Direct Personal Interaction Can Temper Expectations

Perhaps the best way to think about tempering in this instance, is the active listening and participation which imparts strength to others. When this attention is lacking, we may respond via withdrawal and over reaction. One's expectations of others may become so unrealistic, that society suffers the loss.

We can often gain the emotional strength we need, when it is possible to share what we experience with others who provide moments of their undivided attention. Indeed, the greatest gains are when undivided attention begins early in life. In all likelihood, the more shared experiences we have with others, the easier it is to form - and maintain - rational expectations of personal and societal reciprocity.

Everyone has moments in life when they can benefit from the undivided attention of others. Nevertheless, many of today's services take place in ways which reduce personal or undivided attention to a minimum. One common theme after far too many school shootings in the U.S., is the wish that perpetrators of this horror might have gained the personal attention they needed, before it was too late.

Even though we have institutions which promote mutual assistance, they are spread too thinly to provide help where it is presently most needed. This is yet another reason I've advocated for a time based marketplace, where individuals could rediscover the value of face to face interchange. Even though many goods are now delivered in ways that no longer require face to face reciprocity, we could recreate services along the lines that more closely resemble the civility Adam Smith knew, centuries earlier, when shopkeepers still had daily personal interaction with their customers.

Direct personal interaction is particularly important, for the forms of learning that require both personal judgement and time/place specificity. Time arbitrage could provide formal means for students to mutually assist one another, which is all the more important since teachers so often lack time in their schedules to help the students who need it most.

Hopefully in the near future, we will not have to rely solely on broadcast means for the marginalized to access education - valuable though such educational materials can be. While many adults adjust reasonably well to solitude late in life, no one should expect children or young adults to spend too many hours alone in solitude. Lets try to make certain our economic systems maintain the characteristics that encourage true civility and full participation. We have the ability to restore the kinds of direct personal interaction, that make us feel fully human and, yes, sane.

Economic Time Value as a Unique Equilibrium

Often I've struggled to clarify, how a marketplace for time value could function. One reason this market potential isn't immediately obvious, is that the time arbitrage involved, would function as a unique equilibrium. Time value would be utilized in relation to itself, thereby allowing individual and group expression of economic values that exist in relation to local resource capacity.

The groups which take part in this endeavour, would generate new means for time based services in defined local settings, across a broad spectrum of coordinated skills capacity. Expressed time priorities (time arbitrage) in these communities would function differently, from how labour (particularly specific skills) is compensated in the "normal circumstance" of general equilibrium. Further, ownership responsibility and benefits would be linked to all participants, in mobile systems of building components, land use groupings, and flexible physical infrastructure.

Another problem I sometimes encounter, is discussion re what could be in an economic context, when it isn't quite clear what already is, by contrast. Even though today's services based economy represents close to 80% of U.S. economic activity, the theoretical structure of this activity is far from concise, as contrast with the much easier to measure "goods" economy, that prevailed till the latter part of the 20th century.

While production gains can still be discerned in tradable sector activity, the murky relationships of today's dominant services capacity, are far less tangible. For that matter, the theoretical nature of services organizational capacity, has yet to be differentiated from the still relevant neoclassical framing, of global tradable sector activity.

Consequently, I've argued for production clarification (tangible definition) in services which might also prove useful for economic modeling. Even though simpler methods of knowledge use would hardly be "perfect" "substitutes for skills specialization, such methods could still provide more reliable progress indicators over time, than what today's arbitrarily limited services capacity can provide. Even better, an organizational knowledge use structure which - via time units - generates new wealth at the outset, could finally relieve the long term budgetary burdens now faced in the U.S.

In all of my attempts to describe my framework, I realize my own economic "shorthand" phrasing and theoretical suggestions, fall short of what is actually needed. Hence I will continue my efforts to conceptualize from as many angles as possible, for the sake of greater clarity. After all, many observers frame economic concepts somewhat differently, depending on their own roles for economic participation.

This discussion of defined equilibrium considerations wouldn't be complete, without mentioning some normative aspects of economic freedom. When economic freedom is mostly envisioned as freedom from the actions of others, the actions of the strong over the weak mostly give free markets a bad name. Worse, a "do nothing" approach, has encouraged regulations which ultimately undermine remaining economic freedoms for all concerned.

Given the extent of economic freedoms we have already lost, might intentional economic design make it possible to begin reversing those losses? While some remain certain that "The road to Hell is paved with good intentions", I would respond that good intentions are often necessary to preserve the most economic freedom, for the greatest number possible. Fortunately, time as an economic unit, could provide apt means to preserve personal leverage for the supply and demand of services which individuals mutually prefer in the same settings.

Again, it has been difficult to express the idea of personal economic time value, due in part to a lack of clarification in the time value that people find most important in general equilibrium conditions - let alone the defined equilibrium conditions which I have described. Since too much of our potential time value ends up excluded in today's services dominant economy, our time commitments are no longer well aligned, with the environments we have built via the relationships between money and other forms of resource capacity. What's more, our personal skills race with technology continues, because we still lack the means by which to provide economic value for what we experience with others, through the shared mechanism of actual time and place.

Should we gain the ability to pursue the freedom of mutual employment, it would also allow us to relax our grip up on a skills race with technology that can't be realistically won. Yet no one need fear displacement by automation, if they are willing to explore a completely new marketplace which makes it possible to think differently about services supply and demand. A marketplace for time value, could help to restore faith in the value of economic freedom, and it would give individuals the chance to pursue mutual challenges and aspirations on more personal terms.

Margins of Safety For the Marginalized

While this title seems obvious in retrospect (for my own efforts), a recent post from Shane Parrish, made me more aware, how I approach potential non tradable sector "circles of sustainability". In "Making the Most of Second Chances", Shane Parrish provides some explanation for margins of safety:

We can make the most of our second chances by building margins of safety into our lives...The concept is a cornerstone of engineering. Engineers design systems to withstand significantly more emergencies, unexpected loads, misuse, or degradation than would normally be expected.

What happens when societies are no longer convinced they have sufficient margins of safety? What's more, it's not just citizens that are slowly being marginalized. So too, are many forms of knowledge use, which - when private interests only find them profitable up to a point - are becoming less amenable over time, to the budgetary burdens of government funding.

Also, note Parrish's engineering reference. Many economists prefer that the discipline not be approached from an engineering or problem solving perspective, but as an act of passive observation. However, this "hands off" observational approach, likely bears some responsibility, for the fact that too much economic activity has consequently ended up as wealth capture (with its associated public debt), rather than wealth creation.

Wealth capture also functions by establishing margins of safety that are mostly intended for higher income levels. Alas, lower income levels also need more viable options for risk management. Even so, it's not easy to make peace with the fact one's resources (and internal fortitude) might have become insufficient for prevailing norms. As a result, we often don't realize that it's time to let go of commitments in line with societal expectations, until they become too risky. Once this occurs, personal attempts to "bounce back" from adversity, cease to be as reliable as before.

How to know when better margins of safety are needed? Parrish provides an apt example:

There is no doubt that the prospect of death wakes us up. We don't often think about how dangerous something can be until we almost died doing it. Then...we adapt. We recognize that if we don't, we might not be so lucky next time. And no one wants to rely on luck as a survival strategy.

When people no longer have recognizable margins of safety to continue life as before, it's not just frustrating for those who personally experience setbacks, but also those who have previously depended on them in some capacity. A close brush with death can sometimes be an economic "bridge too far" as well, since societies lack sufficient local environment options which make it feasible for individuals to continue work and personal responsibility, in any "diminished" capacity.

One unsettling aspect of the Great Recession, is that this economic catastrophe should have provided a wake up call, which would have encouraged populations to build stronger margins of safety for the marginalized. Hopefully, we will be able to create local environments which are more responsive to actual income and personal resource levels, before any economic catastrophe may strike again.

Maintenance as a Basic Time Arbitrage Function

Time arbitrage includes a crucial maintenance role. Why might this be so important?

For one thing, witness the growing inability of private enterprise to extend marketplace access (production and consumption roles) to all citizens, even as firms grow more reliant on the additional budgetary burdens of government subsidies. This private sector reliance on government assistance, makes it even more difficult for governments to preserve revenue space for basic maintenance functions. Potential revenue sources wouldn't be such an issue, were it not for the fact that aggregate organizational capacity is now too thin for governments to rely on broad citizen majorities for public support, via taxation. For historical context, past civilizations ultimately failed, after losing their ability to coordinate the necessary care of earlier wealth creation - in its many forms - among all citizens.

How might we ensure a fuller range of maintenance preservation, in the near future? Even though maintenance is often thought of as mostly involving simple skill sets, many of society's maintenance roles have actually become quite intricate. Oftentimes, societies lack the ability to improve productivity and long term growth, unless populations are fully involved in the maintenance of wealth generation which has already taken place.

Maintenance roles are vital, across a full range of knowledge and skill capacity. By no means do they include just the care of individuals, buildings and physical infrastructure, for they also directly support the knowledge and skill which societies advance. Nevertheless, today's knowledge use patterns are organized in ways that don't encourage their broader dispersal across societies in general. Citizens are now in need of platforms which more closely echo the knowledge generation of the past, when individuals could still stand "on the shoulders of giants" for the advancement of knowledge and skill. Whenever knowledge is siloed and protected, it tends to be more readily lost, in the inevitable setbacks that civilizations ultimately face.

The time arbitrage of knowledge use systems would include maintenance functions at all skill levels, as a core purpose of organizational capacity. As a horizontal (symmetric) wealth generation structure, time arbitrage would give new life to maintenance functions which both private and public endeavour have become less able to provide, via the centralized nature of asymmetric compensation. Maintenance functions would be particularly important in areas such as these:

- Knowledge use storing and dispersal, for vast backlogs of preexisting useful and experiential knowledge.
- Research and development which private enterprise can't generate due to lack of profits, and which governments now lack the revenue to provide.
- Preventative care for both individuals and a wide range of existing social/physical infrastructure.
- New infrastructure means which are more closely aligned with local (current) resource capacity and global ideas for innovation.

New communities, organized as knowledge use systems, could focus on particular areas of knowledge and skill application that are important to the original participants, who in turn would seek broader participation for a full range of related activities for individuals and families alike. Each chosen primary knowledge function, serves as a focal point of framing, by which a multiple range of skills capacity can be coordinated in a year's time. Individuals and families alike could enter and exit these flexible communities as lifestyle needs gradually change. The result would be a more complete template for economic continuity, especially to preserve vital forms of non tradable sector activity which are presently restricted to upper income levels. There's also an equilibrium corporation group motto: Steadfast in knowledge, strength in mobility.

Only recall that in the past, firms extended partial templates for wealth creation in environments which also benefited from a full template of societal coordination that was only partly economic in nature. It's easy to forget, how many of those earlier broad templates for societal coordination have been lost. Time arbitrage could help to restore the broader societal coordination, that makes it possible to once again advance the possibilities of long term growth and prosperity.

The Productivity Challenge of Our Time

Lately there's been discussion about personal "moonshots", and if I were to try and describe my own, it would include addressing the ways we currently think about the nature of productivity gains. All the more so, since measurable productivity is closely linked with the economic theories we continue to rely on. That said, have neoclassical theories re productivity outlived their "usefulness"?

Arnold Kling thinks so. In recent posts, he writes:

My personal moonshot is that I wish to be a leader in overthrowing neoclassical economics.

...As I see it, neoclassical economics is characterized by two essential propositions. 

1. Production is a process that employs two primary factors - labor and capital.
2. The distribution of returns to labor and capital reflects their respective contributions to the production process. 

Kling suggests labour productivity is now a "nonsensical" number, given today's numerous intangible factors of production. Nevertheless, if it proves "impossible" to sort out how we collectively think about intangibles, GDP as concept will only face more excessive scrutiny in the years ahead - some of it unhelpful. Alas, devaluing both GDP and output measure without concise replacements, is not a desirable approach. Any supposed inability to model today's economy of seeming intangibles, ultimately means problems for accurate monetary representation, as well.

There's potentially good news in all this confusion. Since the basic labour to capital nature of tradable sector production remains essentially unchanged, neoclassical logic remains important as part of our economic foundation. That said, its applicability would be better utilized in a dual modeling framework, where productivity outcomes depend on whether tradable sectors or non tradable sectors are observed. Even though intangible factors affect the labour calculations and production of tradable sectors to some degree, the tangible nature of tradable sector output is still readily observable, as contrast with the time based product of non tradable sector activity. In particular, today's non tradable sector intangibles, suggest that something is essentially different, re societal organization of labour and capital.

Part of the productivity challenge, is to break intangibles down into understandable elements, especially since doing so also makes them more amenable to output gains. Even though we can't expect to change the intangible nature of government compensated labour, or professionally defined (time based) product - hidden as they are in other measures - time arbitrage would provide a long term approach to generate output on more tangible terms. As a direct means of wealth creation, time arbitrage also would not be subject to the political limits of fiat monetary representation, as is the case for government compensated labour and professional capacity.

Consider for instance that for tradable sector activity, a Solow framework for output gains still applies. The problem comes in when the Solow framework is applied to the time based product of non tradable sector activity. Should aggregate time participation be reduced by technology in these settings, arbitrary losses in the production and consumption of time based product may also occur, with little if any gain in either output or productivity. This is one reason why it is so important to have a better understanding, of the nature of what we now call intangible factors.

Let's consider how we derive benefit from time based product, so this form of economic interaction might gain some much needed tangible definition. In time based product, the commitment of time and specific place, are central to each individual's immediate cost. Labour, or derived time preference, becomes linked to human capital in the form of our personal investment. Time and place are utilized for mutually experienced product, which embodies production and consumption at the same time. How so? First, consumption is not just what the end consumer seeks, but also the provider, who often finds the act of provision (production) to be a highly desired consumption good in its own right. In other words, the work we desire, might be one of the most important "products" we choose to purchase in the course of a lifetime, despite the high risks that are frequently involved.

Now, consider the interactive nature of time based product, for recipients or end consumers. For the latter, even though they may not be personally engaged in specific production roles with their providers, the personal interaction which takes place can still factor into future productivity roles (direct or indirect human capital investment) on the part of the recipient.

One way to make this interactive relationship more tangible, is to utilize time as the primary economic unit for measurable output. While other recorded definitions would exist alongside this approach (particularly in terms of shared knowledge transmission and dispersal), mutually compensated time would be recorded for purposes of GDP. Importantly, time arbitrage would also provide records of the knowledge, skill and other activity that provider and recipient find noteworthy in specific interactions, as opposed to more static forms of skill representation as presently recorded for purposes of GDP.

Hence time based product via time arbitrage methodology, would combine human capital and labour (or expressed time preference), as simultaneous production and consumption. Greater productivity over time accrues via a continuum of mutual skills acquisition, as knowledge use patterns are continuously recorded by the groups involved. While these recorded knowledge and skills gains by participating groups are also quality gains, such gains can take place without the internal inflation which has long been associated with high skill time based product. Time arbitrage as a relatively constant commodity value, makes it simpler to determine both the extent of services output and consequent production gains, since the output of this decentralized services capacity isn't muddled by general equilibrium transmission.

The productivity challenge of our time, is perhaps not so much about "throwing out" the old models, but recognizing the dual nature of tradable sector and non tradable sector production. Is it possible to redefine the latter on tangible terms? Can time preferences gain economic validity? To clarify the production potential of time based product, the social implications of mutually desired time preferences would need to be recognized. After all, mutual time preferences are quite different from the externally defined labour components of tradable product. Indeed, few other aspects of economic activity hold the same potential, for greater economic participation and inclusion.

"Basket Case" Nations: Emigration as the Only "Good" Option?

First, apologies for this rather sad term, although at least it's not as distasteful as one that's been bandied about of late. As someone who has always lived in the U.S., I remain supportive of immigration from all nations. However, I don't believe it's helpful for anyone to insist emigration is the only "logical" long term option for those who lack economic opportunity, especially given today's political backlash against immigrants in general.

Why have nations suddenly decided to pretend, that it is impossible to generate meaningful economic activity beyond the places it already exists? Only recall that highly valued production processes have been widely dispersed around the globe as long as anyone can remember, particularly tradable sector activity. Even though the organizational processes involved haven't always turned out well, in the whole they still provided means for wealth generation which nations previously lacked in many instances. This is no time to be giving up, on what has been a civilizational capacity for problem solving.

I get frustrated every time someone insists nations are hopelessly bound to present day cultural outcomes. How does anyone remain convinced in the potential of economics as a dynamic, "hands on" discipline - capable of assisting nations in general - if economists encourage policy makers to give up on the possibilities of multiple nations ever "getting their act together"? Especially since advanced nations have become so reluctant to take in millions who hope for a better life.

Normally I cite articles (particularly if I write an entire post in response such as this one), but recently I was frustrated by a poorly written opinion piece, from a journalist whose articles I once enjoyed. What might have been a fruitful discussion re immigration on this individual's part, was simply thrown to the wind because it was framed in an extremely partisan context. Apparently Trump was "reasonable" to express out loud that some countries simply weren't worth our time or attention. And yet, even though some villagers would be happier to find economic opportunity in their own villages if they could, we have the nerve to boast how much better our advanced nations are for these people, even as we simultaneously limit their entry. Limited entry is understandable, it's something many nations have to do. But proud boasting about our own good fortune, knowing full well that others in the near future won't be near as fortunate, is something I don't find acceptable.

If economics is to remain viable in the near future as a dynamic discipline, I suggest that journalists, politicians and economists at least think twice before blurting out variations on these three themes, even if one is pessimistic enough to basically believe them:

1) The poor will always be with us.
2) The poor regions of advanced nations will always be with us.
3) We can't "bottle" what works so that it will help anyone else, in our own countries or elsewhere.

Firms learned how to organize "bottled" productive activity and spread it across the globe. Given the chance, a new kind of firm could also "bottle" more productive means of local knowledge use for global dispersal, via time and knowledge as direct wealth creation.

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.