Wednesday, October 24, 2018

Time Value

"Time is Money"      - Benjamin Franklin

It was in 1748 when he said that in an essay, "Advice to a Young Tradesman".

In 2006, Ian Walker of Warwick University, in England, apparently intrigued by the Ben Franklin quote, derived a formula for calculating the value of time. According to his calculation, "three minutes of brushing one's teeth worked out to the equivalent of 45 cents". After taxes and Social Security, of course. That was supposed to be, at that time, what every Briton gave up by not working. In fact, if he or she spent half an hour washing the car, that effort was worth $4.50.

That was then. In today's dollar, after inflation, those values are naturally far higher. We don't know what that is but I'm sure somewhere, someone had figured that out. Meanwhile, if you work where time sheets (clocking in and out) rule your work day, or if you're paid by actual productivity, as in being paid by the pieces of work turned in or task completed, then the science of calculating what your time is worth is an exact one.

There lies just one of the many ways time, with its very nature much a part of it, is one of humanity's most debated, most enigmatic, most mysterious phenomenon. Time - untouchable and invisible - defies a single explanation yet affects everything and everyone in the universe. We cannot feel it the way an invisible wind does, or how we are able to smell the wafting of perfume or the enticing aroma of a cooked dish. It is not something that our basic senses can detect yet we are aware of its passing, or so we think.  Of course, of all the attributes of time that we had ever thought of so far, because who knows what else we may yet discover someday, the flow of time is the most perplexing of all. More specifically, the unique and seemingly one-way direction of time. Time simply goes from yesterday to today to tomorrow in that and the only order. The arrow of time is set for all eternity and throughout the universe, where there are only three sign posts - the past, present and future.


However, does it really flow like water does? If we sit still, does time flow by us anyway, like the passing current off a river bank? Can we or any inanimate object for that matter sitting unmoved - not a muscle flexing or any part of an object stirring - experience time the same way as someone racing on a Lamborghini around the race track or a meteor hurtling through space? Does time flow, if it flows at all, at the same rate for everyone? Wherever everyone is? If it does, why?  If it doesn't, the question is still - why?  When we turn our face away from the moon, we know the moon is still there, whether we're watching it , or not. We know too that time had elapsed after some indeterminable moments even when we were not looking at our watch but did it actually flow, tick by tick, at the same rate if we were looking at our watch? Would you believe that that is actually not such a slam dunk as we might think it is?

Staying with the basketball metaphor, let's say two fans are watching on TV the last 10 seconds of a game where one team is leading by one point but possession of the ball was with the team lagging behind. Suppose one of the two fans was rooting for one team and the other for the opposing team. The fan rooting for the leading team will sense the ten seconds as too slow while the other fan will think ten seconds was too fast. And there is that about time that makes us feel it differently depending on our personal circumstances. 

That led Einstein to say,  “When you sit with a pretty girl for two hours you think it’s only a minute, but when you sit on a hot stove for a minute you think it’s two hours". That’s relativity.” That was actually Old Albert's attempt at explaining relativity to every layperson willing to try to comprehend it. In reality the scientist made life more complicated in his desire to simplify. This leads both scientists and philosophers to believe - some of them anyway - that time is an illusion. Time is in the mind of the beholder.

But it can't be! We see a plant grow from seed, a toddler to adolescence, we see wrinkles on our faces, and clearly our year book reminds us we were very young and lean and smooth-skinned once in high school and we know how little we knew then than now. Yet, now we are still denied the understanding of time.

We now know too that the clock on a GPS satellite runs at a different rate from a similar clock on the ground. In fact, identical clocks on the surface of Jupiter or on a massive neutron star and here on earth will all run at rates varying from mere seconds to years.

Let us leave anymore insights into that to scientists and philosophers to argue; or, perhaps, someday for them to explain at last, without any doubt or obfuscation, what time really is. Meanwhile, it does not stop us from lightly ruminating about it. That, by the way, is a sign not to take things too seriously because of the oxymoron the phrase connotes. Because to ruminate actually means to think deeply about a subject so that lightly doing it is well ...

Anyway, somebody won the Mega million lottery last night. They advertise it as a 1.6 billion dollar payout but cash option reduces it by a lot. Aside from the fact that the first guaranteed winner, long before a single penny is doled out, is the IRS, the advertised amount which is good for a three decade payout, falls victim to time.  The present value of $1.6 B is $904 M, and when taxes are taken out the winner receives a cash payout of between $490 M to $570 M, depending on how clever his or her accountant or financial adviser is. Still a lot of money, mind you, although the point here is what role time plays in everything.

Stories of when bread was ten cents a loaf are real and even truer is that we will never get back to that point in history. If we transport ourselves to that time we will have been talking about the present value of ten cents as worth a future value of $3.99 in 2018. The time value of money is the reason. And there lies the conundrum. How is  a gold eagle dollar coin in 1900, something anyone held valuable then, something to touch, feel, see and even taste, be affected by something invisible, tasteless and free of detection by any of our senses? That something was and is and will always be time.  So much power and such inevitable impact.

But time, we're told by some, is an illusion. Its effect may be real but not to everyone or every circumstance. The value it created may not be real. To a castaway on a deserted island, a gold eagle coin in his possession is valued at equal  to nothing, while a loaf of bread may be ten times its weight in gold; the same gold sitting in a vault in an office of a Manhattan precious metals trader, who will value bread with chopped corned beef and all the trimmings as a cheap quick lunch on a busy day.

Here lies time and the true meaning of life in a day. The most valuable commodity we possess at the beginning of each day, if it is a commodity at all, is time. We lose it at the end of each day but the wealth of all wealth is to have it come back the following morning - its value the same for all and for everyone. And the biggest win of all wins is to wake up the following morning and get to claim time, one more time. Each morning we get up to live another day has a present value worth a future value many times over on that one future morning we get up after ten thousand tomorrows from today.


We're told to value the time of day, of every day, because we will never get its value back. This prompted the Greek philosopher, Heraclitus, to say:

“No man ever steps in the same river twice, for it's not the same river and he's not the same man.”

 


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