Productivity Musings, and Wrap Up for December 2016

Often, over the course of 2016, I found myself mulling over declines in productivity. Is is possible to rethink what productivity consists of, given the need to take total factor productivity for time value, into account?

In particular, the internal time use patterns (or time use continuum) that many institutions rely on - especially for product quality - don't always translate into greater output or other obvious aggregate gains. Yet at the same time, we are experiencing other forms of societal gains which don't include economic equivalents for reliable coordination over time, or mutually supportive time use patterns. While our institutions continue to make an appearance in GDP figures, that doesn't hold true for many important aspects of what we provide to the world as individuals - both for ourselves and for others on a daily basis.

And no one can afford to be fooled by suggestions we "shouldn't" need money for what we do with our scarce time, given the reality of living costs. Granted, some lost monetary aspects of technological gain appear as though consumer "freebies". But does that mean tech perks are good deflation in disguise? Not quite. For one, this recent result doesn't contain the requisite components of good deflation, especially as it normally translates into more productive organizational patterns. Too many tech consumers - while they are indeed fortunate in their way - still lack either economic connections or reliable reciprocity with others. Technological gains won't translate into societal gain, until other resources can be brought together, to reinforce what is still a missing level of aggregate monetary support.

Given this circumstance: how could productivity gains be redefined to present reasonable options, especially during periods of economic stagnation?  While innovation still features prominently in many settings, non tradable sector activity can be compromised (whether profit or non profit) should these institions attempt to provide more employment and output, in their present organizational configuration. Why so? Non tradable sector product is largely represented by the product of specific time or place. In other words, it has a strong, built in natural scarcity of production limits, which tradable sector activity often does not face. When time or location linked product is offered for a lower price, the result may be either less available budget revenue or profit.

This helps to explain why non tradable sector institutions have tremendous incentive to capture innovation gains internally. What innovation they are inclined to allow, tends to result in less overhead expense instead of lower product costs. After all, the built in scarcity of non tradable sector product which is attached to time and place, means any price cuts for time/location dependent product can disadvantage these institutions in relation to their for profit and not for profit competitors.

However, production losses in terms of output and employment cannot continue indefinitely, without negative economic effects. Organizational capacity needs new patterns which includes both producers and consumers in the loop of gains from innovation and participation. When such gains remain impossible for too long, system wide networks eventually fall out of balance.

Fortunately, there are ways that these structural pressures can be reduced. New institutions could eventually achieve total factor productivity gains for producers and consumers alike. Even though new non tradable sector institutions would need to operate via internal coordination of resource capacity as well, they would do so across a wide range of economic activity. This would allow them to contribute greater total factor productivity at the margins, where normal productivity often becomes constrained by the general equilibrium limits of secondary market formation.

In the meantion, non tradable sector innovation - unlike tradable sector innovation - can't really be designed to increase general equilibrium output. That's why the innovation which has occurred in these areas, tends to accrue in terms of capital gains, instead of the gains of employment, wage increases and total output. These gains are "static" in the sense they don't readily translate into the earlier gains of jobs, output and increased wages.

Tradable sector activity is a more reliable provider of increased wages, than non tradable sector activity, because of the secondary market position of the latter. However, the present lack of market dominance for tradable sector activity (in relation to non tradable sector activity), means relatively less high income potential for tradable sector activity as well.

Dietrich Vollrath takes a closer look at the fact that employment is going south. Literally.

David Beckworth asks, "Can the global economy survive a stronger dollar?"

Many of these youth are witnessing firsthand, a world that has become increasingly difficult for them to take part in, via a standard expectations outcome: https://conversableeconomist.blogspot.com/2016/12/youth-and-future-of-arab-states.html

One of the more notable posts early this month was "Desperately searching for a new strategy". Here's Tim Duy:

Whether or not Trump can or should attempt to reverse the decline in manufacturing jobs is not the big story here. He can't. The real story is that he continues to tap into the anger of his voters about being left behind. That will give him much more power than our criticisms will take away.

Politicians, aided by economists, have long ignored the negative impacts of trade-induced structural change. Indeed, they have even cheered it on. After all the process "releases resources" for use in other, more productive parts of the economy. Those workers are just "low skilled" workers. The US needs more "high skilled" workers anyway.

Fact: Workers hate being referred to as "low skilled". 

How we respond to Trump is important. If we simply fall back on our standard numbers, we lose. If we confidently predict that TPP is a big win because it will add 0.5% to GDP by 2030, we lose. If we just use this as an opportunity to reiterate the importance of a college degree, we lose. We have been doing this for decades, and it helped deliver Trump to office. 

Part of the problem is whether one is actually in a position to even be able to innovate, or otherwise meaningfully reciprocate with others in terms of shared knowledge, when they do not have the requisite degrees. Fortunately, in tradable sector activity, degrees aren't necessarily part of the equation in terms of one's ability to interact with others. These individuals can contribute to what are already internal processes, which benefit from resource use patterns amenable to local adjustments. However, in non tradable sector activity, even those with the requisite degrees find it difficult to innovate. The knowledge based processes involved, mean being too close to the very structures that are threatened by new organizational patterns.

In the knowledge based work that is non tradable sector activity, it's not easy to establish resource pattern changes (innovate) to reduce costs. By way of example, the vertical integration that consolidates resource use for productivity gains in tradable sector activity, can't be replicated in the knowledge use (of general equilibrium) for non tradable sector activity. Yet the fact vertical integration isn't possible in today's non tradable sector knowledge use processes, also means it is becoming difficult for lower to middle income levels to take part in important time based services product. The result of course is lost human capital, and lost economic output.

The supply of medical practitioners in the U.S. has two problems which particularly stand out: heavy distribution of physicians in prosperous regions instead of rural areas. Also, too many healthcare providers aren't currently able to fill in for physicians, in a wide range of areas where the latter choose not to live. (HT Miles Kimball) http://www.nytimes.com/2016/11/08/upshot/a-doctor-shortage-lets-take-a-closer-look.html

Where are rates of unemployment for men, below average? https://www.brookings.edu/research/americas-male-employment-crisis-is-both-urban-and-rural/

A Q&A with Nobel Laureate Oliver Hart

The most common job in each state has changed considerably, in recent decades. Automation in transportation, would reduce the now common truck driver designation, much as the secretary role was reduced decades earlier.

This is actually a general equilibrium approach which has potential. But would the groups slated for such moves, actually tolerate leaving the places which mean so much to them? The government activity being addressed is still centralized activity after all, even if it does not appear so, geographically. http://www.vox.com/new-money/2016/12/9/13881712/move-government-to-midwest

James Pethokoukis makes an excellent point in this post, especially since the statistics back it: the U.S. economy is far more closed to global trade than many realize. https://www.aei.org/publication/just-how-open-is-the-us-economy/

The U.S. has a "disability belt", and Arkansas is at the center. https://www.aei.org/publication/here-is-americas-disability-belt/

Common ownership can cause some unexpected problems when incentives are poorly aligned.

Well said, William Easterly:

One of the greatest insights of economics is that individual incentives work while group rewards and punishment don't. Collective guilt doesn't work to change anyone's behavior. In the end, collective guilt, fashioned from bogus analysis and delight in stereotypes, is mere slander. It's a formula for constant antagonism and it's poisoning American politics.

It's much easier to innovate, when the reference points for ongoing divisions of labor are internally coordinated. http://voxeu.org/article/how-engineers-innovate-automotive-supply-chain

Seattle opens its first convenience store without a cashier.

The importance of place for a college education. Some would question "education deserts" for the same reasons they questioned food deserts a few years earlier, but I remember well how distance played a substantial role in the difficulty of completing a college degree.

From Real Clear Markets: "Don't Expect the Jobs Gains of 2016 to Continue"

Are there NIMBY tendencies hidden beneath Trump's growth stance?

Ashok Rao asks, "What are real assets?"
Also, is it still possible for individuals to make a real difference for those in need, when this responsibility has already been designated to governments?

Education also has productivity issues because much it does not fit well in any time continuum, which could explore a full range of aggregate time use potential https://www.brookings.edu/blog/social-mobility-memos/2016/12/23/the-declining-productivity-of-education/

Basil Halperin on "Monetary misperceptions, food banks and NGDP targeting"

Like so many of my readers, I can't help but hope that 2017 will turn out to be a more pleasant, less stressful year, than 2016 has been. Here's wishing everyone a Happy New Year!

Recapture Knowledge Use

Are people "willingly ignoring" the value and contribution of knowledge in society? Even though I'd prefer to think not, more direct organizational means could greatly assist knowledge dispersal, so that the use of knowledge is not constantly caught up with the redistributive struggles of politics. Can we make the necessary connections between knowledge use and desirable product formation, which have yet to be recognized?

Regular readers know I believe that tradable sector activity does not have to carry the burden of knowledge dispersal and product formation, solely through its own resource capacity. The threat of knowledge use limits in times of economic stagnation, comes through in this post title from Brad Delong, "Regional Policy and Distributional Policy in a World Where People Want to Ignore the Value and Contribution of Knowledge- and Network-Based Increasing Returns". Even though he appears to envision the problem in terms of generating more efficient monetary redistribution, the dispersal of knowledge is far more crucial, in that it directly affects output potential, hence total monetary capacity. Here's Delong:

Perhaps in the end the problem is that people want to pretend that they are filling a valuable role in the societal division of labor, and are receiving no more than they can contribute. 

But that is not the case. The value - the societal dividend - is in the accumulated knowledge of humanity and in the painfully constructed network that makes up our value chains.

A "contribution" theory of what a proper distribution of income might be can only be made coherent if there are constant returns to scale in the scarce, priced, owned factors of production. Only then can you divide the pile of resources by giving to each the marginal societal product of their work and the resources that they own.

Delong explains that this isn't the world we live in, and continues:

In a world - like the one we live in - of mammoth increasing returns to unknown knowledge and to networks, no individual and no community is especially valuable. Those who receive good livings and those who are lucky - as Carrier's workers in Indiana have been lucky in living near Carrier's initial location.

First, I want to briefly highlight Delong's use of scale, as both redistribution means and recognizable wealth creation. While scale measure approximation is salient (for monetary redistribution) from tradable sector activity which provides a value (measure) for skills contribution via product output, the scale gains of non tradable sector activity are not as readily distinguished. The value of time for time based services, occurs in more subjective ways.

Hence the knowledge gains of non tradable sector activity are the intangibles, the secondary market movers, the subjective knowledge use scale gains over time which Delong emphasized in his post. They also belong to the fiat monetary formation which populations learned to accept on faith in the 20th century, for both services generation and other vital secondary markets.

While government linked secondary market structure is indeed valuable, time based product is only capable of immediate measurable scale, via patterns which allow for knowledge continuity between groups. And while institutions have learned to provide this vital capacity to a limited degree, not just any community has been given the chance to participate in the institutions which provide a valid knowledge use continuum for all concerned.

Even though today's schools begin a coordinated time use continuum with high levels of public and private commitment: for many of these institutions, the process is broken off abruptly - upon graduation - in irretrievable ways. Even in the best of circumstance, one may find little economic purpose with neighbors in a hometown upon graduation, unless they've managed to snag a scarce local job. Nonetheless, homeowners are often expected to commit their property tax dollars to these schools through the course of a lifetime, with little measurable return in terms of lifelong local services capacity, or tangible knowledge use gains close to home.

Meanwhile, communities are presumed lucky - or not - depending on whether substantial tradable sector activity exists nearby, where at least these institutions are (hopefully) structured to continue the vital processes of knowledge use and skill application for all concerned. Just the same: in terms of wealth creation, broad and complex knowledge use patterns (productive agglomeration) are the ultimate scarcity, especially when productive agglomeration is heavily government dependent. This core scarcity inhibits both the redistribution of money and time based services product, in the present.

Consider Delong's characterization of luck, along with some other implications in this particular context. For one, small communities are designated "lucky", should tradable sector activity exist nearby to provide local employment, above and beyond subsistence levels. Equally important - in terms of wealth creation - is the present dependence on tradable sector wealth, for the follow through knowledge wealth which governments are also "supposed" to somehow fairly apportion to their citizens, in spite of existing harsh institutional limits on actual supply. Just as communities feel lucky with tradable sector activity nearby, so too the knowledge beneficiaries which recognize their own good fortune in this regard, since tradable sector wealth is a more tangible source of redistribution, politically speaking, than mere local holdings of international wealth.

So there's a problem. The extent of aggregate knowledge use potential in this instance - both via available revenue and actual product formation - is limited to the wealth creation which has already been generated via means not directly related to knowledge product. Consequently, any underlying assumption of government dependence on tradable sectors for knowledge based services creation which Delong may hold, is still valid. After all, the follow through and government linked secondary market activity which flows from primary markets, has been more extensive than the initial wealth creation of fortuitous tradable sector activity, for some time. Hence the note of fear - or at least existential uncertainty - in Delong's post title.

Fortunately, it's not necessary to "force" governments to further redistribute more tradable sector wealth than has already been the case, especially given today's lack of prominence of manufacture as a primary market activity, in communities as a whole. Nor is it necessary for governments to force today's non tradable sector beneficiaries of knowledge use to part with their earlier good fortune regarding skills valuation, as it was in fact reinforced by governments in the first place. These providers could gradually phase in greater knowledge use by entire populations, within the same time frame that populations eventually phase in more direct sources of social security and less government redistribution in the near future.

Indeed, we don't have to associate fortuitous resource reciprocity of tradable sector activity, as the only source for first mover wealth creation. After all, the "luck" of fortuitous location can be recreated, any time that a society decides to organize economic time reciprocity, so that it becomes capable of internal wealth generation. By so doing, no one would need to "force" tradable sector activity in certain locations, or the limited wealth it presents, for the activity of knowledge use. Sometimes, institutional organization becomes a matter of recreating our own "luck".

The Non Political Nature of a Growth Level Target

Even among those who agree with market monetarists regarding monetary policy, some prefer growth level targets, while others would be equally comfortable with growth targets. However, a growth target isn't necessarily anchored to economic activity in aggregate, as an unbroken continuum over time. How might one think about the difference between these two options, as a potential monetary rule?

For one, a growth level target would be less subject to either discretion or political favoritism. Even though populists and others might declare a "need" for greater growth, a growth level target rule would nonetheless instruct central bankers to continue following the lead of the marketplace. After all, economic stability is a result of monetary representation which aligns as closely as possible, with existing conditions across the real economy. Despite the supply shocks which may affect GDP and output, a nominal target level can smooth the disruption among sectors which aren't directly connected to the supply shock.

While a growth target could closely approximate changing supply side circumstance, chances are this form of discretion - as a policy rule - would instead be used for the wrong reasons. For instance: today's sluggish market conditions were also a result of a high level of central banker discretion, prior to the Great Recession. Even though monetary policy returned to a familiar growth trajectory, there's no escaping the fact that (overall) trajectory exists at a lower level. Yet in spite of this important fact, too much confusion surrounds the fallout which also occurred, due to excess central banker discretion.

There's no denying the importance, of maintaining via monetary policy, a reasonably constant level of economic activity over time - wherever possible. And prior to the Great Recession, any further discretion on the part of central bankers which could have amended a heavy loss of monetary support, needed to occur quickly. Instead, they only utilized a heavy level of discretion once and in basically one direction: downward. Consequently, even though the Great Recession began as a loss of monetary representation, that loss spread to the real economy as well.

Since the loss of that earlier level of output has not been carefully discussed with the public, it's difficult to know for certain, whether central bankers are willing to adhere to a stable monetary level in the near future. Will they keep the monetary policy focus on the supply side (instead of credit) conditions that are responsible for long term growth?

Indeed: should a growth target be adopted, such a rule could still lead to discretionary problems - especially if growth levels are adjusted for the wrong reasons. Whether implied or explicit, monetary policy decisions may either be subjected to wishful thinking, or possibly negative assumptions which do not accurately designate existing marketplace conditions, among other things. Hence some might be tempted to use the rationale of a growth target, to arbitrarily shift down the money supply, once again.

Granted, a growth target is more logical than today's interest rate targeting. Just the same, such a rule would still face pressure from existing political and/or credit driven circumstance, both of which may interfere with real economy conditions and obligations. Whereas a growth level target would return monetary policy to a more practical position that is less reactive to political disturbances.

Most important, a level nominal target rule would highlight where the real responsibility lies, for a better economic reality: the supply side. Real growth is still possible when special interests do not stand in the way. Yet it's been too easy for many of their representatives to hide behind the discretionary mistakes of central bankers, instead of facing their own shortcomings. With a level target rule, monetary policy would be able to proactively respond to supply side conditions that generate new growth, instead of making constant adjustments on behalf of the special interests which seek to limit growth.

Notes on Time Aggregate Imbalance and the Medium of Account

A recent post ("India's Money Shortage") from Scott Sumner, provides useful framing for circumstance reflecting the monetary roles of medium of exchange and medium of account. India continues to suffer from a negative supply shock, via the medium of exchange role. Theirs is a highly unfortunate reality, in which the poor now pay a (temporary?) heavy price of lost access, since larger bills were removed from the marketplace with little to actually replace them. Yet this occurrence is different from today's ongoing medium of account money "shortages", which disproportionately affect lower income levels in ways that are more hidden. From Econlog:

Both old monetarists and market monetarists like to describe recessions in terms of a "shortage of money", caused by either a drop in the money supply or an increase in money demand. In this view, the focus is on money as a medium of exchange.

I've always been uncomfortable with that framing, as I don't think the term "shortage" accurately describes the problem. Rent controls and price controls on gasoline lead to huge queuing problems. In contrast, there are usually no lines at ATMs, even at the worst points of a recession...In my view, it's more useful to think of the problem as an increase in the value of money. My focus is on money as a medium of account. 

I don't want to overstate these differences as we both believe the problem is caused by either a decrease in money supply or an increase in money demand, and we both believe that the effects are higher unemployment and monopolistically competitive firms having more difficulty finding customers at their current (sticky) prices.

I find these arguments compelling, and would suggest that the role of money as medium of account is not sufficiently acknowledged. In the twentieth century, the monetary flows of general equilibrium were subjected to the increased valuation of highly specific skills sets. The Baumol effect particularly highlights this equilibrium shifting pattern, since it also generates wide variance in otherwise basic sets of service and asset consumption costs. Indeed, tradable sector activity more quickly adjusts to any lack of monetary representation, in part since the skills sets associated with tradable product tend to be more temporary in nature, than skills sets associated with the knowledge endeavour of non tradable activity.

Monetary problems for the U.S. in particular, reflect broadly expected medium of account valuations in non tradable sector formation. Yet despite the reality of sticky wages and prices, central bankers have gradually become less inclined to represent their full array of aggregate claims to marketplace inclusion. Even though these kinds of very real money shortages don't translate into long lines at ATMs in the U.S., there's a hidden "wait" just the same: much of it, in a wide array of ("innovated") services product not intended for all comers, despite what the evening news might suggest. The high skill services "wait" for low or otherwise fixed incomes, simply occurs on different sets of terms. Some of the "return to gold standard" discussion, can be thought of as medium of account related, in terms of more fixed monetary limits, which would prove less inclined to accommodate high skill services participation in the marketplace.

How to think about the medium of account role for money, in relation to other roles? Consider how money as a unit of account, contributes to overall medium of account marketplace representation, in terms of aggregate resource capacity. For instance: in "An Empire of Wealth" on page 43 (I'm less than 100 pages into this interesting book), John Steele Gordon provides some basic explanations of monetary functions:

As a unit of account, the value of all other commodities is expressed in terms of money. And money acts as a store of value, a place to hold wealth temporarily between productive investments.

Money as medium of account, could be thought of as a natural extension in terms of aggregates, for the unit of account function. But what if the restrictions of a given general equilibrium, make it difficult for "single price" extensions to fully represent production and consumption of goods and services?

Time value could also be expressed as a valid medium of account (with other traditional monetary roles), so as to create more economic complexity and a more complete marketplace. However, money would still provide its normal functions alongside time as a medium of account. Only local asset formation and services formation would exist separately from the broader general equilibrium. Even though knowledge use systems would utilize an alternate equilibrium (for time as medium of account) they would still share the broader economic equilibrium with surrounding economies - especially in terms of tradable sector activity. Eventually, time value as a recognized alternative medium of account, could help to address the high skills marketplace expectations which central bankers have become increasingly disinclined, to fully represent.

Can the Product of Time and Place, Benefit From Innovation?

Why do products that include highly specific time or place (time based services and real estate) pose such problems for truly productive innovation? In spite of the fact non tradable sectors tend to hold local customers "hostage", admittedly the product of time and place can be the most difficult scarcities to replicate on reasonable terms, for all involved. This will likely hold true, whenever organizational patterns for non tradable sector production are approached on exogenous terms - particularly where environment use patterns reflect international sets of resource capacity.

Also: given the fact this form of non tradable sector activity relies on preexisting revenue, it can gradually lose the capacity for further expansion, as total aggregate formation begins to displace that of primary markets at international levels. Indefinite expansion of secondary markets can be illusory, if primary markets are not able to maintain their first mover position for marketplace contribution. Is it possible to productively innovate the products of time and place, by means of a first mover position which would diminish the burden of secondary market dominance?

Clearly, not all kinds of innovation make this possible, as has already been shown. Consider a recent post from James Pethokoukis, who highlights Clayton Christensen's description of innovation differences:

There are three types of innovation. The first are "empowering" innovations. These transform complicated, costly products that previously had been available only to a few people, into smaller, cheaper products available to many...Empowering innovations create jobs for people who build, distribute, sell and service these products. The second kind are "sustaining" innovations. These replace old products with new...Sustaining innovations replace yesterday's products with today's products. They keep our economy vibrant - and, in dollars, they account for the most innovation. But they have a zero-sum effect on jobs and capital. The third type are "efficiency" innovations. These reduce the cost of making and distributing existing products and services. Efficiency innovations almost always reduce the net number of jobs in an industry, allow the same amount of work (or more) to get done using fewer people...Efficiency innovations are liberating capital, but that capital is being reinvested into still more efficiency innovations. Our economies are generating many fewer empowering innovations than in the past.

Should anyone attempt to (broadly) replicate the product of time or place on general equilibrium terms, the result would be massive disruption and major wealth loss, both for the owners of real estate and those with high levels of skill. Increasingly, these groups are the same. Since they are among the major anchors of general equilibrium, empowering innovation in this instance needs to be approached, so as not to distort already existing structural patterns.

Equilibrium dependence for secondary markets, especially makes them prone to the use of the third type of innovation described by Christensen: "efficiency" innovations which ultimately reduce jobs. These are consequently the groups most in danger of automation, should an insufficient amount of primary market activity be in place to provide the ongoing revenue needed to compensate time based product. This growing impulse to reduce employment where possible in services product, doubtless plays a role in the reluctance of today's high skill centers to increase population densities.

Automation need not destroy the jobs of the future. However, the best way to ensure this doesn't happen, is to restore a healthy balance between primary and secondary market formation, so that the latter will continue to have the necessary funding to maintain today's existing general equilibrium skills and asset formation. Fortunately, knowledge use systems have the capacity to generate new wealth via a first mover (primary market) position. By organizing as a single unit which coordinates a broad range of asset and services formation, the resources needed to fulfill these functions are recognized and recorded at the outset. Symmetric compensation would allow these groups to slowly - but surely - contribute to a healthier primary market balance, which otherwise has proven difficult to return to, on general equilibrium terms.

Consumer Cities: Are they (Individually) Sustainable?

What is different about cities oriented towards living and working (rather than making stuff), in terms of economic stability? Economists such as Ed Glaeser have described today's services and knowledge oriented cities as consumer" cities. I've borrowed Glaeser's earlier moniker to title this post, since it reflects descriptions on the part of another economist, Richard Florida. In "The Most Disruptive Transformation in History", Florida writes:

I would suggest that this transformation - the clustering of knowledge over physical labor -  is among the most disruptive in recorded history.

But even more so, this age of urbanized knowledge capitalism requires a shift in power from the nation-state to cities. Which are the key economic and social organizing unit of the knowledge economy. That also means that cities must take on the outsized power of the nation-state and the imperial presidency. We must devolve power and resources back to the local level - raking back their tax money from the federal government so they can spend it on themselves. 

Is the decentralization of cities really possible, in the way Richard Florida imagined in the above article? These are prosperous regions with wealth structures that are quite different from earlier manufacturing hubs, in terms of both population densities, and the landscape designs which complement (what have become more important) present city functions.

Even though consumer cities are thriving, their present incarnation is closely connected to the resource capacity being tapped by nations and international networks - both of which face a growing degree of political and economic uncertainty. Just one example of connectivity issues (in the the U.S.) are healthcare networks which would be completely torn asunder with decentralization, such as Medicare provisions for the elderly. Many individuals don't have time based service production options at the ready, in their own neighborhoods. Plus, Washington remains largely responsible for much of the city based care people do receive, for important applications of knowledge and skill. It is the ways in which much of today's non tradable sector activity is organized, which provides little means of knowledge preservation for long term stability, or decentralization options at the ready.

Consequently, some of the autonomy of today's cities is illusory, given the delicate balance between primary and secondary economic activity as origins of wealth formation. More specifically: to what degree is today's knowledge based (secondary market) economy "disruptive" in the way Richard Florida suggests? Granted: knowledge use extends to more of the populace in this historical juncture than before - given the vitality of secondary market activity which took place in the last century. Nevertheless: is this particular "disruption", one that exists in a truly productive capacity? After all, the positive disruptions which broadly contribute to marketplace definition, also increase marketplace output. Yet it is not obvious this has occurred, given the dependence of rural regions on cities, and cities in their turn on nation states. Instead, secondary market city activity has supplanted broader sources of primary market economic activity, which were once far more widely dispersed.

In other words, many of these cities remain general equilibrium dependent. While today's knowledge use appears to advance wealth formation, too much of it is structured in ways which displace other forms of wealth - at least to some extent - because it does not completely internalize resource capacity through recognizable means. Whereas if these organizational patterns were not so dependent on the very (primary market) factors they are disrupting, the process would be more dynamic and capable of enhancing total marketplace output. Perhaps most important about this development, is that what appears secure in a mature economy - such as today's knowledge based activity - becomes most vulnerable when it affects the output potential of primary market formation, instead of contributing to that formation.

Today's consumer city activity takes place across countless budget ledgers, rather than internal organizational means. Yet internal organizational patterns could make it easier to confront what are very real supply side limits, for knowledge use. Indeed, the use of fiat money - helpful though it has been - also expresses general equilibrium dependence. Fiat money makes it simpler to achieve spontaneous coordination of time based product for higher income levels. But the fact this process doesn't function adequately for lower income levels, decreases total global output potential in at least two ways.

First: due to non tradable sector consumption definition, a growing lack of (low income) ability to consume housing and services, means less output potential for these forms of secondary market activity. Second, the consumption of non tradable goods still necessary for lower income levels, also crowds out the discretionary income that would otherwise contribute to tradable sector activity. This effect also shows up via institutions which manage default (crisis response) positions for low income groups.

The crowding out of primary market activity matters all the more, since tradable sector goods contribute more to quality of life for low income levels, than for high income levels. One might say that low income levels are major contributors to what is also the primary market first mover position for equilibrium growth. These two factors prevent the "disruption" of today's consumer cities, from being a disruption component which contributes to positive economic vitality and long term growth.

Knowledge - in all its infinite variety, usefulness and challenge - can be preserved for the generations of the future. However, it is difficult to achieve such preservation, strictly on today's general equilibrium terms. At a practical level, it would also be difficult for large states to effectively scale down in terms of resource use patterns (while retaining economic complexity), until knowledge use participation is more broadly shared.

Commodification of Time: the Imaginary Enemy

Why is the commodification of our economic time value, so often perceived as a negative? Possibly, because of the fact a substantial amount of personal time became externally defined in the 20th century, by the institutions in our midst. Nevertheless: in the 21st century, as these same institutions gradually need less employment to generate more output, societies will need to reconsider the wealth potential (commodification) of time value, in a much more positive light.

Otherwise, many groups would have difficulty initiating mutual forms of self employment, for time based product. Yet doing so is likely the most advantageous process, to effectively counter the effects of automation in the near future. Negative perceptions regarding time value need to be confronted, because otherwise they could ultimately lead to great losses in productive economic complexity, which would unfortunately be reinforced by progressives and conservatives alike. In many respects, what was an earlier internalization of time value in relation to institutions and/or resource capacity, would shift towards economic time value in relation to individuals. It's also a process which could help to restore a great deal of personal autonomy (economic freedom), which was temporarily apportioned to external organizational processes.

The inherent usefulness of our time for others, is a natural resource in the same sense as any other form of commodity or product wealth, despite the fact time value has yet to be directly tapped (on symmetric terms) for economic purpose. Meanwhile, the incentives to initiate such a process are only growing. Indeed, the more useful our time value is perceived by others, the more options in life we would have - once again. Even though the services economic option is sometimes openly disdained (which is "better", building or maintaining/assisting?) in part due to perceptions of gender limits, skills use options are far more open ended, than the class/gender separations suggested by general equilibrium terminology.

Granted, through much of the twentieth century, few individuals needed to provide mutual, time based assistance via internal (direct) means, since widely dispersed tradable wealth made a full range of time based coordination possible for multiple income levels. Whatever complaints one had about externally driven time commodification in the 20th century, the benefits of this (more temporary than realized) compromise were still undeniable. It was also a time of abundant "stuff" in our environments. While this form of material abundance is not as important as it once was, many income levels during this period were able to experience life, in ways which extended well beyond the places and circumstance of one's birth.

Greater mobility and personal autonomy are still possible. In this post I'd like to suggest that we have scarcely even begun to pull back the layers of commodification potential, to discover what lies underneath. What might that potential consist of, in terms of regaining a societal level of personal autonomy which has been all but forgotten, in recent years? Mike Konczal is one of many, for whom time commodification appears as though the "enemy". While musing about the reality of a Trump presidency, he included some negative associations with time commodification. In response to a working class which feels as though constantly ordered around by professionals, he writes:

Meanwhile, we should feel out our own case against professionals. Tying professionals to commodification, the people who get in the way of needed goods (especially with whatever TrumpCare ends up looking like), might be a way to get there.

One problem with commodification labels such as this: they neglect today's limited production processes, which in turn greatly diminish aggregate supply potential. Here, Konczal further clarifies the commodification identity:

...the divide among economists on trade is driven by the fact that labor economists study the real effects of unemployment on real people, where trade and macroeconomists treat people as just another commodity.

Were macroeconomists the first to do this? I would suggest they took their cue from a broad array of institutions which had already done so first, through the process of offering lucrative - but double edged - asymmetric compensation, to individuals in the form of well paying work, throughout the years they were able to do so. Small wonder, then, that human capital as a productive resource, became narrowly defined.

Negative reactions to time as commodity, can also be attributed to the fact that people chose to heavily invest in education as a long term career gamble, during the 20th century. By so doing, many individuals collectively handed over the keys to their broader time options and destinies, in hopes of gaining a lifetime of security. Yet gambling for fortuitous gains in human capital, has become more elusive over time. Should one ultimately land on the "right space", it often feels imperative to remain there.

Circumstance such as these likely contribute to skepticism, regarding time as commodity. Another way to frame the problem: narrowly defined human capital imposes substantial limits on aggregate economic time value, which in turn disrupts once productive economic landscapes. Given today's minimum of managed time continuum environments for group work, only a mere fraction of what we learn through the course of our lives, translates into economic or even social gain. Even though some of our economic contributions are highly valued, this process has occurred in ways which lay waste to the larger potential of human capital.

Fortunately, human capital need not exist solely as a time based component of externally defined wealth. Let's return to the consideration of commodity definition in a positive light. Upon doing so, something immediately becomes evident: time's perishable nature. Just as many time options need to play out in an organized continuum (if they are to fully manifest), food is also a perishable commodity, which needs to be consumed within a fairly short time frame. And yet something very positive for progress took place for foodstuffs in the 20th century, which has yet to take place for human capital: greater food preservation.

Instead, the institutions of the 20th century, made time use potential more perishable, along with the knowledge use potential associated with time value. Let's reverse this process. I suggest that an equilibrium corporate construct, be given the chance to do so. The progress of the 20th century, can hopefully be continued in the present. Time value is by far, the most important commodity we all have.