- "The most precious asset... is time."
- —Warren Buffett
- Most fields of knowledge do not have immediate relevance to us. One example is higher mathematics, and in particular the study of prime numbers, which prior to digital cryptanalysis was considered a pure form of knowledge with no practical applications. In most cases, the conversion of knowledge into a technology or other development happens without the need for a comprehensive understanding of the underlying field of knowledge by most of us in contact with that development.
- But according to the school of philosophy that led to the revolution in Western society on the basis of self-governance and free markets which has marked the past several hundred years, there is one thing that no one has knowledge of more than any other individual: our own goals, values and ideals. While our policymakers may attempt to guide towards progress, the conflicting desires of individuals, patterns of morality used to evaluate the limited information we come in contact with, and lack of willingness to accept or work toward compromise mean that the best course of action for the society as a whole is often unclear. The lack of expression of opinion by every one of us, as experts on our own desires, on unusual or unanticipated policy suggestions with limited precedent in political thought limits the progress our policymakers can make to resolve social conflict. One of the most important of these conflicts, with relevance to all of us, is the sharp contrast between the global financial elite and the world's poor, the lack of job opportunities and the best way to resolve these problems.
- In contrast to this debate, it may be surprising that many of the world's richest do not see any benefit from their accumulated wealth. According to Warren Buffett, at one point the world's wealthiest person, "The most precious asset... is time." The divergence of wealth in the modern world can best be understood as a misunderstanding both of this basic principle and of the effect of individual decisions within the scope of an economic framework on the system as a whole.
- There are three, interrelated assumptions of importance to an industrialized world, where economies of scale put high-quality products within financial reach of the average individual:
- ‣ Additional labour by an employee will always provide benefit to other individuals in a society, by decreasing the cost of that good or service or increasing access at a given price
- ‣ Wasteful spending by wealthy individuals decreases the amount of that good or service available to the rest of society and the total amount of economic output other individuals have access to
- ‣ Refraining from wasteful spending, thus reducing the utility of money, will lead to a reduction in the source of income allowing that money to be spent by other people
- Adhering to all three of these principles causes a society to experience increasing accumulation of wealth in the owners of factors of production, but the reason becomes more complex for a subset of conditions. When the outflow of wealth as a result of wasteful spending happens due to disproportionate value of higher qualities of a certain good with no increase in the quantity purchased, instead of wasteful spending as a larger quantity of the most cost-effective version of that good, then combined with the first of the above assumptions the resulting currency flow effectively forms a loop or eddy in the higher socioeconomic tiers of a society, as a result of insensitivity to prices due to the lack of alternative uses for the same money which prevents other sellers from competing in that market by driving down the price.
- Those of us who have 'too much money' tend to buy from other individuals or firms who also have 'too much money', and the cycle continues. In the absence of more information on market demand, will a given firm that has already achieved profitability be more likely to increase their benefit to society by lowering prices and allowing more people access to their product, or alternately should they raise prices, allowing their competitors more access to the market while decreasing the work needed to obtain a certain revenue? The above three assumptions on society benefit do not provide a clear answer to this question, which is just as relevant to the market for employment as it is to the market for finished goods due exactly to the ubiquity of high-quality, low-cost products in the modern world and the lack of the concept of time as a form of compensation for work.
- A simplified economic simulation demonstrates the effect of the above-mentioned eddies of spending on unemployment.
- Sophia, wealthy individual
- Her husband, Yuto
- Isabella, jewelry producer
- Dmitriy, quality banana maker
- Александр, average banana maker
- Each banana maker is capable of making enough bananas for four people. Dmitriy attended banana school for four years, and is capable of making bananas that are 10% less squishy than normal, which he sells for three times the price of normal bananas. Александр has not attended banana school. Isabella attended jewelry school for four years and sells at a price making her income equivalent to that of Dmitriy. The bananas are eaten uncooked as in the United States.
- Dmitriy makes bananas and sells them to Sophia, Yuto, and Isabella, and consumes the remainder. Sophia buys jewelry for her husband from Isabella, and Dmitriy buys lower-priced jewelry which makes up for the rest of Isabella's production. No one buys bananas from Александр.
- Александр cannot afford loans to attend banana school or jewelry school for four years, and is considering moving to a different country which would interrupt his education. Because no one will accept his bananas even for free Александр is considering becoming a mime artist but is uncertain about the market potential or whether it is worth the loss of self-esteem. The government gives him money to keep from dying, with much of the money from his purchases eventually reaching Sophia.
- As this simple simulation has demonstrated, due to Dmitriy's insistence on making high-quality bananas to his full capacity and his desire to purchase jewelry which takes no time to enjoy instead of supporting mime artists who could take substantial time to complete a performance, Александр is left unemployed and the market will not fix this until a change in the basic assumptions about lack of need to question the benefit to the employee and to society from working beyond what is necessary to satisfy the employee's goals given the prices of other goods and the recognition of the value of time as its own reward during employment by a firm.
- If Dmitriy or, in a more realistic scenario his employer were to hire Александр using Dmitriy's expertise and guidance, Dmitriy or his employer would gain profit of 200% of a normal banana for each high-quality banana that Александр made, resulting in a more equal distribution of both free time and wealth. In order to achieve this result on a wider scale, it is necessary to communicate to both individuals and firms that all levels of society would benefit from the reduced unemployment that would result from less individuals working at full-time employment and the reduction of the eddies of spending in high socioeconomic tiers.
- For those of us selling our employment to firms and owners of capital, this requires knowing both that we will benefit from accepting a reduction of hours and also that other individuals will benefit, at the most basic financial level without having to understand the entire economic system or the interactions of the three mentioned assumptions on economic impact. This means, simply, that the marginal wage for smaller amounts of work should be higher than the marginal wage for full-time work, whether this is measured per day or per year or a combination of both. This means that by requesting a reduction of work hours due to personal needs or accepting one due to an economic downturn and lower demand for the firm's goods, the total wage would decrease but the hourly wage would increase. Similarly, the approval of a reduction of work by one valued and skilled employee gives the firm an opportunity to lift another worker out of unemployment, which due to the higher marginal wage for initial work would increase the total income available to and increase demand for goods at that socioeconomic tier.
- For firms, the issue is as much benefit to the global standing of the society it is located in and competitiveness with other firms, and not just loyalty to specific individuals employed by the company. In many cases, international competitiveness is more important to decisions made by a firm than worker compensation. This is as much the perception of benefit to the local economy by continuing to grow and avoiding relocation to a more profitable region as it is the actual profitability of the firm, and as such an additional metric comprehensive of the flaws of the previous three assumptions would allow pressure on firms that threaten relocation on the basis of competitiveness. Contribution to gross domestic product in the form of company revenue and number of jobs are the main points looked at for a company at present, but this ignores the problems that inevitably result when too much of society is working full-time without the opportunity to spend that income on additional goods, whether the income goes to employees or to major executives and the owners of capital.
- In contrast to flat contribution to GDP, the metric that more accurately takes the full economic effect of a firm into account, while also encouraging the adoption of the above compensation scheme that allows employees to work according to their own needs, is to incorporate the free time of employees into society's judgement of the firm.
- revenues * ([number of workers * 40 hours per week] - total number of hours worked per week) / number of workers = wellness number for positive contribution to society
- This number goes up as both the size of the firm and its willingness to allow employees to control their work hours increase. A firm that forcibly reduces hours without a higher marginal wage rate is more likely to have workers quit for a different company due to the cost of living, and a multinational company that achieves high profits without giving its employees the flexibility required for individual needs and positive economic impact should not be seen as more desirable to the local economy than one which may have lower profitability, but does give this flexibility.
- If you desire the adoption of these metrics of social benefit and the economic changes which will result, distribute this message to where it will have the greatest effect. If this describes something which is contrary to your desires, do not do so.
- "Measuring systems will include a variety of transferable and non-transferable progression in the measurement, depending on the expectation of the target audience and assumption of goals
- Competency within a restricted context is more efficiently measured by a minimum of progression which is more useful to the receiver of the signal represented by the measurement, while in an expanded context a more precise measurement gives more information to and is more useful to the sender of the signal
- Disagreement over expected situational complexity and responsibilities means that measuring systems encountered in different aspects of life have different amounts of utility as a primary signal of capabilities or estimation of competence
- A system which reminds or teaches that an accurate measure of competence is often based on personal knowledge of a situation and cannot be reliably communicated, has value to an individual and society
- Situations which involve conflicting goals, where progress in one direction causes a reduction of expected progress in another direction, promotes the self-measurement of a hidden competence metric and is therefore more useful than a single variable measurement for individuals who are not accustomed to attempting to keep track of progress outside of what is measured by the previously developed system, even if a single variable can accurately measure competence within a constrained set of assumptions
- A broad awareness of the varying reliability of primary signals increases overall efficiency of society by increasing the demand for reliable signals"
- Other pastes:
- "Three Arguments" http://pastebin.com/QrmDEymL
- "One-Step Plan to Eliminating Unemployment" http://pastebin.com/SrWHNFxS
- "Why economists are wrong" http://pastebin.com/Wy8B0hK9
- Additional resources:
- "low consumer demand" http://s122.photobucket.com/albums/o245/Taemojitsu/?action=view¤t=theiPodeffect.jpg
- Updated 13 Apr 2012 11:17 a.m.
Misaki Jun 17th, 2011 3,373 Never
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