledge use patterns.

Fortunately, time arbitrage could provide non linear options for new growth, through differently aligned workplace patterns and relationships. Non linear patterns feature in what are termed complex adaptive systems. How might one envision such systems? Wikipedia explains their nature:

A complex adaptive system is a system in which a perfect understanding of the individual parts does not automatically convey a perfect understanding of the whole system's behavior. The study of complex adaptive systems, a subset of nonlinear dynamical systems, is highly interdisciplinary and blends insights from the natural and social sciences to develop system-level models...They are complex in that they are dynamic networks of interactions, and their relationships are not aggregations of the individual static entities.

In a recent post Ian Hathaway notes that "startup communities are examples of complex adaptive systems", and adds:

Linear thinking works in individual sports like tennis or golf, but not in sports teams like baseball, where the integration of the pieces (the players) can be more deterministic of the outcome than the sum of the parts (the combined talents of the individual players).

How to think about the difference? When groups work to create product or outcomes which benefit from specificity, linear approaches can be appropriate. However, many forms of time based product need not be quite so skill specific, at the individual level of providers and recipients. In these circumstance, often neither participant expects or desires a universally defined product or outcome - even though institutions may choose to impose standardized outcomes, so as to maintain control and reduce costs.

Time arbitrage could coordinate a more diverse range of skills and knowledge use possibilities, so that many services would ultimately function more effectively as free markets. Likewise - as Hathaway emphasized regarding startup communities - time arbitrage, in contrast with skills arbitrage, would "focus on the interactions between the people involved".

Coordinated team effort as an ongoing process, is a good way to envision time arbitrage potential. Group participants would align mutually desirable activities so as to create a more flexible range of services product, thereby making the process more relevant for all concerned. While we don't always associate greater autonomy and personal challenge with the nature of today's time based product, the digital era gives us an excellent chance, to reduce what is often unnecessary hierarchical organization in these sectors.

Time Arbitrage as a Contestable Market

One potential advantage of time arbitrage, is that knowledge would be experienced and applied in non rival context. Non rival use reduces market frictions and encourages a fuller, more diverse range of group skills capacity. Imagine the process as a concentrated and decentralized community setting, for productive agglomeration. When knowledge use is non rival, there's fewer cost burdens of entry and exit for all concerned. Likewise, the resulting continuum for mutually obtained skills coordination, promotes market competition for the many - not just the few. Exchange velocity increases, since knowledge application is less likely to bottleneck or be treated as absolute and exclusive of interpretation.

Given the reality of time scarcity, we don't always have the economic time value at our disposal, to reimburse what others may deem the economic value of their own exclusive skills arbitrage. Nor do governments always have the budgets to completely reimburse skills arbitrage for given groups beyond a certain point - which in turn limits both the production and consumption potential of valuable knowledge and skill. Consequently, the extent of marketplace vitality which is possible for time based services, depends on how many actually take part. How much aggregate participation is presently lost, due partly to extreme variation in skill value which is further compounded by present day accreditation processes?

What's more, the reality of time scarcity, prevents (standard) economies of scale when human capital investment (mostly) accrues to time based product. Fortunately, time value unit symmetry would allow scaling up through added participation. Here's how Economics Online describes contestable markets:

The theory of contestable markets is associated with the American economist William Baumol. In essence, a contestable market is one with zero entry and exit costs. This means there are no barriers to entry, such as sunk costs and contractual agreements. For a market to be perfectly contestable, relevant industry technology would be readily available to potential entrants.

The existence, or absence, of sunk costs and economies of scale are the two most important determinants of contestability. On the basis of these two criteria, natural monopolies are the least contestable markets.

Nevertheless, no market can be completely competitive in its entirety. As William Baumol explains:

In our analysis, perfect contestability...serves not primarily as a description of reality, but as a benchmark for desirable industrialization which is far more flexible and is applicable far more widely than the one that was available to us before.

While Baumol's focus in this (early eighties) instance was industrialization and tradable sector activity, contestable markets as concept, could also be useful for the market potential of non tradable sector activity. In particular, for high skill time based product, a contestable market would be one in which knowledge could be utilized as freely as possible.

To this end, time arbitrage could eventually help reverse the trajectory of excess rival knowledge costs which are now lodged in rising government debt loads. And interestingly enough, while Baumol's disease tends to be associated with non tradable services income in geographic correlation with tradable sector income, non rival knowledge use could lessen the chronic severity of this "condition" in a macroeconomic capacity - given its unfortunate contribution to sectoral imbalance.

In recent decades, numerous opportunities have surfaced which could help reverse the costs of human capital investment. What's more: Of late, these possibilities have greatly increased, and AI deep learning could make it possible for the average citizen to work alongside AI in a "just in time" knowledge production capacity. Will the reality of today's growing debt burdens finally encourage societies to remove constraints of human capital investment when they are no longer necessary? How many sunk costs for today's high skill services, are actually self imposed? After all, it wasn't so long ago, that healthcare mostly functioned as an open, dynamic, highly contestable market - one with minimal entry and exit costs.

Skills Arbitrage Exacerbates the Knowledge Use Dilemma

Skills arbitrage as the prime means of monetary compensation, is creating problems for the marketplace structure of both healthcare and educational institutions. Increasingly, as governments grapple with national debt burdens, the consequent revenue limits have encouraged an excess focus on core elements, as if "one size fits all" patterns were appropriate for the use of knowledge and skill.

Unfortunately, a "one size fits all" response doesn't align well, with the realities of students, customers, patients, or providers - especially given the experiential nature of time based product. One result of the present dilemma, is undue focus on metrics for the measurement of system outcomes. However, this approach encourages not only those who game the system, it sometimes leads to losses in what might have been productive approaches for knowledge and skill.

Consider how secondary market organizational patterns have impacted supply side sources for services generation at a general equilibrium level. For instance, it's unrealistic to expect public education to leave no child "behind", given the problems that creates for individual learning and the fact many workplaces now mostly seek the "best" human capital available. There's far too many potential workers who are currently being left behind, yet formal education mostly part of the problem insofar as it's been kept separate from workplace and marketplace realities for too long. No amount of formal educational access is going to create an inclusive society, if workplaces are solely organized as exclusive realms of knowledge application and endeavour.

Even though it's obvious that skills arbitrage isn't representative of aggregate human capital potential, until now we've lacked means to address this problem directly. Alas, when healthcare and education are dependent on external revenue sources, they can become caught in a secondary market status which makes it difficult to expand from core sets of knowledge use and skill, when general equilibrium capacity becomes weighted towards non tradable sector dominance. Once non tradable sectors establish these patterns in complex economic settings, societies need the additional option of organizing for knowledge use as a wealth generating primary market.

Unlike skills arbitrage, time arbitrage - as a primary market for time value - would seek to improve the human capital prospects and wealth generating potential of all individuals. However, economic time value is internally organized in local group settings, so that time and skill preferences can be personally managed in relation to group preferences. By utilizing economic time as a commodity or natural resource, it becomes possible to generate time based services as a defined equilibrium - one which aligns available resource capacity into a negotiable group context.

No one would need to be limited to core knowledge or skills choices with others in these settings, as is now frequently necessary in formal education at multiple levels. Another considerable benefit, is that more individuals would gradually be able to offer "peripheral" or experiential learning/application options, as they assume more personal responsibility for core learning via the digital realm.

The purchase of time with time, creates wealth at the outset - indeed, in a similar manner to the resource reciprocity of tradable sector activity. Ownership of our own time in relation to others is a powerful economic option. After all, once this form of activity is established and understood, participants need not wait indefinitely for the stars to align, or for outside political groups or corporations to provide money for challenges and endeavour which people are anxious to put into motion now. Importantly, the most important metrics for time based product in these settings, are the ones that mutually benefit the individuals involved. In other words, it's not about how many patients receive treatment, or how many students receive the best grades, but about how many individuals in any given group, are able to create and access the kinds of service product which are meaningful to them.

Time arbitrage makes it possible to utilize valuable knowledge and skill, without constantly having to rely on human capital investment cost as the most important reference point for all concerned. This particularly matters, since AI is already well on the way to achieving deep learning outcomes. Many aspects of AI deep learning could eventually make extensive costs for human capital investment, unnecessary. With time arbitrage as a focal point in our economic relationships, not only could we productively respond to structural unemployment and knowledge use supply side limits, we gain the ability to work with AI in a peer to peer relationship - one with a real chance to reduce unnecessary knowledge use hierarchies and their extensive human capital risks.

Healthcare Isn't Free Market. But What Does That Mean?

Oddly, the fact that today's healthcare isn't part of the free market, is still intellectual fodder in opposing ideological camps. Indeed, some of these arguments quickly jump from correlation to causation judgments. One apt example: Healthcare practitioners and policy makers who argue against government interference in healthcare as a "slippery slope" to socialism. Hence one might reasonably ask after a long slide (decades) of government meddling, "Are we there yet?" Meanwhile, others continue belittling free trade as a general concept, since healthcare costs continue to increase relative to other sectors. Hmm, great, let's just destroy free markets since healthcare doesn't work...

Reasoning such as this is unhelpful, for it only adds to confusion and divisiveness. Likewise, Scott Sumner recently pointed out a similar process of faulty logic re healthcare at Econlog. Despite the hope Republicans might remove regulations standing in the way of economic dynamism, removing cost controls on Medicare is just a deregulatory pretense for crony capitalism.

Also part of the problem: When well meaning would-be reformers address healthcare, they sometimes miss that similar policy attempts were already tried decades earlier, only to end up unsuccessful and - worse - years of concerted effort mostly forgotten. In a post last year I highlighted some of these efforts with historical examples from "The Social Transformation of American Medicine". Paradoxically, while many healthcare practitioners tend to publicly "favor" free markets, that doesn't mean that as a group they necessarily agree with free market efficiencies such as Adam Smith advocated, centuries earlier. How to respond to such a reality? The fact this circumstance has long been the case, is just one reason why I advocate the use of knowledge for long term prosperity, by completely different sets of means.

A major part of the confusion re knowledge use for time based product, is that when aggregate time value isn't possible as a formal economic consideration (alongside skill), no one can coordinate the use of time based skill or knowledge on truly competitive terms. Today's public and private designations for healthcare don't get to this problem, since they both compensate skills arbitrage in ways which of necessity rely on the revenue of wealth that already exists. We see this reality for private healthcare supply, as increasing supply for the traditional supply structure would unfortunately mean reducing individual income. The asymmetric compensation of today's institutions can redistribute wealth, but this form of monetary compensation can't build wealth for time product via direct means. When valuable time based product is sought on indirect terms, there will always be ideological struggle as to the outcome.

By treating time value as wealth potential, time based activities including healthcare, could function as free markets. Nevertheless, I don't advocate for a complete replacement of traditional healthcare with such activities, because there are good reasons for governments and special interests to compensate the skills arbitrage of extensive human capital investment, wherever it is possible to do so. I'm simply suggesting that skills compensation associated with costly human capital investment and its associated redistribution of wealth, are no longer enough, for long term knowledge use and economic prosperity.

We need a better understanding about all of these dynamics. For that matter, we could already be paying the price for too much knowledge use protectionism, given recent growing protectionism by nations against global markets which have operated freely. After all, it's easy to dismiss a post title such as "The American Healthcare System Shows Why We Can't Trust Free Market Ideologues", until we stop to consider the fact that Trump and friends have their own questionable allegiances in this regard.