The old adage tells us that “Time is money,” and at the surface this seems to make sense.  We spend our time at work to earn money.  Compound interest makes our money grow over time.  But then again what exactly is money?

Money is currency.

What does this mean?  This means that money is the universally accepted means by which we trade goods and services.  It is a symbolic representation of the value we would otherwise convey in bartering these goods and services.  It’s only a representation of value, not value itself.

So where does the value come from?  Labor.  It takes work to produce TVs, food, cars, and houses.  It takes work to clean someone’s teeth, repair their refrigerator, or massage their tired feet.  It takes time to do this work—your time as you go to work each day to produce some of these goods and services.

It also takes a certain amount of skill.  Your doctor attended years of med school.  The singer of your favorite band has spent countless hours practicing and perfecting his art.  The engineer who designed the power plant that powers your home has put considerable effort into obtaining the certifications and technical knowledge needed to design that plant.  Skills take time and effort to develop, and this time and effort is factored into how we value the goods and services that people produce.

The goods, services, and information produced by society are all produced through the expenditure of time.  It is time, not money, that is the ultimate measure of value—money is merely a surrogate. So it appears that the old adage has got it backwards. Money, in fact, is time.

Time is the most precious commodity of our lives.  It is the root of all value, yet few of us are very effective at managing this scarce and precious resource to get more of what we want out of life, myself included.  It is astounding that we are not taught from a very early age how to focus time toward our vision of a perfect world to make that world a reality.

Think if we could double the amount of value each person can produce in their lifetime—economic, social, spiritual, artistic, environmental value.  Think how that would send the quality of life on Earth soaring to new heights.  If we change how people harness the power of time, we will change the world.


Jon · November 13, 2010 at 12:54 pm

On an individual level, sure. But your last point speaks to the possibilities economy-wide and completely unravels when you consider the existence of unemployment.

There are literally millions of people who are unemployed (and that means actively looking for work, by definition). Millions more simply are not part of the labor force.

For these people, time is NOT money. Put another way, their time could be money, but they cannot find anybody to pay for their time. So their time has no value at all.

On that note, if you, I, and a million other people were able to double our productivity, two things would happen: 1) we as individuals would be paid more 2) unemployment would increase, because our increased productivity would replace, reduce, undermine, or eliminate the need for others to be productive elsewhere in the economy.

My point is: there are too many people chasing too few jobs.

If this were a tight labor market with near-zero unemployment, then yes, an increase in personal productivity could translate into more money economy wide. But with so much unemployment, this is a beggar-thy-neighbor idea that would exacerbate the current unemployment problem.

Adam Mayer · November 14, 2010 at 5:21 pm

I agree completely with your first point. All time is not money, otherwise we could all get rich sitting on our couches watching Jersey Shore and eating Funyuns (though the cast of Jersey Shore, on the other hand, seems to make buckets of money doing absolutely nothing). My point is that all money/value is the product of time, not that all time produces money.

To your second point, if what you say is true then we would have never had the Industrial Revolution and the subsequent explosion in value and population growth. Likewise it would mean that cheap energy would also not cause growth, as energy is essentially time in a bottle, replacing human labor with mechanical and computerized labor.

What I am suggesting here is a personal revolution, or Awakening as I have entitled this category of my blog, where instead of improving productivity through technology and mechanized industry, we improve people so that they realize what they are fully capable of and give them the tools and skills they need to reach that potential. This is not all about economics–this is about living a complete, enriched, meaningful, and happy life. The economic benefits, however, could be comparable to those of the Industrial Revolution.

Jon · November 15, 2010 at 3:56 pm

But I think you’re still missing the systemic economic point. People are more expensive than technology and mechanization. How can they possible enjoy a complete, meaningful, and happy life by improving their use of time when our society does not need so many people?

Unemployment means that their time has no value. It’s not a deficit of skills (since many of the unemployed were employed a few years ago)–it’s a deficit of demand. Our economy simply does not need them.

The industrial revolution appeared because of a confluence of changes that led to low costs for resources and made mass production and energy intensive industries possible. What change, other than just deciding we should all be productive, would bring such benefits?

That’s been done before, by the way. Deciding to increase productivity as a society was a key part of communist economic plans (great leap foward, 5 year plans, etc.)–and a big part of why the communist economies failed miserably: it directly resulted in the overproduction of inferior, low quality goods the economy did not want or need.

Adam Mayer · November 17, 2010 at 3:20 pm

Another piece of the equation is that as an individual’s productivity grows, they get paid more as a result. Once people are paid enough to support their basic survival, any extra income they make is essentially a luxury. People need something to do with this extra income… they start to want stuff to buy with that income, and this creates more demand for products and services, which in turn creates jobs.

Alternatively, people can become more productive by starting their own businesses. Entrepreneurs are the people who created the innovations that allowed the Industrial Revolution to occur and who will usher in future revolutions in the advancement of the human condition. There is always a need for something to be done cheaper, faster, and better, and entrepreneurs are the people who make that happen, leaving jobs and even entire new industries in their wake.

I don’t think you can compare the effects of improved productivity in a controlled socialist economy to what would happen in our own supply and demand-driven capitalist markets. Here, overproduction of subsidized corn has resulted in the development of high fructose corn syrup, cheap meats fed by corn, and even biodegradable manufacturing materials made of corn. Overproduction of fiber-optic cable fostered an explosion in Internet technologies that have changed life for the better. Our entrepreneurs and free markets will always find ways to make use of excess resources, including people.

Chelsea · February 25, 2011 at 2:14 am

Adam – you write this as if you’ve come up with something profound.

The “Labor Theories of Value” were written about by your namesake Adam Smith in 1776, and by others before him.
However, the problem with Smith is that his model of value only takes into account the costs of production and not the consumer’s interpretation of the value. This has since been replaced by most with a neo-classical view of the world.

With your comment “time is the most precious commodity of our lives” you’ve fundamentally misunderstood how people make decisions on how much time to supply to the labor market. People decide on how much labor to supply by maximizing their utility. This is based on an optimal allocation between their income (and the associated desire to consume) and leisure time. To summarize – at a working week that was one hour less than this optimum they would actually value the additional hour’s wage more than the hour’s leisure time. Kind of contradicts what you’re saying right?

You close out by saying “Think if we could double the amount of value each person can produce in their lifetime”. A noble sentiment, but not really backed with any firm grasp of basic economic principles thus far.

At this juncture I turn my attention to Jon, who is clearly a moron. Doubling productivity would not increase unemployment.

A key measure of productivity is output per capita. The ability of a country to improve its standard of living is based on the ability to produce more per person year-on-year. An increase in productivity results in an increase in real income (note my use of the word “real” here) per unit of work expended.

This rise in real income increases people’s ability to buy stuff – guess what Jon – this increases employment. The guy in Starbucks wouldn’t have a job if our standard of living hadn’t progressed to such that we could afford to spend $4 on a latte.

Secondly – the increase in real income affects how people make decisions on how much labor to supply to the market. Adam – a lesson in labor supply economics here… an increase in real wages can actually cause people to supply LESS labor – more leisure time.

Productivity is king – and yes, it was innovation and the subsequent effects on productivity that caused the Industrial Revolution and thus a step change in people’s standards of living.

I’ll also gloss over Jon’s misunderstanding of involuntary / voluntary unemployment and the associated models. Near zero unemployment would result in an increase in wages leading to massive inflation. There is no economic model anywhere that says that an increase in productivity results in more unemployment.

The Communist model failed for any number of reasons, but not because the intent to increase productivity was wrong. In fact the fundamental problem with the Communist model is that at no meaningful level are individuals or groups of individuals incentivized to focus on productivity.

I can’t fault any of your arguments about the importance of entrepreneurship for sustained long term economic growth. However I can fault your example where you talk about subsidized corn production in “supply and demand-driven capitalist markets”. The very fact that it is subsidized means that this is not free market economics at work.

Adam – I like your intent but you would be better served keeping it purely philosophical and dropping the armchair economics.

Time IS valuable, and I wish I hadn’t had to spend mine correcting you.

Reading Freakonomics does not make you Milton Friedman.

Yours sincerely.

Chelsea Roebuck

Adam Mayer · February 25, 2011 at 10:31 am

Hi Chelsea, thanks for the feedback. I haven’t read Freakonomics, but I do have a Ph.D. in Armchair Economics from the University of Google Reader.

I think both you and Jon are mistaking my post for purely an economic argument, which it isn’t. I agree that rehashing Adam Smith is certainly nothing new or profound, but what I would like people to understand is that because time is the root of all value–economic, social, artistic, familial, etc.–that people should put a lot more focus into how they spend their time so that they can get more of what they want out of life. People put a lot of thought into how they invest their money, whether to buy a house or invest in mutual funds or ETFs or whether they should open a CD or a savings account, but relatively little thought into how they spend their time. My argument is that the latter is exponentially more important to getting more of what one wants out of life.

A macroeconomic side benefit of the increase in productivity at the individual level is an increase in economic value. But the more important figure is the increase in Gross Domestic Happiness, Self-Actualization, and Empowerment.

This post will make a lot more sense in the context of future posts about time management, entrepreneurship, etc. Going through a career change now so the blog is on hold.

What is your background? Are you an economist?


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