Jobs as a Form of Societal Permission

How might artificial intelligence affect employment prospects in the near future? Answers may partly depend on how AI impacts the aggregate output of tradable and non tradable sector activity. Essentially, we may gain more societal permissions for employment, so long as we ensure that aggregate output is not compromised.

And while AI is beneficial for non tradable sectors, in certain crucial monetary respects it is better positioned to increase output in tradable sector activity. After all, tradable sectors don't face the limiting factor of time scarcity in final product. One can only hope that tradable sector potential does not become overly suppressed in the near future by the excessive market demands (price making) of today's non tradable sectors.

AI can only improve aggregate output in non tradable sector activity up to a point. Even though AI can augment time value in non tradable sector time based product, it more often does so for specific or individual efforts, rather than general worker participation. Since these (historically early) patterns of AI are occurring in restricted knowledge environments, AI tends to exacerbate income variance in non tradable sector activity, instead of contributing to greater knowledge dispersion in society.

At first glance, one might expect the professional work of knowledge providers in non tradable sectors, to be among the safest jobs in the near future. Nevertheless, market availability in these areas will still require societal permission in the form of reliable general equilibrium revenue flows. This being the case, many professionals may ultimately have less control over their management of job creation, than they would prefer. At some point, budgetary restrictions could "require" more use of AI to substitute for human capital, even though knowledge providers understandably prefer otherwise.

When considering whether AI contributes to or detracts from job creation, it helps to determine whether the relevant activity provides an initial wealth source which can utilize immediate resource reciprocity. This organizational approach doesn't require redistribution or long term debt formation, plus any budgetary restrictions it creates are mostly immediate and short term. Today's tradable sectors are the most dependable sources of initial wealth generation. Given this priority market position, they should continue to serve as reliable job creation, so long as markets maintain a steady growth trajectory.

Alas, some secondary or non tradable sector market formation is not only heavily reliant on redistribution, but also on the ability of governments to fulfill competing responsibilities without substantial disruption. Eventually, due in part to extensive price making, these forms of knowledge production could suffer losses of aggregate output, even in conditions of carefully calibrated growth trajectories. While many time based services still appear as though steady sources of employment, some of the most highly compensated employment could be disrupted by budgetary issues in the near future.

Fortunately, there are new organizational possibilities for societal permission in skilled time based services. An important difference in future capacity, however, is that full monetary compensation for the time product of knowledge providers, will not always be possible. Despite this reality, time arbitrage could make it feasible for participating groups to coordinate time based services. Advance planning towards this end, would also lessen the negative impact of income losses for all concerned.

Participating groups could especially step up quality workplace possibilities, by giving AI "permission" to assist individuals in the creation of quality time based product. One could readily imagine today's AI assistance for professionals as a starting point, since the real potential for societal gain is in raising the skills ability of all individuals in their workplaces. Even though AI can't multiply existing time scarcities, it can improve the aggregate time value of those who take part in services generation. Let's bring workplace permissions within reach of all individuals who would provide mutual assistance.

Full Employment, or Future Productivity Gains?

Indeed, why should it have to be one or the other? And why isn't automation more often acknowledged, for the long term employment problems it might ultimately pose? Basically the issue is this: Would it be necessary to give up full employment for society to realize continued progress?

Perhaps the fact many earlier Luddite arguments didn't pose long term problems, explains an inclination to disregard where automation is a factor in regional employment losses. Nevertheless, as Scott Sumner noted in a recent post, protectionist and Mercantilist trade spats between nations aren't a reasonable approach, either. Alas, more logical responses aren't as obvious as one might expect, and there are plenty of moving parts in this scenario. Even though nationalist responses for instance are inappropriate and counterproductive, there's little consensus regarding a constructive framework for long term employment potential.

Any progress in this regard would focus on domestic economic realignment, and continued productivity gains are key to this discussion. Importantly, there are no linear solution sets which include full employment and continued productivity gains in a general equilibrium scenario. That said, the good news is that tradable sector organizational capacity is as appropriate as ever, at all levels of equilibrium dynamics. It's the organizational capacity of non tradable sectors which pose such problems for long term productivity, and employment as well.

If there is a tradable sector problem in all this, it's that we can no longer expect full employment in these areas. What we also can't accomplish is full employment from non tradable sector time based services as they are currently constructed. Without a more dynamic approach to services generation, these dependent (secondary) markets would ultimately create extensive societal burdens. Hence non tradable sector activity could benefit from a non linear approach. These new institutions (new communities) would build defined equilibrium settings which create additional employment and supply side potential, via mutual time reciprocity.

Once new non tradable sector institutions address full employment, how would they contribute to future productivity gains? First, a time arbitrage defined equilibrium does not detract from total factor productivity, since it would function as a primary or direct wealth creation market, instead of as a secondary market which depends on general equilibrium wealth.

Possibly the best news, is that internal sustainability is only part of what time arbitrage could contribute to long term productivity gains. When participating groups align skills and applied knowledge internally, they create new wealth in the process. Even though each individual's economic time options are necessarily rival due to time scarcity, the applied knowledge in each setting is non rival. Consequently, knowledge and skill gradually accumulate in ways which move forward services production benefits to future generations. This, instead of mostly expecting future generations to pay for today's skilled services! Even though these particular aspects of productivity might not manifest as monetary gains, they would nevertheless accumulate as long term output gains for knowledge, skills and services markets access.

Again, tradable sector productivity is still optimal in the sense that in many respects, we mostly need to keep doing what already works. One could say that tradable sector activity as a linear reality, is relevant as ever - not just for general equilibrium dynamics but as potential for every defined equilibrium setting. Yet we need to organize differently for non tradable sector output capacity, by thinking in non linear patterns which simultaneously encourage full employment and long term productivity gains.

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.

Musings on Strategy, Tactics, and the LFPR

Much of today's economic confusion, concerns individuals who aren't certain how they might expect to be meaningfully employed in the near future. Yet much of this particular discussion has been derailed, given the positive statistics which suggest we're in a good place economically. Many are convinced that societies can ultimately adjust to increasing automation without substantive unemployment issues, just as has occurred in the past. After all, why would discussions about unemployment be relevant, if corporations are having problems finding suitably skilled employees?

Labour force participation "facts" often depend on where one is actually standing, and yet these logistical issues are part of a larger structural story which is not yet well understood. One can almost imagine an economy which "cries out" for more dynamic markets that actually serve as sources for wealth origination. In spite of all the statistical "good news", we could all breathe easier if there were even one plan B waiting in the wings, as protection for unforeseen economic problems.

All too often, societies lack adequate means to respond when substantive economic issues come to the fore, and such moments are often notorious for quickly changed economic circumstance as well. Once real problems do arise and become evident to all, it's difficult at this point to "think straight" in terms of a well considered response. Given the fact we need strategies that are macroeconomic in nature, far more is involved than simply the logistics of time and place. This is a historical moment when we need to take a closer look at what we actually consider to be wealth, which is why monetary policy is also such an important part of the process. Almost the entire twentieth century served as a preparatory phase for the kinds of work many individuals imagined was actually possible to achieve.

A recent post from Farnam Street, "Strategy vs Tactics: What's the Difference and Why Does it Matter?", triggered my own musings. Shane Parrish writes:

In order to do anything meaningful, you have to know where you are going...Strategy is overarching plan or set of goals. Changing strategies is like trying to turn around an aircraft carrier - it can be done but not quickly. Tactics are the specific actions or steps you undertake to accomplish your strategy.

He continues:

Whatever we are trying to do, we would do well to understand how strategy and tactics work, the distinction, and how we can fit the two together. Without a strategy, we run the risk of ambling through life, uncertain and confused about if we are making progress toward what we want. Without tactics, we are destined for a lifetime of wishful thinking or chronic dissatisfaction.

Strategy revisions become necessary, once a given path is no longer straightforward. However, thus far re economic uncertainties, we've mostly discussed a range of policy tactics (such as UBI and public assistance as an option for the already employed) which not only contradict one another politically, but lack any coherent long term strategy. Again, Parrish:

To achieve anything we need a view of the micro and the macro, the forest and the trees - and how both perspectives slot together. Strategy and tactics are complementary. Neither works well without the other. Sun Tzu recognized this two and a half millennia ago when he stated, "Strategy without tactics is the slowest route to victory. Tactics without strategy are the noise before defeat." We need to take a long-term view and think ahead, while choosing short-term steps to take now for the sake of what we want later.

Let's hope that tactics presently being bandied about by governments in general, won't just be the "noise before defeat". Meanwhile, in the U.S. we're mostly left with the usual suspects arguments how government can alleviate low labour force participation via policies discouraging economic dependence, while others continue to hope governments will be able to reimburse those who lack sufficient economic access.

Parrish also mentioned Richard Rumelt ("Good Strategy, Bad Strategy") who wrote, "A good strategy doesn't just draw on existing strength, it creates strength". When thinking about economic uncertainty, Rumelt's insight also helps to explain why new forms of wealth creation are so important - not just to generate a rising labour force participation level, but also to reduce our long run fiscal burdens. The connection between fiscal realities slowly spiraling out of control, and the fact many of us go too long in our lives without meaningful economic connections, has become too important to miss.

Perhaps we're also left without any coherent strategy, since so many of us became worn down from competing theories and mountains of "war chest" statistics after the Great Recession. Like others, I became overwhelmed by statistics in particular - so much so that it finally became difficult to think about employment issues on those terms. Even authors who spoke so eloquently about the need for broad strategies, such as Charles Handy in "The Hungry Spirit" and Ryan Avent in "The Wealth of Humans", weren't able to generate a sustained public dialogue. Not only have many observers long since "moved on" from these discussions, our growing fiscal burdens didn't became a constructive part of the debates. Perhaps it's the fact no coherent long term strategies were created, that we've ended up with political leaders ready to claim victory from tactics which are just protectionist enough to add to the cost burdens of general equilibrium. Let's hope those additional costs for getting things done, aren't mistaken for renewed economic dynamism.

It's perfectly understandable that people grew weary of debating long term economic strategies. At times I've felt just as overwhelmed, as anyone. That said, the political climate is increasingly in tatters, since we gave up on the process in the very years when everyone still had the impetus to take constructive action.

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

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

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

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

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

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

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

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

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

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

Employment vs Staked Claims on a "Material" World

Now that the Walmart effect is also "forcing prices down" in India, Tim Worstall reminds us how this process is ultimately for the good. However, in "The Benefit of Killing Jobs" he asks:

But who should we be supporting here? Clearly, our innate prejudices are in favor of the small operator, that struggling family business, as opposed to some monster of late stage capitalism. We could further believe that a thriving community of sturdy independents is more valuable to us than some mere reduction in the prices of diapers or milk. 

But that's not the point here, nor is it what makes us richer. Economics advance is about using less labor to do any one task. This is why we obsess over productivity. It's not so that we can gain more from the same amount of labor either. It's so that some labor is freed up to go and do something else, which is the important matter.

Nevertheless, too many of our productivity gains continue to break down, at the level of total factor productivity. As some individuals continue to lose jobs, others are increasingly tempted to enhance their income through the revenue gains of more recent productivity advances. Carried too far, it's a process which could eventually undermine our structural mechanisms for societal coordination.

When local jobs are lost, this often translates into diminishing local service capacity as well. Much of the obsessing over productivity accomplishes little, when price makers (many of whom function beyond the Solow growth model) reduce aggregate productivity gains which could have contributed to a higher standard of living. Chris Dillow also responds to Tim Worstall's article, and he sums up:

...technical progress and destroying jobs are not sufficient to achieve good economic growth, even where markets are functioning well.

While I agree with Dillow insofar as this sentiment is concerned, how does it relate to his broader perspective, re future employment potential? For example, in what context do we express concern about "losers", if the world has supposedly experienced "enough" material growth? Who still gets a "living" wage, if growth ceases in its tracks and other revenue has already been claimed? In his post, Dillow references Daniel Cohen, the recent author of "The Infinite Desire for Growth", where materialism is questioned in the Amazon review for the book:

a future less dependent on material gain might be considered and how, in a culture of competition, individual desires might be better attuned to the greater needs of society.

What exactly is being implied, by pining for a "less material world"? Who is actually getting a chance to compete for life's wants and needs? Indeed, all is not quite as it appears in this regard. Materialism, like so much present day conceptualization, suffers from a moralistic framing which makes it difficult to approach the issue rationally.

After all, many forms of valuable knowledge are also essentially being hoarded, so that citizens lack the ability to compete in terms of skills production and presentation. How is knowledge hoarding any different from material hoarding, especially if material hoarding proceeds are used to compensate knowledge hoarders? Individuals whose time value seems off the charts in relation to others, are still being compensated via the revenue potential of countless material things. One of the best examples I've come across, is the extreme volume of sales necessary in a hospital thrift store, before sufficient revenue is collected to pay for a mere fraction of human capital value in hospital procedures.

For that matter, material hoarding can be likened to the "lesser" challenges of our natural inclinations for personal arbitrage. Alas, much of what we bring home, can seem more valuable than the extent to which our time may be perceived by others. Yet when we are confident regarding our time value in the workplace, our discretionary time is more often spent in the pursuit of collecting the memories of experiential product. But what about those whose time value has been prejudged and deemed not necessary for 21st century intellectual challenges? Will we further suggest that their junk collecting challenges should be tossed as well, in a less material world?

Is it possible to be a little less hypocritical? When anyone demeans an "infinite" desire for growth, is this imaginary cap expected to extend to the growth possibilities of the human spirit? Why not promote a world that actually needs less materialism to pay its intellectual bills? And above all, let's not assume society should determine the nature of desire and the greater good of all concerned, on specific one size fits all terms. Instead of attempting to hand out consolation prizes to the excluded, find ways to include them, through value in use means. It's one thing to take advantage of a material world for one's own extensive value in exchange benefits, but altogether another, to assume that is the only kind of world that is feasible.

What Economy Should We Be Preparing For?

Adam Ozimek wonders whether we could be worrying about the wrong things, in a recent Forbes article, "There are so many worse things than robots taking our jobs". Why scramble to put together a universal basic income, for instance, should productivity refuse to rise? And what if present day debt levels become a serious constraint to growth? Shouldn't we be addressing this possibility? For that matter, might these two issues be somehow interconnected? Ozimek continues:

It makes as much if not more sense to worry about slow growth and exploding debt than it does to worry about rapid productivity growth and disemployment.

Granted, future unemployment is a very real concern. However, it will ultimately need to be addressed in ways which don't create further demands on what has become a somewhat fragile general equilibrium. Already, extensive price making demands on aggregate revenue in recent decades, have meant both higher debt levels and sectoral imbalance.

These non tradable sector realities also contribute to relatively tight global monetary conditions, even as emerging economies rely on global monetary flows for their own continued growth. Such correlations between debt and productivity trajectories are quite real. Nevertheless, they will need a stronger theoretical economic framing, before increased labour force participation can be realistically created which will not negatively impact productivity levels.

Presently, total factor productivity still relies on labour (or increasingly, high skill time use preferences) as a residual of product formation. Before greater productivity can contribute to higher growth levels, wealth creation may need to take place via symmetric means, so as to sidestep the labour residual problem that now factors into low labour force participation. Plus, when high skill asymmetric compensation is created via traditional means, much of it becomes intangible product. However, this designation hides the degree to which the aggregate input of knowledge production can be much higher (across separate institutions), than the aggregate output of time/knowledge centered product these institutions are now capable of providing to the public.

Symmetric forms of mutual employment - or time arbitrage - would allow individuals to increase labour force participation which doesn't rely on further dilution of total factor productivity or the creation of further government debt. Indeed, this could be where the greatest possibilities for near future employment and wealth creation reside, since both local NIMBYism and nationalist protectionism have created limits to growth, in general equilibrium settings.

Nevertheless, the price taking coordination mechanism that would make time arbitrage a rational and cost effective response, requires innovation in physical infrastructure and building components, so that a price taking services defined equilibrium (bypassing the Baumol effect) doesn't lead to undue losses in living standards. Otherwise, there would be insufficient monetary equivalence - hence a lack of personal and group motivation - to make defined equilibrium settings truly functional. Importantly, better monetary equivalence (via real wage gains) is needed for all income levels that is not only free of further public debt, but private debt as well. The way to a better future for all is still through extensive supply side innovation - albeit this time in non tradable sectors.

For that matter, present day asset costs for non discretionary housing and traditional infrastructure, help to explain why it would be unwise to disturb the fragile equilibrium of asymmetric compensation which continues to support today's supply side structure. After all, the traditional means of knowledge use and preservation which evolved in recent centuries, can be maintained up to a point. We just need to prepare for the fact that price making strategies for knowledge use and preservation in general equilibrium, can no longer provide the long term growth which global populations still need.

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.

Knowledge Use Doesn't Have to Be "Totalitarian"

Are the recent societal impulses towards "creeping" authoritarianism, inevitable? For instance, one can only hope that 21st century knowledge use might eventually break free of its present rigid modes. Otherwise, the arbitrary limits to knowledge use which translate into limits to growth, could mean a return to the limits of closed societies as well.

Like Scott Sumner, I'm of an age when many of us took for granted the intellectual gains which resulted from the wars and struggles of the twentieth century. How many of those gains are being lost? Life already feels quite different than it did at the turn of the century. In a recent Econlog post, Sumner highlighted an article from The Economist which explores "agency" as a contributor to today's growing nationalism. From the article:

The new nationalism does not just insist on the difference between countries, it also thrives on the anger within them...Men and women lacking in, or deprived of, agency look to nationalism to assure them that, in their own way, they are as good as everyone else--better, even. It is just that the world does not give them the respect they deserve. They are quick to identify with those they see as on their side and to show contempt for others...At the same time they are obsessed by how others see them.

One only need consider the environments of our schools, which due to the limits of knowledge use in society, can inadvertently designate students as winners and losers in terms of the economic access which matters most. And the schools of our youth are only the beginning of this process. Presently, too few individuals are expected to work with vital aspects of knowledge in their communities - oftentimes, knowledge which determines much of the quality of life for everyone else.

Knowledge use can become totalitarian, when specific skills sets are assigned to certain individuals and denied to others. When we permit a full range of skill application solely according to meritocracy, eventually those who are fortunate enough to be included end up in a bubble, surrounded by millions who have been left out of so many vital economic processes, they are no longer able to fully function or assist one another. When we allow our governments to legislate away the freedom of knowledge use, thereby limiting employment possibilities at home, citizens inevitably become less inclined to keep an open mind re the free markets of tradable sector activities between nations.

It is not necessary to keep using knowledge as societal means to separate the "winners" from the "losers". We have important reasons not to do so, since automation now produces so many of our goods. After all, services options are the logical next step for 21st workplaces, but we have yet to build local environments which would even make mutual coordination possible, for services generation. Meanwhile, knowledge use as mostly hierarchical systems, needlessly grinds human initiative into the dust. Let's find means by which the use of knowledge need not be totalitarian, so that the political and social uncertainties of our time can finally be addressed.

When Governments Enforce Limits to Growth

Why is it so difficult to understand, how protectionism and favoritism can negatively impact economic outcomes? Nevertheless, the latest example is obvious to observers far and wide, at least beyond the confines of the White House. Which makes it all the more frustrating, that 10 percent tariffs on imported aluminum and 25 percent on imported steel, will actually be implemented. As Gregory Mankiw noted, Trump even managed to unite a polarized country: "How often do Jeffrey Sachs and the Wall Street Journal agree?" And Mickey Levy of E21 wrote:

The economic effects of these tariffs on the macroeconomic environment will depend critically on whether they damage business and household confidence...the danger is if these tariffs adversely jar confidence - perhaps fueled by foreign retaliation - heightened uncertainties would lead businesses to tone back their expansion plans and the trajectory of consumer spending would be softer.

Supposedly the tariffs would be "helpful" for reasons of national security. But where do the majority of these imports come from? James Pethokoukis explains:

That reasoning is pretty much ridiculous, unless the Pentagon has given Trump reason to think it's possible that the 1st Armored Division might one day be racing toward Toronto, or Army Rangers parachuting into Rio de Janeiro. The top two suppliers of steel imports to the U.S. are Canada and Brazil.

He adds, in spite of a report from the Commerce Department that metals imports eroded weapon making ability, the Defense Department only needs 3 percent of total U.S. steel, or 70% of the U.S. market. And the economic argument is at least as bad, since Trump is possibly hurting the many, just to help the few, by increasing the price of "commodities used to make a vast array of products for businesses and consumers."

According to Politico, Trump's tariff decision spurred retaliatory threats from close allies as well. Both Australia and China expressed concerns that other countries would follow the U.S. lead, and retaliate. Indeed, the EU could target $3.5 billion of U.S. imports at the outset.

It's astonishing no one could convince Donald Trump that tariffs are generally a bad deal for everyone concerned, instead of making a stronger economy more likely. Of course, other limits to growth due to political favoritism have been in place for well over a century - even if these limits don't have obvious implications re employment outcomes. Presently, the degree to which knowledge use limits affect employment potential, no one really knows.

Washington's focus on supposedly retrievable twentieth century jobs is off the mark. Especially since technology and automation impel us to reconsider, what work and wealth creation in the 21st century is all about. However, it's difficult to start a dialogue about this reality, when existing wealth is being jeopardized by an insistent focus on the past. Hopefully in the years to come, this unfortunate circumstance can be changed.

General Equilibrium and the "Closed Trail"

Recently, Tim Worstall, in a post titled "Governments Really Just Aren't Good at Maintenance," notes the $11 billion backlog of maintenance work which is accruing in national parks, here in the U.S. One issue in particular stands out: Why focus on the uninterrupted support of well paid administration in headquarters, while the average worker could more effectively tend to areas in need of personal attention?

While the "closed trails" of general equilibrium in this post are a reference to limited societal options in general, sometimes the real world provides apt literal examples. Zion is among my favorite national parks, and one of its popular trails has remained closed since 2010. Worstall sums up:

The truth being just that the long term provision of goods and services, the maintenance necessary to make that happen, isn't a process well dealt with by government.

That said, what gives us the confidence that private enterprise is always capable of keeping more consumer options on the table for the public as a whole? Healthcare in the U.S. is just one glaring example, of the problems in this regard.

Nevertheless, the ways in which private enterprise are presently structured, means firms often have little choice but to quickly respond by shutting down not just "trails" but their entire edifices, should profits be insufficient to keep desirable goods, services or amenities available. While governments often have the option of waiting for further revenue before they elect to close off options entirely, private enterprise lacks the ability to do so. By way of example, many who have traveled across the U.S. remember privately owned areas of natural beauty which proved too difficult to keep open to the public. One noteworthy example I recall is Diamond Cave, located near Jasper, Arkansas.

Why has it proven so difficult for society to provide maintenance capacity, as continuity for valued resources and assets? In some respects, before money began to substitute for other cultural functions, populations had more incentive to dedicate personal time management (and labour) to mutually valued maintenance. One reason it is now difficult to prioritize maintenance, is that productivity gains are sought in both private and public endeavour by minimizing labour, wherever possible to do so. Indeed, incentives to minimize labour are quite similar for both. Perhaps the main difference is simply that governments are slower to respond, before removing desirable public services and amenities.

How to think about these circumstance in terms of general equilibrium capacity? Private enterprise focuses the extent to which profit can be derived from partial equilibrium, to preserve institutional viability. Hence some forms of private enterprise - especially the non tradable sector activity which has led to disequilibrium - tend to seek only a limited portion of any potential consumer base. Governments lack the ability to generate additional marketplace capacity as well, given their own reliance on asymmetric organization and compensation. When production capacity (and its consequent employment) is limited, so too the closed trails of consumption capacity.

Are there ways to gain additional general equilibrium potential, for economic activity beyond the bounds of present day institutions? Given the extensive algorithm capacity now in use, algorithms could also assist individuals in the optimal coordination of symmetric, or mutual time capacity. When time value is matched at the outset to generate new wealth, producers and consumers alike would be able to focus on marketplace capacity which is difficult to provide via the asymmetric means of specific skills compensation. In other words, some of today's more desirable closed trails, could be reopened through the defined equilibrium settings that time arbitrage makes possible.

Even though every trail (all the goods, services and amenities that populations desire) can't remain open, societies could still create better organizational patterns for the ones they deem most valuable - particularly those which our present institutions have become ill equipped to provide. As we go through life, certain goods, services and amenities become more important to us. Specifically designed (or defined) non tradable sector equilibrium settings, would focus on one or else a few essential categories in this regard. These specifically highlighted group preferences, would provide unique frameworks for an overarching structure of local and mutual time management. Time arbitrage would make it possible to prioritize a full range of maintenance functions, via the wealth building capacity of time as an economic unit of measure.

However, the priorities of natural beauty and other environmental maintenance, are but a starting point. There's also the mutual care and related asset maintenance which daily life requires, alongside the practical and experiential uses of knowledge so important as a foundation for life's higher aspirations. By defining specific aspects of non tradable sector activity we find most desirable at different periods, individuals and groups would have the ability to create wealth by coordinating a full range of skills capacity, all the while utilizing the most important time period aspects of the process as unique central coordination points. Even though it is not possible to keep every trail open that we would like to explore or benefit from, it is infinitely possible, to open more trails through mutual employment and time centered wealth generation.

Time Value: Reskilling, or Perhaps Reorientation?

Should we focus entirely on reskilling for our (hopeful) inclusion in future workplaces? After all, reskilling implies shedding for good, previous skills investments on our part which are supposedly outdated. Yet many of us have committed extensive resources over the course of a lifetime, for the costs of economic access, with limited results. While lost skills value on our part is sometimes true, perhaps it would be worth our while, to examine more closely, whether the "broken value" of our skills capacity is not always so.

I've questioned "useless" skills consensus, in part because much of what we learn and experience, also provides value for others in contexts beyond our present day workplaces. These informal contexts deserve more of our attention than they've received, thus far. Indeed, I found reason to question the rationale of "useless skill" in the early nineties. Upon losing a valued job, I was told certain work opportunities were "disappearing" and I should consider a career change, yet younger individuals were still being hired in a position I'd recently paid more than a thousand dollars to acquire. While the rationale for that lost job opportunity (automation) could have been understandable, how to explain the fact that individuals younger than myself, were still preparing for essentially the same work?

Granted, these new hires were coming in with more (skill specific) formal education, than what was necessary when I entered office work. Even now, many office responsibilities are still secretarial in nature, but full time secretarial work with benefits is mostly reserved for those with college degrees. That long ago job loss was frustrating, since secretarial work was strongly recommended by my family (and a few bosses as well) for those such as myself who didn't complete college. Fifteen years after my first office work, when so many baby boomers were let go, it was easier for many of us who lost the opportunity cost gamble, to simply restart in a new direction, rather than prolong the frustration by suing for discrimination when our jobs went to younger workers.

As it turned out, the secretarial job loss would not be the only lost investment in economic access. Plus, later investment losses for self employment ventures were much higher. Life experiences such as these, make me question the idea of reskilling as capable of solving future employment needs for all concerned. In particular: When our institutions no longer need the workforce capacity that was once necessary, it's time to reconsider how our mutual commitments with one another, might safely take place well into the future.

Present day firms will continue to discriminate from pools of potential job applicants, simply because it is so easy to do so. There's a lot more of us looking for meaningful economic engagement, than society is presently organized to accommodate. Worse, this circumstance has created false impressions that vast numbers of us aren't "up to speed" or "good enough", for something as incredibly basic in life as economic participation.

Meanwhile, others keep telling the marginalized how we are making the "wrong" human capital investment choices, even as policy makers cross their fingers and insist all citizens will somehow be able to adapt, to today's increasingly concentrated institutional needs. From a recent report by the World Economic Forum:

Economic value creation is increasingly based on the use of ever higher levels of specialized skills and knowledge, creating unprecedented new opportunities for some while threatening to leave behind a significant share of the workforce. In a recent survey of OECD countries, more than one in four adults report a mismatch between their current skills sets and the qualifications required to do their jobs.

One in four? What does the high institutional mismatch suggest, about the ways we are currently going about all this? The report continues:

Even among people formerly working good jobs, disrupting technological and socio-economic forces threaten to swiftly outdate the shelf life of people's skill sets.

At the very least, we observe a wide range of multiple skill sets in our personal lives which we highly value - from the practical to the experiential. But we have inexplicably lost the social and economic context by which we could make them valid, on terms that could be mutually honored. Perhaps all of this is less a matter of reskilling, and more a matter of desperately needed reorientation.

Some economists now argue that if fewer of us go to college, businesses may once again become willing to hire folks without college degrees. If only this were true, but it scarcely seems likely for firms which still offer full time employment with benefits. And this is the kind of work which presently allows people to take responsibility for their lives. Even though the exhaustive costs of reskilling pay off in some instances, many can't reasonably afford to place their bets on this approach. Chances are, the status quo workplace of the near future is only going to need a mere fraction of today's humanity. The rest us would do well, to reorient how we approach mutual employment and economic engagement.

Does Perfect Price Discrimination Affect General Equilibrium?

And is perfect price discrimination more of a problem for institutions which rely on time based product, given the growing scarcity of time aggregates in relation to other resource capacity?

Price discrimination incentives for the context of this post, include the extensive requirements of human capital investment for physicians in the U.S. In particular, twentieth century physicians were careful to preserve a direct negotiation position with patients and customers. After all, if they had not done so, other institutions would have quickly stepped in to impose "greater efficiency", which would have translated into quick losses for their personal time management. Such losses would have been even more difficult to bear, given the costs of access for their production rights.

However, physicians preserved direct negotiation in an environment of growing general equilibrium division between (a full range of) time aggregate value and global wealth value. The effects of price discrimination for time based product become more pronounced, as total wealth continues to expand in relation to the full range of aggregate time value. In this organizational setting, healthcare gradually becomes limited to higher income levels. Possibly the only reasonable way to address this general equilibrium coordination problem, is to generate local settings where time value can be negotiated without the (presently necessary) total correlation of aggregate monetary wealth.

From Economics Online:

First-degree price discrimination, alternately known as perfect price discrimination, occurs when a firm charges a different price for every unit consumed. The firm is able to charge the maximum possible price for each unit which enables the firm to capture all available consumer surplus for itself. In practice, first-degree discrimination is rare.

Is first-degree discrimination actually rare? After all, U.S. hospitals appear to be organized so as to encourage this practice, even as physicians are sometimes inclined to make amends with more benign institutional norms. Nick Rowe also has concerns about the practice of perfect price discrimination. He writes:

I have always thought, and taught, that Perfect Price Discrimination leads to an effective allocation of resources. I now think that is wrong. It only seems to work if we use partial equilibrium reasoning, for a single monopolist, that practices PPD...It doesn't work in general equilibrium. 

Ultimately, if everyone took the route of perfect price discrimination:

If you make the rich pay more, because they are willing to pay more, nobody will do any work to produce anything. 

One of Nick Rowe's commenters sent him a paper which appeared to reflect Rowe's concerns, "Is Perfect Price Discrimination Really Efficient?: Welfare and Existence in General Equilibrium*" Even though the math made it difficult for him to understand (and of course impossible for me), there were still some pertinent aspects of the paper which seem useful to highlight, here. In the abstract the authors noted an inefficient equilibrium, yet

we validate partial equilibrium intuition by showing (1) that equilibria are efficient provided that the monopoly goods are costly...However, we find that Pareto optima are sometimes incompatible with surplus maximization, even when transfer payments are used.

Indeed, the requirement of education more extensive than other countries, rationalizes the high cost of this monopoly good in the U.S. Nevertheless, the lack of "Pareto optima" for transfer payments, in this instance, also translates into the fact that no government can give additional healthcare time to patients and consumers, which physicians don't already have at their disposal.

This also explains why there's no such thing as "surplus maximization" for sought-after time based product, especially given the fact technology is used (thus far) to change the product into something which is not necessarily time based at its core. What's more, as technology increasingly augments the income and leisure of high skill providers, the result is one example of Nick's observation that people could eventually lose their incentive to work.

Still, the above explanation is a production perspective. How might one think about broad decision making re consumption, in a labor force participation context? One example is employer provided healthcare, which was advantageous at the outset because it allowed insurance markets to seek consumers (workers) who - in relation to total population - were relatively healthy. U.S. healthcare was initially offered to those who didn't find healthcare consumption particularly necessary in many instances. Unfortunately however, as employees age, they are in greater need of the healthcare benefit. Which in turn encourages employers to fire older workers. The shared employee responsibility for healthcare - given its costs - encourages age discrimination, as employees become more expensive.

For the worker, a process can be set into motion after losing full time healthcare with benefits, which eventually leads to a premature exit of the formal workplace. As we age, our employment offers tend to be less likely to include full health coverage. In particular: once workers experience health setbacks which may include bankruptcy, there's a growing awareness of excess risk for remaining employed in work which takes an additional toll on health. And this may be the only work on offer in many locations, especially without a college degree. Once older workers face health risks which could prove more substantial than their personal resources, it may actually be less risky - odd though this sounds - to stay out of the formal workplace, so as to preserve one's health as best as possible.  In short, healthcare price discrimination, even though it is supported by partial equilibrium validation, doubtless contributes to reductions in labour force participation which have yet to be fully understood.

GDP: What Welfare Needs to be Quantified?

As aggregate output has become more difficult to determine, due in large part to the nature of today's services sectors, GDP as a measure has increasingly been questioned as well. Might the changing nature of aggregate output, help to explain recent debates regarding potential human welfare considerations for GDP? If so, how could such an approach assist this vital measure in its core tasks - particularly given its underlying monetary representation?

Diane Coyle noted some of these issues in a recent podcast for the International Monetary Fund. She stressed the sizable gap between what is being measured, versus welfare effects which could be worthy of recognition. In particular, GDP is "less well suited to measure progress in today's digital economy."

Despite the importance of digital product for societal gain, the greatest need of the present, is careful attention to human welfare via levels of aggregate economic participation. In particular: How has the resource capacity of multiple income levels changed over time, in relation to what have become basic institutional requirements? We simply don't have a clear statistical picture, how these institutional expectations correlate with the resource capacity of a full range of citizenry. What's more, a better understanding of our existing non tradable sector requirements, might present a clearer picture of existing societal debt obligations as well.

Digital gains, on the other hand, largely accrue in a discretionary consumer context. Regular readers likely aren't surprised, that I find the non discretionary requirements of non tradable sector activity, to be one of the greatest obstacles standing in the way of human welfare. Nevertheless: Even though non tradable sectors have been less than forthcoming re quantifiable output, we could eventually develop new means of services generation which are more transparent at the outset. And doing so, could vastly improve the measure of GDP in the 21st century.

The present lack of services quantification, has made it difficult to understand the dilemma that lower income levels actually face. Even as citizens have experienced tradable sector abundance for decades, their ability to do so has gradually diminished, as vital elements of non tradable sector assets and participation have been made artificially scarce. Should additional measure of human welfare be taken into account for the purposes of GDP measure, one can only hope our actual participation in economic life, becomes easier to determine than is presently the case.

Lifetime Learning in Total Factor Productivity Context

There's a sort of "good news, bad news" aspect to a recent Barry Eichengreen article, "Two Myths About Automation". Here's the problem I found with (what appears to be) his conclusion: Are we reasonable in our confidence that automation won't necessary take our jobs, in part because total factor productivity remains lackluster?

After all, the bottom line regarding questionable productivity is some degree of relatively reduced output in aggregate. These difficult to identify output losses can continue, but aggregate output is still closely tied to further employment options. From the Project Syndicate article:

While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technological change, has been stagnating since 2005 in the US and across the advanced-country world.

He suggests there are two myths: that jobs are actually threatened, and that higher skill jobs in particular are at risk. After all, the reasoning goes, if productivity isn't all that great, how exactly are jobs supposed to be threatened? Nevertheless, he stresses the important of continued learning, so as to keep up with changes that automation will bring to the workplace.

Again, it helps to envision future employment potential based on potential output gains. Without measurable growth in actual output, one cannot expect additional employment capacity. Since a certain percentage of non tradable sector output is intentionally limited, existing employment presently depends on what the status quo is willing to allow. Most important for both healthcare and housing, however, are the quality requirements which most contribute to existing imbalances between aggregate input and output. The quality requirements of these sectors likely bears the most responsibility, for the conundrum that is today's productivity stagnation. Nevertheless, these sectors package their experiential product so as to make it difficult to determine - let alone measure - the aggregate output gains that would otherwise be possible.

Notice in particular, how Eichengreen's proposed response of lifetime learning to maintain employment options, ties into the productivity conundrum of non tradable sector quality product requirements. Alas, lifetime learning in a status quo context, is still part of a knowledge and skill acquisition process which continues to increase aggregate input (skill requirements) in relation to the aggregate output of total factor productivity. One might reasonably ask, given this circumstance: Might lifetime learning as a sort of human capital coping mechanism, actually reduce total factor productivity?

Presently, it depends on whether one assumes education over a lifetime as love of learning - that is, education as purely experiential product. On the other hand, might this be a strictly pragmatic purchase? Is the educational product a human capital investment, which needs a specific economic result in the form of reliable employment? If so, the pragmatic option also translates into employment as a component of knowledge and skill production, which in turn contributes to measured output in a sort of knowledge "factory" process. Basically, the pragmatic option is not "supposed" to become final product in the knowledge production cycle, hence would become an investment loss should this in fact occur.

On the other hand, treating formal education as experiential product (as I've typically done) may allow us to be satisfied with education as final product. In this instance we can be satisfied (hopefully!) with educational product as the ultimate completion of an aggregate input to output cycle. If education is sought out of love of learning, and doesn't offer economic reward, measurable output, or meaningful dialogue with others for that matter, one might assume the total factor productivity loss is relatively minimal. Yet making that assumption includes the reasoning that one's personal investments need not count, in the lives of others.

What of aggregate productivity if education is purchased not as a consumption function, but specifically for human capital investment? Potential employment risks in this instance are more obvious, both at a personal and societal level. The problem for lifetime learning at present, is the lack of economic connection between today's formal education as reliable input for knowledge based product.

Even though formal education as experiential product is important, one's personal efforts still need to be part of the larger dispersion of knowledge use in society. Fortunately, the same blockchain technology that presently contributes to digital monetary processes, has an important parallel in learning processes, in that peer to peer learning could serve as cumulative wealth connections. The cumulative factor for peer to peer learning, would allow each input of knowledge and skill to serve as a point of simultaneous output. Time arbitrage would eventually allow for substantial productivity gains, by making the measure of time based services a transparent process.

Should time based services become organized as cumulative wealth generation, lifetime learning would readily contribute to total factor productivity. Personal learning efforts would no longer pose extensive risks of one's money and time, because individual learning would translate into mutual employment potential. In all of this, the ratio of inputs to outputs is important, for how society could ultimately expect the use of knowledge to contribute to progress and long term growth.

Technology Will Affect Skills Compensation

In a recent McKinsey Institute report, "What the future of work will mean for jobs, skills, and wages", the authors write:

Our key finding is that while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging - matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.

They highlight in particular that "Automation will have a far reaching impact on the global workforce." It also helps to consider what is being defined as "full employment" in this context, which is recent statistics and employment gains. Nevertheless, current employment levels don't account for what have been gradual losses in labour force participation, which were exacerbated by the downward monetary adjustments of the Great Recession. In other words, the oft stated challenge is mostly to maintain, what are already less than ideal levels of labour force participation.

Until recently, technology - more often than not - gradually led to increased output which meant further employment opportunities. But non tradable sectors tend to apply technology somewhat differently. Over time, intangible forms of input and product measure have become sheltered from general public view - perhaps for political and other reasons. As a result, it's difficult to ascertain how a wide range of resources are being measured and utilized, or how compensation is actually taking place. And when the relationship between aggregate input and output for services production becomes murky, human capital investment for specific skills use is less certain as well.

Fortunately, even though the extent of future skills compensation is in doubt, we can respond by assigning greater economic value to the use of our mutually held time priorities. Despite the uncertainties of technological change, our personal time preferences for getting things done, are important to us and for others as well. While it would be slow going at first - learning to measure and ascertain mutual time preferences - the eventual result would be organizational work patterns that are more spontaneous and transparent, than the institutional skills use patterns of the twentieth century.

Indeed, the subjective values of our work challenges and other personal commitments, would play out quite differently from the time commitments of institutional skill requirements. When we focus on time value and priorities, time management includes not just the higher skill levels our institutions seek, but also the full range of skill levels which we seek to coordinate with others in multiple aspects of our lives. And unlike the skills that our institutions sought - yet technology is now able to replace - we can still prioritize our time preferences, even as the skills we utilize, are more likely to be those ones we deem most important.

A marketplace for time value, would give voice to our time priorities. Another benefit of time arbitrage: By utilizing the time that individuals and groups actually have at their disposal, the price taking mechanisms which prevailed during times of tradable sector dominance (when resource use was more transparent), once again become possible. When individuals coordinate the time they actually have for daily activities, each hour in aggregate functions as a pricing mechanism for local group settings. Even though our time is rival (one cannot be in two places at once), the rival time/place limits of various skills functions would gradually become evident, allowing individuals to plan for what is already being provided, versus what might still be added to the overall mix of service generation.

Even though technology will continue changing the structure of present day workplaces, we all have more options for the work that matters most to us, than is currently recognized. Some of this work is complex, and some of it is simple. What's most important, is that all the work we find worthwhile, has value. A marketplace for time value, could also restore the value of our own personal priorities, in relation to others. Even though technology will affect skills compensation, it need not get in the way of the patterns we ultimately choose for out time commitments, in terms of mutual responsibilities and aspirations. Technology may pose a threat to today's skills arbitrage status quo, but it need not pose a threat to the potential of time arbitrage.

Broad Tightening Ahead, and The Phillips Curve Problem

Is it a lack of faith in high labour force participation levels for the near future, which encourages central bankers to continue tightening monetary policy? Or - instead - are central bankers inclined to believe that employment for all who seek it, is strong and will remain so? Something about actual employment and cumulative output gains, isn't quite adding up. According to Bloomberg:

Wall Street economists are telling investors to brace for the biggest tightening of monetary policy in more than a decade.

And it isn't just Wall Street, because other central bankers will be following the lead of the U.S. in this regard. Much of the rationale for doing so, has been based on the Phillips curve as an indicator of an "overheating" economy. But what, exactly, is overheating? Plus: Given an undue emphasis on the Phillips curve - even though its reliability is dubious for mature economies with services dominance - central bankers are likely to continue tightening monetary conditions in the near future. They appear determined to do so, even though dependence on the Phillips curve relationship between employment and inflation, has become problematic.

What makes the Phillips curve an ill suited economic indicator? Among the possible reasons, is a strong institutional trend away from price taking toward price making, in recent decades. Price making occurs at so many levels of product formation, that it negatively impacts overall productivity and investment. In particular, the employment losses which accrue from price making, aren't just a problem for societal coordination. They also make it difficult, to correlate today's supposed "full" employment levels with inflation expectations.

When tradable sector activity was still dominant, so too was price taking, as a coordination factor among many firms. The once natural tendencies of price taking, also meant firms had more options for hiring, based on the optimal resource capacity at their disposal. But as non tradable sector activity came to the fore, its organizational capacity contained numerous incentives for price making, which meant a certain degree of employment potential would be left on the sidelines.

This lost employment potential is doubtless a factor, in the gradual (long term) decline of labour force participation. Unfortunately, the Fed is paying closer attention to recent employment statistics for decision making, instead of what has occurred to aggregate employment levels over time. Indeed, gradual employment losses are reminiscent of the nominal level target losses which were incurred in the onset of the Great Recession, even though those losses took place within a single time frame.

Some are well aware of what the Fed has not considered, regarding aggregate employment circumstance and the nominal income losses of the Great Recession which were never fully regained. Even though market growth presently appears strong, investors are not quite as bullish as economists, this time around. And perhaps for good reason.

Labour Abundance is Impacting Middle Class Dynamics

Even though the reality of labour abundance has been noted in recent years, this problem has yet to be productively addressed. For the most part, full time employees are doing well, with sufficient salaries for both basic needs and discretionary consumption. However, employees working on contract - especially in firms that are subsidiary to core activity - sometimes lack the salaries to purchase basic needs on today's non tradable sector terms.

The growing use of contract labour in the 21st century, with its associated lack of benefits or job certainty, is one of the more prominent examples of labour abundance. While one can point to earlier examples of labour abundance, some societal developments (at least in the U.S.) are becoming more obvious as unemployment related, in retrospect. Until recently, unemployment was closely associated with one's personal shortcomings - whether perceived or real. Indeed, the correlation of many societal burdens with a declining labour force participation rate, is one of the few economic associations that is obvious.

And the U.S. in particular, benefited from relatively low unemployment statistics for decades, in part due to the ramped up use of imprisonment. Another institutional response has been disability assistance, which individuals with health issues sometimes turn to, after a protracted struggle to maintain steady employment. More recently, zoning restrictions and the costs of scarce productive agglomeration, have contributed to both reduced internal migration and long term unemployment. Excessive labour abundance can also be traced to homelessness, drug overdose deaths, and the black markets which include slave and sex trafficking. Often, the latter is perpetuated through dubious enticements, for what the victims believe to be legitimate jobs.

In "The Wealth of Humans", Ryan Avent stressed the fact that labour abundance would continue impacting middle class dynamics, well into the foreseeable future. He noted that while formal education was once an appropriate response to labour abundance (when people left the farms for the cities), education could no longer be expected to to work the same magic, in the 21st century. Even if everyone "miraculously" gained a college degree, today's institutions would not be able to hire everyone, on the same middle class income terms.

Nevertheless, policy discussions have yet to truly focus on Avent's warnings. Instead, policy makers tend to double down on the earlier recommendations of "more education" and additional income support. Alas, in his book, Avent explained how responses such as these were insufficient for the present.

Fortunately, there are strategies to counter labour abundance, which could prove more productive than preparing ever more skills for the institutions which presently need less of our skills, in aggregate. Education in particular, needs a strong reorientation. Educational input, as human capital investment, could become part of an institutional process which measures both input and output for mutually desired time based services. Both local infrastructure and building components need extensive improvements in the decades ahead. This last measure is especially important, if citizens are to regain their confidence in the capacity of their own income potential.

Granted, it's not easy to focus on the need for institutional adjustment and structural reform. But labour abundance needs to become a positive in the marketplace, so that already existing skills sets and investments will not be lost. It's important to face up to the reality of labour abundance, before the labour force participation rate trends even further downward. As Avent emphasized in "The Wealth of Humans, history is not always kind, when labour is abundant. It's time to put our present day abundance to good use.

Preserve Economic Time Value, Not "Guaranteed Jobs"

In response to a proposal to address job creation from the Center for American Progress (HT Marginal Revolution), Adam Ozimek notes that "Guaranteeing Everyone a Job is Harder Than it Sounds". He writes:

The plan lists several jobs that apparently are a good fit for the currently non-working and also in high demand: home care workers to aid the aged and disabled, affordable child care, teacher's aides and EMTs. So the basic plan, if I understand it correctly, is that the federal government will pay for jobs for people to work in the public or private sector, and the government will pay for training as needed.

Crowd out is obviously a big problem here. Will the employers being paid to create these "guaranteed jobs" actually create new jobs or just replace existing ones? Or perhaps they will "create new jobs" that were going to be created anyway...The incentive to crowd out is strong for local government especially. The CAP piece justifies the demand by pointing out that many local governments are "cash strapped".

There are delicate equilibrium balance issues at stake. Consider also, the fact local governments have already scaled back hiring out of necessity, in response to existing local pension obligations. Again, we are faced with what could be considered a"mature" general equilibrium which does not have room for all comers on the same sets of terms. The basic template of this equilibrium for economic participation has many interconnected features, which presently lack the flexibility to respond to major shifts in existing resource capacity.

It has proven difficult to discuss new economic possibilities, in part because economic access in general needs better framing. Alas, for populations to maintain the social cohesion that was (largely) possible in the twentieth century, we need continual efforts to improve the production and consumption potential of our non tradable sectors. This, instead of ever more calls for income gains which can only stretch so far, when basic resource flow patterns have long since been committed.

When economies were primarily based on expanding tradable sector output, the drumbeat for ever more income gains perhaps made more sense. But once economies become increasingly focused on time based services, everything about the basic structure of output begins to change. Ultimately, that also translates into less of the traditional output which once meant broad wage gains. An important aspect of this historically recent development, is the fact not everyone can productively engage, on today's government/private sector dictated terms.

Yesterday's middle class was built on strong tradable sector output. If that prosperity is to be continued, most aspects of output potential for non tradable sector activity, will need close examination. Meanwhile, the recent article from the Center of American Progress ("Toward a Marshall Plan for America: Rebuilding Our Towns, Cities and the Middle Class"), almost feels as though an audible sigh and wish, that people who didn't complete their college degrees (such as myself, though I didn't vote for Trump), didn't have these problems to begin with. The authors wrote:

The truth is, progressives should be as concerned about the declining fortunes of those who do not go to college as any other group. Not because they are disrupting politics - though they are - but because they are our brothers and sisters too.

Once, long ago when Obama was voted into office, I wrote letters to him, detailing the plight of rural America. There was no response. Sometimes I wonder, had I finished the college degrees I so wanted, would I be a progressive, today? The answer really isn't important. But degrees would have meant having the option of city life in these later years, and progressive friends as well.

We need to preserve economic time value for all concerned, instead of trying to guarantee jobs to the ones who have been left behind. Fortunately, even though jobs are a cost, it is not necessary to define all costs on what have become expensive technocratic terms. Once we step outside the weak tea of "make work" and artificial service roles, we can remember the concerted efforts people have always been willing to assume - either because those work efforts are perceived as necessary, desirable, or possibly, both.

Both constructs suggest a world of worthwhile work, which because there is a lack of suitable framing for economic time value, ends up defined as not feasible or possibly just "unimportant". Yet understanding the difference between personally initiated versus externally mandated work, is important, for time value to gain economic legimitacy. People want to be responsible for themselves and for others, in ways that matter at a personal level. Why not approach a revitalized economy on these terms?

Economic Time Value is a Logical "Next" Step

One reason it is difficult to address the growing issue of technology driven unemployment, is the fact some of this problem remains in the future - even if that future is no longer in the far distance. Meanwhile, the present backdrop of "apparent" full employment (by traditional measure), encourages many to believe the issue can be safely dismissed for now.

Yet this "do nothing" response is hardly as safe, as it may appear. Perhaps the fact no "Plan B" exists, accounts for why basic income as concept, gets a fair amount of traction, in spite of growing long term budget issues for nations in general. Already a simple example of potential economic fallout in the U.S. is on the horizon: a wide range of drivers could be replaced in coming decades with autonomous or self driving vehicles. If options for widespread continued economic participation are not already in place should this occur, there's a risk that production capacity could be lost, on a scale at least equal to what occurred in the Great Recession, when central bankers neglected to maintain a stable nominal income level.

Whenever technology driven unemployment is debated, it helps to take a long range view, about the societal options which actually exist for product potential in the marketplace. It's not really feasible to think about future work options, if we don't also consider other important characteristics in our environment at the same time. Plus, what we collectively believe to be valuable as marketplace product, directly influences the work options we actually have. Indeed, while educational product as economic access has turned out somewhat dubious; educational product as experiential good, turned out to be a positive result of the 20th century progressive movement. This, even though formal education wasn't exactly promoted in a traditional marketplace context.

Despite the fact excessive secondary market structure now limits the participation template (and growth potential) for developed nations, some of its initial 20th century framing for marketplace expansion, proved to be a positive on a number of levels. The initial useful impact of formal education on wealth creation and employment potential, cannot be dismissed. Might the promotion of a more complete context for economic time value, provide a logical "next step" in this progression?

Ideally, the next step could restore the primary market function as a major component of long term growth, for developed nations. Why does time value - as commodity - hold potential for providing this role? Through the (monetarily) reinforced purchase of time value for time value, everything from time based maintenance activity to research and development activity, would contribute wealth generation from a primary market position.

How was formal education able to contribute to overall growth capacity, from a secondary market position in the 20th century? The advent of extensive formal education for populations as a whole, mean more customers for product which directly benefited from this increased level of knowledge dispersion. Formal education contributed to the mass production of tradable sector product which did not need a direct time based link. In other words: initially, formal education led to additional employment not just in terms of the discipline itself (further provision of education) but served as a multiplier for the kinds of tradable sector product which in turn could consequently be generated in the marketplace.

Nevertheless, secondary markets such as formal education (and healthcare), now face constraints which mean real limits in the template for economic participation which is presently possible. One important aspect of this constraint, is that it contributes to class divisions as well. Even though property zoning is problematic in terms of social and economic exclusion; presently, the "zoning" of knowledge use would continue to divide populations, even if property zoning were to be eased in the near future.

It is difficult to directly observe the dependent role (in terms of wealth creation) for non tradable sector activity as contrast with tradable sector activity, since non tradable sector activity assumes dominance in terms of monetary requirements. However, over the long term, resource capacity for non tradable sector activity also needs to be well organized at internal levels, just as what occurs for tradable sector activity. For time based services of all skill levels, maintaining these vital functions of society may sometimes require decentralized processes - especially when tradable sector activity becomes highly automated and in less need of paid employment.

Otherwise, nations may experience too much difficulty, in their efforts to continue the first mover wealth creation positions which set the possibilities for monetary velocity. By matching time value internally for a wide skill range of knowledge and maintenance functions; resource capacity for time value, would ultimately function as efficiently as has been possible in tradable sector activity.

Economic time value in the marketplace is the next logical step. Initially, in the 20th century, formal education greatly contributed to time value. However, since individuals did not have economic means to purchase the incremental time of others through their own, only a limited number of specific skill sets could be directly rewarded in the marketplace. Consequently, too much human capital investment could not be directly tapped, and went underutilized. Today, as labor force participation declines, people do not have good options outside the marketplace to assist others in ways capable of promoting economic stability.

Even though 20th century education suggested great promise for time value early on, marketplace growth momentum was lost, as the secondary market position of knowledge use drifted towards centralization. In recent decades, centralization of high level skills use, has diminished the platform of economic participation which is possible. A marketplace for time value, could once again expand the template of economic participation, through decentralized settings for productive levels of knowledge use.