One of the primary topics of debate that has arisen in recent months is the general goal of modern macroeconomics and society as a whole. The so-called “holy grail” of modern macro is full employment and price stability. This is convenient because the figures are relatively easy to quantify and they allow economists to build models that are not excessively complex – kind of like plug and play. And in this case, we’re plugging in numbers and often concluding “abracadabra, we have full employment and price stability if we do X, Y and Z!” Of course, the world is not so simple and this dismal science often turns out to be awful science or not even anything closely resembling science.
I wonder if, at times, in focusing solely on these admirable goals we are in fact losing sight of the real goal. The reason why any society forms in the first place is because we have a collective understanding that we can achieve a better overall living standard if we leverage one another’s strengths and abilities. I have argued that human beings are the ultimate pack animals even though we like to think of ourselves as rugged individualists. This basic innate understanding is what drives us to need one another and understand that we are better off in groups than we are alone.
Our monetary system is simply an evolution of this understanding from spoken bonds (and even unspoken bonds) to written bonds. But the goal of a society has not changed despite the fact that the tools we use have changed. The end game has always been the same. It is the desire to generate improving living standards through the efficient use of resources resulting in the optimization of time. The element of time, in my opinion, is the key piece of this puzzle. The true holy grail of modern macro is not price stability or full employment. It is time. Time is the ultimate form of wealth in a modern society. It is through time that we are able to live fuller and more meaningful lives. What you do with your time is up to you. But the key is that having more time means being able to do more of what you want to do. In theory, we can consume and produce an infinite amount given the time. But time, as we all know, is not infinite for finite creatures.
I have been kicking around what I have been privately been referring to as the “MMR Law”:
“We generate improving living standards through the efficient use of resources resulting in the optimization of time“
This is a powerful concept and one that can change the way modern societies approach economics, public policy and every day life. When one understands that time is the ultimate form of wealth their perspective is dramatically altered and the playing field is changed. And while full employment and price stability are admirable goals, they become secondary to this understanding which sits above them in the hierarchy of societal goals.
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