Thursday, September 6, 2007

If Space-Time is Money

Its long been said that time is money. The question is how much money? Because when you think about the value of a person-hour in any society is a crucial determinant of how that society will live.

If the value of time is low the pace of life will be slower. People will be more relaxed about how quickly they get from A to B, the need for a higher velocity of money (ie the number of transactions per day that each person makes) will be reduced.

A low value of time means the differential between economic activity and non-economic activity is also reduced. People will be better disposed towards volunteer work, playing with children and recreational activities rather than trying to fill their days with transactions. Playing fields and religious activities will have greater prevelance over shopping and selling.

So how do we determine the value of time?

The traditional approach is to ask people how much they would be prepared to pay to save X amount of time. You average all this out and you get a dollar value.

But I wonder if the value of time isn't directly connected to the value of space, i.e land. The higher the value the more economic activity one needs in order to occupy it. Of course the value of land depends largely on the number of other bidders in the market willing to occupy it. Thus the argument becomes cyclic. The land is more valuable because more economic activity occurs on it and the more economic activity occurs the more the land is worth. This explains why cities form economic vortexes which pull in people from the surrounding countryside.

Following this analogy the differential in the value of land between the town and the country will establish the rate of suction from the country to the city as people are attracted to the city to make their fortunes basing their decisions on earning capacity in the city and anticipated costs of the country.

Is it possible for Governments to intervene in this space-time-value equation? The answer is yes but largely only through making the physical connections between places faster, safer and more efficient. In Roman or Persian times this meant building roads between market-places. These days it also includes airports, telecommunications regulation etc.

But the real question is what is the optimum value of time from a human perspective? Have we passed that point and are now running like mice in a wheel trying to keep up with ourselves? Can we ever go back?

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